# House prices to keep rising for years



## moses (15 February 2008)

Time to change subjects...

Reasons.

a) limited supply and increasing demand (immigration)

b) increasing building costs of new homes ripples through to all housing

c) increasing minimum expectations (McMansions)

d) increasing wealth trickling down from mining boom

e) increasing cost of capital (interest rates)

f) increasing wage pressure


The increased building costs are due to:-

1) skilled labour shortages (tradies)
2) increasing OHS requirements
3) increasing environmental standards
4) inflation based increases in building materials
5) increasing compliance requirements on builders

And thats before we start discussing land prices, let alone the dramatic wages currently available to ordinary people who are willing to work in unpleasant places for a while and save big deposits. Nor have I factored in a shift from the stock market back to housing (which I suspect will only be transient).

I can't see a lot of these things reversing all together. It seems to me that those who are hoping for a collapse in house prices are really up against it. It may well be that ownership of property will define the wealthy and the poor, and perhaps eventually require legislation to redistribute the wealth (like the UK did with its death duties to force heirs to sell the family castle etc). But that is a long time away; endless cheap land is the historic reason why every Australian expected his own backyard, but those days are disappearing fast and the owners of land are getting wealthier and wealthier.

And rents will go up up up up...

Thats my theory anyway...


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## Kimosabi (15 February 2008)

moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...




*You wouldn't be looking for a Valentine would you?*


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## KIWIKARLOS (15 February 2008)

Totally agree Moses

The US house prices are failing so rapidly becasue they are such an unproductive country and simply consume more than they produce.
The US became the most powerful country in the world on the back of resources such as oil, wheat etc but since the 70's when they became a debtor nation they have been on a downward spiral.

Australia has quite a small population and lots of potential for an increase in population, birth rates are slowly starting to increase and we have abundant supplies of energy and resources. We are probably in the best country on earth. We have resources which exceed chinas in some area with a 1/50th of the population. 

In terms of been self suffiecient we are not to bad, our agriculture can supply our population and there is heaps of room for agricultural expansion eg. the Ord river etc. + were coming off the back of a severe drought and undoubtedly will have some bumper crops for the next few seasons. We have enough coal for 300 years and enough geothermal for 1000 years and its cheap! 

I do believe that with the decline in oil there will be a huge emphasis on Urban consoldation and the biggest house price gains will be in colse proximity to major metro centres, I don't like the outlook for the outer burbs. 

The cost of services is only going to rise and the best way to keep them low is to stop the sprawl and consolidate. I don't think the NSW gov should release more land I think we should make better use of the land we have.


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## wayneL (15 February 2008)

KIWIKARLOS said:


> Totally agree Moses
> 
> The US house prices are failing so rapidly becasue they are such an unproductive country and simply consume more than they produce.
> The US became the most powerful country in the world on the back of resources such as oil, wheat etc but since the 70's when they became a debtor nation they have been on a downward spiral.




I'm usually the first to criticize the US's economy, but the above statement is totally ludicrous. The US's GDP per capita is still far greater than OZ.

And by the way, Australia is also a debtor nation. I guess it's on a downward spiral as well. LOL


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## KIWIKARLOS (15 February 2008)

wayneL said:


> I'm usually the first to criticize the US's economy, but the above statement is totally ludicrous. The US's GDP per capita is still far greater than OZ.
> 
> And by the way, Australia is also a debtor nation. I guess it's on a downward spiral as well. LOL




I would argue that GDP is not the best indicator of a "productive" nation. Alot of that GDP you are talking about would be generated by the US monster financial institutions and banks which play funny games with trillions of dollars. The same insto's that are writing off billions of dollars of monopoly money. Plus the fact that the US has made its dollar the world currency and the fact you can really only buy oil in USD. Its propping them up.

I believe that the real value of a countries money is tied to the tangible assets it can produce. How much do you think their GDP is now with all the economic woes going on I mean for heavens sake they are sending rebate checks to a huge % of their population! 

How about other measures such as purchasing power etc. 
No country can remain a debtor nation forever its just not possible you have to start paying back the loans sometime or you just default. Notice now its the creditor nations that are in essence saving the debtor nations by pumping billions into their economies.

I think it is a big issue that we are in fact in one of the best positions economically for a half century yet we are still borrowing money from foreigners! What happens if the commodity boom slows or even stops 
Times like these should be used to cushion against future times that won't be so good.


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## kivvygosh (15 February 2008)

KIWIKARLOS said:


> I would argue that GDP is not the best indicator of a "productive" nation. Alot of that GDP you are talking about would be generated by the US monster financial institutions and banks which play funny games with trillions of dollars.



_Per person_ GDP is universally accepted as the best indicator of a 'productive' nation, but of course you can argue with that.

But if you are measuring 'what they produce', consider the computer you are using and a large proportion of the technology you enjoy, most of the media you consume whether it be entertainment or reference (which includes trends, culture, and marketing itself), not to mention plenty of foods, drugs, etc.  It's true that the USA is long since being the 'world's factory' but it now leads the world in other much more lucrative areas - innovation, ideas, technology.

To suggest that Australia is somehow more 'productive' than the USA - based on mining? - is definitely something I haven't heard before!  Apart from mining we are in the same boat as the USA except we are far less innovative and influential in the marketplace of ideas.


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## tech/a (15 February 2008)

Personally I think the biggest problem is for those who are struck by fear into doing NOTHING.

I remember in 1996 when buying everything that the bank would let me get my hands on----being looked upon as a nutter.A few friends bought a little as investment and wish they bought more.

There are creative ways of taking advantage of that which Moses points out above and creative ways of mitigating Risk which Wayne is forever going on about.

There will always be risk in various degrees and there will always be opportunity in various degrees.

*Talks is as expensive as it is cheap!*


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## nioka (15 February 2008)

KIWIKARLOS said:


> No country can remain a debtor nation forever its just not possible you have to start paying back the loans sometime or you just default. Notice now its the creditor nations that are in essence saving the debtor nations by pumping billions into their economies.
> 
> I think it is a big issue that we are in fact in one of the best positions economically for a half century yet we are still borrowing money from foreigners! What happens if the commodity boom slows or even stops
> Times like these should be used to cushion against future times that won't be so good.



How true, how very true. Howard used that in his campaign to defeat the Keating government yet, under his leadership he allowed/helped the country into a worse position. Will Rudd get us out or dig the hole deeper?


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## numbercruncher (15 February 2008)

KIWIKARLOS said:


> The US house prices are failing so rapidly becasue they are such an unproductive country and simply consume more than they produce.




If consuming more than you produce is measured in monetary terms, we literally suck.




http://www.whocrashedtheeconomy.com/blog/?page_id=4

If Australians are this bad at saving now, Id dread to see what happens in a recession or an enviroment of rising Interest rates


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## xoa (15 February 2008)

Whenever a boom reaches its climax, people scramble to find reasons why the good times will continue forever. During the tech bubble, people did the same thing (ironically the tech implosion triggered the housing bubble). I don't find the "reasons" for continued price growth reassuring at all.

Even the first (and most commonly cited) "reason" - immigration, is misleading, because the growth of our adult population is actually at historic lows, due to 30 years of below-replacement birthrates. Immigrants are preventing population decline, but that's all.

Even ignoring plummeting house prices in the USA, NZ and UK, there is one good reason why prices can't rise much higher: peak debt. We're reaching a point where the average household cannot afford to borrow more.


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## KIWIKARLOS (15 February 2008)

kivvygosh said:


> _Per person_ GDP is universally accepted as the best indicator of a 'productive' nation, but of course you can argue with that.
> 
> But if you are measuring 'what they produce', consider the computer you are using and a large proportion of the technology you enjoy, most of the media you consume whether it be entertainment or reference (which includes trends, culture, and marketing itself), not to mention plenty of foods, drugs, etc.  It's true that the USA is long since being the 'world's factory' but it now leads the world in other much more lucrative areas - innovation, ideas, technology.
> 
> To suggest that Australia is somehow more 'productive' than the USA - based on mining? - is definitely something I haven't heard before!  Apart from mining we are in the same boat as the USA except we are far less innovative and influential in the marketplace of ideas.





Innovation sure but that doesn't help when a foriegn gov or company can simply steel your info and not contribute to its discovery. I would also argue that they are not the worlds leaders in innovation.

Look at GM ford etc the japs are kicking their butt in development of cars and drive systems hence why they are lossing so much money. The real big innovation in the US is to produce better arms ! I would say their best industry is the arms industry  The Europeans are far more innovative in renewale energy than  the US aswell !. 

The big difference is in the US the laws are set up so that if a company releases a product and it causes harm the company gets sueed, hence they believe that this will result in safe products because nobody wants to get sued. But in fact the big companies just pay the victems off or get laws passed so they are not accountable. In europe a product must be proved safe before it is sold. Their product safety and standards are much higher than the US. Australia is actually also a world leader in producing medical breakthroughs, technology and drugs.

You say they export culture but that is on the wane aswell anti US sentiment is growing around the globe and people no longer see them as the best country to idolise and work toward becoming.

One last point throughout the cold war the USSR produced much more innovative weapons systems that were inexpensive and worked as good if not better than the US. They simply lacked the economic clout to compete.


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## Kimosabi (15 February 2008)

Theres one thing you Property Spruikers forget to mention, there is only so much Rent people can afford to or are prepared to pay.


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## KIWIKARLOS (15 February 2008)

Really whats their other option? 

Buy a house or live in a cardboard box :

Perhaps move to a rural community where there is no work, and no ladies :


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## numbercruncher (15 February 2008)

Default on their rent and excercise squatters rights while their landlords bleed a grand a week 

Even Pollys arnt getting pay rises this year, so dont put up their rent 

RBA is going to put up the Money renters rent though


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## Tysonboss1 (15 February 2008)

Kimosabi said:


> Theres one thing you Property Spruikers forget to mention, there is only so much Rent people can afford to or are prepared to pay.




thats why the average property over the years will increase in desity and get smaller. so that more renters will occupy the same land area.


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## KIWIKARLOS (15 February 2008)

yeah i have no sympathy for investors with multiple negatively geared houses. Negative gearing is BS all it does is push up house prices and feeds the asset bubbles whilst pushing first home buyers out of the market.
I was speaking to a guy a year ago he had 8 properties all on interest only loans ! I dont know who's the bigger scum the investor or the bank that backs him


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## Tysonboss1 (15 February 2008)

numbercruncher said:


> If consuming more than you produce is measured in monetary terms, we literally suck.
> 
> View attachment 18128
> 
> ...




does it really matter if you are not saving cash but just investing all your wealth in income producing and growth assets.

I mean some one who took a snap shot of my personal finances today would see credit card debt of about $10,000 and about $250 in the bank,.... which may look bad. but if you took a closer look you would see that I never pay interest on that credit card debt and the only reason I have no cash is because i always use it for investing or clearing down debt.


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## Tysonboss1 (15 February 2008)

KIWIKARLOS said:


> yeah i have no sympathy for investors with multiple negatively geared houses. Negative gearing is BS all it does is push up house prices and feeds the asset bubbles whilst pushing first home buyers out of the market.
> I was speaking to a guy a year ago he had 8 properties all on interest only loans ! I dont know who's the bigger scum the investor or the bank that backs him




whats wrong with negative gearing property,.

any asset that returns less than 9% has to be negative geared,...... 95% of shares would be negative geared if you borrow to buy them.


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## numbercruncher (15 February 2008)

Tysonboss1 said:


> thats why the average property over the years will increase in desity and get smaller. so that more renters will occupy the same land area.





Also the average number of people per household will probably increase (Kids stay at home longer, more lodgers etc), currently runs at like 2.6 ppl per household.

I know alot of argument gos to the supply side but last year was a 300k population increase, about half natural, yet 150k new dwellings built - that averages 1 dwelling per 2 people, seems to be keeping up to me. I assume a certain percentage would be tear downs and rebuild, but its surely got to be in the vicinity of matching supply despite what the commentators/spruikers are saying.

Its easy to research, always squillions of rentals available on r....e..comau , just certain areas that demand out strips.

This will be the tell tale year though to see who was right or the least wrong in the property debate  If Interest rates bite and selling momentum and sentiment kicks in ..... youve got huge swathes of the population nearing retirement and if they see asset prices reversing and they are relying on that cash to fund retirement, oops


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## Tom Ronalds (15 February 2008)

Anyone who thinks house prices will continue rising much further from their present levels must have rocks in their heads. Consider the following:

- Australia already has the most unaffordable housing of any developed country. Every single one of our capital cities is classed as "severely unaffordable" (the highest rating), with regional cities largely all in the same category as well. See detailed discussion on this in the latest Demographia report: http://www.demographia.com/dhi.pdf

- House prices in relation to incomes are now so far out of historical averages that it makes the US situation *before* their property crash look good. Check out this graph - it's scary:
http://tinyurl.com/239gqj
Prices clearly cannot continue to keep increasing, as there will soon be hardly anyone able to afford to buy anything! Where there are no buyers, prices must fall.

- The massive bubble shown in the above chart has been largely funded by debt, made possible by relatively low interest rates and a loosening of prudential lending standards. It certainly was not possible to borrow 100% or even more of the acquisition price 10 years ago, where the nominal repayments are 80% of the gross income - a true case - I dealt with a client in my professional capacity recently, who has entered into just such an arrangement! -- Now some lenders will do that. If that's not asking for trouble, I don't know what is.

- Personal debt levels in Australia are way above those in the USA: 
http://tinyurl.com/2kxk9oY
Many of these people are already struggling to keep up with repayments; if the economy slows & unemployment increases, we'll see a property crash here that could exceed the current wipe-out in America. Some economists have mentioned across the board price drops of between 35-50% will be needed to restore affordability.

As share traders, you'd no doubt agree that over the long term, fundamentals tend to re-assert themselves, regardless of any short-term price fluctuations. This applies equally to house prices, and as anyone who was around in the late 80s & early 90s will attest, "safe as houses" is a massive fallacy.

I have no doubt that the current major falls of even large financial stocks (Big4 banks in particular), which would appear unjustified on current fundamentals, are at least to some extend due to the major institutional investors being concerned about a likely fallout from a property crash. Then of course the banks' fundamental indicators will suddenly look very different!

Keep in mind also that it's no longer just sub-prime borrowers in America that are getting evicted and their homes repossessed. We are even more vulnerable here in Australia - their interest rates are going down; our are going up. Our debt levels and subsequent servicing costs are much higher. Altogether a pretty toxic mix, if you ask me.

It is also interesting to note that some of the most affected areas in the States have also had housing shortages & major price rises & affordability issues, due to zoning restrictions etc. - especially California. Yet CA is now the amongst the leaders in repossession rates and price falls.

Property prices are also now falling in the UK, with loan defaults on the increase. Again, this is despite previously insufficient supply in some areas. The ridiculous prices and cost of debt servicing have all started to catch up.

Personally, I am a financial services professional and I can say I would not be in the least surprised if we had a recession in Australia over the next 12-18 months. And then all the bets on housing will be off.

Tom R.


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## Uncle Festivus (15 February 2008)

KIWIKARLOS said:


> Really whats their other option?
> 
> Buy a house or live in a cardboard box :
> 
> Perhaps move to a rural community where there is no work, and no ladies :




Actually I think you'll find the regional areas are doing pretty good, as they are taking in the 'disposessed' section of the market who are unable to afford to live in the capitols (yes, we even get your 'Klopaks' ). 

University towns = lot's of ladies !

It's top of the cycle comrades. As Australia is lagging the rest of the world it may be a good time to _sell_. Something about a global reccession....?


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## Tom Ronalds (15 February 2008)

Sorry, a typo sneaked in to one of the above links. The personal debt comparisons between USA/AUS are here:

http://tinyurl.com/2kxk9o

Tom


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## Uncle Festivus (15 February 2008)

Tom Ronalds said:


> Sorry, a typo sneaked in to one of the above links. The personal debt comparisons between USA/AUS are here:
> 
> http://tinyurl.com/2kxk9o
> 
> Tom



Yes Tom, your post was a refreshing summary of reality. But it maybe _when_ not _if_? Only the timing is in question.


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## tech/a (15 February 2008)

Tom

Interested in your comments with regard to the following related to the affordability question.

Will not the affordability issue be quelled from both sides,possibly over years.

(1) A retreat in pricing of housing particularly in areas of over supply (Some Australian CBD's),and at least a stagnation for a time in other areas.
(2) An increase in real wages.
(3) Decrease in real taxation.
(4) Decrease in consumer debt.

Is not the major problem consumer debt---hence lack of disposable income. 

Is Australia not in a position where an un winding of this in balance is more likely than a crash?
Due of course to some of the points mentioned?


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## KIWIKARLOS (15 February 2008)

Your talking long term trend over the last 80 years, the thing is there can be huge planet wide phenomenums which buck the trend and start a whole new type of economy focus. 

The trend we are basing all these assumptions on has been on the back of rapid development from 120 years of growth on the back of the most cheap, abundant and energy dense resource on earth !.

in ten years you won't be able to build a house cheaply becuase the materials will cost huge amounts more. Hard wood will be even rarer, plastics which are a product of oil will become more expensive, steel / aluminium will increase rapidly as the cost of production skyrockets. Vietnam just announced they are reducing and may even halt coal exports to china.

As resources become scarce they cost more, land in australia may be abundant but land in city areas is finite and will not grow as it did throughout the 70's and 80's. Its just not economic now to build huge amounts of infrastructure to service outling suburbs with relatively low population density.

Right now we are seeing countries fighting to secure energy resources for their future. Australia is energy secure now and is one of the few countries that can be energy self sufficient. we may not have oil but we can still easily run a efficient and productive economy of cheap electricity.

I guess i do agree house prices in some areas will decrease becuase the cost of living there will become to much, I think house prices will increase in areas where people will flock to to ofset rising living costs. Particularily transport which is so dependant on oil rather than electricity. There are big plans to upgrade and expand Sydneys rail network but the focus will be on the inner suburbs not the outer burbs.


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## krisbarry (15 February 2008)

What a load of garbage...if people think house prices are going to keep rising for years then I have 2 words for you "INTEREST RATES"

The only sure thing that is going to be rising is interest rates, NOT the price of housing!

What are people smoking?  The RBA has given its strongest hint that more aggressive rate rising is on the way.  

I can feel a late 90's housing bubble bursting all over again!


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## Tom Ronalds (15 February 2008)

Hi tech/a,

Your points are valid and if you do a Google search on "Australian house price bubble", you'll find links to articles from 2004/2005, when it appeared the bubble was getting ready to burst. Then as now, informed commentary was for a "soft landing", where prices would stabilize and stay flat, allowing incomes to catch up.

Unfortunately the bubble re-inflated due to various government incentives, the mining boom and the easy availability of massive amounts of cheap credit. We are now not only in a much more exposed position, but, unlike in 2005/2005 we are also looking down the barrel of a world recession.

Despite the widespread belief that China and India will keep us going, mining in fact employs relatively few people in relatively few areas. We are already running into major infrastructure capacity constraints and the proposed re-regulation of the workforce and increased participation by unions in the mining sector will exacerbate this. There is little chance of mining all by itself providing an ongoing support to the economy.

From my professional capacity, I see the current housing/debt relationship as not dissimilar to margin lending: While the going was good, many people geared massively and thought the good times would just roll on forever. When prices dropped dramatically across the board, we have seen many margin lenders drastically downgrading loan valuation ratios of many companies (HFA/AFG are prime examples - beloved by analysts & total disaster for investors), which exacerbated the margin calls and subsequent sell-offs & realized losses. Many of these investors will not be able to recover easily from this.

With houses, it's a true house of cards/pyramid scheme. I see it where I live (FNQ). An influx of southern migrants has pushed prices up. That pushed construction up and also attracted lots of extra tradespeople & building industry workers here. Hell, any tradesperson could earn well in excess of $100K easily and even unskilled jobs paid up to $60K - you just needed to turn up and start pushing the wheelbarrow! Of course, all these people require housing, so the merry go round continues. Local median house prices jumped up to about $450K - in a city where the average household earns around $60K!

Now Cairns is being hit with a slowdown in tourism. The AUD doesn't help and the economy here is not overly diversified. House prices are also such that it is no longer overly attractive for even migrants from capital cities to come here. What will happen when construction slows substantially, as it must? 

Clearly, many of the tradespeople working in that area will then be out of work. They will move on, which means they'll want to sell their houses. That will put downward pressure on prices and rentals, which are also becoming unaffordable for many people. The net result will be major drops in property values, and many investors will suddenly have substantial negative equity in their properties & face a loss of rental income. Repossession is then next.

The picture is not that different on a national scale. Once loans cannot be serviced, it all falls over.

All of this has happened before. And it will happen again. I'm afraid the chance of a soft landing this time around is very, very remote. 

And yes, I have been a property bear for at least 5 years now. And I have been wrong so far.

However, as we all know, fundamentals will dominate over the long term and the bigger the bubble, the bigger the bang when it finally bursts.

Cheers,

Tom R.


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## Tom Ronalds (15 February 2008)

Kiwikarlos: "new type of economy"

Now where did I hear this one before? ;-)


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## KIWIKARLOS (15 February 2008)

Yeah interest rates are going to increase rapidly but they can come down just as fast mate. The main reason they are on the way up now is inflation.
What are the biggest contributors to inflation ?

1. Energy cost
2. Food cost
3. Living costs eg. entertainment and consumption.
4. Wage increases without productivity gains.

coming down potentially are.

1. Energy costs. If the US does go into recession oil could easily hit $70-80 a barrel. Electricity costs will increase marginally but both these energy costs can be offset with efficiency gains.
2. Food costs are going to go down. We are officially in El nina and above average rain if forecast for the next 3 - 6 months at least! probably the next 12 - 18 months really.
3. Living costs. Because this is descretionary spending it will be the first to be cut back as interest rates rise.
4. Wages will go up but we need to remove bottle necks at ports, road and rail. Work choices was starting to help by reducing conditions and pays and even though the current labour gov is scrapping AWA's I bet the new system is still fairly identical and will encourage a "flexable" workplace.

Also it takes months to even know the impact of rate rises on the economy + banks are increasing beyond the RBA. Consumer sentiment is dropping as is business confidence give it 6 months a couple more rises and the brakes will be well and truely starting to work. I believe by end of year we will be on the cusp of the interest rate down cycle.


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## Tom Ronalds (15 February 2008)

One more thing, on Kiwikarlos' comment regarding resource availability:

The same constraints apply presumably in every country. Yet Canada for example is nowhere near AUS in the affordability stakes. Similarly, many areas in the USA (Texas, Georgia), which have exhibited some of the best growth rates, have remained affordable.

I would suggest you read the Demographia report I linked earlier. It's a very interesting reading.

Tom


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## KIWIKARLOS (15 February 2008)

There is currently a huge shortage of workers particularily skilled workers even in a significant downturn all we will do is reduce the shortage not tip it into excess because the shortage is so severe.


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## Tom Ronalds (15 February 2008)

I would be so certain about drops in energy and food costs, Kiwikarlos.

You're forgetting about the "green madness" that is extending its grip over the developed countries. Any form of carbon tax, coupled with mandatory renewable energy targets will see energy prices going through the roof. 

Similarly, food prices are rising throughout the world, to a large extent due to subsidies being paid for growing biofuels, where these displace food crops.

The growing energy needs of China will ensure oil prices do not drop substantially, even if there is a slowdown in the USA.

Tom


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## Tom Ronalds (15 February 2008)

Of course I meant to say "I would *not* be so certain...." in the post above.


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## KIWIKARLOS (15 February 2008)

You can't just compare OZ to US and canada. The US is the size of oz with 90% of it habitable OZ has 10% habitable land. 

In the US house prices rose heaps but wages have stagnated and there skilled labour is shrinking. Most of the subprime borrowers work in the service industry getting paid peanuts and the service industry is always the first to get hit in a downturn.

We may be getting 100% loans in OZ but at least we can service the loans + we don't have ARM's our interest rates increase relatively slowly across the board in the US a subprime borrower can one day service his loan at 6% the next day he can't at 12% because the rate resets. Not to mention the fact that in america people can simply hand back the keys to a house they can't afford with no debt in OZ we can't we are liable for the loss.


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## KIWIKARLOS (15 February 2008)

I agree but if house prices look like they were to do 20% the gov would soon relax its energy emission targets and the RBA would almost certainly drop rates like the ECB and FED becuase inflation is better than an across the board asset depreciation. We can survive inflation but asset depreciation on that scale = world wide depression


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## Tom Ronalds (15 February 2008)

<quote>
You can't just compare OZ to US and canada. The US is the size of oz with 90% of it habitable OZ has 10% habitable land. </quote>

Even if this was correct, it still does not explain why you can't compare with Canada. You could say exactly the same thing with regards to habitable land in Canada as in Australia.

And you can only service the loans while you have a job.


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## Tom Ronalds (15 February 2008)

Anyway, time will tell, as it always does. And there are in fact plenty of people who believe just what you said - asset depreciation on that scale = world depression.

Well maybe not a depression, but a serious, deep recession without a doubt.


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## tech/a (15 February 2008)

Hmmm didnt I see truckloads of Fruit and vegetables being fed to livestock as cheap imports (Over supply) cut the hell out of our producers?

While this continues increases in food costs are unlikley.

Tom.
I think yoiur view is broad brushed.
While I know in FNQ your pretty spot on here is SA---you know that little state that everyone here is over 80---Kiwi's out look is more reasonable.

Now Interest rate rises AND a recession---which one?

My take is More middle road.
Areas of extreme pain.
Areas of No or very little growth or negative growth
Areas of growth.

Nett---depends on where you are.
Depends on personal circumstances---and where you are.


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## xoa (15 February 2008)

Tom Ronalds said:


> Kiwikarlos: "new type of economy"
> 
> Now where did I hear this one before? ;-)




Dot com


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## chops_a_must (15 February 2008)

tech/a said:


> Hmmm didnt I see truckloads of Fruit and vegetables being fed to livestock as cheap imports (Over supply) cut the hell out of our producers?
> 
> While this continues increases in food costs are unlikley.



Had a look at soft commodities futures lately?

Or the margins farmers had before the grain run up? Food cost increases indeed...


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## KIWIKARLOS (15 February 2008)

hahahahahha yeah except the internet bubble is based on the VIRTUAL world  and was over a 5 year timeframe where as oil economies are REAL world and have been the basis of industrialisation across the globe for 150 years.

Germany lost WW2 because the US had texas oil and the USSR had Baku oil each drove their war machines. Resources drive economies not the ability to talk to your friends on facebook : The internet is nothing without the real world for it to relate back too.


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## Tom Ronalds (15 February 2008)

tech/a:

Of course my view is broad brushed and any slowdown will have different impact in different places. That has already been happening - look at Sydney prices, where the growth over the last 3 or so years has been relatively minimal. 

My concern is that I see many people on a regular basis who are stretched to the max. They keep going because they can still service their costs - for now. As you would no doubt agree, debt can help accelerate your wealth building, but it can also kill you off very quickly. Too many people are too exposed, on the assumption that good times will keep rolling on for ever. The more people are in this situation, the bigger the impact on those who have been prudent once they start going broke. I actually lived in Adelaide in the late 80s & early 90s, and remember quite a few good, relatively conservatively run companies going broke because they were not getting paid by those who had not been so conservative and went under as a consequence. These things snowball in a frightening manner, the more debt there is to service.

Interestingly enough Adelaide is mentioned in the Demographia report as an Australian city that has had minimal population growth and yet its house prices have moved into the severely unaffordable category now. Why do you think that is? -- Four words: Cheap debt and property speculation.

Cheers,

Tom R


----------



## KIWIKARLOS (15 February 2008)

Yeah gone are the days of leaving high school at 15 getting a job for life and been able to live comfortabily. These days you have to continually educate yourself to ensure that your wages do increase, you are in demand and that we can improve productivity. Education in this country is great but it could be better and more money need s to be invested in the system and in getting older people back into education. Education can also be a exported as a commodity.


----------



## tech/a (15 February 2008)

> I actually lived in Adelaide in the late 80s & early 90s, and remember quite a few good, relatively conservatively run companies going broke because they were not getting paid by those who had not been so conservative and went under as a consequence. These things snowball in a frightening manner, the more debt there is to service.




Hmm you must have been watching me!

I'm in construction.
That was the case and that was me.
This time round did the same as far as gearing to the teeth till 2002.
But this time round geared down since,sold some and freeholded others.

These days (Different to 80s) we can demand our payment terms even on the larger Civil Projects 500k+
We have no problem with 14 days from invoice.
Exposure is minimised---no EFT no Start!
As for work we are knocking it back as we are 90 days pre booked.
Expansion is very difficult as we are waiting for all the qualified boys to come back from Cairns begging for a position.

Perhaps there are advantages in getting older!
One of the very few.


----------



## Temjin (15 February 2008)

Very nice summary there, Tom. 

My awareness and understanding of the current credit crisis (and how it potentially affect Australian properties) were gain quite recently but I have come to the exact conclusion as yours. 

Rising property values are largely because of the era of cheap credit first introduced by Alan Greenspan back in the 2001s and as a result, directly influence the cost of money in Australia. In fact, the era of cheap credit may have gone back as far as over 20-30 years ago according to some experts. 

Your comment on that you have been a bear on property for the last 5 years is very interesting. I wished I had attained the same kind of knowledge I had back then and gauge how my perception on the market be back then. However, we still need to realise that the markets CAN BE irrational for longer than one would think. 

Speculating back several years ago would have been extremely profitable, and obviously, at the expense of those at the top of the property pyramid scam. That is, property value rises only if someone else is willing to get into much deeper debt than you are currently in at the moment.

How all this will come out will depend on how US will respond to the current crisis in the near future. The possibility of a staginflation is becoming more of a reality where inflation occur during a recession, which was previously regarded as impossible by Keynesian economists. (i.e. mainstream)

It's now a fight between inflation and deflation, where the former will occur if the central banks continue to drop money from helicopters in an attempt to simulate growth, or deflation where defaults and leveraged financial instruments loses continue to increase and spread to other assets. (i.e. potential massive defaults from bond insurers on CDOs were mentioned recently, and this is serious stuff and would make the subprime a child play) 

The US Federal reserves have already announced their intention to prevent deflation at all cost after the stagflation happened back in 1970 when Paul Volcker decided to pump up interest rate to the mid-high 10%. 

I agree with Tom on this one. It is naive to assume China be completely decoupled from this, while they are more independant they have ever before, China's growth is still highly dependant on export with their majority of factories are geared for export. Alot of critics are saying but US is only 30% of China's export, however, US is not China's only customers. There have been talks of global recessions as the global credit crisis hits other developed countries where the public and private sectors are leveraged to the max. There are now talks about staginflation occuring in parts of Europe.  

Global consumer demands will drop and and this would put a huge break on China's demand for resources. And everybody would know what this will do to Australia. 

Uninterruption in real wages rise, employment rate? I wouldn't bet on it.


----------



## nioka (15 February 2008)

KIWIKARLOS said:


> Yeah gone are the days of leaving high school at 15 getting a job for life and been able to live comfortabily. These days you have to continually educate yourself to ensure that your wages do increase, you are in demand and that we can improve productivity. Education in this country is great but it could be better and more money need s to be invested in the system and in getting older people back into education. Education can also be a exported as a commodity.



 My plumber left school at 15 and became a plumber. His son did the same and became a plumber. They are both still plumbers. They are hard to get to a job as they are very busy. They charge $75 per hour plus make a profit on materials used. This is, in my view, due to the fact that there were too many got a good education but a useless one and not enough left early to learn a trade. I have as much trouble getting a brick layer or a carpenter.


----------



## ROE (15 February 2008)

Cant believe people keep arguing for and against house price rise.
I said let people borrow what they want to borrow, spend as much as they want, drive up price as much as they like.

Come the correction, it will clean out the weak and leave the strong standing just like Uncle Warren always said

"It's only when the tide goes out that you learn who's been swimming naked."


----------



## Tom Ronalds (15 February 2008)

@tech/a:

Well it's good you can set your payments terms now. Unfortunately that's not the case with plenty of other industries. And if you've been around as long as you say, you'll know that the current demand can turn rather quickly. 

It's still flat out up here as well, but with basic house/land packages for a 3-bedroom home now starting at $450,000 plus costs, I can't see how much longer that can continue. My wife and I have a combined income well into the six figures, but I would not go and buy a house at these prices. With say a $400K loan (nothing unusual these days), it means a couple on say $120K (way above average income)  will be paying the equivalent of 50% of that in after tax repayments (meaning you need to earn around $60K gross to service the net payments over a 25-year term). That's pretty crazy if you ask me and in itself shows the house price levels cannot rise much further. Eventually the construction sector will slow and so will the order books for builders.

@temjin:

Again quite frighteningly in my view, amazing numbers of people do not appreciate or understand that property is a very illiquid investment, has major acquisition/disposal/holding costs and is totally inflexible - i.e. you cannot flog off one bedroom if the going gets tough. Also, for many property investors, it's the proverbial "everything in the same basket" story, when it comes to their investment exposures. That makes them much more vulnerable once a downturn comes.

We have had an amazingly long run here in Australia of never ending good times and increasing prosperity. Many people seem to think it will just keep going. They are in for a rude awakening sooner or later.

The Keynesian approach to stimulating the US economy also worries me - the Fed over there was the main culprit of the current fiasco and they are now applying more of the same medicine. It can only postpone -and magnify - the final reckoning. Our Reserve Bank has not been a lot better - the major growth in money supply over the last few years is one of the main reasons for the current inflation pressures that are now starting to show.

Tom R.


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## robots (15 February 2008)

hello,

gee great stuff 47 posts in a day,

and property doesnt stir up emotion NC?

the whole affordability "crisis" is a fabricated load of rubbish,

look at a couple on similar to TOM R's buying a house in say Frankston here in Melb for 330k, nice 3-bed house, driveway for cricket, yard for swimming pool

and guess what 3x salary, 

can see why people question financial services workers,

sure you arent Steven Keen?

thankyou

robots


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## kivvygosh (15 February 2008)

Tom Ronalds said:


> @tech/a:
> With say a $400K loan (nothing unusual these days), it means a couple on say $120K (way above average income)  will be paying the equivalent of 50% of that in after tax repayments (meaning you need to earn around $60K gross to service the net payments over a 25-year term). That's pretty crazy if you ask me and in itself shows the house price levels cannot rise much further.



I think you're off the track a bit Tom.  No evidence of a recession in Australia at this time, except that the economy is growing very strongly and prices are rising.  But rising prices does not equal a recession!

I recently bought a new house and now have a loan close to what you mention above, and my household income is again close to what you mention.  It's a lot of money, no doubt.  But I know a lot of people that are renting houses and paying over $500 a week for a fairly basic, nice-but-nothing-fancy house.  You'll find very few houses for rent under $400, and even fewer units under $300.

Do you believe this is unsustainable?  People don't have a problem paying this on rent, so why wouldn't they pay another 50% on a mortgage?  This sort of activity points to an increase in inflation (which we are seeing) rather than an imminent price correction.

The only way prices would drop significantly is if there was a recession.  And again, what evidence is there of a recession?


----------



## xoa (15 February 2008)

robots said:


> the whole affordability "crisis" is a fabricated load of rubbish,
> 
> look at a couple on similar to TOM R's buying a house in say Frankston here in Melb for 330k, nice 3-bed house, driveway for cricket, yard for swimming pool
> 
> ...




There must be a massive conspiracy. All those impartial researchers from within Australia, the OECD and international universities must be cooking the books. 

You should also inform the Australian Bureau of Statistics that the median salary is actually $110k, because they seem to have the opinion that it's less than half that level.

If you think it makes sense to buy a $330k fibro house in Frankston, an hour's drive from Melbourne, then go ahead and buy it. Personally, I'd rather continue renting, and buy a nice villa in Seattle or San Fransisco instead. Lots of one-time property bulls are facing foreclosure over there. Good luck!


----------



## xoa (15 February 2008)

kivvygosh said:


> I recently bought a new house and now have a loan close to what you mention above, and my household income is again close to what you mention.  It's a lot of money, no doubt.  But I know a lot of people that are renting houses and paying over $500 a week for a fairly basic, nice-but-nothing-fancy house.  You'll find very few houses for rent under $400, and even fewer units under $300.




My unit costs $160 pw. It's old and has a combined bedroom/loungeroom, but it suits me. The unit's about 50 metres from the beach. In the suburb of Shorncliffe, Brisbane (surrounded by quite a few million-dollar homes).


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## robots (15 February 2008)

hello,

yeah man, another great day in the USA

6 dead, 5 just going about there business thankyou very much such a great place

oh ABS stats, owners 6x wealthier than renters so go for it

might flip you a dollar when I see you on the street

thankyou

robots


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## robots (15 February 2008)

xoa said:


> If you think it makes sense to buy a $330k fibro house in Frankston, an hour's drive from Melbourne, then go ahead and buy it. Personally, I'd rather continue renting, and buy a *nice villa* in Seattle or San Fransisco instead. Lots of one-time property bulls are facing foreclosure over there. Good luck!




hello,

is that slang for a cabin in a trailer park next to Kid Rock?

thankyou

robots


----------



## xoa (15 February 2008)

robots said:


> hello,
> 
> oh ABS stats, owners 6x wealthier than renters so go for it
> 
> robots




Owners may be wealthier, because (a) they are older, and (b) most were owners before the property boom. 

Your arguments are non-sequitur. Using your "logic", I could have argued for everybody to buy dot com stocks at the height of the tech boom, because the average such investor was wealthier than average. Or I could urge everybody to buy a BMW, because the average BMW owner is wealthier than average.


----------



## wayneL (15 February 2008)

kivvygosh said:


> I think you're off the track a bit Tom.  No evidence of a recession in Australia at this time, except that the economy is growing very strongly and prices are rising.  But rising prices does not equal a recession!




How quaint!

People still believe in the extrapolation of recent trends to infinity. The folks here in the UK were saying the exact same things in defense of the house price bubble... immigration, lack of supply, strong economy, blah blah BLAH!

But the bend at the end of the trend has done gone and bended. 

People can list every BS fundamental they want, but ultimately there is only one fundamental that really matters... CREDIT.

Perversely, the RBA attempt to tighten credit by raising interest rates is bringing fresh cash to the country looking for superior risk free returns, which in turn must be lent out to get a return for the instos. That's why the credit crunch hasn't hit Oz as much so far and why "official" inflation is higher than other western countries. This however only serves to delay the inevitable.

Recession is inevitable.


----------



## xoa (15 February 2008)

robots said:


> hello,
> 
> is that slang for a cabin in a trailer park next to Kid Rock?
> 
> ...




Search for yourself on the internet. $330,000 AUD buys you a very nice home in a wealthy suburb there. 

The same money here buys you a "renovators delight" in Frankston. Talk to your bank manager and snap up that fibro house before it's too late!


----------



## robots (15 February 2008)

hello,

you just have to send the kids to school in an armoured Humvee with a gunner in back, uzi in pocket, vest under school shirt, 

laser on the 9mm and be ready as hell to pop caps

so I guess by the time you add up those costs things change

thankyou

robots


----------



## xoa (15 February 2008)

robots said:


> hello,
> 
> you just have to send the kids to school in an armoured Humvee with a gunner in back, uzi in pocket, vest under school shirt,
> 
> ...






Yeah, suburban Seattle and San Fransisco are really dangerous. They're practically synonymous for murder. Don't let the low crime rates fool you, the police are in cahoots with the crooks, cooking the books. 

Those silicon valley and microsoft employees must enjoy raising their families in a violent environment.


----------



## CecilHills (15 February 2008)

Hey, the outer suburbs (Sydney) are getting a raw deal here: 25 years from now we won't be worrying about surging king tides ruining our beachfront( if there is a beach left) or harbourside coffee shops.
BTW this forum is so informative and such a good read!


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## wayneL (15 February 2008)

robots said:


> hello,
> 
> you just have to send the kids to school in an armoured Humvee with a gunner in back, uzi in pocket, vest under school shirt,
> 
> ...




We been through this before 'bot. 

Middle class suburbs are as safe. I've lived there bud.


----------



## Tom Ronalds (15 February 2008)

@kivvigosh:

That there is no sign of a recession in Australia yet means very little. It can all turn very quickly. Just look at the share market - as late as early January, BT Investment Management issued a bulletin saying the Australian market fundamentals were strong and we could still expect between 11-13% return for the current financial year! 

The recent business sentiment data shows a massive drop in confidence - why do you think that is? -- These people are at the battlefront; they see every day how their customers feel and behave.

Think also of the fact, in your personal situation, how would you cope if you or your wife lost your jobs. Would it still be so easy to service your loan then?

With regards to renters: Here in Cairns, increasing numbers of people are struggling to afford even to rent - particularly at the lower end of the market. These guys simply don't have the money to buy and now they can't even find rentals. Potential landlords, on the other hand, can't find cheap houses they could rent at affordable prices to that market segment, and even the medium priced properties now deliver very mediocre returns. Not far from where I live, near the Cairns CBD, a 2-bedroom unit sold recently for $375,000. I know that these places rent for around $335-$350 per week. There is a body corporate fee of about $2,500 p.a. plus rates of around $600. Would you think buying at those yields is a smart idea? How much further do you think the rents can go, before even more people cannot afford to pay - especially if the unemployment rate shoots up to, say, 7% - which is still low going by historical standards?

Additionally, the recent wage increases have not been distributed equally around the working population. Many people in the hospitality industry around here don't earn more than $40K - which isn't a great deal more than what they were getting 3-4 years ago. Yet their cost of living has gone through the roof over the same time period.

The housing situation is definitely unsustainable.

Furthermore, some of the stories I see at work would make your hair turn white. Like this 53-year old guy, who was "advised" by an "investment adviser" to use the equity in his home as a deposit for a margin loan, whereby he then geared up to 70% in "safe stocks" - mainly banks. He has lost over $250,000 already and may now well lose his house. He's far from being the only one in such a predicament.

The number of people I come across who have used the growth in their home equity to follow the "How to Build a 10-million Dollar Property Portfolio in 5 Years" con is also something you wouldn't want to believe. This is a borrowing on top of another borrowing and so on. It all just works while the properties are tenanted and keep going up in value by 25% each year, the rental flows keep coming and you keep your job at the end of the chain. Once a link in this chain breaks, you lose the lot.

Also, the "wealth effect" is now starting to dissipate. Many people, who felt great and confident about taking on more debt, because the news was full of stories about the house prices going up by 20% every year, and because their paper profits on their geared share portfolio were into the hundreds of thousands of dollars, are suddenly not only realising it was all a bit of a chimera, but many are losing their shirts in margin calls and forced sales. How long do you think before this trips the economy and affects housing prices?

You guys here may think this is all a bit far fetched, but this is what I see too often for comfort. Unlike some here, I am also very very sceptical about claims that this is a new economy, so it does not matter that we are having housing affordability levels at almost 9 times salary, which is close to three times long term average and two and a half times what's viewed as a "comfort/reasonable level".  Our national median house prices - and remember these include the back of Woop-Woop - are now around $450K. If you think it's all unimportant, then it only confirms my opinion that too many people have by now forgotten that property crashes do happen, and that they can be every bit as vicious at their stockmarket counterparts.

Tom R.


----------



## robots (15 February 2008)

hello,

when I see pictures on the tv of these typical uni students or school kids it looks just like a suburb here in Aus,

it is very real and happens all over the US, 9mm's are everywhere

people have shooting range's in their homes in the middle/high class suburbs

thankyou

robots


----------



## robots (15 February 2008)

Tom Ronalds said:


> You guys here may think this is all a bit far fetched, but this is what I see too *often for comfort. Unlike some here, I am also very very sceptical about claims that this is a new economy, so it does not matter that we are having housing affordability levels at almost 9 times salary, which is close to three times long term average and two and a half times what's viewed as a "comfort/reasonable level".*  Our national median house prices - and remember these include the back of Woop-Woop - are now around $450K. If you think it's all unimportant, then it only confirms my opinion that too many people have by now forgotten that property crashes do happen, and that they can be every bit as vicious at their stockmarket counterparts.
> 
> Tom R.




hello,

I am amazed, now we are up to 9x salary,

thats just not the case, every case is different

Tom R, did you own any property during the so-called crash?

my GF had a unit in Elsternwick (melb) which increased in value during the "so-called" crash,

sure people were affected, for instance those in Mt Eliza walked from their mansions as "executive" jobs crashed 

thankyou

robots


----------



## theasxgorilla (15 February 2008)

robots said:


> I am amazed, now we are up to 9x salary,
> 
> thats just not the case, every case is different




Yes, I bought a property in Melbourne at 3.2 times income.  Girlfriend not counted at the time as she hadn't been working for long enough.  Then, a handful of years later, the bank comes chasing me (I say chasing because I was applying for a credit card at the time) telling me that they want to lend me something that would have amounted to us being able to buy a house at over 7 times our household income.

Surely if the credit is on-tap like that and being peddled actively by the banks we can at least begin to understand how the multiple has become so high.

ASX.G


----------



## Tom Ronalds (15 February 2008)

@ robots:

Check out the data in the Demographia report. I already provided the link earlier, but here it is again:

http://demographia.com/dhi.pdf

The overall national multiple in Australia is 6.3, but as I said before, that includes the back of Woop Woop and many areas are between 8 and 9 The likes of Sunshine Coast and some parts of Perth are 9.3-9.5.


----------



## Tom Ronalds (15 February 2008)

@ robots:

Sorry, I overlooked your question: No, I didn't own property during the "so-called crash" (too young at the time), but I knew quite a few people who lost their homes.

I also know that I owned several properties (in coastal Queensland) between 1992 and 2001, and over that period capital gains amounted to less than CPI.

We built our home in 1992 in a seaside town, with great seaviews, swimming pool and only a short walk to the main street & beach for the grand total of $150,000. This was valued by a registered valuer in 2000 for $198,000! We sold in 2004 for $400,000 and the same property is now supposedly worth about $800,000. You may think this is reasonable; I don't.


----------



## wayneL (15 February 2008)

robots said:


> hello,
> 
> when I see pictures on the tv of these typical uni students or school kids it looks just like a suburb here in Aus,
> 
> ...



Stuff like that happens in Oz middle class too mate. Don't you recall the Monash Uni shootings? Flinders lane? Lygon Street underworld murders?

...and that's just in your home town of Melbourne.

Puhleeeze.


----------



## numbercruncher (15 February 2008)

Tom Ronalds said:


> @ robots:
> 
> Check out the data in the Demographia report. I already provided the link earlier, but here it is again:
> 
> ...





That 6.3 is household income. And doesnt take account income tax 

So the after tax PE for the average wage for the average house has got to be running around 10x 

Get it to 15x this year anyone ?


----------



## theasxgorilla (15 February 2008)

xoa said:


> You should also inform the Australian Bureau of Statistics that the median salary is actually $110k, because they seem to have the opinion that it's less than half that level.




It's important to go deeper than the stats and ask how and why and genuinely want to find the answers.

Household income is more important for starters.  The olden days (the good old days??) where a household could survive on one income have rapidly become a thing of the past.  Those that can survive on one income, lets say its the median you describe from the ABS, probably bought their houses early/pre-boom and have little mortgage compared with today's wages/cost-of-living.

Hands up property OWNERS if your partner is under 30 and stays at home all day while you making a living for the household?  Please tell us how you do it!

Thanks,

ASX.G


----------



## robots (15 February 2008)

hello,

yes Tom R,

so now we have Interest rates at the highest level since 1996, another increase in March maybe yet no crash is occurring in prime wanted real estate,

many talking how the credit crunch is going to ruin the globe have been greatly embarassed I believe,

whats happening?

you have building starts decreasing monthly yet unemployment in the building sector is nil,

thankyou

robots


----------



## robots (15 February 2008)

hello,

yes, 

Aus gets it once a year or two, not every week

let alone all the other drive-by's and ghetto boys capping the innocent in US

thankyou

robots


----------



## wayneL (15 February 2008)

robots said:


> hello,
> 
> yes,
> 
> ...




No wonder Goebbels was so successful.


----------



## GreatPig (15 February 2008)

wayneL said:


> ultimately there is only one fundamental that really matters... CREDIT ... Recession is inevitable.



A good book on the subject, and the fate of the US dollar: The Dollar Crisis by Richard Duncan.

Written in 2002, his comment on when the global recession will occur:



> When the US property bubble pops. In 2002, the global economy is being supported by an American shopping spree that is being financed by a bubble in the US property market.



Hmm... isn't that, like, now?

GP


----------



## chatty (15 February 2008)

A lot of people have fixed their home      loan. the proportion of fixed rate home loan has increased from 7% to 30%.  This proportion is likely to continue as people can see that RBA is going to increase interest rate again.

Also long term fixed rate is lower than the current variable.  It looks like investors can see that in the next 12 to 18 months the interest rate will start to fall down.

unemployment rate is historically low. high interest rate forces the consumers to reduce their spending. That's why JBH price has been hit hard.

People will tighten their budget and do everything to keep their house.


DOes it mean that recession is unlikely?

I bought a house in deer park in melbourne for $182K. Today, my house is around$210K.  Our loan is $120K (our household income is $110K) so when I read the report that people are buying a house at 6.5 x their income.

Just doesn't make sense to me.


----------



## gfresh (15 February 2008)

> hello,
> 
> yes Tom R,
> 
> ...




 woa.. damn some people have it coming if they think these things have an *instant* effect in the property market.. there hasn't been a real recession in 17 years and people have clearly forgotten how these things play out.. You might want to check lag time between the 1987 stockmarket crash and the recession that followed, and the crash in housing across Australia. It didn't happen in 1987.. the real crash hit later when the ass fell out of the jobs market, etc as a result of the turmoil, but it took a while... and it's looking very similar right now.  

Who wants a personal loan right now for a boat? hmm, variable personal loan interest rates are now over 14% .. no thanks, I'll pass right now. Mr Boat Builder who's since done a roaring trade suddenly finds himself low on work as nobody's buying boats. Off go the staff, damn not much work in the boat business right now, ****, getting harder to find a job. Makes the home repayments a little difficult at a rate of 10% being unemployed - damn, wish I'd saved a little when times were good..  

Mr Allco employee, company about to go under, guess they are out of work too... damn, time to sell up that second beach property. 

Mr NAB who works at NAB just lost his job too, as the bank savages staff to protect it's net profits as that cost of wholesale credit soars and the share price sits at a 7 year low (now). Hard to grow earnings when Mr Consumer isn't buying boats on credit, that leaves cutting expenses to maintain the same net profit - staff are an expense. Guess that property has to go to...

Mr NAB and Mr Boat Builder Staff start selling their properties. Values come down, lines of credit drawn on "always increasing" property value suddenly cutoff.. in fact bank is no longer willing to extend the line of credit as the property value is actually decreasing - that would be silly anyhow, we can't package that into a AAA security on world markets anymore.. damn, guess I'm not buying a new car this year..  Mr car seller has trouble selling cars, lays off staff, and so the spiral continues.   

These things take time ...


----------



## Tom Ronalds (15 February 2008)

chatty said:


> I bought a house in deer park in melbourne for $182K. Today, my house is around$210K.  Our loan is $120K (our household income is $110K) so when I read the report that people are buying a house at 6.5 x their income.
> 
> Just doesn't make sense to me.




I'll give you an example from an appointment I had recently:

The other day I spoke to a client, who is a 37-year old single female, on $85,000 annual salary. She is interested in purchasing a unit in Palm Cove (Cairns Northern Beaches), which she can buy for $700,000 plus costs. She has saved $100,000, so would need to borrow approximately $635,000 to complete the purchase. She has, believe it or not, secured a lender who is prepared to forward this amount - provided the loan is taken on an interest-only basis. She will therefore have to pay at least $54,000 p.a. in interest (assuming 8.5% commencing interest rate). The unit can apparently be let for $550/week (a gross yield of around 3.9% - net yield is likely to be closer to 3%). The client would then have a shortfall of at least $26,000 (or over $17,000 after allowing for the tax deduction) to cover from her own pocket.

Is this a wise strategy? ”” On her income, it can be said it is affordable; just.

However, what happens if the unit is not rented for some time? What happens if the value drops and so does the achievable rental? What if she loses her job? What happens if - as is likely - there is no capital gain of note over the next decade? Wouldn’t it be more prudent to invest elsewhere, with less debt and much less risk?

The fact that somebody in that situation is seriously contemplating borrowing such a large sum of money,  that she can actually obtain it and that she still expects to make a large capital gain over the next few years - as she must to justify the net cashflow loss - is to me enough of a proof that this is the worst property bubble/some of the most loose lending standards I can remember.

These people are out there. It may not be you, but when they crash and burn, it will hurt more conservative property investors as well.

Cheers,

Tom


----------



## Tom Ronalds (15 February 2008)

@gfresh:

My words exactly! How soon people forget!

No wonder history tends to repeat itself...


----------



## jet328 (15 February 2008)

Tom Ronalds said:


> Tom R.




Well said Tom.

Charlie Aitken has a good article in todays Eureka report. Along similar lines, people using 'equity mate' from their houses, then into margin loans and even adding the unused part of the credit card in to the margin loan. Then using the loan to buy into junior resource stocks! Ouch!

He also notes an increase in top-end houses for sale...

Credit goes in cycles, wouldn't be touching the consumer stocks at the moment


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## Kimosabi (15 February 2008)

Tom Ronalds said:


> I'll give you an example from an appointment I had recently:
> 
> The other day I spoke to a client, who is a 37-year old single female, on $85,000 annual salary. She is interested in purchasing a unit in Palm Cove (Cairns Northern Beaches), which she can buy for $700,000 plus costs. She has saved $100,000, so would need to borrow approximately $635,000 to complete the purchase. She has, believe it or not, secured a lender who is prepared to forward this amount - provided the loan is taken on an interest-only basis. She will therefore have to pay at least $54,000 p.a. in interest (assuming 8.5% commencing interest rate). The unit can apparently be let for $550/week (a gross yield of around 3.9% - net yield is likely to be closer to 3%). The client would then have a shortfall of at least $26,000 (or over $17,000 after allowing for the tax deduction) to cover from her own pocket.
> 
> ...



Tom, Tom, Tom,

I know your new around here, but I've got to let you know, we try not to use facts or logic in Real Estate threads on ASF, ok.



There is not Real Estate Bubble, there is no Credit Bubble, there is definitely no Credit Crunch, there is no Housing Unaffordability Crisis, left is right, right is left, up is down, down is up, right is wrong and wrong is right. Real Estate will continue to rise by at least 20% YOY for eternity...

Thankyou....


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## ROE (15 February 2008)

I don't mind property keep going up and up and let people leverage up and keep their dream alive that property is always goes up and never down.

Same goes with stock price in the Bull Market...you cannot lose money in a Bull market.

I just don't buy when I think something is over price. I just drink my coffee
and go on Sunday drive, then one day when I wake up and check my daily news and found damn this stuff is reasonable cheap but no one is buying, damn people must scare, what has change?

I think I better get some of this stuff to bring down the cash in the bank.

Then the asset I bought sits there for a while and not moving anywhere, capital gain is not crash hot, but then again I am a lay back fellow go slow sort of guy so maybe this is my thing and happy just to collect 4-5% rental and dividends.

5-10 years pass, employment start to pickup, interest rate drop everyone is out buying their latest toys and real estate and shares seem to be going through 20% return a year....everyone is talking about how good the property and the market is..taxi drivers...people at the BBQ everyone seem to be doing pretty damn good .... and I look at my asset, wow it has gone up a fair bit but hang on what the hell is going on my rental yield is now lower based on my asset value and stock PE looking pretty damn high at 18-20 when I got them it was on a PE 10-12. Interest start to pickup to cool down inflation, cash in the bank starts pay 6%-7% look damn tempting compared to my 3% yield on rental and shares.

Too much excitement for me to bear and thing look very expensive to me. My Uncle Warren once told me 

"Be fearful when others are greedy and be greedy when people are fearful"
which I sometimes shorten it to "Sell on Greed and buy on Fear".

 I'm fearful and I sold 80% of my shares portfolio that has PE of 20 and Higher and all my investment property except my PPOR.

I put most of my cash in my shares trading account that pay 7% then watch the world goes by and drink coffee and keep doing the Sunday drive.

The market continue to roar and property continue to go up for the next 12 months, then on the fourteen months when I woke up stock drop 20% and continue a down trend, no one is buying everyone is selling...what has change since 12 months ago? my cash in the bank doesnt seem to look that good any more when I can buy stocks on PE of 12 and dividend yield of 4-5%
and the journey start once again.


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## debaron (15 February 2008)

I'm an immigrant who just moved to Oz not long ago. Been looking around at housing price around SE Qld and found the price to be unreasonably expensive for the property they are selling. The fact that i'm a professional on a decent wage and cant even afford to buy a house that i want says alot about the property market over here. ( I can, but that will mean an end to the weekend dine and wine sessions and seriously, who would wanna lead a life without the occasional indulgences anyway?). So cut my story short, after reading several articles and doing my own research i have decided to keep renting the modest apartment that i have, and invest in somewhere else that is not overpriced. Until i find the prices to be reasonable again, i wont be stepping into the property market anytime soon. 
happy investing y'all.


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## ROE (15 February 2008)

debaron said:


> I'm an immigrant who just moved to Oz not long ago. Been looking around at housing price around SE Qld and found the price to be unreasonably expensive for the property they are selling. The fact that i'm a professional on a decent wage and cant even afford to buy a house that i want says alot about the property market over here. ( I can, but that will mean an end to the weekend dine and wine sessions and seriously, who would wanna lead a life without the occasional indulgences anyway?). So cut my story short, after reading several articles and doing my own research i have decided to keep renting the modest apartment that i have, and invest in somewhere else that is not overpriced. Until i find the prices to be reasonable again, i wont be stepping into the property market anytime soon.
> happy investing y'all.




I believe in the market, when something is selling above what it's worth(share, property,cars) due to irrational exuberance ..sooner or later the market will come to correct it....The only thing we cant figure out is when 
and that the same philosophy I apply to investing... Buy all my investments under value, sooner or later Mr Market will come to the party and give it the correct price tag.


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## xoa (15 February 2008)

American houses have lost another $13k in the past quarter. Median house price stands at $206k, less than half our price level.

http://money.cnn.com/2008/02/14/real_estate/home_prices_fall_for_year/?postversion=2008021411


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## WaySolid (16 February 2008)

Property will remain a gilt edged asset class in this country, smart people will continue to make great money in good times and bad, just as they always have. I have a few places bookmarked for a cheeky offer when the tide turns (recessions do tend to always happen so forecasting one is not really a bold move) as presently the prices are too high for me. 

The real message for me from the first thread about stagnating prices was 'beware of toxic info', you can read such stuff and be put off any type of investing, I have both sold and bought property and made money doing both since that thread started and so have plenty of others. 

There almost seems to be an emotional element wanting property to crash, so the schadenfreude (sp?) can flow, I interpret that mainly as Gen Y angst as they encounter the first road block in their lives though that could just be my bias. I have done well out of property but would be selling everything as fast as possible if I thought there was going to be some serious tankage on the way and I could profitably time such an operation, I don't think I can so I'm staying put and watching my LVR closely. The huge chunks of depreciating paper you have borrowed and secured with your inflation resistant vehicle (prop) becomes just a smaller pile of depreciating paper once you sell, so there is a cost in not being exposed to property and 0% invested in property for a tax paying resident in this country is a very aggressive position to be taking.

You can confuse process and outcome at the moment as there is no doubt a degree of greater fool in some capital gains, but I like to think I'm a much better property and suburb picker than a stock picker. You can also ratchet down your risk level with property by such things as buying well, seeking out special situations, value adding by renovating and various means and so on and on. 

If you have a look at a log scale of median prices for Brisbane over the last 40 years then you can remove the emotion you feel looking at the bubble chart I saw posted earlier, that line is a pretty smooth  trend. It's true the last boom was in the order of 2+ standard deviations away from norm but it's still nothing compared to what happened in the 1890's, now that was a genuine bubble for those who aren't aware of what a real once actually looks like. That party was accompanied by a classic over supply situation in stock and something that is just not happening to any similar extent presently.

I have dug down into the records and researched my suburbs back to the original grants of land in the late 1800's (you could be more thorough if you were a Sydney investor),  I remain cautiously long residential property in my areas and will look to add to holdings if there is a recession, the deeper the better as I see it as that's when you can get great bargains. The people willing a crash need to have a plan to take advantage of it when it happens and not find out they aren't any better as they were passive bystanders. A peak oil/global warming end of rules as we know it scenario doesn't really scare me as I have this idea that you make your money betting on the continuation of the Roman empire and not it's demise.


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## WaySolid (16 February 2008)

xoa said:


> American houses have lost another $13k in the past quarter. Median house price stands at $206k, less than half our price level.
> 
> http://money.cnn.com/2008/02/14/real_estate/home_prices_fall_for_year/?postversion=2008021411



http://www.zillow.com/quarterlies/QuarterlyReports.htm

I follow one guy who invests in appartment blocks who describes the present time as having the best buying in a generation, a case of buying when others are fearful perhaps.


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## Tom Ronalds (16 February 2008)

xoa said:


> American houses have lost another $13k in the past quarter. Median house price stands at $206k, less than half our price level.
> 
> http://money.cnn.com/2008/02/14/real_estate/home_prices_fall_for_year/?postversion=2008021411




And it'll get worse. They laughed at Schiller back in 2005, when he said:

"He predicts that prices could fall 40 percent in inflation-adjusted terms over the next generation and that the end of the bubble will probably cause a recession at some point."

Source: http://tinyurl.com/dee5s

And here are some prescient words about our own bubble, from 2004:

"The slight decline in housing prices doesn’t mean the bubble has now disappeared. It may be largely quiescent at the moment, but given any encouragement it can easily  re-ignite. The catalyst for the price boom has been the sharply rising investment in rental housing, with negatively geared investors now accounting for one-third of banks’ outstanding housing loans. This compares with an investor proportion of only 15 per cent in the early 1990s."
....
"Given that nearly 17 per cent of Australian taxpayers are estimated to have rental income, compared with only 6.5 per cent of taxpayers in the US and 2 per cent in the UK (Productivity Commission report p.22), you can see the speculative element at work, a product mainly of the tax advantage in Australia."

Source: http://www.henrythornton.com/article.asp?article_id=2809

Of course, it has got a lot worse since then. At that time, the US was only on "bubble watch" (according to The Economist), while Australia was already firmly in bubble territory.

The same site also offers these prescient words:

"Housing booms and busts have happened before. You only have to witness the wild 1980s not only in Australia, but in the UK, USA and Japan as a case in point, which led to a bust in property prices after the peak in 1990. A number of world cities were affected almost at the same time, including Boston, Los Angeles, London, Sydney and Tokyo. Given the current widespread international housing boom, watch out for the eventual bust. Housing cycles, like share market cycles have a habit of repeating themselves in one form or other.

"Given any economic faltering in the US, and the same goes for UK and Australia, watch the default and delinquency rates closely. As they say, housing prices don’t keep rising forever."

In hindsight, this was an understatement.


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## Tom Ronalds (16 February 2008)

@ WaySolid:

What you are saying about your property strategy is no different to certain astute investors being able to make good profits in the most severe bear markets. 

This thread was, if I understood correctly, about the general direction of house prices in Australia. It was being proposed these will keep increasing. I think through the several longish posts I made here, I have presented evidence that such thesis does not hold water.

This has nothing to do with "willing to bring a crash on" so as to delight in other people's misery. It's simply an acknowledgement that the prices are way out of line with incomes, debt is out of control and, because of what I get to from various clients at work, this has the potential to be truly the "toxic mix" you mention.

I have no doubt, and from comments here I believe there are others with similar opinions, that many people have forgotten property can indeed crash, crash very badly and it can happen here, just like it has in the past. That does not mean everyone will get wiped out, but it will mean very hard times for many. 

The whole debate here reminds me of some of the arguments always heard during bullmarkets of all kinds - long term fundamentals don't matter, ridiculous P/E ratios are unimportant, this is a "new economy", there are always ways to interpret figures to show every thing's just peachy,it'll keep going on forever. It's always the same and it will continue to be the same. I am not a Generation Y, and I do remember very well that all good things come to an end. If you are an astute property investor and you are not up to your eyeballs in debt, you are likely to be fine - even though your properties will drop in values and your rents may do the same. Eventually this will recover, like it always has.

Many others will not be so lucky to see that recovery.

Cheers,

Tom R.


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## robots (16 February 2008)

Tom Ronalds said:


> This thread was, if I understood correctly, about the general direction of house prices in Australia.* It was being proposed these will keep increasing*. I think through the several longish posts I made here, I have presented evidence that such thesis does not hold water.
> 
> This has nothing to do with "willing to bring a crash on" so as to delight in other people's misery. It's simply an acknowledgement that the prices are way out of line with incomes, debt is out of control and, because of what I get to from various clients at work, this has the potential to be truly the "toxic mix" you mention.




hello,

Tom R, this was never the case in the other great thread, the general acceptance was property was going to stagnate

only a few were "commenting" based on their "experience" that property was still solid and providing good returns and that is evident by your acceptance  that "X" times earnings is still as high as ever.

unlike most who read the toxic trash (hahaha) many here do go out to auctions, RE offices, State Revenue Offices and research individual prices.

people can easily afford a home, 

keep renting if you think it is so cool, but very few "save" the difference between renting or buying and thats why owners are 6x wealthier than renters (Austalian Bureau of Statistics).

thankyou

robots


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## Tysonboss1 (16 February 2008)

debaron said:


> The fact that i'm a professional on a decent wage and cant even afford to buy a house that i want says alot about the property market over here.
> 
> So cut my story short, after reading several articles and doing my own research i have decided to keep renting the modest apartment that i have, and invest in somewhere else that is not overpriced. Until i find the prices to be reasonable again, i wont be stepping into the property market anytime soon.
> happy investing y'all.




I don't really understand what you are saying,.... S/E queensland has some of the cheapest property within ear shot of a capital city in Australia,... where are you planning on finding property cheaper that still has the same growth potential....

Secondly I think it would be a mistake for you to wait to buy into this corner, it ain't going down any time soon,... what area exactly were you planning on buying into.


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## Tysonboss1 (16 February 2008)

Every body seems to be saying how property investors are going down because of interest rates,.... but most large property investors would have fixed a large portion months ago and are paying interest at far lower rates than the advertised rate,..

and secondly the interest rate is offset to an extent by inflation,.... 

Inflation is a property investors friend,.... It  over the years reduces the amount owed to the bank,.... while increases cashflow and value of the property.


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## xoa (16 February 2008)

Tysonboss1 said:


> Inflation is a property investors friend,.... It  over the years reduces the amount owed to the bank,.... while increases cashflow and value of the property.




???

All things being equal, inflation will erode profits. It erodes real house prices and the real rental returns. What's worse, is banks respond to high inflation by raising interest rates, to protect their margins. Most people hold variable interest rate loans.

I don't know where the "cheap" houses in SEQ are. They're definitely not in Brisbane or the Gold Coast or Sunshine Coast or even Ipswich. You might find the occasional $300k fibro shack, if you're willing to live with asbestos and a $100k renovation bill. International visitors from Europe or North America definitely wouldn't consider that cheap.


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## robots (16 February 2008)

hello,

plenty of cheapo's in canada or US xao,

just get a 303 from walmart

thankyou

robots


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## numbercruncher (16 February 2008)

As of Nov 2007, 28pc of Mortgages where fixed.


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## Tysonboss1 (16 February 2008)

numbercruncher said:


> As of Nov 2007, 28pc of Mortgages where fixed.




as of nov 2007,.... less than 28pc of the property was probally held by sophisticated property investors,...

By the way I don't consider half the people who own an investment property investors,...


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## Tysonboss1 (16 February 2008)

xoa said:


> ???
> 
> All things being equal, inflation will erode profits. It erodes real house prices and the real rental returns. What's worse, is banks respond to high inflation by raising interest rates, to protect their margins. Most people hold variable interest rate loans.
> 
> .




Property values and rent on average will rise faster than inflation ( or worst case with inflation) where as the amount on loan from the bank will decrease with inflation.

I am not saying that this is how you should make your money in property,...

I am just saying that this offsets to some extent the interest rate rises in the long run.


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## Tysonboss1 (16 February 2008)

xoa said:


> ???
> 
> 
> I don't know where the "cheap" houses in SEQ are. They're definitely not in Brisbane or the Gold Coast or Sunshine Coast or even Ipswich. You might find the occasional $300k fibro shack, if you're willing to live with asbestos and a $100k renovation bill. International visitors from Europe or North America definitely wouldn't consider that cheap.




Pound for pound,.... brisbane is still one of the cheapest capital cities as far as realestate goes,...


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## xoa (16 February 2008)

Tysonboss1 said:


> Property values and rent on average will rise faster than inflation ( or worst case with inflation) where as the amount on loan from the bank will decrease with inflation.




Except when there's a bubble. Property prices in the United States have fallen by more than 20%, relative to inflation. Most  investors who bought there after 2004 are grappling with negative equity.

Even though we earn less than Americans, our prices are more than double theirs. I wouldn't even want to become an owner occupier at the moment.


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## wayneL (16 February 2008)

Tysonboss1 said:


> Property values and rent on average will rise faster than inflation ( or worst case with inflation)



Think about this for a little while, open up excel and do some simple modeling, you'll realize the absurdity of this statement. We have dealt with these myths waaaaaaaaay back in the other thread with some very simple extrapolation backwards and forwards. 

Rent most certainly does NOT increase faster than inflation. That is ridiculous. I can't believe anyone who has passed year 10 maths could possibly believe this.

I will demonstrate this if I absolutely must, but anyone can prove this for themselves.


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## Sean K (16 February 2008)

House prices go up in the long term, from the stats I've seen, but I'm not sure if the owners really care. It's the security of the space that is most important. Immeasurable. 

For 'investors' it's a different situation. 

For 'investors' it seems that you'd be better to own art, or race horses, or truffles.......

Anyone who can post up a summary of the last 100 years of 'average' investor returns across all investment opportunities, I dip my hat! 

Otherwise, it's just people making the most of opportunities which ebb and flow.


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## chops_a_must (16 February 2008)

Tysonboss1 said:


> Property values and rent on average will rise faster than inflation ( or worst case with inflation) where as the amount on loan from the bank will decrease with inflation.



So you are saying that inflation and cost of living will end up going vertical for ever more when plotted are you?

ROFLMAO.


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## Tysonboss1 (16 February 2008)

chops_a_must said:


> So you are saying that inflation and cost of living will end up going vertical for ever more when plotted are you?
> 
> ROFLMAO.




Not really sure what you mean,... But yes I think there will always be inflation,..

and that the cost of renting any given piece of land will rise marginally faster than inflation do to increasing density.


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## chops_a_must (16 February 2008)

Tysonboss1 said:


> Not really sure what you mean,... But yes I think there will always be inflation,..
> 
> and that the cost of renting any given piece of land will rise marginally faster than inflation do to increasing density.




Costs of living, i.e. renting and house prices are the biggest contributors to real inflation, as they comprise the biggest expenses in people's lives.

Now, if you continue to increase rent and house prices above the levels that inflation and the cost of living is running at, then this will feed into itself, causing inflation and the costs of living to keep increasing. And on your logic, this will perpetually keep happening, meaning inflation and the cost of living will eventually be going straight up for ever. So people will actually end up paying more in rent than they are earning on your premise.

Do you see why this is funny coming from a property investor?


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## moses (16 February 2008)

xoa said:


> ???
> 
> I don't know where the "cheap" houses in SEQ are. They're definitely not in Brisbane or the Gold Coast or Sunshine Coast or even Ipswich. You might find the occasional $300k fibro shack, if you're willing to live with asbestos and a $100k renovation bill.




Not true. 

My daughter and hubby just bought a timber Queenslander cottage (no asbestos) in Ipswich for $275k (advertised $295) as a first home; it will benefit from some renovation when they can afford it but meanwhile is perfectly liveable, comfortable and structurally sound, close to the railway station etc.


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## xoa (16 February 2008)

moses said:


> Not true.
> 
> My daughter and hubby just bought a timber Queenslander cottage (no asbestos) in Ipswich for $275k (advertised $295) as a first home; it will benefit from some renovation when they can afford it but meanwhile is perfectly liveable, comfortable and structurally sound, close to the railway station etc.




Good for her. Did she find a decent job in Ipswich or does she take an hour commute to Brisbane?


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## Tysonboss1 (16 February 2008)

xoa said:


> Even though we earn less than Americans, our prices are more than double theirs. I wouldn't even want to become an owner occupier at the moment.




Property is a longterm asset, do I believe property will continue to increase in value at rates of 20%,....NO!, I believe that on average property will return just over 10% /pa including rent.

Even if I did believe that my properties were going to drop in value by 20% this year I wouldn't sell them,after all that just the froth of the top from the last 5 years, They longterm holdings, and I feel that if you try and trade your property portfoilio timing the market it's not really worth it, 

Do I believe it is a Bad time to enter the property market,... N0! It just depends on your area, your type of property, your stratergy, your debt level, your experiance, there are many factors.

Property is not like the share market where you buy in and get the return you are given,... there is much more scope to improve your out come.


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## moses (16 February 2008)

chops_a_must said:


> Costs of living, i.e. renting and house prices are the biggest contributors to real inflation, as they comprise the biggest expenses in people's lives.
> 
> Now, if you continue to increase rent and house prices above the levels that inflation and the cost of living is running at, then this will feed into itself, causing inflation and the costs of living to keep increasing. And on your logic, this will perpetually keep happening, meaning inflation and the cost of living will eventually be going straight up for ever. So people will actually end up paying more in rent than they are earning on your premise.
> 
> Do you see why this is funny coming from a property investor?




Yes, this is true, and not funny. 

People will actually end up paying more in rent (tomorrow) than they earn (today).

That's what inflation does. Thats why house prices keep rising.

But house loans are fixed in dollar terms. This is why yesterday's house loans and house prices look so cheap today.


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## moses (16 February 2008)

xoa said:


> Good for her. Did she find a decent job in Ipswich or does she take an hour commute to Brisbane?




Commute.

It could be worse. People commute from Lithgow to Sydney, more than 2 hours each way, just to get an affordable house with enough space that the kids can have a backyard etc. Commuting to Brisbane is a pain, but almost trivial compared to Sydney.

All of which raises the prices of inner city and convenient suburbs.


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## Tysonboss1 (16 February 2008)

chops_a_must said:


> Costs of living, i.e. renting and house prices are the biggest contributors to real inflation, as they comprise the biggest expenses in people's lives.
> 
> Now, if you continue to increase rent and house prices above the levels that inflation and the cost of living is running at, then this will feed into itself, causing inflation and the costs of living to keep increasing. And on your logic, this will perpetually keep happening, meaning inflation and the cost of living will eventually be going straight up for ever. So people will actually end up paying more in rent than they are earning on your premise.
> 
> Do you see why this is funny coming from a property investor?




Notice  that I said the cost of renting a given piece of "Land".

not the cost of renting a certain number of bedrooms,...

the cost of renting an average 3 bedroom accomadation may only increase at the rate of inflation,.... but the average 3 bedroom accomadation will decrease in land content over the years,...

for example in the 50's the average 3 bed sydney home was probally on a 1/4 acre block,.... now over the years the cost of renting 3 bed homes has probally gone up with inflation, but the cost of renting the original homes on 1/4 blocks has increased far more than inflation,... because the average 3 bed home now is probally a town house or apartment.


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## numbercruncher (16 February 2008)

moses said:


> Commute.
> 
> It could be worse. People commute from Lithgow to Sydney, more than 2 hours each way, just to get an affordable house with enough space that the kids can have a backyard etc. Commuting to Brisbane is a pain, but almost trivial compared to Sydney.
> 
> All of which raises the prices of inner city and convenient suburbs.




Ahhh so much for the next generation living better than the last, enslave em with debt and make em do 10 hour days, when Interest rates rise make em flip burgers on the weekend - all for a depreciating over priced asset :bad:

Dont worry the kids will understand why they never see mummy, houses are the most important thing to Aussie "battlers" 

Its no wonder we have a rapidly falling birthrate eh ?


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## chops_a_must (16 February 2008)

Tysonboss1 said:


> Notice  that I said the cost of renting a given piece of "Land".
> 
> not the cost of renting a certain number of bedrooms,...
> 
> ...




Originally, you did not. That's what I was answering.

And in theory you are correct. But then you propose another absurd premise. That density in areas will continue to increase ad infinitum. So, eventually, 3 bedroom homes will be the size of cardboard boxes. Is that correct? And don't say it is the proportion of land to the number of apartments built on it, because you have already equated 3 bedroom homes with apartments above.

And in areas like Perth, it's not correct anyway. For the price of renting a shoe box these days, you could have rented a 3 bedroom house inner city 2 to 3 years ago. Rent in apartments in Perth have appeared to increase on a percentage basis, far higher than homes on their own land in the inner suburbs.

So what will be the next lot of 3 bedroom homes that allow the now apartments to increase in rent above inflation? And then after them? And again...


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## moses (16 February 2008)

Tom Ronalds said:


> tech/a:
> 
> Of course my view is broad brushed and any slowdown will have different impact in different places. That has already been happening - look at Sydney prices, where the growth over the last 3 or so years has been relatively minimal.
> 
> ...




Tom, thanks for your responses, you make some good points.

Sydney: yes, prices paused, even fell a little, but have now picked up 10% although no strong indicator as to what happens next. This would be described anywhere else as consolidation.

Perth: prices are flat, clearly consolidating after some dramatic rises, and prone to fall only in the unlikely event of a mining collapse.

Brisbane: no sign of slowing down, up 20% pa.


When I was young we HAD to be stretched to the max to achieve anything as worthwhile as buying a house; consequently I'm stretched to the max now, to the point where I've left my job to concentrate on developing my investments as my wages ($100k+) didn't have a hope of maintaining my debts, let alone achieve my lifestyle goals.

Do I worry? Yes?
Am I taking risks? Absolutely?
Will I win? Don't know.

What I do know is that I have only ever succeeded by stretching myself to the max, so that is what I do even if it means being debt driven.


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## Tysonboss1 (16 February 2008)

wayneL said:


> Think about this for a little while, open up excel and do some simple modeling, you'll realize the absurdity of this statement. We have dealt with these myths waaaaaaaaay back in the other thread with some very simple extrapolation backwards and forwards.
> 
> Rent most certainly does NOT increase faster than inflation. That is ridiculous. I can't believe anyone who has passed year 10 maths could possibly believe this.
> 
> I will demonstrate this if I absolutely must, but anyone can prove this for themselves.




read the above thread where I explain this,


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## tech/a (16 February 2008)

> What I do know is that I have only ever succeeded by stretching myself to the max, so that is what I do even if it means being debt driven.




While there is truth in this statement,I really cant see the point in doing this *without quantifying risk and having contingency plans to avoid disaster.*

This was me in the early 80s and I paid the price.

This time I wont be paying that price if the worst does happen.

Going outside the comfort zone in times of growth is fine---to stay there and indeed maintain or even increase that level of discomfort---*isnt I'm afraid wise investing OR speculation.*


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## moses (16 February 2008)

wayneL said:


> Think about this for a little while, open up excel and do some simple modeling, you'll realize the absurdity of this statement. We have dealt with these myths waaaaaaaaay back in the other thread with some very simple extrapolation backwards and forwards.
> 
> Rent most certainly does NOT increase faster than inflation. That is ridiculous. I can't believe anyone who has passed year 10 maths could possibly believe this.
> 
> I will demonstrate this if I absolutely must, but anyone can prove this for themselves.




Not forever of course, but rent can rise faster than inflation if other costs are rising less than inflation (or going down). In our economy most manufactured goods are getting cheaper and cheaper; the price of a fridge/washing machine/lawn mower hasn't changed in 25 years for example, and hi tech goods like computers just keep getting cheaper and better. Meanwhile more people are measurably wealthier than ever and can afford to pay more for lifestyle choices.

Also, inflation isn't the only reason why prices rise. Increased intrinsic value raises prices too, which is another way of saying that distortions in the relative costs of rent and housing between, say, the city and the country, or between different countries, have a real economic basis that cannot be explained by inflation.

Therefore rent can certainly rise faster than inflation.

It can also fall behind.

So it gets back to choosing when and where to invest.


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## moses (16 February 2008)

tech/a said:


> While there is truth in this statement,I really cant see the point in doing this *without quantifying risk and having contingency plans to avoid disaster.*




Of course. Merely stretching oneself to the limit isn't a recipe for success.

But not stretching oneself is a recipe for failure.


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## Tysonboss1 (16 February 2008)

chops_a_must said:


> Originally, you did not. That's what I was answering.
> 
> And in theory you are correct. But then you propose another absurd premise. That density in areas will continue to increase ad infinitum. So, eventually, 3 bedroom homes will be the size of cardboard boxes. Is that correct? And don't say it is the proportion of land to the number of apartments built on it, because you have already equated 3 bedroom homes with apartments above.
> 
> ...





Firstly.... I have very limited knowleadge on the perth market, So I can't comment on that, I don't invest there.

secondly,... yes density will continue to increase from,.. large blocks to ,.. small blocks,... town houses,... low level apartment building,... medium apartment building etc.etc.

does this mean that every suburb will eventually be apartments, no.

some areas with houses,... but the price of the house and the rent will grow at a rate faster than average,... other areas will stay at town houses but again as developement edges closer then they to will have there rents grow marginally above inflation, and other areas will have density increase qutie quickly, and should maintain rental increases on par with inflation in the longterm,..... 

factors that allow rent to increase in apartmenta are the actual size of the apartment eg number of bedrooms,.... It's location in respect of sort after areas eg. a low level apartment with veiws onto bondi beach, has a better chance of it's rent out pace inflation than a studio in a 60 storey apartment building in the cbd, features such as carparking can also give it an edge if more new developments have limited parking, 

my mate owns a large 3 bedroom apartment with a veiw of sydney harbour, and 2 car spaces,.... his rent has been out pacing inflation because apartments of that size are hard to get,... especially with a veiw and two car parks,... at one stage he was renting out the carparks separately to the apartment because the tenant didn't have a car.


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## numbercruncher (16 February 2008)

Anyone see anything unsustainable in this equation ?




> Financial services research firm Cannex says median house prices across the six capitals have risen 340 per cent since the March 1990.
> 
> “Weekly earnings have increased by 87 per cent since 1990 so in a time when the amount earned by ordinary Australians hasn’t even doubled, the price of houses has more than trebled,” said Cannex financial analyst Lauren Newlands.




http://www.news.com.au/business/money/story/0,25479,22717645-5013951,00.html


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## KIWIKARLOS (16 February 2008)

numbercruncher said:


> Ahhh so much for the next generation living better than the last, enslave em with debt and make em do 10 hour days, when Interest rates rise make em flip burgers on the weekend - all for a depreciating over priced asset :bad:
> 
> Dont worry the kids will understand why they never see mummy, houses are the most important thing to Aussie " battlers "
> 
> Its no wonder we have a rapidly falling birthrate eh ?




Mate the birthrate is actually increasing. The baby bonus is making a real difference. 

Fundamentally most house prices in inner metro areas will either stay flat or increase slightly as long as our economy is strong. Undoubtedly it is unlikely that the boom with double digit growth will continue but prices have a strong economic base. China is not goin to decrease its consumption of oz resources. BHP rio etc have order books filled for the next few years and are rapidly expanding their operations eg. BHP olympic dam and rio iron ore production. Vietnam the largest exporter of coal to China just ann they are going to cut exports and may even stop them ! 

We are powering the largest industrialisation the world has ever seen. With 8 % of the worlds coal reserves the cheapet and closest iron ore provinces to China, Massive amount of LNG, huge amounts of uranium the list goes on we are sweet. Qld gas is in the process of a JV to export LNG to the US and BP was going to build a hub at california fo oz LNG. The biggest business deals in the world are happening with oz companies. How is there any sign of weakness in our economy. We may be loading our debt onto future generations but if trends are anything to go by the future generations will be far more productive than we are today through innovation and technology anyway so the debt burden will be significantly less. 

Debt economics is driven by productivity gains, increasing populations and increasing standards of living and all three of these factors are still powering along. Even if pops go down standards of living simply increase even more.


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## KIWIKARLOS (16 February 2008)

one last thing median house price is a fuzzy figure. There are many places where all the housing is well below this figure and places where the housing is all miles above. Your speaking as if the whole country was priced the same. There is plenty of cheap housing out there and well if people can't afford a 3 bedroom house tough t1tt1es go live in an apartment which you can afford.


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## WaySolid (16 February 2008)

Inflation is and has been great for property investors. To not think so makes me curious as to what property investing experience people can share with me as I would like to learn. Extreme conditions might negate this idea, but I will repeat that inflation has been wonderful for property investors in this country. The basic idea is you are positioning yourself on the 'bandit' side of the great inflation tax, a trend that has to rate as one of the great ones of all times.

There's a lot of theory speaking and not much practice I think in this thread, if someone who has actually made some coin from property says that they are selling their portfolio then I'm really looking forward to reading about that and will pay very close attention. So when Sam Zell offloads his holdings that is a very significant piece of information, and a person who has one IP selling their place; somewhat less significant. Have a look around and tell me of the BRW200 rich list most of whom are landed up to the hilt; who exactly is selling at the moment?

Don't we just live in remarkable times when a person can complain about a commute from Brisbane and Ipswich as a negative for their search for a house under 300k? Open your history books and read about the experiences of first home owners in times past in Australia, could learn something.

Robots you are spot on about the tenor of that original thread, and why I posted for the first time here, glad to see the new topic of this thread!

Based on my study the one thing that I consider remarkable at the moment, is not really the prices but the rents. The flipside of govt sponsored resi investment is that your rent is subsidized as well, the rental levels at the moment in Brisbane are just ridiculous, not many talk about what would happen if mean reversion in PE ratios involved rents going to a more realistic level.

I bought twice for PE ratios under 20 in Brisbane (10k CBD) last year, expensive housing indeed but in practice you can still find value if you do some work and stop complaining.


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## WaySolid (16 February 2008)

KIWIKARLOS said:


> one last thing median house price is a fuzzy figure. There are many places where all the housing is well below this figure and places where the housing is all miles above. Your speaking as if the whole country was priced the same. There is plenty of cheap housing out there and well if people can't afford a 3 bedroom house tough t1tt1es go live in an apartment which you can afford.



One of the reasons the median price is a such a smooth line on a log curve. You do however have significant pain at various levels though and luxury has been known to be particularly volatile in the past in areas I'm familiar with such as the Gold Coast.

I saw a prediction of a large reduction in the median house price in Brisbane recently, something that hasn't happened to my knowledge since Federation. Sure it could happen but building an investing strategy around an event that hasn't ever happened, that's quite an assumption to be working from. What might be more accurate is that certain parts of the market could get whacked, and others could do very well, a prediction that is very much in line with happenings of the last 200 years.


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## xoa (16 February 2008)

WaySolid said:


> Inflation is and has been great for property investors. To not think so makes me curious as to what property investing experience people can share with me as I would like to learn. Extreme conditions might negate this idea, but I will repeat that inflation has been wonderful for property investors in this country. The basic idea is you are positioning yourself on the 'bandit' side of the great inflation tax, a trend that has to rate as one of the great ones of all times.




I'm not sure you even know what inflation is. There have been extended periods in our recent history where inflation has eroded house values. The only type of inflation you seem to understand is asset inflation.



WaySolid said:


> Don't we just live in remarkable times when a person can complain about a commute from Brisbane and Ipswich as a negative for their search for a house under 300k? Open your history books and read about the experiences of first home owners in times past in Australia, could learn something.




I hope you can give me some anecdotes about the struggle of our convict forefathers, because nothing in modern history compares to the bubble we're faced with.



WaySolid said:


> I bought twice for PE ratios under 20 in Brisbane (10k CBD) last year, expensive housing indeed but in practice you can still find value if you do some work and stop complaining.




You bought two properties costing near 20 times your annual income? Were you on ice?

The banks have helped every Henry, Dick and Harry become an amateur "property tycoon".. Let's see how many remain in a few year's time.


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## WaySolid (16 February 2008)

numbercruncher said:


> Anyone see anything unsustainable in this equation ?
> 
> 
> 
> ...




Expectations of Gen Y?

The vanishing of the dream of living in a McMansion or trendy unit within walking distance of coffee culture, work, night life and a better house than their parents ever dreamed of starting with?

I try not to read the lamestream media, I'm not aware of much original thinking and research coming from the papers in Australia, though it might be out there.

Sure property has been on a tear, and gosh it could even be due for a large fall, I've done too much reading of history to think otherwise. But I'm betting on a readjustment of Gen Y expectations long before the property they want to buy comes at the price they want to pay.


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## numbercruncher (16 February 2008)

The figures show that Gen-Y simply arnt buying, thats when Pyramid schemes come undone, when they dont get new entrants.

Gen y simply arnt interested in debt slavery home ownership, they are the gimme now generation, Ipods, foreign holidays, rock concerts, generally having a ball and adding to Inflation 

Gen x seem to be the ones obsessed by home ownership, they are something like 20pc of the population and 50pc of the debt


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## Mofra (16 February 2008)

numbercruncher said:


> The figures show that Gen-Y simply arnt buying, thats when Pyramid schemes come undone, when they dont get new entrants.
> 
> Gen y simply arnt interested in debt slavery home ownership, they are the gimme now generation, Ipods, foreign holidays, rock concerts, generally having a ball and adding to Inflation



Given a reasonable portion of gen Y is still at high school/university I wouldn't be too surprised by any figures that suggest they have borrowed less than gen X.


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## WaySolid (16 February 2008)

Xoa, inflation eats away at my debt even while my holdings stay still or even go backwards in real or hamburger terms. You could look at the 1970's as the best inflation example for a decade. Again you will have to do some homework though.

It's not the biggest bubble if that's what we are in, I've already mentioned that. There is actually under supply of stock in Brisbane and a lot of places around the country.

Jan Somers first house is a good example to start with, or the experience of couples buying in the 40's and 50's and what they started out with in terms of quality of housing, location for the time and other things they did away with that today would be considered nescessities.

PE ratios, I will let you work that one out for yourself.


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## chops_a_must (16 February 2008)

WaySolid said:


> Based on my study the one thing that I consider remarkable at the moment, is not really the prices but the rents. The flipside of govt sponsored resi investment is that your rent is subsidized as well, the rental levels at the moment in Brisbane are just ridiculous, *not many talk about what would happen if mean reversion in PE ratios involved rents going to a more realistic level.*




Because society would cease to function. People would just stop working. There's no point in doing anything if you are going to go broke anyway. Rent can't be raised much above real wage, or minimum wage growth, without serious long term consequences.

So much talk about mining boom and housing prices... what exactly does a house in western Sydney have to do with that? And fwiw, the majority of people have not experienced wage increases commensurate with cost of living increases, that's one side of the whole debate. In Perth, most people don't have anything to do with the mining boom, yet everyone assumes they do. cost of living is through the roof and wage increases have been less than the local inflation rate. Essential service staff are going elsewhere because there just is no point working here. Every public service sector from health and education to worksafe, is totally non functional and on the point of collapse because of cost of living problems and comparative wages.

So there are two solutions: Wages increase to fully reflect cost of living, house prices and rent, or secondly, property values decrease so that people living on minimum or even average wage aren't actually going broke, simply being alive.


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## trinity (16 February 2008)

> Mate the birthrate is actually increasing. The baby bonus is making a real difference.




sorry, am off topic, but not too sure if they are using the baby bonus to buy new plamas as well... 

back to the topic...
http://www.domain.com.au/Public/Article.aspx?id=1202760272500&index=NationalIndex&headline=Welcome%20to%20the%20new%20Struggle%20Street&s_rid=smh:Homepage
IMHO, the outer suburbs have been overpriced and reality is starting to kick in, but the inner suburbs will continue to grow  

PS.  Not a property owner yet, have been looking around and ... still haven't found what i'm looking for ...


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## moses (16 February 2008)

numbercruncher said:


> The figures show that Gen-Y simply arnt buying, thats when Pyramid schemes come undone, when they dont get new entrants.
> 
> Gen y simply arnt interested in debt slavery home ownership, they are the gimme now generation, Ipods, foreign holidays, rock concerts, generally having a ball and adding to Inflation
> 
> Gen x seem to be the ones obsessed by home ownership, they are something like 20pc of the population and 50pc of the debt




If this is true, then Gen Y will be happy to pay higher and higher rents, and Gen X will be happy to invest in more and more property. 

This isn't a pyramid scheme. It is a real supply v demand market.


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## brettc4 (16 February 2008)

My . Is it or isn't it a bubble.  Are the price increases because of a fundamental change, or are the prices increasing because investors think they will keep rising?

Fundamental changes include:
- extra cash from mining
- relatively cheap credit for a long period
- Increasing population
- Higher Consumer sentiment
- Low Unemployment

On the Bubble side, you just have lots of people trying to get ahead of the game, retire early, so you have a number of investors and specutalors buying with the belief prices will continue to increase.  I see this as why property investors go with Interest only loans. They expect the price to increase, as such they do not need to make principal repayments to gain equity.

But it is hard to tell how much is bubble and how much is fundamental.  I think we have seen in a couple of markets where the bubble component hqas started to wear off, ie in Perth and some parts of Sydney. Does this means other states will also follow this path.

Others have posted that the prices cannot continue at current levels because no one will be able to afford to purchase a house so there is a ceiling. On the other hand Gen Y wants wants wants wants, and their is currently enough credit to allow them to get get get.  But with increased interest rates, comes fewer loans. It may take time to filter through, but it happens.

The currently rental crisis will also see additional development take place as it is less risky. This will bring on new supply, unfortunately, that supply can take a couple of years to come about and is not always what people are after.

I will be looking to upgrade my home in a few years time, and I hope to see a cooling of (not necessarilly a drop, but a slower increase) during that time. I do not see how rents can continue to increase over the longer term way ahead of wage increases. People just cannot afford it. So either they will move further out, or downsize their requirements, or the government will step in with new supply, or subsidies. Subsidies however will not slow house price growht so I hope they do not do that.


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## wildkactus (16 February 2008)

*From the master builders website.*

Slide in Dwelling Approvals
05 Feb 2008

Dwelling approvals fell back sharply in December in the wake of last November’s interest rate rise, according to Master Builders Australia, the peak body for the building and construction industry.
Mr Peter Jones, MBA’s Chief Economist, said “Recovery in residential building will be further delayed as the impact of January’s bank-induced rate increases as a result of the sub-prime crisis flows through.”
“With the Reserve Bank likely to lift official interest rates again, the prospect of any sustainable upturn this year appears very unlikely.
“The so-called take-off in dwelling approvals looks like being aborted in a similar fashion to previous episodes experienced since the cycle troughed way back in 2004.”
*“Another false dawn means the growing imbalance between residential building demand and supply has the potential to escalate to intractable levels.”
“The dilemma for the Reserve Bank is that higher interest rates are suppressing building activity and the shortage of stock is fuelling rental increases that, in turn, feed into the consumer price index measure of inflation. The RBA responds to higher CPI inflation by lifting rates and a vicious cycle develops.”*
“The total number of dwelling units approved, seasonally adjusted, fell by 16 per cent to 12,263 units in December, to be 0.9 per cent lower than the same month in the previous year.”
“Private sector house approvals fell by 11.6 per cent to 8,199, to be down 4.9 per cent on the same month last year.”
“The more volatile private sector ‘other dwellings’ (apartments and townhouses), fell by 24.5 per cent in December, to be 8.2 per cent higher than in December 2006.”

I also remember from another article that we are also only building about 90% of the needed demand for new dwellings to meet the current market interest.
so from this it's clear that supply and demand will keep house prices rising for the forseable future on its own. so this coupled with rising interest rates i can't see a slow down in property price's.
IMO good properties (close to cbd, schools, transport, etc) will always increase in value no mater what the market conditions are. and these are the properties that i always look for when investing in property.


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## moses (16 February 2008)

Tom Ronalds said:


> - Australia already has the most unaffordable housing of any developed country. Every single one of our capital cities is classed as "severely unaffordable" (the highest rating), with regional cities largely all in the same category as well. See detailed discussion on this in the latest Demographia report: http://www.demographia.com/dhi.pdf




Interesting read, but imho it makes a better case for land prices going up faster than ever than for governments to ease restrictions. Land use restrictions are increasing, and will continue to increase (a) as environmental concerns mount, and (b) as food production gets more important.

The outcome will be more people crammed into less space, making land and house prices less affordable than ever.


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## robots (16 February 2008)

hello,

rents are going up up and up in the future, its a given

many renters can afford the increases and if they cant then downsize, move suburb or get better paying job, very simple

a lot of landlords are passing on the increases very quickly,

just back from having latte on chapel st and is this tattoo thing going around the country?

thankyou

robots


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## Happy (16 February 2008)

I think there are couple of popular explanations what propels property market waves.

One is mentioned already, that houses wander in an out of buyers reach.

Another is, that rent makes house more or less attractive.

More attractive when rent is so high that repayments of purchased property are not much higher than rent.
Less attractive when rent is so low that purchasing own property is much more expensive.


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## Tom Ronalds (16 February 2008)

Rents cannot continue to increase forever, even if there is a shortage of available housing. It's simple, really, and I have already written about it earlier. 

Eventually you get to the point where more and more people cannot afford to rent anything. That's becoming the case here in Cairns now. At the same time, would-be landlords cannot buy cheap enough properties to satisfy this market segment. There is only so much demand for property that can be rented for >$400/week - especially when the average family earns just over $67,000 p.a.

Ultimately you end up with people who can't afford anything that's available, and with landlords who cannot rent their $400,000+ townhouses. At such time, rental yields, which are pretty poor already, drop even in what is otherwise a tight market.

As I also said many times before, if/when the economy slows and the credit bubble blows up, there will be even more people (unemployed etc) who can't afford to pay the median rent (now over $300/week) and even more of those who can't keep repayments on their overpriced properties in which they now have negative equity.

I am amazed that in light of what is happening in America, where by any measure the bubble was a lot less severe than here, so many people here can still continue to argue that our property prices will keep going up and up and up on the basis of what I'd see as some pretty dodgy reasoning.

In fact the writing is already on the wall: When you have news like this on bankruptcies running at record highs from early last year, what's going to happen when the economy really slows: 

http://tinyurl.com/2poxmz

Quote from the article:

"In the three years to last December [2006] house prices fell an average of 8.8 per cent in Sydney, according to data from the Australian Bureau of Statistics (ABS).

"In real terms, relative to inflation, prices have fallen almost 16 per cent in Sydney over the past three years as values slumped mainly in the western suburbs.

"'They jumped on the bandwagon on the assumption of rising property prices in Sydney,' Mr McDonald said.

"'They felt a degree of peer group pressure that if you're not in the market then you're losing.'

"Queensland bankruptcies jumped 10 per cent to 1,521 to their highest level since the June quarter of 2002, according to the ITSA data."

In the European countries, with a high population density and long histories, the long term data trends (350 years in the link below) are very revealing for those in Australia who believe property price growth can consistently exceed income growth: Prices fluctuate wildly, but ultimately return to equilibrium. The following link gives some great reading:

http://www.abc.net.au/news/stories/2008/01/28/2148237.htm

Tom R.


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## Tom Ronalds (16 February 2008)

numbercruncher said:


> Anyone see anything unsustainable in this equation ?
> 
> Financial services research firm Cannex says median house prices across the six capitals have risen 340 per cent since the March 1990.
> 
> “Weekly earnings have increased by 87 per cent since 1990 so in a time when the amount earned by ordinary Australians hasn’t even doubled, the price of houses has more than trebled,” said Cannex financial analyst Lauren Newlands.




Clearly many people don't. The equation of 2+2=5 is still widely believed to be true. 

The deadly mix of too much debt and a slowing economy has now been forgotten by too many, who either have not experienced it or, after 17 years of uninterrupted good times, believe the normal economic cycle is now dead.

Statements of this type just show the depths of the delusion: 



			
				robots said:
			
		

> many renters can afford the increases and if they cant then downsize, move suburb or get better paying job, very simple




You can only move to a better paying job if you have the needed qualifications and if there are any to be had, mate. You can only downsize if there are places available to downsize to. 

Well it seems like many people will need to be reminded of how things can be in bad times...Does any Victorian here recall what things looked like in Collins Street in 1991 or thereabouts? I reckon every second building was vacant and for rent, with up to 24 months of lease holiday being offered to prospective tenants. Sounds hard to believe, viewed from today's perspective, doesn't it? 

Tom R.


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## Tom Ronalds (16 February 2008)

moses said:


> Interesting read, but imho it makes a better case for land prices going up faster than ever than for governments to ease restrictions. Land use restrictions are increasing, and will continue to increase (a) as environmental concerns mount, and (b) as food production gets more important.
> 
> The outcome will be more people crammed into less space, making land and house prices less affordable than ever.




And yet you seem to ignore that this is not the case in at least some countries comparable to Australia (Canada & parts of USA in particular) or even in some high population density countries like Germany (where prices have been flat or falling for decades) or Japan..


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## xoa (16 February 2008)

Tom Ronalds said:


> And yet you seem to ignore that this is not the case in at least some countries comparable to Australia (Canada & parts of USA in particular) or even in some high population density countries like Germany (where prices have been flat or falling for decades) or Japan..




I don't know, they'll find some excuse. Live and let live though. I don't care what they do, so long as they don't crash the entire economy.


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## Happy (16 February 2008)

Tom Ronalds said:


> Well it seems like many people will need to be reminded of how things are in bad times...
> 
> Tom R.




Downsizing can go as low as few families in one house or unit.

People can move to caravan parks and possibly tents.
People could endure quite a lot if they had to.

But things can turn nasty really quick, because several generations back, people could take pressure on their own shoulders, now increasing number of people believe that everything has to be provided.


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## Kimosabi (16 February 2008)

Record Debt Levels + Negative Savings Rates = All Hell Breaking Out, the only question is when...


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## Kimosabi (16 February 2008)

Does anyone have any data on the Volume of Houses being bought/sold around Australia?


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## hangseng (16 February 2008)

moses said:


> Interesting read, but imho it makes a better case for land prices going up faster than ever than for governments to ease restrictions. Land use restrictions are increasing, and will continue to increase (a) as environmental concerns mount, and (b) as food production gets more important.
> 
> The outcome will be more people crammed into less space, making land and house prices less affordable than ever.




I agree it is an interesting read although taking the median income of Perth as ~$59k is misleading. This is the lower end of Perth incomes, not what would be regarded as median.

I am remaining in the property market as I see excellent rental returns continuing in fact increasing significantly. I am close to positve gearing now and will definately be so in 6 mths.


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## wayneL (16 February 2008)

Anyone involved in overseas markets such as the US or UK must be experiencing deja vu reading these threads. I'm most familiar with the UK market as I had a bit of a flutter here a few years ago.

The very same arguments that the bulls are using on this thread, was being used by the bulls here... *exactly* the same. i.e. immigration, supply and demand, strong economy, this market is different yada yada yada.

Yet the RE market here has turn to **** in the last six months. It's happening folks, it's beginning to crash... and quickly. Whether that continues and we see rather large reductions in prices, we'll just have to wait and see; but these cycle tend to be played out over a period of years rather than months.

Distress sales are everywhere and "buy at 20% below market and rent back to owner" companies are busy as anything. (These figures are not reflected in most indicies, or in the mortgagee sales number). Realistic vendors are flogging there houses at 2005 values while everything else is sticking.

I Cheltenham where I live, the amount of "won't sell, so I'll rent it out" rental stock is amazing and rents are dropping as there is competition for tenants.

I've just signed on to a new build (six months old) property that represents 2.9% yield  and at a 15% discount to what the first tenant paid. LOL

Now remind me why Australia is so different? It's just a matter of time and global economic tipping points. Already stuff is happening behind the scenes in Oz financial markets.

The prudent will come out fine in the end, but prices are set at the margins and the margin is veeeery stretched... everywhere.

Now, I'm sick of this discussion because we are going around in circles and repeating ourselves. I'm off to lech at some hot Polish ladies before they all go home to Poland.


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## Tysonboss1 (16 February 2008)

numbercruncher said:


> The figures show that Gen-Y simply arnt buying, thats when Pyramid schemes come undone, when they dont get new entrants.
> 
> Gen y simply arnt interested in debt slavery home ownership, they are the gimme now generation, Ipods, foreign holidays, rock concerts, generally having a ball and adding to Inflation
> 
> Gen x seem to be the ones obsessed by home ownership, they are something like 20pc of the population and 50pc of the debt




What the,.....I am gen Y and I hold plenty of real estate,... My sister is gen Y she owns 2 properties,... out of my 5 closest mates 4 hold realestate one of them holding more than myself.

But yes alot of other gen Y members i know don't hold any investments let alone realestate,... they have more important things to spend there coin on such as binge drinking, consumer goods, new cars and holidays

Its funny I actually had my girlfriends besty telling me she couldn't move out of home because rent was to expensive as she was plugging her new digital video camera into the tv to show me footage of here latest over seas trip to europe,.... she was also drinking her 5th vodca crusier of the night and was thinking of heading out to the club later on.


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## theasxgorilla (16 February 2008)

Tom Ronalds said:


> And yet you seem to ignore that this is not the case in at least some countries comparable to Australia (Canada & parts of USA in particular) or even in some high population density countries like Germany (where prices have been flat or falling for decades) or Japan..




I'm glad you look abroad Tom and try to find some answers or get some perspective.  But I think it's important to understand why a situation is the way it is.  If we want to throw in comparisons why can't we also cite examples such as South Africa or Ireland.  Why is RSA an interesting case?  Well, it's prime borrowing rate is 14.5%, and it's economy continues to grow.  How can that be?

Or what about Ireland?  From a practically bankrupt country back in the 80s, to some 25 years later where they're the second richest country in Europe, per capita, behind little Luxembourg.  How is this so?  Furthermore, what does this look like?  Well, from what I understand (having some great Irish friends myself) it means that if you want to find a rental you get up at the crack of dawn every Saturday and fight your way to open houses and fill in applications hand over fist.  It also means that the landlord of the place you are renting is raising rents as fast as your own salary and house prices are increasing so you continue to struggle to get the deposit needed to break free.  Things can get much worse and stay bad if the conditions for their perpetuation remain.

I'd be more interested in lengthy discussion if it included answers to some of these questions, because I think it's just as relevant as it is to identify why Germany is a bad example.  I have an idea, lets give Western Aust and parts of SA and NT to an empirical communist state for a few decade and lets see what kind of shape it's in when we get it back.  Then we try growing our combined economies from there, whadda ya say?

And Japan.  I think Japan is one of the most unique countries on earth and has suffered a unique fate for many decades now.  Use it as a reference point at your own peril, IMO.

And that brings us to the US and Canada.  Hmmm.  Speak English and use dollar signs when they count money.  That's good enough for me.  Our fate will mirror theirs.

ASX.G


----------



## Kimosabi (16 February 2008)

Well I'm Generation WTFU(Woke The F^ck Up)

I'm going to buy a lump of Semi Rural Land and Grow all of my own Organic Fruit, Veges and Herbs, etc and become completely self sufficient.

I'm going to sell some of what I produce so I'm getting a return on Investment, but ultimately I don't give a F^ck about money, there are more important things in life than the Rat Race where your drinking water is poisoned, your food is poisoned and the air you breath is poisoned.

Goodluck yo'all, I'm off to lead a long, healthy life...


----------



## Tysonboss1 (16 February 2008)

wayneL said:


> Anyone involved in overseas markets such as the US or UK must be experiencing deja vu reading these threads. I'm most familiar with the UK market as I had a bit of a flutter here a few years ago.
> 
> The very same arguments that the bulls are using on this thread, was being used by the bulls here... *exactly* the same. i.e. immigration, supply and demand, strong economy, this market is different yada yada yada.
> 
> ...




No doubt this year will be the worst in some peoples lives then,.... other more advanced investors will probally say it was the best time of there investing life.

it's all a cycle wayne,.... downturns come and go,... you just have to have your business setup so it doesn't wipe you out,.... and think of stratergies that you will still beable to keep working at throught the down turn.


----------



## theasxgorilla (16 February 2008)

wayneL said:


> Now remind me why Australia is so different? It's just a matter of time and global economic tipping points. Already stuff is happening behind the scenes in Oz financial markets.




There can only be answer to that question, since there only one thing that Australia does well and that is sell the stuff dug up out of it's backyard to China.  And China, as an unusually governed country, doesn't have to play by the rules of a global market economy as moral high-grounders like the US and UK have to appear to do.  I see it as plausible that China might crack the whip, so to speak, and use softer commodity prices to continue meeting its agendas.  It might not propel Aust growth at the same rate of knots, but it may be enough to keep us steady.  Last time I checked, sub-prime and credit-crunch was not a Chinese agenda.  Olympics and industrialisation seem to be.

I'm sorry to hear that the pretty Polish cleaning ladies might be heading home.  DIY could mean something different in the coming years.

ASX.G


----------



## numbercruncher (16 February 2008)

Thats nice Tyson, doesnt show in the figures though ....


This is what i typically see/hear from Gen-Ys

Feedback from a news article ....



> We are better educated, more mobile (vertically and internationally), and are earning much more at a younger age than previous generations. The next 20 years will be a buffet of opportunity for us as the boomers retire and sell up all the assets that they have acquired in lieu of a lifestyle. You certainly don't need to feel sorry for this inner city renter.
> 
> Perhaps my experience is not generalisable, but in my social circles *the only people who seem to be worried that my generation aren't buying houses is the generation who wants to sell them to us*.





http://www.abc.net.au/news/stories/2007/11/05/2081872.htm


Seriously Gen-Y are on easy street renting at a fraction the cost of ownership and a never ending stream of Genx and Boomer property speculators adding to the rental property market 

Piece of useless information for ya'll , in 1989 in the 25-29 age group 45pc of ppl had children, in 2004 that had dropped to 29pc - I wonder how much can be directly attributed to affordability and how much to lifestyle ?


----------



## wayneL (16 February 2008)

Tysonboss1 said:


> No doubt this year will be the worst in some peoples lives then,.... other more advanced investors will probally say it was the best time of there investing life.
> 
> it's all a cycle wayne,.... downturns come and go,... you just have to have your business setup so it doesn't wipe you out,.... and think of stratergies that you will still beable to keep working at throught the down turn.



Hang on a minute! That's my argument! WTF?

You've been agreeing with me all this time? Sheesh, talk about teaching me to suck sausages!


----------



## chops_a_must (16 February 2008)

theasxgorilla said:


> I'm glad you look abroad Tom and try to find some answers or get some perspective.  But I think it's important to understand why a situation is the way it is.  If we want to throw in comparisons why can't we also cite examples such as South Africa or Ireland.  Why is RSA an interesting case?  Well, it's prime borrowing rate is 14.5%, and it's economy continues to grow.  How can that be?




Because there are stringent laws regarding the exporting of company and personal dollars. So a lot of money gets put into RE there because there isn't anything else to do with the money. And then you get people, like the one who explained this to me, a stockbroker here that has won the West Australian Newspaper competition forever and a day piling in because they see a way to make a buck on the back of legislation in a country forcing overly inflated investment.

(Obviously there are reasons why they made the legislation but it has side effects) South Africa this is.


----------



## wayneL (16 February 2008)

theasxgorilla said:


> Last time I checked, sub-prime and credit-crunch was not a Chinese agenda.



Might pay to check again. I've heard some stories of dodgy lending there too. hard to get the real picture though.



theasxgorilla said:


> I'm sorry to hear that the pretty Polish cleaning ladies might be heading home.  DIY could mean something different in the coming years.
> 
> ASX.G



Oh they're sharper than that! They kick the local chavette's backside in the jobs stakes. My personal banker at HSBC is a very pretty Polish lady. Fortunately she is engaged (or unfortunately as the case may be ) to a Pom so will be staying on.


----------



## theasxgorilla (16 February 2008)

numbercruncher said:


> Piece of useless information for ya'll , in 1989 in the 25-29 age group 45pc of ppl had children, in 2004 that had dropped to 29pc - *I wonder how much can be directly attributed to affordability and how much to lifestyle ?*




As a person putting off having kids I can give my own answer.  And for us it's both lifestyle and affordability.

Increasingly the middle-class ain't looking so middle any more.  Take the house I grew up in with my parents out in the suburbs of Melbourne as an example.  When that was new and we were living out there in an idyllic little suburban community it was something to behold.  Today, the same houses are run down, and many in the street have become investment properties changing hands through various owners and tenants, and the community is in shambles.  And I'm supposed to pay more, in real terms, for that existence?  To me, this is an affordability crisis.  Paying a lot of money for a **** existence.

The only alternative I see is upward social mobility.  And that don't come easy when you add kids to the balance sheet too early on in life.  Neither does world travel or both parents working 60+ hours a week.

I don't expect that everyone who puts off having kids sees it this way.  Some people who put it off until later in life are still broke when they start a family.

ASX.G


----------



## numbercruncher (16 February 2008)

another good article on the Gen difference .... I'll quote a little ....




> 1 November, 2007: Generation Y's preference for the inner city rental life over mortgages and McMansions isn't a sign of immaturity or snobbery, writes Scott Hickie. Rather, it shows their knack for sophisticated microeconomic modelling
> 
> Economically speaking, the boomer seachange is ironic because their financial profile opens up a wider spectrum of choices in the property market, yet they select areas that won't have the infrastructure demanded by well-heeled retirees, until they have more than one foot in the grave.
> 
> ...




( Genx profile is so well backed by the massive distortion of Debt Genx hold )

http://www.newmatilda.com/2007/11/01/unbearable-logic-gen-y-real-estate-market


----------



## Tom Ronalds (17 February 2008)

theasxgorilla said:


> I'm glad you look abroad Tom and try to find some answers or get some perspective.  But I think it's important to understand why a situation is the way it is.  If we want to throw in comparisons why can't we also cite examples such as South Africa or Ireland.  Why is RSA an interesting case?  Well, it's prime borrowing rate is 14.5%, and it's economy continues to grow.  How can that be?




Many reasons, but amongst the most important ones would be the fact that a majority of the South African population is trying to climb up from a very low base. It's similar to China in that context - high single or even double digit rates of growth can be sustained when you are starting at the very bottom. Most of these people do not have much debt, as they cannot borrow much anyway on the incomes they are earning. So interest rates are not necessarily directly relevant to them.

Nominal interest rates also do not mean much on their own. You need to look at the real interest rates, taking into account the rate of inflation. On top of that, many other factors influence economic growth. As I said above, high interest rates may not be such an impediment, if personal and business debt is low. Just look at Brazil - not so long ago their interest rates were over 20% and they are one of the new economic "tigers" now - member of the BRIC bloc.



> Or what about Ireland?  From a practically bankrupt country back in the 80s, to some 25 years later where they're the second richest country in Europe, per capita, behind little Luxembourg.




Ireland had received massive amounts of EU subsidies, but they also significantly freed up their economy and reduced taxes.

They are a good example of free market reforms delivering real and fast increases in wealth.

Compare with Portugal, which started from a similar level, also received a lot of support from the EU, and its income per head is still stuck at around 65% of the EU average - not a great deal more than that of the "new Europeans" - fast growing post communist countries like Slovenia or Czech Republic. Many of the post communist countries have introduced low, flat tax systems and they will soon start overtaking the sclerotic members of the "old" Europe. Unlike many western European countries, the post-communist ones have experienced socialism first hand, so they do not hanker for a cradle-to-grave government support, as is the case in places like France, Belgium or Italy.

Portugal is a relatively socialist country. Their results are also quite predictable for that reason. Spain had an unemployment rate of over 20% for many years, until finally it got a non-socialist government at about the same time John Howard first got in here. Now its unemployment rate is in single digits, its GDP per head is about to overtake Italy's...and the Socialists are back in power! It'll be interesting to see how long the Spanish miracle will last, especially as Spain has had one of the most severe housing bubbles in Europe, which apparently is now starting to keel over.



> How is this so?  Furthermore, what does this look like?  Well, from what I understand (having some great Irish friends myself) it means that if you want to find a rental you get up at the crack of dawn every Saturday and fight your way to open houses and fill in applications hand over fist.  It also means that the landlord of the place you are renting is raising rents as fast as your own salary and house prices are increasing so you continue to struggle to get the deposit needed to break free.  Things can get much worse and stay bad if the conditions for their perpetuation remain.




The Irish housing bubble is pretty much over now; it's just a matter of how quickly it will deflate. A bit like next door in Britain.

Besides, Ireland still retains quite a few places with a lot lower prices than Dublin, which is where the majority of the massive increases in house prices were located. Overall, it is nowhere near as unaffordable as Australia.



> I'd be more interested in lengthy discussion if it included answers to some of these questions, because I think it's just as relevant as it is to identify why Germany is a bad example.




Germany is a totally valid example for the point I was making - i.e. that urban planning and high population density do not necessarily equal massive house price rises. Germany also has had relatively high rates of immigration over the past 15 or so years, so in my view it serves as a reasonable comparison.



> I have an idea, lets give Western Aust and parts of SA and NT to an empirical communist state for a few decade and lets see what kind of shape it's in when we get it back.  Then we try growing our combined economies from there, whadda ya say?




I think the results would be quite predictable. It's quite possible that having wall-to-wall Labor governments in this coutry will soon give us a taste of what spin-based economic management from the left angle is all about. ;-)



> And Japan.  I think Japan is one of the most unique countries on earth and has suffered a unique fate for many decades now.  Use it as a reference point at your own peril, IMO.




Japan is indeed unique. Its very own property bubble was also unique - in how massive it got before it burst. Yet it can serve as a good example of the fact that property bubbles do burst eventually, and that sharemarkets do not always have to go up - even for decades at a time.

Cheers,

Tom R.


----------



## krisbarry (17 February 2008)

In 1996 we had high interest rates and by 1999/2000 the bottom of the housing market was hit.

In 2008 we have high interest rates and by 2011/2012, the bottom of the housing market will be hit.

Get my drift....house prices are heading down

Its all cyclic, not straight up as some head strong housing gurus suggest!

Please "robots" stop ramping this over-heated housing market


----------



## BradK (17 February 2008)

Stop_the_clock said:


> Its all cyclic, not straight up as some head strong housing gurus suggest!
> 
> Please "robots" stop ramping this over-heated housing market




I agree...


----------



## Tysonboss1 (17 February 2008)

Stop_the_clock said:


> In 1996 we had high interest rates and by 1999/2000 the bottom of the housing market was hit.
> 
> In 2008 we have high interest rates and by 2011/2012, the bottom of the housing market will be hit.
> 
> ...




yes exactly,... But to try and pick the exact top andsell all your property investments then try to pick the exact bottom is not really worth doing.

especially if you hold properties in strong areas the down turn will most likly only be a period of stagnation, not a massive drop like the bears here are predicting.

So if you have a  property portfoilio of properties that have features that will become sort after in the future, it's best just to hold it through gloom and boom and just steadily add to it over the years,

Property is not like shares you can't just sell today and buy into the exact property again in the future, some I the properites I own would be very difficult to replace in the future,


----------



## ROE (17 February 2008)

Stop_the_clock said:


> In 1996 we had high interest rates and by 1999/2000 the bottom of the housing market was hit.
> 
> In 2008 we have high interest rates and by 2011/2012, the bottom of the housing market will be hit.
> 
> ...




looking we may have highest interest rate in 2009 and 2011 as well ... 

http://business.theage.com.au/bracing-for-the-new-china-flu/20080216-1slf.html

High inflation, no more cheap chinese import, Petrol at record high it's building into an atomic bomb 

Cash is king save up, go bargain hunting in a couple years ahead...


----------



## numbercruncher (17 February 2008)

ROE said:


> looking we may have highest interest rate in 2009 and 2011 as well ...
> 
> http://business.theage.com.au/bracing-for-the-new-china-flu/20080216-1slf.html
> 
> ...





I've always said Chinas next big export will be Inflation .... looks very close to becoming reality, no wonder they dont want to revalue their currency eh ....

Might be time to stock up on all your cheap Chinese trinkets !@

quote from the article for those who cant be bothered reading link !



> AFTER years of filling Australian shops with cheap products, China's latest export is inflation, with the price of goods set to rise over the next six months, economists say.
> 
> Soaring energy prices, higher labour and raw materials costs, and new environmental and tax rules are forcing Chinese manufacturers to increase the price of their exports, which, in turn, is being passed on to consumers.
> 
> ...


----------



## nioka (17 February 2008)

ROE said:


> Cash is king save up, go bargain hunting in a couple years ahead...



 Wouldn't it be better to stock up now on those items expected to increase by 50%. Your cash will buy a lot less next year.


----------



## numbercruncher (17 February 2008)

nioka said:


> Wouldn't it be better to stock up now on those items expected to increase by 50%. Your cash will buy a lot less next year.





Exactly, its time to go mental and stock up on a couple of years worth of presents, bulk supplys , clothes , electronics, gizmos , gadgets etc etc.

Ofcourse this behaviour would be highly inflationary with enough people doing it, but a win win situation, (Might not be so good for people with mortgages on over inflated assets) Get all you goodies at a huge discount and help force some more rate rises to benefit your savings. Im on a spree at dealsdirect as we speak doing my bit of microeconomics, free postage till midnight as well (Im in no way affilated with these folks btw, but they are cheap compared to tomorrows prices)


----------



## ROE (17 February 2008)

nioka said:


> Wouldn't it be better to stock up now on those items expected to increase by 50%. Your cash will buy a lot less next year.




I'm buying everyday when I can Identify stuff that sale cheaper than it's worth.
Few more years when everyone is selling and cant meet their repayment it's even cheaper


----------



## explod (17 February 2008)

numbercruncher said:


> Exactly, its time to go mental and stock up on a couple of years worth of presents, bulk supplys , clothes , electronics, gizmos , gadgets etc etc.
> 
> Ofcourse this behaviour would be highly inflationary with enough people doing it, but a win win situation, (Might not be so good for people with mortgages on over inflated assets) Get all you goodies at a huge discount and help force some more rate rises to benefit your savings. Im on a spree at dealsdirect as we speak doing my bit of microeconomics, free postage till midnight as well (Im in no way affilated with these folks btw, but they are cheap compared to tomorrows prices)





Problem with electronic gadgets/gizmos is they date too quick so depreciation could be worse than the inflation.

Try, long life foods, coffee etc,  best is 1966 aussie 50cents coins, worth about $7. and rising.   or have a good look at the gold thread.


----------



## robots (17 February 2008)

hello,

yes yes, here we go 

summary of today's discussion:

the handout crew still complaining

thankyou

robots


----------



## numbercruncher (17 February 2008)

Open your wallet Robi .....


I did my little bit for inflation today, you should to 

Your not listening to all that anti-Inflation mumbo jumbo from Ruddy are you ?

When do you plan to purchase your next highly geared investment property btw ?


----------



## robots (17 February 2008)

hello,

I am on the same gig as you NC, save save and save

ride bicycle to work, get a latte and a couple of donouts on the way for inflation


thankyou

robots


----------



## Kimosabi (17 February 2008)

robots said:


> hello,
> 
> I am on the same gig as you NC, save save and save
> 
> ...



What are you saving for Robots, any smart Real Estate Investor should be leveraging themselves to the hilt...


----------



## robots (17 February 2008)

hello,

I just like to save for an easier life

thankyou

robots


----------



## numbercruncher (17 February 2008)

I've got this feeling this thread is going to Jinx property bulls ! Just as the other seemingly Jinxed property bears ....




> *Have the distressed property auctions started*?
> 
> Thursday, 14 February 2008
> James Frost
> ...




http://www.smartcompany.com.au/Free-Articles/The-Briefing/20080214-Have-the-distressed-property-auctions-started-.html

Seems like a bit of a rush for the door eh ? Bet they all plan to buy back in later at a sexy discount


----------



## chatty (17 February 2008)

numbercruncher said:


> Anyone see anything unsustainable in this equation ?
> 
> 
> 
> ...




I should have invested in the property in 1990.  340% up...not bad at all. good return on investment...really..

does anyone here bought investment properties in 1990 and still have it?


----------



## Temjin (18 February 2008)

Also scary when you see article like this on mainstream news.

http://www.news.com.au/business/money/story/0,25479,23228158-5013951,00.html

*What to do if you're about to lose your home*

That would scare the crap out of those who are struggling with their repayments. 



			
				chatty said:
			
		

> should have invested in the property in 1990. 340% up...not bad at all. good return on investment...really..
> 
> does anyone here bought investment properties in 1990 and still have it?




I'm sure almost every home owning baby boomers here and a number of Gen X ppls have got the bulk of the trend.


----------



## theasxgorilla (18 February 2008)

Tom Ronalds said:


> Germany is a totally valid example for the point I was making - i.e. *that urban planning and high population density do not necessarily equal massive house price rises*. Germany also has had relatively high rates of immigration over the past 15 or so years, so in my view it serves as a reasonable comparison.




Tom, thanks for responding to my previous post.  You raised some great points.

I agree with your statement (bolded).  The reality is that it depends on how it's done.  On the one hand your have disgusting high-rise social housing developments where all the immigrants to Germany get placed, and on the other you have the densest borough in terms of people per hectare in London, that being Kensington and Chelsea, which is at the other end of the desirability spectrum.

I think the 37,000 foot view of the situation is misleading.  Why would you care about what prices do in the former area if you only plan to invest/live in the latter?

ASX.G


----------



## theasxgorilla (18 February 2008)

Tom Ronalds said:


> Ireland had received massive amounts of EU subsidies, but they also significantly freed up their economy and reduced taxes.




Sounds familiar.  Tick the box for a freed up economy and reduced taxes.  Only our equivalent of the subsidies have instead been increasing demand and record commodity prices.  Remember, Australia did okay during 'dotcom'.  We got progressively wealthy as an acillary beneficiary, but our economy didn't really come into it's own until commodities turned.  The Irish, on the other hand, turned their sails to the wind, so to speak, with regards to 'dotcom' and 'biotech', and have been great beneficiaries of this.

Granted the outcome in Australia has not been as extreme as in Ireland, which might explain why the robo-Paddies can emigrate to Australia and still pick up better property for less than it costs for a shoebox in traffic congested Dublin.



Tom Ronalds said:


> The Irish housing bubble is pretty much over now; it's just a matter of how quickly it will deflate. A bit like next door in Britain.




Is that a crystal ball you hold?    Shouldn't that read, *the Irish housing bubble appears to be be pretty much over, FOR NOW*?



Tom Ronalds said:


> Besides, Ireland still retains quite a few places with a lot lower prices than Dublin, which is where the majority of the massive increases in house prices were located. Overall, it is nowhere near as unaffordable as Australia.




Once again, I don't understand why we would we talk about Irish property and purposely not focus on Dublin.  Why bother with analysis of their Hicksvilles?  Remember, this is still a country that many inhabitants would leave for somewhere warmer, and happier, and with a better standard of living in the blink of an eye.  Those areas are more affordable for a very good reason.  Compare this with Australia.  We're number 3 on the United Nations Human Development Index.  You still get more for less here.'

ASX.G


----------



## theasxgorilla (18 February 2008)

Temjin said:


> I'm sure almost every home owning baby boomers here and a number of Gen X ppls have got the bulk of the trend.




I think so too.  But once again, it's the thing called hindsight.  I'd be inclined to say that those of us (me) who were late Gen-Xers, but too early to be full Gen-Yers (thankfully) need to be more daring with our investments.  And more nimble too, since we don't know when the music will really stop.  Think: exit strategy.  And we may not be able to tell immediately that it's already stopped.  In which case if you are over-committed it could be be too late.

But to be fair to the boomers and earlier Gen-Xers, their investments during various stages of the cycle must have seemed quite daring.  Sure it would have felt good to know that property and interest rates were as cheap and low as they could reasonably expect to be.  It would still have felt risky knowing what the market had done the previous 4-5 years.  A recession fresh in people's memories, and the fallout of the 80's excesses and stock market crashes still lingering.

They did such a good job sweeping all that under the rug back then I'm confident that whatever happens these next couple of years they'll do their best to accomplish the same thing again.  Staying cocked and ready.

ASX.G


----------



## robots (18 February 2008)

hello,

this is from the Victorian Office for Housing (rental report)

*rents across melb up 12.7% in 12 mths

*inner melb up 13.3% to $340/wk

*nort-east melb up 13% in 12 mths

rents have a long way to go, and would comfortably say that every year now people are going to see these sort of rises

thankyou

robots


----------



## Birdster (18 February 2008)

robots said:


> hello,
> 
> this is from the Victorian Office for Housing (rental report)
> 
> ...




Where did you get this info from robots? The latest info on rental reports (I could find)is June q. '07 with much lower figures. 
link: http://hnb.dhs.vic.gov.au/ooh/ne5ni...570D500101BD60AE2EDFE1A3ADBF9CA25712300816307

I cant seem to find those figures you posted on the site anywhere.


----------



## xoa (18 February 2008)

Ouch.. 

Property prices in Melbourne have more than doubled in the past 5 years, but rents have only gone up 14.4%? No wonder rental yields are so abysmal.


----------



## tech/a (18 February 2008)

ASX



> need to be more daring with our investments. And more nimble too, since we don't know when the music will really stop. Think: exit strategy. And we may not be able to tell immediately that it's already stopped. In which case if you are over-committed it could be be too late.




Now your getting to the crux of it.

Most I'm afraid are linier in their outlook and understanding of property and investment in it.
Even the supposedly Financially savvy.

Like the stock market there are times to buy and hold and hold and hold and there are times to be creative---shorter term.
Property is no different.
NOW we have a severe shortage of rentals and high density *cheaper *units/apartments in closer to city locations and in some cities outer suburb employment based demand.

Developing even smaller complexes can see one with a low risk developement and positively geared result.

Build 4 sell 3 and keep the last either freehold or close to it.Positively geared with rent return and tax benifits.

Just one example,there are more.


----------



## numbercruncher (18 February 2008)

More evidence of how bad its getting, people plundering there super 

Madness destroying your super to pay for a house your probably going to lose anyway ..... If they cant afford it now they certainly cant afford it after the coming Interest rate rises !




> DESPERATE Australians are draining their super nest eggs to fend off mortgage foreclosures in record numbers.
> 
> As continuing interest rate rises squeeze cash-strapped mortgagees, more are dipping into their super to save their homes.
> 
> Super fund trustees are reporting a staggering rise in the number of people drawing on their compulsory retirement funds as rates soar.




http://www.news.com.au/business/money/story/0,25479,23228188-5013954,00.html

SO they blow there super and the taxpayers get to pay for their
 retirement via centrelink pensions, the cost of the property bubble is sure starting to stack up!

Banks are falling back in line price wise for their exposure to over inflated asset prices - will take them years and years to get back to previous highs


----------



## tech/a (18 February 2008)

Ive come to realise that posting on these sort of threads is a waste of keyboard strokes.

People will defend their view with whatever they can find.
Both for the positive and negative view of the topic.

If your happy doing what your doing just continue to do it.

*If your not involved in it I fail to see how hypothesis or theory/Quoting articles can be of benifit to you or anyone else.*

Like asking your heart surgoen how many surgeries he's performed and how he handles things when they go off the rails.

His reply would be based on many of the comments here.

"Well Ive read many news articles on the topic and watched RPA,but dont really want to get involved as I might stuff up"

If your involved in property and you make it a business no matter how small,you'll become good at it and do better than you could dream of.

If you dont then you'll also do very well at doing nothing.

*"Progress comes from the intelligent use of experience." *

Thats experience NOT theory.


----------



## numbercruncher (18 February 2008)

Your right people will always defend their view.

But average house prices are and always have been capped by that ultimate fundamental, credit , they cant rise further on average than peoples borrowing/repayment capacity.

You can argue all day that everyone needs shelter or everyone needs food etc, it doesnt mean they can or will start paying $100 for a hamburger.

With rising interest rates (in the absense of even bigger payrises) people simply cant borrow more than they did prior to the rate rises.

In this Globalised economy we are going to be effected by what goes on elsewhere, virtually every western economy has falling house prices, I see it as the ultimate and most timely warning.

Just look at the soaring amount of properties coming up for auction. Rising defaults. Banks share prices . Soaring Interest rates . etc etc.

Perth and NZ prices already stagnating and/or falling - I think Perth got like 1pc growth last year, thats a dead set massive loss when adding up the holding costs.


----------



## ROE (18 February 2008)

This is what I usually find.

Ask RE investor if house price will ever stand still or go down?
Ask a barber if you need a hair cut
Ask a bank if you need a loan
Ask stock analyst if you can lose money on blue chip
Ask a Car dealer if you need a new car

They should instead ask

ask a barber if you need a new car
a car dealer if you need a hair cut 
etc...

that should put thing in perspective.


----------



## Uncle Festivus (18 February 2008)

tech/a said:


> Ive come to realise that posting on these sort of threads is a waste of keyboard strokes.
> 
> People will defend their view with whatever they can find.
> Both for the positive and negative view of the topic.
> ...




Tech/a, I agree to an extent, as I was surprised to see this thread appear because I knew it would be the same old thing rehashed form previous threads, a classic flame. 

Several posters do in fact post (the latest) data, both for & against, to back their opinions so to this end it is there to be discussed in this forum/thread, because data is ever changing.

I guess the biggest gripe I have against the property perma bull's is the assumption that 'property always rises'. It is subject to cycles as is most things. Is this the top of the cycle?

Out of curiosity, what would it take for you to change your view that the _general_ property cycle in Australia has turned or peaked? ie what would make you _sell_?


----------



## Temjin (18 February 2008)

tech/a said:


> Ive come to realise that posting on these sort of threads is a waste of keyboard strokes.
> 
> People will defend their view with whatever they can find.
> Both for the positive and negative view of the topic.




I agree as well.

This is why I admire Tom Ronald for coming into this thread and attempt to present his view in an unbiased way. Presenting facts on the current economic and real estate market situation should be encouraged at every way.

However, attempting to change one's view on a particular topic is usually futile because you can almost guarantee that person have a vested interest in maintaining their view and defend against all criticism / opposing ideas. (i.e. investment in properties) It's human nature.



> If your happy doing what your doing just continue to do it.
> 
> *If your not involved in it I fail to see how hypothesis or theory/Quoting articles can be of benifit to you or anyone else.*




Agree, if you are fine with the real estate and already have a sizeable portfolio, then go ahead and continue to ride the trend. It is just not my cup of tea at the moment given the huge capital investment and how dangerously leveraged it has to be in comparsion to my existing net worth. 

I am fine with my other ventures that I preceived to be of less risk and more rewarding, at least for now!  


To Tom Ronald,

We are all thankful for your participation in this thread. Your efforts in presenting the facts will definitely be useful for future references. I am sure that someone would seriously consider the information / argument you have given and re-evaluate their investment portfolio as a result of it. I admire your knowledge so far in this particular topic.  These are definitely contrarian thinkings and I have almost always failed to persuade anyone (who already own a home/investment property) to agree otherwise.  

I will be sending a PM to you for some personal advises soon.  

Cheers


----------



## Temjin (18 February 2008)

Uncle Festivus said:


> Out of curiosity, what would it take for you to change your view that the _general_ property cycle in Australia has turned or peaked? ie what would make you _sell_?




I would question it another way.

Does it matter for YOU personally if he changes his view on the current general property cycle in Australia? 

Sometime it's better to think this way because it would mean less flustration when someone has an opposite view. This become more prevalent when you start to think more contrarily. (i.e. the general Australian public still believe the property cycle in Australia has not turned and will continue trending up indefinitely)


----------



## wayneL (18 February 2008)

Temjin said:


> I agree as well.




Me too. 

The setup is in place, it's now a matter of observing how it plays out and taking investment decisions according to how we individually see it.

However, we shouldn't underestimate the amusement value of bickering about it all.  No sense spitting the dummy because others see things differently.


----------



## Kimosabi (18 February 2008)

Temjin said:


> Your efforts in presenting the facts will definitely be useful for future references.



pppfffftttt,

There is no place in this debate for the presentation of facts, logic or clear, concise arguments.

Thankyou


Kimosabibots

ps, I need Property Volumes data, low volumes is the trigger for the bust...


----------



## tech/a (18 February 2008)

> Out of curiosity, what would it take for you to change your view that the general property cycle in Australia has turned or peaked? ie what would make you sell?




I'll answer specifically in a moment.

Firstly Economic data is current long enough to be proven correct or Incorrect.
Just as a economic data can be right longer than you can stay liquid if at times buying on valuation (In the stock market).

Its the Broad Brushing of not only the arguement but the questionable accuracy of all articles and tables presented.(Median Averages can be misleading---particularly if small data pools are used). I doubt anyone could argue that this can be debated from both sides probably successfully by both.

Specifically answering your question.
of 11 IPS I now hold 7.
Why did I sell 4---Gearing. Of the 7----3 are Freehold the others + geared.
My requirement (personal) to limit risk exposure has as it turns out cost me in real terms around $300,000 on what I would have recieved if I had sold now.
Thats an awful lot of interest I could have paid back.---I'm far from perfect!

The point I'm attempting un successfully to make is that regardless of economic circumstance you can find opportunity.

Dont disregard risk but embrace it when doing your own personal numbers.

I agree not all will be able to take advantage of these opportunities as their risk parameters will be too great.This may in the future change---I never thought it would in the late 80s when I saw my world fall to a card board box---(so to speak).

I'm saying to those people who arent in a position to take advantage of opportunity to be aware that although it seems impossible now---one day it will present it self as either
(1) Your circumstances change
OR
(2) Economic Circumstances cange
OR The most likely
(3) Both change.

Dont become frozen by fear!
Dont be baffled by experts who have no practical experience (I'm not pointing at TOM here!).
Dare to be an individual.
Take care of Risk and you can do anything---Business /Property/Trading.




> I need Property Volumes data, low volumes is the trigger for the bust...




How true that is!


----------



## Tysonboss1 (18 February 2008)

ROE said:


> This is what I usually find.
> 
> Ask RE investor if house price will ever stand still or go down?
> .




I would say that if a person doesn't believe that property prices can fluctuate and down trend from time to time then they are not a true property investor,...

Most people that own realestate are property "buyers" who fool them selves into thinking they are Property "Investors".


----------



## Tysonboss1 (18 February 2008)

Kimosabi said:


> pppfffftttt




was that a fart,...?


----------



## Kimosabi (18 February 2008)

Tysonboss1 said:


> was that a fart,...?



It can be whatever you want it to be...


----------



## theasxgorilla (18 February 2008)

Uncle Festivus said:


> Out of curiosity, what would it take for you to change your view that the _general_ property cycle in Australia has turned or peaked? ie what would make you _sell_?




Changes to the economic fabric which suggest a prolonged rise in unemployment.  While everyone is so gainfully employed they'll keep borrowing and struggling to repay. Property will remain safe as, well, houses. :

ASX.


----------



## GreatPig (18 February 2008)

theasxgorilla said:


> Property will remain safe as, well, houses



Just like these ones you mean? :

GP


----------



## robots (18 February 2008)

hello,

actually Tom R has written the same old same old from the socialist crew, Tom R admitted that he has missed out on 400k since selling his place and isnt happy about it

"oh rents cant rise and rise, values cant rise, people cant earn more money etc",

I fine many who comment are those who have simply missed out and begrudge anybody else who is making $, the seachangers especially

and when someone on the forum tells everyone they have a million dollar share portfolio or killed it with a 50% profit on XYZ its like "well done brother"

but if its on property you get popped,

thankyou

robots


----------



## ROE (18 February 2008)

robots said:


> hello,
> 
> actually Tom R has written the same old same old from the socialist crew, Tom R admitted that he has missed out on 400k since selling his place and isnt happy about it
> 
> ...




You on  a stock forum aren't you  .....people here are stock bias for whatever reasons.. maybe you can find sympathy on Property forums.
I usually don't care if someone  make money in property or shares.. I generally express views if something I think is over price. 

I dont understand Why bother arguing ? everyone has their investment objectives, it's better throw around ideas rather than arguing RE is better or shares is better, or this that never go down in price....I found it pointless.

why dont we close this sort of thread and move on


----------



## Kimosabi (18 February 2008)

ROE said:


> I dont understand Why bother arguing ? everyone has their investment objectives, it's better throw around ideas rather than arguing RE is better or shares is better, or this that never go down in price....I found it pointless.
> 
> why dont we close this sort of thread and move on



Why, it's so much fun.

I hope everyone realises that eventually the Bears will be proven Right, Just as the Bulls will eventually proven right as well, it all depends where we are in the Privately Owned, Central Bankers cycle...


----------



## robots (18 February 2008)

hello, 

yeah but why get stuck into people because they make money with property, oviously it annoys people,

you get labelled perma-bull, spruiker, real estate agent for only holding a bit of property and making some $,

I hold shares and have missed out on $ by not being in the resources (except for some LGL) but dont carry on like everything has to crash

thankyou

robots


----------



## explod (18 February 2008)

Kimosabi said:


> Why, it's so much fun.
> 
> I hope everyone realises that eventually the Bears will be proven Right, Just as the Bulls will eventually proven right as well, it all depends where we are in the Privately Owned, Central Bankers cycle...




Of course we all want to be right but it does not happen.

Aussie Stock Forums is basically about investing, full stop.    That is my only real interest in it also, fun well taking the mickey out of those that wear their hearts on a sleave can be akin to pulling wings off flys.

I have no overall preferences between investment vehicles but I do have preference to vehicles in thier time on the financial cycle.  It is best to be on the horse that is in front.   We cant' do that at the races but we can do that with investments and those that do are the winners.

Property has been fantastic since I started in it in 1968.  Resources,Banks..etc(what about the run up for CBA) all have had their sunshine.    At the moment for me I see incredible financial problems around the globe and with its onset noticed a few years ago that gold looked like the best vehicle.   Since 2001 it has come from US$260 to 900 an ounce and on an inflation adjusted basis compared to the 1980 spike should be over 2000. 

I will be back to property again when it looks to be the best vehicle.   So rather than be concerned about individual preferences lets just be focused on the facts for good investments.


----------



## robots (18 February 2008)

hello,

explod, great of you to bring up gold,

look at the thread about gold and you will get nothing but encouragement for all on when to buy/sell or whatever else, pats on the back all round

but oh no, not the property thread's

so begs the question why the angst?

thankyou

robots


----------



## wayneL (18 February 2008)

robots said:


> hello,
> 
> yeah but why get stuck into people because they make money with property, oviously it annoys people,
> 
> ...



This sort of argument along with incessant ramping is total nonsense. Ludicrous straw man arguments. Trolling really.


explod said:


> Of course we all want to be right but it does not happen.
> 
> Aussie Stock Forums is basically about investing, full stop.    That is my only real interest in it also, fun well taking the mickey out of those that wear their hearts on a sleave can be akin to pulling wings off flys.
> 
> ...



On the other hand, this sort of argument makes for interesting discussion. Something someone can read, take away the points and use to make a decision, one way or the other.

Let's keep it at this level, bull, bear, or somewhere in the middle.


----------



## robots (18 February 2008)

hello,

 i am just the messenger

thankyou

robots


----------



## moses (19 February 2008)

Well I'm interested in the discussion because I like to see the sentiment. 

As it happens I've got to decide now whether to sell an approved but as yet undeveloped rural-residential subdivision to reduce my debts, or hang on for grim death and follow it through for a greater profit in the end. I don't want a fire sale, nor do I want to wait 5 years before selling.

I remember 20 years ago when interest rates and house prices were skyrocketing there was a move out to the country for cheaper housing; people found that they could sell their property in Sydney with sufficient profit to buy in the country and be completely free of debt. Needless to say prices rose dramatically in the country as a result, albeit from a low base.

A chap I know made his fortune by buying cheap country dumps; for a while we all thought he was mad, but then things changed and in the space of a year and a coat of paint they pretty well doubled in price. As Tech/A says, the important thing seems to be to DO SOMETHING as doing nothing ensures nothing happens.


----------



## MRC & Co (19 February 2008)

Unfortunately I think property investments are a thing of the past and have been touting this for a while now.

Wasnt there a change recently in laws making it harder for superannuation to be invested in property?

Just looking at the very basics here, income/house price ratios are just rediculous, no other words to describe it.  

The Government, both Federal and State are writing policy to slowly bring these two back together without causing political controversy with a fall in nominal house prices.  Therefore, decrease real house prices, bring back income/house price ratios towards historical averages and try not to loose votes while doing it.  

Easier said than done, but the writing looks on the wall.


----------



## moses (19 February 2008)

To my mind the main factor popping the property bubble was the lifting of the tax threshholds, which wiped out the zero cost of investing for most mum and dad investors. Clever move really; politically popular to cut tax, and pop the bubble at the same time without anyone noticing.

Which is probably why I've stopped buying rental properties and am looking more for development opportunities.


----------



## tech/a (19 February 2008)

> Wasnt there a change recently in laws making it harder for superannuation to be invested in property?




The exact opposite is the case.



> Which is probably why I've stopped buying rental properties and am looking more for development opportunities.




Good idea,you can of course have both keep one freehold or near to it creating a passive income.


----------



## theasxgorilla (19 February 2008)

moses said:


> To my mind the main factor popping the property bubble was the lifting of the tax threshholds, which wiped out the zero cost of investing for most mum and dad investors. Clever move really; politically popular to cut tax, and pop the bubble at the same time without anyone noticing.




It was a smart move.  And owner occupiers moved in, with their increased levels of disposible income to bouy and eventually bring further breakouts in prices.  Rental stocks were reduced as many investors who miss-timed the market peak in '02 sold into this strength, thinking it was a sucker rally, but it wasn't.  And now between higher prices, higher interest rates, and higher inflation many are much nearer their tap-out point than they were 12 months ago.

ASX.G


----------



## robots (19 February 2008)

hello,

yes yes, great day today in melbourne 34 degree's

saw a couple of boards up as i pedalled around the streets all is looking rosy still even with the credit crunch hysteria in full swing

people will be attracted to the "genuine" yield as life rolls on

anybody know what has happened to Tom R as havent heard from him for a few days now

thankyou

robots


----------



## explod (19 February 2008)

robots said:


> hello,
> 
> yes yes, great day today in melbourne 34 degree's
> 
> ...




Tom has probably got tired of trying to discuss a subject with someone who is entirely inflexible.   

The Aussie Stock Forums in my view is about testing many and varied ideas on investing.   Solid investing is about identifying what is the safest, best and highest yield and growth available.   

There have been some good gains in property over the last few years and in some places some spectacular gains.    Those of us who want to stay ahead of the pack could not care less about the figures of the last year or two, we want to know where it is all heading right now, today.   And you know what, apart from a few isolated  areas, property is on the nose, it is going down.

Robots.. I would like you to give me some provable figures on a state wide (state for state basis) of sales in the last few weeks that say otherwise. 

I would also like to hear from you the economic (not the sentimental) reason why property is a good investment at the moment.


----------



## robots (19 February 2008)

hello,

always like these exercises from you explod,

but explod if you read my posts you will notice I totally "admit to not knowing" what is going to happen in the future,

and this has been my stance for a long time,

i have just presented the facts from my time going to auctions in the inner bayside area's for over 18mths and even this coming weekend,

multiple bidders, higher prices being achieved

and no RE is not on the nose, far from it

i am not sure what you mean by "economic reason for property to be good investment"

thankyou

robots


----------



## BSD (19 February 2008)

Any word on how the 1000 auctions in Melbourne went over the weekend?

Only 50% more than normal. 


Buyers shrugging off the expectation of 100bps rise in rates I assume?


----------



## robots (19 February 2008)

hello,

yes enormous no. coming up in next few weeks

i think the clearance rates will stay around 72-73%,

last weekend was 73% on about 500 auctions,

there is a lot of "stock" to choose from and a bit of cat and mouse will go on on auction day probably,

a couple on "average" wage and reasonable deposit will still be in the market

the wanted RE will get snapped up

thankyou

robots


----------



## numbercruncher (19 February 2008)

robots said:


> i am not sure what you mean by "economic reason for property to be good investment"





Pffft ....


Demand exceeding supply, running out of land, massive immigration, rising wages, falling interest rates, growing exports, easily available credit, booming world economy etc etc etc !


----------



## tech/a (19 February 2008)

> I would also like to hear from you the economic (not the sentimental) reason why property is a good investment at the moment.




People are just reading and applying what they wish to-----relative to their view.
Evidence abounds for very real opportunities for those seriously involved in creative business in R/E.
Most here look at Property like they do the stock market.Longterm buy and hold.


----------



## Tom Ronalds (19 February 2008)

theasxgorilla said:


> Once again, I don't understand why we would we talk about Irish property and purposely not focus on Dublin.  Why bother with analysis of their Hicksvilles?  Remember, this is still a country that many inhabitants would leave for somewhere warmer, and happier, and with a better standard of living in the blink of an eye.  Those areas are more affordable for a very good reason.  Compare this with Australia.  We're number 3 on the United Nations Human Development Index.  You still get more for less here.'




The answer to your question is fairly simple: There really are hardly any areas in Australia (outside of some truly outback places) where prices can be classed as low.

The other weekend I want mountain bike riding in Irvinebank, which is a ghost of a mining town about 50 kilometres - partly on dirt road - from Atherton in the Tablelands above Cairns.

Irvinebank used to be a thriving tin mining community early in the 20th century. Now there is just a little pub there and the population is about 30 people. 

I saw a property for sale there - an old Queenslander-type house, from the sight of it uninhabitable, on a 900 square meter block. Incidentally, some hours later, I saw it in a real estate agent's window in Herberton, the closest town of any size about 30 km away. The asking price was $365,000!

If these kind of prices are being asked for properties at the back of Woop-Woop, you may be getting the idea of why the nationwide median house price here is way into the stratosphere, and a lot higher than the one in Ireland.


----------



## robots (19 February 2008)

hello,

great of you to highlight those items NC,

i think they are all irrelevant

thankyou

robots


----------



## wayneL (19 February 2008)

tech/a said:


> People are just reading and applying what they wish to-----relative to their view.
> Evidence abounds for very real opportunities for those seriously involved in creative business in R/E.
> Most here look at Property like they do the stock market.Longterm buy and hold.



Exactly as most people should. Imagine if every investor became a developer?

The truth is, not many have the desire, time, skills or contacts to be a property developer. You get paid well because not everybody can, or wants do it.

I can tell you that I would rather stick needles in my eyes.

But I can make money in something else that you can't.  Therefore, it's buy (at the right price) and hold for me.

Ain't nuttin' wrong with that and the time for that will return at some point.


----------



## Tom Ronalds (19 February 2008)

Temjin said:


> I agree as well.
> 
> This is why I admire Tom Ronald for coming into this thread and attempt to present his view in an unbiased way. Presenting facts on the current economic and real estate market situation should be encouraged at every way.




Thank you. I certainly do not expect to change anyone's mind and I have no personal barrow to push on this. When I saw the topic title while accidentally stumbling across ASF, I couldn't resist - had to register and put forward some of my first-hand experiences I hear from people I deal with every day.



> To Tom Ronald,
> 
> We are all thankful for your participation in this thread. Your efforts in presenting the facts will definitely be useful for future references. I am sure that someone would seriously consider the information / argument you have given and re-evaluate their investment portfolio as a result of it. I admire your knowledge so far in this particular topic.




As I said - I work in the financial services industry. I'm not here in any official capacity - which is not allowed anyway - and I definitely am not here to in some way solicit business.

But there is so much disinformation out there, particularly when it comes to property, it's frightening. If some basic facts can at least make people a little more careful before they commit to what generally amounts to a very major investment, then I'm happy.

Cheers,

Tom R.


----------



## tech/a (19 February 2008)

Wayne.

Plenty under $300k here.

http://www.myhome.com.au/buy/sa/ade...93:6wPgodB6B3YAABrBgL0AAAAH:20080219095844#/1

Suburb over from me.
40 mins from the city.
Within 500 meters of the beach.
Dont tell me these are stupid prices!
Bloody bargains no wonder those in WA and NSW are buying up here!

Where have you bloody well been!

*OH look under Seaford*

Check out the 5 bedroom (Last one on the list) Backs on to Esplanade and is $325K!!!!!!!


----------



## Tom Ronalds (19 February 2008)

robots said:


> hello,
> 
> actually Tom R has written the same old same old from the socialist crew, Tom R admitted that he has missed out on 400k since selling his place and isnt happy about it
> 
> ...




Robots, you are giving me the idea that you may be the local troll!

Very few people would call me  a socialist on the basis of putting forward what essentially amounts to fundamental analysis of the residential property market and the broader economy - just because this analysis is currently fairly bearish!

I am also quite amazed how you concluded that I would be unhappy about what I "could have" obtained from the sale of my house had I hang on to it till now. Outside of the fact that only a moron can somehow feel smug over his intellectual superiority if this is demonstrated only with the benefit of hindsight, I don't recall that I mentioned anything about what I may have done with that $400,000, and whether it perhaps may have returned a better result than hanging onto that particular property.

You come across like a person who may well be up for some fairly hard lessons in the recession that we will inevitably have sooner or later.

Tom R


----------



## wayneL (19 February 2008)

tech/a said:


> Wayne.
> 
> Plenty under $300k here.
> 
> ...




Yeah but it means going to South Australia. 


I like English property... yields are better (generally).


----------



## tech/a (19 February 2008)

Wayne thats 150,000 quid what can you get say within 40klms of a reasonable size city there say 1million people for that money?


----------



## MRC & Co (19 February 2008)

tech/a said:


> Wayne.
> 
> Plenty under $300k here.
> 
> ...




Yeh, I think Adelaide is the next property boom City!  About the only one left (other than perhaps Tasmania, but who wasnts to live there)!

I actually like Adelaide, only been there once for a week, but I enjoyed the atmosphere and the City!


----------



## wayneL (19 February 2008)

tech/a said:


> Wayne thats 150,000 quid what can you get say within 40klms of a reasonable size city there say 1million people for that money?




Not much, but what's there will yield much higher.


----------



## Tom Ronalds (19 February 2008)

MRC & Co said:


> Yeh, I think Adelaide is the next property boom City!  About the only one left (other than perhaps Tasmania, but who wasnts to live there)!
> 
> I actually like Adelaide, only been there once for a week, but I enjoyed the atmosphere and the City!





Adelaide is also now classed as "severely unaffordable" on the backdrop of essentially no population increase.

Prices have been inflated by speculation and not much else. Whether it will be a "boom" city from now is something I would not want to bet on.

Tom R


----------



## robots (19 February 2008)

hello,

i remember you commented that the house you sold in 2001 had since doubled in value to 800 big ones, and you didnt like that,

all ears, but the 400k into 800k in 6yrs (lets say end of 07) is a fairly hassle free return and guess what CAPITAL GAINS TAX free if PPOR

maybe we can have a royal commision into fees and commisions on other investments while hammering property

thankyou

robots


----------



## wayneL (19 February 2008)

tech/a said:


> Wayne thats 150,000 quid what can you get say within 40klms of a reasonable size city there say 1million people for that money?



Here's one for 150 http://www.rightmove.co.uk/viewdetails-9909702.rsp?pa_n=2&tr_t=buy
Here's one for 160 http://www.rightmove.co.uk/viewdetails-16782085.rsp?pa_n=2&tr_t=buy


----------



## Tom Ronalds (19 February 2008)

robots said:


> hello,
> 
> i remember you commented that the house you sold in 2001 had since doubled in value to 800 big ones, and you didnt like that,




You're a bit lazy, aren't you? You just needed to go back to post number 67, where it clearly says I sold that place in 2004, not 2001.

You'd then also find that I didn't say anything about liking it or not; I just said the current estimated value is not reasonable for that property.



> all ears, but the 400k into 800k in 6yrs (lets say end of 07) is a fairly hassle free return and guess what CAPITAL GAINS TAX free if PPOR




Perhaps you misunderstood my comments above concerning the benefit of hindsight?

It is quite possible that in 3 years' time, the current owner, having been kicked out by the bank and the place sold for $600,000, may be saying "...gee, I wish I had sold in 2008...!"



> maybe we can have a royal commision into fees and commisions on other investments while hammering property
> 
> thankyou
> 
> robots




You mean into the fraudulent activities of the real estate industry, and the major con that is the property auction system? 

I agree wholeheartedly. Bring it on!

I recall that Melbourne is the auction capital of Australia - that really is a title the city can be proud of!

Tom R


----------



## Temjin (19 February 2008)

I think it would be better just to ignore him and spend our time elsewhere instead of confronting with a robotic troll who have no appreciation for any sensible discussion here.

Let him continue with what he is doing right now. Fate will decide his ignorance, lack of maturity and closed mindness one day.



			
				 Tom Ronalds said:
			
		

> But there is so much disinformation out there, particularly when it comes to property, it's frightening......................
> 
> When I saw the topic title while accidentally stumbling across ASF, I couldn't resist - had to register and put forward some of my first-hand experiences I hear from people I deal with every day.




Don't worry, I believe alot of us have tried it and the end result would ensure the thread be degenerated into a flaming battle of personal attacks (sometime) and emotional defences (always).  Having come across this personally in real life many times, especially at work and with friends, I have learnt to keep my mouth shut and refrain from heating up the topic ever again. 

Just to change one's mental belief that property DO NOT ALWAYS NECESSARY RISE is extremely difficult, especially at a time like this. 

You are doing a great job though. haha


----------



## robots (20 February 2008)

hello,

I guess thats even more frustrating when you sold for 400k in 04 only to see the place go to 800k in 07 (lets say the end of 07),

400k to 800k in 3 yrs, WOW, and all capital gains tax free,

you would of got that just for walking through the front door,

i dont mind copping a bit of flack if it helps to release a bit of tension, 

ask again, why all the angst towards property owners?

thankyou

robots


----------



## tech/a (20 February 2008)

> Adelaide is also now classed as "severely unaffordable" on the backdrop of essentially no population increase.
> 
> Prices have been inflated by speculation and not much else. Whether it will be a "boom" city from now is something I would not want to bet on.




I love this.

I'm in the industry here.
We deal with the 5 biggest home builders in Adelaide.
We also deal with the 3 biggest Civil Works companies here.
This is a laughable comment---you read to much un informed crap.



> "severely unaffordable" on the backdrop of essentially no population increase.




We are working in 4 major sub divisions now the most mature with 2000 new homes all sold.
As we are in Civil works we are also on 1 which is 50% sold and another 2 under construction.
Infrasructure in these areas are going ahead at massive rates.
Builders cant get enough land! They have teams looking for and purchasing land.
All bought by investors---hahaha.----no demand--love it.
People CAMP on blocks and often a week before a land release.

Rather than sit up and get Pizzed on in FNQ why not buy a couple of properties in the land of the sun and be a few $100K richer in a few years time?

Nah didnt think so fear got ya.


----------



## theasxgorilla (20 February 2008)

robots said:


> ask again, why all the angst towards property owners?




The answer to that question is as plain as day to me.  Not many people I know grew up dreaming of becoming property investors.  Astronauts or racing drivers or princesses, but not property investors.  Find a soul mate, get married, go on a honey moon somewhere exotic, come home, buying a house with a yard, build a career or perhaps a business and raise a family.

Many people who grew up assuming that they could have a version of what their parents had, and what their parents parents also had, reached the "buying a house with a yard" stage and found that their ideal property had been chased away from their affordability point by greedy property investors.  And the yard had been shrunk, if not completely replaced by a unit/flat, thanks again to the investors.

Ordinarily, as we've jousted over on this thread and in other parts of the forum, the boom/bust cycle would end up serving those scrupulous, risk taking property investors right.  But alas in this most recent incarnation of said cycle,  in many, many parts of the country it has not.

People are right peeved because they blame property investors for greedily chasing their hopes for the future outside comfortable reach.  I can admit that that sucks, but at the same time I reckon a lot of the people with a gripe about affordability have a vested interest in seeing property crash so they can satisfy their own investment agendas, rather than any social conscience they pretend to have.

ASX.G


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## tech/a (20 February 2008)

> been chased away from their affordability point by greedy property investors.




What a complete load of absolute rubbish. You and those like you read what you want to read.Believe what you want to and dfo basically bugger all.

Truth is 90% of the population stood back and watched ---take a look at the "House Prices to Crash thread" Still watching still frozen by fear still looking at the worst not investing in the best.

So I suppose those nasty business owners who open up Bunnings in your neighbourhood and drive out the small guy are greedy greedy people.
Employing 1000s.

This sort of narrow minded rubbish leads to a breed of complaining whinging weaklings---not INNOVATORS.

I and others like me are securing OUR financial future.
Even with my holdings I read that to retire at 55 and live for the next 30 years I may not have enough.
Go secure yours and stop whinging.




> ask again, why all the angst towards property owners?




Here's why.
They sat back watched and now in hindsite missed the biggest opportunity to become wealthier that they will possibly see in their lifetime.
If it does chances are they'll miss that to.

*"Talks as expensive as it is cheap"*
JR 2008


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## Bill M (20 February 2008)

There was an old man with a long beard standing at the Real Estates Office window every day looking at the house prices on the board. A guy walking past says to his his friend "what is he doing there everyday"? His friend answered "He's been doing that for years, he's waiting for the house prices to come down." 

In this country house prices will always go up in the long run, might stagnate for a while but in the long run they will always go up.


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## theasxgorilla (20 February 2008)

tech/a said:


> Truth is 90% of the population stood back and watched ---take a look at the "House Prices to Crash thread" Still watching still frozen by fear still looking at the worst not investing in the best.




90% of the population, or some similarly large unknown proportion, have not even participated in this boom.  Some people bought before the boom and still haven't sold...some bought during the boom, and still haven't sold...and some might have bought and sold during the boom and bought back into the same market for a net effect of, yep you guessed it, not much.  These are just people who see property as a place to live.

Fear, schmeeeer.  The philosophical question...the societal question, is should those people need to, have to, be reluctantly dragged kicking and screaming into giving a **** about real estate booms and busts?  

You seem more preoccupied with rallying everyone to go out and take chances.  Realise this, there are a lot of second and third rate 'property investors' out there who have been rewarded for taking a risk, nothing more.  I think that gets under a lot of people's skin.

ASX.G


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## theasxgorilla (20 February 2008)

tech/a said:


> This sort of narrow minded rubbish leads to a breed of complaining whinging weaklings---not INNOVATORS.




Tech, I think you'll find that *narrow mindedness relates to not being able to see things from another point of view.*


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## tech/a (20 February 2008)

> Tech, I think you'll find that narrow mindedness relates to not being able to see things from another point of view




I can see others points of view---dont have to agree with them.

Why do you think people visit threads like this?
Why do they visit threads on How to better their trading?

How much benifit do they get from negative,non productive rubbish that serves only one purpose and thats to make the writer feel more comfortable in that they are not alone in their frustration of treading water at best and slipping further behind at worst!

I and people like me push past the road blocks and fear and give up *PRACTICAL* experienced opinion----with suggestions of mitigating risk-- in the hope that some of OUR success will help others find *THEIR* success. 

The response we get is "A" typical of the majority of Aussi society.
Success isnt seen as something to aspire to or search and find its seen as an opportunity to get involved in our favorite pastime---"Tall Poppy Syndrome!"

How many took part in the biggest Bull market seen in our time?
Yet in 2000 I posted and a few others like Jose Silva,Stevo,methods which caught the lot---and in public!

All you hear about is the "Tech Bust" yeh well how about those who made a motza being involved.I've told the story of the young guy how did the Securities Institute T/A course with me who bought DVT for 6c and eventually sold for $3.73---bought a house cash in Sydney.
Bet that $370K house is worth near to 800K now!

We live in a capitalist society.
*GET* with the programme.



> The philosophical question...the societal question, is should those people need to, have to, be reluctantly dragged kicking and screaming into giving a **** about real estate booms and busts?




Of course not but dont berate me and others like me who choose not to be.
And or those who in the future search people like us out in the hope of bettering their lot through our experiences. 

If as much time was spent finding ways to capitalise on opportunity rather than on reasons why one *CAN'T* ther'ed be more joining our ranks than 
the ranks of the hopeless!

Anyone can be a bum look around there are 1000s of them.
Those that *WANT* to make something of life *WILL* find a way as we have.


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## xoa (20 February 2008)

tech/a said:


> What a complete load of absolute rubbish. You and those like you read what you want to read.Believe what you want to and dfo basically bugger all.




Don't you see that _theasxwarrior_ was essentially agreeing with you? It's stupid to blow your top at him. But your posts are more comprehensible than greedbot's, at least.

As for your "advice" to buy a property and watch it go up a few $100k in a few years - no thankyou. Australian property is already massively inflated - at 220% the American price level. Gambling on further asset inflation is a very risky affair. I'd rather go to the casino and bet on red, it's far more fun.


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## tech/a (20 February 2008)

> As for your "advice" to buy a property and watch it go up a few $100k in a few years - no thankyou.




Its not a broad brush statement.
I gave an example of how this will definately occur one suburb away from me.
Tell me where you can buy a $325K 4 bedroom home backing on to the Esplanade in an Australian Capital,30k's from the CBD?
If there isnt $100K in that deal plus positive cashflow with 20% down in 3 yrs I'll shout the beers!

When you go into the casino and place $325k on Red let me know I want to watch!



> Gambling on further asset inflation is a very risky affair.




*Dont gamble *just make a business decision.
There are very good ones STILL out there.


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## Broadside (20 February 2008)

I am not going to argue whether or not property prices will continue to soar.  But I do believe that when so much of our equity is tied up in unproductive assets like residential housing stock the nation will face big problems long term.  Instead of our meagre savings being put into research and innovation we are speculating on property.  Maybe the tax system needs to be looked at to encourage innovation and entrepreneurialism.


----------



## wayneL (20 February 2008)

I've never seen such a bunch of puke-worthy posts in my life. The suggestion that property speculation is the only path to a worthwhile life truly made me feel nauseous. Furthermore, to suggest that anyone NOT speculating in property is some sort of loser made me rush for the spew bucket.

FFS Get a grip. 

If this is typical of property investors, I'm selling my properties immediately before it happens to me.

Un-farking-believable!!


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## tech/a (20 February 2008)

> The suggestion that property speculation is *the only path *to a worthwhile life truly made me feel nauseous. Furthermore, to suggest that anyone *NOT *speculating in property *is some sort of loser *made me rush for the spew bucket.




Where'd you get that!!
How'd you read those statements into my posts?
Selective reading obviously.

Wayne your one of the biggest "Poppy Knockers".

Doesnt matter what I or others like me write--we or in particular I only have one agenda in your view and thats to pump our own tyres.

Perhaps I can make you puke a little more.

About 2 yrs ago large box appeared at my office from a guy called Andrew.
In it was A heap of goodies Wine,Cheese,Bicuits,Scotch,Chocolate and a book.There were 2 envelopes marked strangely enough (1) and (2).

(1) One had a card in which was written.
"Thanks for your inspiration and work on "Tech Trader' I was inspired to develope my own method around yours last year (2005) and placed my Super into the method I developed. I am delighted to say that I have increased my Super by 62%---so just a little thanks from me---
PS please open (2)."

(2) My starting Super capital was $750,000.

Thats $465,000.

Go puke some more.


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## xoa (20 February 2008)

tech/a said:


> Its not a broad brush statement.
> I gave an example of how this will definately occur one suburb away from me.
> Tell me where you can buy a $325K 4 bedroom home backing on to the Esplanade in an Australian Capital,30k's from the CBD?
> If there isnt $100K in that deal plus positive cashflow with 20% down in 3 yrs I'll shout the beers!
> ...




Well you're right, a casino has enough conscience to not let you gamble with that much money.

In today's market, when it seems that half of people aged over 40 are "property investors" prowling for acquisitions, I don't think there are many fantastic bargains. If a vendor wants to sell a house for $120k less than the national median, it most likely means there is a deficiency - structural problems, commercial jet flight path, bad neighborhood. Sure, the vendor could be an idiot, but most of them aren't. 

Whatever the condition of the house, $325k looks cheap in this bubble, but it's not cheap by international standards. Before the bubble, $325k would have bought you a prime house a stone's throw from parliament, not 30km out in the sticks.


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## tech/a (20 February 2008)

> Whatever the condition of the house, $325k looks cheap in this bubble, but it's not cheap by international standards. Before the bubble, $325k would have bought you a prime house a stone's throw from parliament, not 30km out in the sticks.




Opportunity my friend will stare you straight in the face and you wont recognise it!


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## wayneL (20 February 2008)

Tech,

Poppy knocker? Show me one place where I have ever criticized anyone for the mere fact of their success. A very weak and anti-intellectual straw man argument.

The subtlety (or not as the case may be) of my points are obviously completely lost on you. There is a monumental hypocrisy of complaining about accusations of greed (which is fair in itself), while at the same time accusing others of fearfulness.

Pump my own tyres??? Hah! Show one place where I have sought out kudos or told all and sundry about people showering me with their affections. Sorry, that's not my agenda.

Nice try, but no cigar.


----------



## Tom Ronalds (20 February 2008)

OK; I think it's time to butt out of this discussion. Some people seem to be getting rather emotional and that's always bad news.

Before I go, I'd just like to make a few parting comments - I guess to some extent for the benefit of tech/a, who seems to on the whole be a sensible bloke and clearly got pissed off when I said Adelaide was severely unaffordable without any population growth. Facts be damned, eh? -- Perhaps it's worthwhile to confirm again that it was not me who made this bit of information up...

Look, however you read into this, the truth is that prices across the board in this country are now quite ridiculous. To assume that even the property you can now buy for $325,00, as you say, will go up greatly over the next few years is quite unlikely to happen, given the world-wide storm that is gathering within the international financial system, and the inevitable fallout that will come out of that. 

This type of confident analysis reminds me of stock analysts, who until very recently confidently predicted that on the basis of yield and expected profits, companies like MFS and AFG were a steal at $4.50 and $8.00 respectively.

These fundamentals can change incredibly rapidly. I know that for some reason lots of people here are unwilling to look at the situation in US property, but that does not mean that a similar outcome here is out of the question. I repeat again: Australia has a higher personal debt per capita than the US and it also has a much more severe misalignment of housing prices with incomes than America ever had. This is a toxic mix in the environment that is now starting to unfold world-wide and you may be surprised how quickly the sentiment here may change.

The situation in the listed property sector is a case in point: Many projects in the States are now getting cancelled, as banks demand more security and higher interest rates. As one commercial property analyst from Macquarie Bank I spoke to last week said: "Who wants to build shopping centres in ghost towns?"

The massive downgrades of expected future earnings of most Australian LPTs that have been flowing through already should provide a warning to anyone who is sensible enough to take notice. The Macquarie analyst's advice was that after having knocked on the door of every single Australian-domiciled LPT and talked with management, the only "safe" allocation of my clients' money was either in the SPDR tracker fund, which is unlikely to go broke in case we get another one or two Centros, or, better still, to get out of this sector altogether; Macquarie-run LPTs inclusive.

I have said before that I have absolutely no barrow to push here and I do not intend to change anyone's mind. I manage tens of millions of dollars of clients' money and this is the advice I get from specialists in the field. I am also paid to take note of relevant economic developments, and based on those, I am bearish on property. 

Will I be proved correct? -- Who knows?

But one can only work with probabilities; this (predicting future market movements) is a very inexact science.

Many of you here, even those who have lived through past downturns, clearly believe in the classical fallacy that "this time it's different". Sure, astute property investors will always be able to find investments with reasonable fundamentals and with good future prospects. However, the property market works no different than the share market - the majority of investors are not very good at picking good properties, and when a general market crash occurs, prices will decline across the board; your property including.

When I see things like this:

http://tinyurl.com/36cfov

- a "transportable home on 588 square meter block in "scenic" Exmouth (WA) for $450K; or this:

http://tinyurl.com/2mvs9v

- a million-dollar bomb, presented as an "executive residence" in Port Hedland with "sea views"; or this:

http://tinyurl.com/33b5s9

- a nothing special-looking place in Broome for $839,000, which is being described as "an opportunity for you to secure a sensibly priced family home"....then I know something is way out of whack, and any sensible person would admit that.

Yes, I know that these places are in Western Australia, and yes, there is a mining boom on. But hey - what is there in Exmouth, Port Hedland or even Broome that justifies these prices?

What is there in Irvinebank (see my previous post) that justifies a price tag of $365K on a house you can't even live in?

Trades people in WA area can expect to earn on average about $70K p.a:

http://tinyurl.com/2c4pa6

Mining, oil and gas workers in WA can expect an average of $125,000:

http://tinyurl.com/28ok7u

Do these incomes justify calling an almost million-dollar property "a sensibly priced family home"? -- Even assuming a combined family income of $200K gross, this amounts to 4.5 times gross salary. More than one such salary is likely to be required to cover just the interest on a loan of $750,000-$800,000.

Can this property be rented out for $900-$1,000/week, to attain at least a 5% yield? -- What do you reckon?

What happens to these prices if the mining boom slows? 

The situation elsewhere is not greatly different. Salaries in SA for trades and services have been trending down in recent months and are now at around $66K:

http://tinyurl.com/26qpvy

Adelaide median house price in the third quarter of 2007 was $320,000; median household income was $49,000. Are properties like this good value?

http://tinyurl.com/2qln2h

Wow, a 3 bedroom home at Christies Beach, 25 km or thereabouts from the CBD, for around $350K (plus costs, which property "investors" tend to forget about including in their acquisition price!)

 -- The average Adelaide family will only need about 7 years worth of income to buy it; surely it will just skyrocket in value from here!

What can a place like that realistically rent for? -- Let's have a look:

http://tinyurl.com/2w9uvj

OK; so if we can get around $250, we'll be doing really well here! This translates to a princely net yield, after cost of rates etc, of maybe 3.5%, if we're lucky.

Man, on such metrics, this is a bargain! I can see the same place going up by 25% over the next 3 years...not!

Does this mean good value properties can't be found in Adelaide or elsewhere? -- Of course not; but most people will not be looking - they will instead fall for the "prices will keep going up" sales spiel of real estate agents and similar gurus.

Is my assessment above faulty, because I use "generalised" data? -- I don't think so; I am not aware of any other useful approaches to do this type of analysis. If you know of any, I'd be grateful if you share them.

I think I'll rest my case here and restate that my intention here has not been to offend anyone. All I ever wanted to do was to present the facts the way I see them. To many, this clearly is not a palatable option.

Cheers,

Tom R.


----------



## tech/a (20 February 2008)

wayneL said:


> Tech,
> 
> Poppy knocker? Show me one place where I have ever criticized anyone for the mere fact of their success. A very weak and anti-intellectual straw man argument.




My apologies I obviously mis read this


> I've never seen such a bunch of puke-worthy posts in my life.






> The subtlety (or not as the case may be) of my points are obviously completely lost on you. There is a monumental hypocrisy of complaining about accusations of greed (which is fair in itself), while at the same time accusing others of fearfulness.




Lost me there.Carrying on business is seen as greed--strange I think.
Fear---a common trait of those who dont understand business---any business.



> Pump my own tyres??? Hah! Show one place where I have sought out kudos or told all and sundry about people showering me with their affections. Sorry, that's not my agenda.




You wrent the subject 



> your view and thats to pump our own tyres.






> Nice try, but no cigar.




Hate cigars.


----------



## wayneL (20 February 2008)

tech/a said:


> My apologies I obviously mis read this
> 
> Lost me there.Carrying on business is seen as greed--strange I think.
> Fear---a common trait of those who dont understand business---any business.
> ...



Tech,

You have completely miscomprehended what I said and have the wrong end of the stick altogether, do you have a problem with English comprehension? 

Persisting with straw man argument after the exposure of such, I last saw in grade five. First time I've seen an adult try that one. LOL

As to the English language itself... wrent? WTF is that?


----------



## Tysonboss1 (20 February 2008)

Broadside said:


> I am not going to argue whether or not property prices will continue to soar.  But I do believe that when so much of our equity is tied up in unproductive assets like residential housing stock the nation will face big problems long term.  Instead of our meagre savings being put into research and innovation we are speculating on property.  Maybe the tax system needs to be looked at to encourage innovation and entrepreneurialism.




Well you see to maintain a decent quality of life there needs to be a steady rate of investment into housing,... so I can't see how it is an unproductive asset,.. If you took away the private developers and Investors I would hate to see the state of the housing market.


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## juddy (20 February 2008)

Agree with you Tech, I certainly think Adelaide is worth a look. Population looks to be increasing and they are making a concerted effort to boost it, advertising etc.

http://au.news.yahoo.com/080204/21/15q99.html
http://news.ninemsn.com.au/article.aspx?id=380926
http://www.theaustralian.news.com.au/story/0,25197,23152877-12377,00.html


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## gfresh (20 February 2008)

While I'd like to believe "house prices to keep rising for years" (owning part of a property myself) I just can't see it with bank variable interest rates at 11%. I think this is very likely in 2009 - seeing as we will receive at least two more this year.  

RBA believes inflationary pressures may continue into 2010, which means who knows - 12.xx% rates by then? These are the sorts of rates we haven't seen in nearly 20 years! and we are staring at least 2 more years of this. 

http://www.rba.gov.au/Statistics/cashrate_target.html

But how can the property bulls say this will not effect the demand equation of property at all. By all logic - how can it possibly not? Even the most bullish of property investors would have to be getting 15% capital returns to just about break even I would say. That's way above the average return even at the best of times. 

This is a severe credit crisis going, and the lines of Centro, Allco, and more are failing on over-leverage, and this is starting to spill over into consumer credit. Just as an example (thankfully there isn't much to go), but my personal loan is now up to 14.2% with the CBA - that's massive... how can all of this not effect the consumer at some point? Especially property investors, who are relying on low interest rates (no), high rental prices (yes, this may stay), and high capital growth (questionable if people can't afford). 

Yup, house prices may continue to go up, but unless it's more than 10%, these interest rates are just going to kill the whole idea that property is a great investment until things improve. The key variable, COST in the equation is ballooning larger and larger.


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## tech/a (20 February 2008)

Tom.

Firstly I know it wasnt you on the Adelaide statement Id read it elsewhere myself.

I dont disagree with you on many points your presenting.

But interested in your view of how better off do you or those you follow believe home buyers will in x? years time.
Will they ever be better off?
Will there ever be a time which is right to buy?
If so what in your view will be the signs.

Do you expect prices and wages to eventually return to say 4x ratio?

There will be crashing of prices I agree in the rediculous situations you mention.
Not so in those that are more "Realistic".
Will inflation be bought under control.
Back in the 80s housing dipped but didnt crash.
In the years to follow prices just took off again albeit years later.

Not all builders will go broke.
Not all investors or home owners will lose their shirts.


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## Broadside (20 February 2008)

Tysonboss1 said:


> Well you see to maintain a decent quality of life there needs to be a steady rate of investment into housing,... so I can't see how it is an unproductive asset,.. If you took away the private developers and Investors I would hate to see the state of the housing market.




I am not talking about owner occupiers.  Sure we need investment in property but there is far too much capital wasting in this sector, it won't add to our future earnings capacity as a nation, innovation will.  I can't blame investors for chasing the best returns, just saying the system is a little skewiff at the moment.


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## numbercruncher (20 February 2008)

Tom Ronalds said:


> OK; I think it's time to butt out of this discussion. Some people seem to be getting rather emotional and that's always bad news.




no no no.

Keep it coming! I think your scaring the permabulls, probably why they are on your case a bit


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## KIWIKARLOS (20 February 2008)

Broadside said:


> I am not talking about owner occupiers.  Sure we need investment in property but there is far too much capital wasting in this sector, it won't add to our future earnings capacity as a nation, innovation will.  I can't blame investors for chasing the best returns, just saying the system is a little skewiff at the moment.




It's not all wasted capital and property investment does inprove the productivity of our country. The biggest drain on productivity are these MC mansions at Kellyville, Rouse hill etc where the infrastructure required to service these places puts an unfair burden on everyone who subsidises the buggers. Right now massive property investments are going on in inner metro centres near major public transport infrastructure. North shore councils plan tens of thousands of dwellings along the northern rail line. Homebush has multiple multi multi million dollar developments, rhodes, south Sydney etc the list goes on.

As these places get built and populated the cost for services for everyone goes down because of sheer economies of scale. The rail network will get a massive boost in capital when more and more people start using the infrastructure. The main reason its so screwed now is because you simply can't make enough money transporting a few thousand people 50 kms by rails when with urban consolidation you can transport tens of thousands over 10 km. 

Undoubtedly average dwelling prices in these outer serive intensive and expensive areas will likely go down, prices in inner city area only upward. It's common sense the dense areas are becoming denser and the sparsley populated areas will continue to struggle to increase the pop as quick.

Look at the hoohar from NW sydney residents that have to pay $17 a Day ! in tolls just to get to the city and thats not even taking into account car costs. That would realistically equate to a $150-200 saving a week for someone who uses public transport in the inner burbs. I for one would rather put that $200 a week toward a closer place to the city and save myself probably two hours a day commuting as well.


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## Temjin (20 February 2008)

Broadside said:


> I am not talking about owner occupiers. Sure we need investment in property but there is far too much capital wasting in this sector, it won't add to our future earnings capacity as a nation, innovation will. I can't blame investors for chasing the best returns, just saying the system is a little skewiff at the moment.




I agree. Property by itself is not a value producing asset. The building itself is a depreciating asset and the land itself is just a pile of dirt for the non-value producing "asset" to be sat on.

Capital (i.e. CREDIT) should be better spent elsewhere and not on speculating land prices. Just imagine how our economy will do well if all these excess credit are spent on infrastructure, research and development, innovation and business growing. Of course, I do not mean that no one should invest in real estate properties, but it's way excessive right now. 

Of course, this is all a simplistic, naive and principle centered view. This is a captalist society and greed is the only way to "get ahead". As a Gen Y, I do have a vested interest in seeing the property values to go down in real term. It is clearly unaffordable to me right now and I have no interest in borrowing to become "financially impotent for a significant amoung of time" just to get on the property ladder and serve the "captialist" baby boomers at the same time. 

As for getting with the "programme" in a captialist society and to get ahead, I am definitely working my way in through other ventures. There is no need for me to play the property ponzi scheme. 

It is perfectly understandable to see those who own properties have a personal agenda to see the values of these assets continue to rise, regardless of the expenses to others or to the economy. Ride the trend as long as possible, but never assume it will last forever. 


P.S: Told everyone this thread will get too emotional.


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## KIWIKARLOS (20 February 2008)

In the US and UK not all prices are dropping there are pockets of severely effected areas and others where values are still rising or stagnate. Most of the places in the US that are taking the hits are Cali, Florida, Chicargo etc. In each of these places the local economies haven't been doing well lately and part of the drop can be directly attributed to worsening job prospects and pays in these area's. Metro New York city prices haven't drop much if anything at all. 

The aussie dream days of sparsley populated burbs driving 50 kms to work or more are built on days of cheap oil and energy which are loooong gone. For instance transport costs of goods would dramatically reduce if we were to consolidate our populations as would the stess and destruction of our precious little environment.


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## tech/a (20 February 2008)

I'm interested in what people actually believe will happen---the end result.

From what I can gather the scenario looks a little like this.

(1) A severe correction in housing prices say 30% in median values which in realterms could well mean very little in some areas and massive (over 50%) in others.

(2) A continuation in interest rate rises.10 even 12% not out of the question,making the affordability issue even worse.

(3) Severe downturn in housing demand due to spiralling costs.

(4) Increasing Un employment further exaserbating the situation.

(5) Stagnation as demand is met by supply as some investors sell properties no longer giving better returns than other investments.(Which will be??)

(6) Rent continues to increase as affordability remains the issue.

Pretty well all this occured in the 80s

Those that bought then and still hold now (Mainly single dwelling owners) wish they had 10
So in 2030 will the scene be any different to those who get through this?


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## xoa (20 February 2008)

KIWIKARLOS said:


> In the US and UK not all prices are dropping there are pockets of severely effected areas and others where values are still rising or stagnate. Most of the places in the US that are taking the hits are Cali, Florida, Chicargo etc. In each of these places the local economies haven't been doing well lately and part of the drop can be directly attributed to worsening job prospects and pays in these area's. Metro New York city prices haven't drop much if anything at all. .




It true that the bubble in the USA was confined to the rapidly growing cities of the sunbelt. Property prices in the north and midwest hardly increased at all during the bubble years, so there's no reason for them to drop. But our bubble effects almost every Australian suburb.


----------



## xoa (20 February 2008)

Tysonboss1 said:


> Well you see to maintain a decent quality of life there needs to be a steady rate of investment into housing,... so I can't see how it is an unproductive asset,.. If you took away the private developers and Investors I would hate to see the state of the housing market.




Very few "property investors" are developers. You shouldn't even use both terms in the same sentence. The vast majority of the "property investors" that have emerged in Australia are little more than property flippers. They buy existing properties (on credit) with the hope of selling for a profit later.

Developers who actually use their own money will still be profitable in the event of a severe correction, because construction costs are still low. Responsible developers in the USA are still making money, despite a 20% price slump. Only the highly leveraged developers are at risk.


----------



## xoa (20 February 2008)

Looks like the next interest rate rise will be 0.5%. 

http://www.news.com.au/story/0,23599,23244958-2,00.html

This morning I went to my BOQ branch to deposit $5000 into my websaver, and there was a middle aged blonde woman next to me trying to repay $70 (!) off her home loan. The poor teller advised her that the minimum repayment was $500 or something. I wonder if she's a "property investor" who's starting to feel the pressure of rising interest rates!


----------



## tech/a (20 February 2008)

> because construction costs are still low




Compared to when?

My latest was locked in in December at $1300/Squ meter.
Exactly the same now would be $1600./Square meter.

I just recieved my latest Indent Order Offer for Structural Steel.
Price rise for this Quarter +14% that is massive.

So add spiralling construction costs to the affordability crisis.
Inflation doesnt decrease prices only demand.


----------



## KIWIKARLOS (20 February 2008)

My prediction for future is

1. Outer suburb prices trend lower as interest rates and cost of transport / services increase. South west / North West Sydney hit hardest. Whilst North Shore, eastern suburbs and inner west increase in price.
2. Inner metro houses increase slowly in price or remain steady.
3. The outer burbs become the cheaper housing for the lower class workers who end up travelling more and more hours on public transport to work becuase driving simply becomes to expensive. Gentrification of the outer burbs consolidation of the inner burbs. As more people head in the people who can't afford the prices move out.


PS: the state government will likely not release any more land because it would only result in increasing budget stress and stress on existing infrastructure.


----------



## KIWIKARLOS (20 February 2008)

tech/a said:


> Compared to when?
> 
> My latest was locked in in December at $1300/Squ meter.
> Exactly the same now would be $1600./Square meter.
> ...




Totally agree mate

steel going up due to iron +65%
Hardwood? ha try buying hardwood at a reasonable price
aluminium up she goes with electricity prices
Labour : most pays up at least 4% year on year and thats before premotions etc.


----------



## Captain G (20 February 2008)

Hi Tech, I always enjoy your posts so you may be able to help clarify this for me. Someone once told me may years ago that property is a good way to help protect your money against high inflation, because say you build a house for say $200,000 and in the long run as prices for materials and labour increases, to build that same house in 5 years time it'll cost a few 10's of thousands more, so it helps push your asset value along. Do you you see this as being correct or makes sense ?? Cheers, Capt.


----------



## xoa (20 February 2008)

tech/a said:


> Compared to when?
> 
> My latest was locked in in December at $1300/Squ meter.
> Exactly the same now would be $1600./Square meter.
> ...




From 1991 to 2007, the real cost of constructing a typical house (in 2007 dollars) rose slightly, from $192k to $211k. Hardly a 10% movement. Compare that to the movement in median prices. Developers have seen their potential profits soar with only a slight increase in costs, and margins will remain healthy after the slump (provided they aren't recklessly geared). The outlook for speculators/flippers doesn't look as rosy though.






From http://www.library.unsw.edu.au/~the...ved/adt-NUN20071210.120652/public/02whole.pdf


----------



## Tysonboss1 (20 February 2008)

xoa said:


> Very few "property investors" are developers. You shouldn't even use both terms in the same sentence. The vast majority of the "property investors" that have emerged in Australia are little more than property flippers. They buy existing properties (on credit) with the hope of selling for a profit later.
> 
> Developers who actually use their own money will still be profitable in the event of a severe correction, because construction costs are still low. Responsible developers in the USA are still making money, despite a 20% price slump. Only the highly leveraged developers are at risk.




Do you think that many properties would be developed if the developers had no investors to sell the finished product to, to help finance the deal by buying of the plan.

and if there was no developments or subdivions going ahead, and no investors buying them to rent out,.... where would all the renters live, 

not many developers that I have met use there own money,...  most are aleast 50% leveraged.


----------



## Tom Ronalds (20 February 2008)

tech/a said:


> Tom.
> 
> Firstly I know it wasnt you on the Adelaide statement Id read it elsewhere myself.
> 
> ...




That's an extremely wide definition, as you no doubt realise.

Those home buyers who bought several years ago and have by now substantial equity in their properties, will be better off; no doubt about that. That applies to most of them even if we have a pull-back in prices.

Those who bought in the last few months may well find themselves with negative equity and even facing repossessions.

It really is no different to any other investing. Had you bought CBA shares at the float, you'd be laughing even after the recent 30% drop. Had you bought a few months ago and funded it with debt, you'd be looking at pretty severe margin calls, with your equity being decimated if you couldn't cover those.



> Will they ever be better off?




Those who may be going to get wiped out over the next few years may take a long time to "be better off".



> Will there ever be a time which is right to buy?




Any prudent investor will buy when the fundamentals on the property/investment s/he is contemplating the acquisition of are a lot less stretched than what we are seeing now.



> If so what in your view will be the signs.




See above. If you can find a property that returns 5% or more in net rentals, and afford to buy it on the basis of being able to carry the loan repayments should you have no tenant for a while, or being able to cover interest rates at 12%, then chances are you will be doing OK in the long run.

These are just basic rules of prudent investing, as I'm sure you'd agree.



> Do you expect prices and wages to eventually return to say 4x ratio?




Given the long term trends here and in other countries, I do expect these to trend significantly towards the mean values. 



> There will be crashing of prices I agree in the rediculous situations you mention.
> Not so in those that are more "Realistic".




Of course, I agree with you.



> Will inflation be bought under control.




Recessions generally do have a positive effect on inflation.



> Back in the 80s housing dipped but didnt crash.
> In the years to follow prices just took off again albeit years later.




And it will be the same now. Prices are not dropping everywhere in America, either, but the possibility of multi-trillion dollar losses I saw mentioned by a fellow who has been an adviser to the US Treasury just today still remains.



> Not all builders will go broke.
> Not all investors or home owners will lose their shirts.




Again, I couldn't agree more. But the vast majority of property investors would in such a scenario be wise to at least not expect large capital gains over the next decade or so.

Allowing for the after tax cost of negative gearing, if you have no or only very low capital gains for several years, then it would be hard to argue that your money would be better off in a term deposit.

Cheers,

Tom R


----------



## Tysonboss1 (20 February 2008)

Broadside said:


> I am not talking about owner occupiers.  Sure we need investment in property but there is far too much capital wasting in this sector, it won't add to our future earnings capacity as a nation, innovation will.  I can't blame investors for chasing the best returns, just saying the system is a little skewiff at the moment.




I don't believe it is a waste of capital, I know that in my situation that my property portfoilio has allowed me to invest 1000's more into the share market than I otherwise would have been able to, 

over a 1/4 of the population rent accomadation that has been provided by investors, it's a market that needs more investment, the only way to lower the rent that people complain about is to build more developments.

your saying that investing in housing won't increase the nations earnings, but the thing is people need some where to live, 

A woolworths supermarket doesn't add to australias earnings either but we need some where to shop.


----------



## numbercruncher (20 February 2008)

tech/a said:


> Compared to when?
> 
> My latest was locked in in December at $1300/Squ meter.
> Exactly the same now would be $1600./Square meter.
> ...





Wouldnt want to build down your way with prices like that !

You can build in Qld for less than half that, Coral homes is a big name here can build 25sq (232m2) for 132k - plus flooring/extras/earthworks etc.

Thats a massive difference.


----------



## Temjin (20 February 2008)

tech/a said:


> I'm interested in what people actually believe will happen---the end result.
> 
> From what I can gather the scenario looks a little like this.
> 
> ...





What about the impact of the global economy when the US goes into a hard recession? 

What if the decoupling theory is not true and rest of the emerging economies go down along with the US as well? (including China)

What if the credit crisis continue to worsen and the lending become much more tightened? 

What if the local banks have a serious solvency issue? That their explosure to the credit crisis is a lot worse than have reported thus far? 

What if the world inflation continues even higher and commodities price increase by alot as a result of it? 

Or maybe what if deflation wins and we have a 1929 type of global depression? 

I just don't know if I can totally discount all these "possibilties" and safetly assume none of them will occur at all. 



			
				Tom Ronald said:
			
		

> Again, I couldn't agree more. But the vast majority of property investors would in such a scenario be wise to at least not expect large capital gains over the next decade or so.




That has been the main message.

Sophisticated property investors may have strategies to minimise the damage during a market downturn, but mums and dads investor may not be that lucky.


----------



## Tysonboss1 (20 February 2008)

numbercruncher said:


> Wouldnt want to build down your way with prices like that !
> 
> You can build in Qld for less than half that, Coral homes is a big name here can build 25sq (232m2) for 132k - plus flooring/extras/earthworks etc.
> 
> Thats a massive difference.




bull****


----------



## xoa (20 February 2008)

Tysonboss1 said:


> bull****




http://www.coralhomes.com.au/design-prices/downloads/BRISBANE.pdf


----------



## numbercruncher (20 February 2008)

Tysonboss1 said:


> bull****





Shocking isnt it, did they just devalue your perceived properties worth or something ? 


Two years ago I built in Hervey Bay(with tamawood/Dixion), which is dearer to built than brisbane, 190sqm , Colourbond, Double height bricks, bull nose verandah etc, nice federation style 160k including the septic system. I did floors/blinds/paving myself on top - and the block involved alot of earthworks and a improved type of slab because of the soil type.

The cost of Building a house hasnt gone up much further than Inflation throughout the boom as far as I can tell.


----------



## Tysonboss1 (20 February 2008)

numbercruncher said:


> Shocking isnt it, did they just devalue your perceived properties worth or something ?
> 
> 
> Two years ago I built in Hervey Bay(with tamawood/Dixion), which is dearer to built than brisbane, 190sqm , Colourbond, Double height bricks, bull nose verandah etc, nice federation style 160k including the septic system. I did floors/blinds/paving myself on top - and the block involved alot of earthworks and a improved type of slab because of the soil type.
> ...




Sorry I mis read you,.... I thought you said including earth works and flooring.


----------



## KIWIKARLOS (20 February 2008)

this stuff about building costs been the same is cr@p you may be spending a similar amount but there is no way your getting the same quality. The only reason you can build quite cheap still is because they build houses to last 20-40 years not 40-100 as they used to.

Does your house have hardwood structure or floor boards? how much do the current costs go up when you stray a little from the basic design? tiles extra, double power points extra. A stencil crete drive way or pavers? the list goes on and on. Double brick is now not the norm its for millionaires


----------



## numbercruncher (20 February 2008)

KIWIKARLOS said:


> this stuff about building costs been the same is cr@p you may be spending a similar amount but there is no way your getting the same quality. The only reason you can build quite cheap still is because they build houses to last 20-40 years not 40-100 as they used to.





Erm ... dunno about that, I see all the 60/70/80s houses that arnt falling down being teared down ....


What do you propose is going to happen to these new homes in 20 years time ? Brick work turns to dust or something ? Nothing wrong with the quality of build now a days, spend an extra few k and get a steel frame to boot.


----------



## robots (20 February 2008)

hello,

you should see the maintenace crews the home builders have now, going around fixing up problems, massive

i hope the thread stays honest and allows everyone to post appropriately, I have copped it and get called names, 

still here proud and strong

thankyou

robots


----------



## zt3000 (20 February 2008)

At the end of the day people one single fact remains. One of the three basic NEEDS of humanaity is

well we have food
then we have water
hrmm last one?? SHELTER ie Housing

Bricks and Mortar is a physical asset, correction or no correction the human population is growing every day and people need a place to live (or rent)

We most probably need a wash out of the speculators in the property market which is most likely to happen in the median house price range.

The high end wont get touched, limited supply and these people are cashed up and more than likely own their home outright. Anything close to the CBD will be fine too.

The problem in WA is that currently so many people are cashed up from mining boom that rasing rates doesn't mean nothing and they keep on spending, whilst the people on low incomes who are currently hurting and NOT spending are just going to get hurt further by rate rises.

i dunno thats just my  .... critique me if you think im wrong


----------



## KIWIKARLOS (20 February 2008)

numbercruncher said:


> Erm ... dunno about that, I see all the 60/70/80s houses that arnt falling down being teared down ....
> 
> 
> What do you propose is going to happen to these new homes in 20 years time ? Brick work turns to dust or something ? Nothing wrong with the quality of build now a days, spend an extra few k and get a steel frame to boot.




I would say the main reason they were being torn down is 
a: the are fibro construction or are full of aspestos 
b: they are on big blocks and are prob getting replaced with a duplex or townhouses.
c: people are building bigger and putting a house that goes from property line to property line.

building on a concrete slab these days may be cheaper than piers but try installing a new power point , telephone line, cable tv you'll be paying a heap of labour. Most townhouses duplexes have windows that go all the way to the roof and ceiling heights have decreased not to mention termites they make short work of structural pine. 

I'm not saying that houses should be built to last, in real life they should prob only stay up max 30 years anyway. 

I think we would all agree though that in the majority of cases its not the house that increases in value its the land. There in lies the basis of my arguement, increasing density = increasing prices and vice verses


----------



## zt3000 (20 February 2008)

xoa said:


> From 1991 to 2007, the real cost of constructing a typical house (in 2007 dollars) rose slightly, from $192k to $211k. Hardly a 10% movement. Compare that to the movement in median prices. Developers have seen their potential profits soar with only a slight increase in costs, and margins will remain healthy after the slump (provided they aren't recklessly geared). The outlook for speculators/flippers doesn't look as rosy though.
> 
> 
> 
> ...




lol you crack me up

im a builder/developer in WA

i dont know about the rest of the country but im getting friggen price hikes in everything it feels like on a weekly basis. Land prices are way way overvalued and its taking a lot longer to find profitable land.


----------



## explod (20 February 2008)

zt3000 said:


> lol you crack me up
> 
> im a builder/developer in WA
> 
> i dont know about the rest of the country but im getting friggen price hikes in everything it feels like on a weekly basis. Land prices are way way overvalued and its taking a lot longer to find profitable land.




Yep, it depends on who's doing the figures and producing the charts.  As has been the case with bodgey figures from general financial analysts from Wall street and now to here in Auz., I am convinced that the Real Estate Promoters and Rampers can no longer be taken too seriously.

Though my own methods may be primitive it is the reason why I have become my own adviser and analyst.  I have not looked back since.

May Dad said 50 years ago, where money is concerned trust no one.  Funny it took 45 years for it to hit home


----------



## tech/a (20 February 2008)

Agree with *zt3000.*
Its now 2008 and the cost of developement for owner occupiers and Developers alike is soaring.

As for housing costs.
The figures quoted are for an Esplanade developement,Not including footings or excavation I'm doing all that.Commercial windows,Lift,Sauna,some 3 meter ceilings not to mention chefs Kitchen and Marble finishes,extensive tiling 200 square meters. 3 story incudes Undercroft garage---need I say more.

Why are houses being pulled down.
The land is now worth far more than the building.
Sub division or re developement is the go.
Minimal land releases means that unless you want what the developing builder is offering in a land release and its where you want to live---then buy a dero,demolish it and build.

As zt says its damned hard to find good priced developement property ---- but its still around over here.The last Esplanade Auction I went to was bought over the phone by a WA buyer.900 square meter block a push over dwelling sold for $890k youd get 2 back to back (Went through to rear street) 2x 200 meter developements at $735K ea fully developed and a return of at max $850k each and its getting skinny!
There are much better.Really unless you get 3-6 on a block its going to be tough if not dangerous.

Finally thanks *Tom* for your comments.
*Temjin* What if we get hit by an Asteriod?
What if we die tommorow.

All we can do is handle our *own *situation as wisely as we can after all *we all* want to be able to live comfortably and happily.


----------



## CamKawa (21 February 2008)

50 Victorians a week have homes taken
http://www.news.com.au/heraldsun/story/0,21985,23248714-661,00.html


----------



## KIWIKARLOS (21 February 2008)

CamKawa said:


> 50 Victorians a week have homes taken
> http://www.news.com.au/heraldsun/story/0,21985,23248714-661,00.html




hahahahaha propaganda and alarmist

How many Victorians are taking out mortgages each week, I'm just taking a guess but I bet its a fair few more than 50


----------



## numbercruncher (21 February 2008)

A quote from the article for those who think Australia doesnt have its own version of Subprime.



> Unregulated mortgage brokers, who are paid for every loan they organise even if the borrower defaults, organised loans for *more than half *of the evicted homeowners.
> 
> Mortgage industry analyst Denis Orrick said lenders were evicting borrowers faster than ever, especially in new housing estates.
> 
> "The lenders don't want to be last in the suburb to sell," Mr Orrick said.


----------



## Tom Ronalds (21 February 2008)

numbercruncher said:


> A quote from the article for those who think Australia doesnt have its own version of Subprime.




Of course we do. Have a look at some of the answers to the FAQ at this mortgage originator:

http://www.reactiv.com.au/faqs.aspx

100% loan & no need to show you have any earnings, if you are "self-employed".

Keep in mind however that subprime was only the first bit of the housing domino to fall in the US. The price crash that has resulted from this has now seen increasing numbers of Americans holding some seriously negative equity in their homes, which is prompting ever larger numbers of even credit worthy borrowers to resort to what the Yanks call "jingle mail" - i.e. put the keys to you house into an envelope, post to your bank and walk away.

As the numbers of these people increase, banks are faced with having to fire sell ever increasing numbers of properties into an already distressed market, which then precipitates another round of the same thing.

In this article, a respected US property blogger "Calculated Risk" explains the mechanism and the possible outcomes:

http://tinyurl.com/2fw5kb

He estimates that if house prices decline by 10% in 2008, this would see around 10.7 million of households with negative equity, prompting at least some of them to walk away. 

The article dates back from December 2007 and the latest data shows that in fact the number of distressed households could now be as high as 12 million and perhaps even higher. Some experts now believe that the overall decline in house prices may be as high as 30%, which would mean over 20 million households in strife!

The fallout from this could destabilise and even bankrupt the entire US financial system. Calculated Risk covers this in this article:

http://tinyurl.com/yvddb8

His conclusion is that an across-the-board average fall in house prices in the order of 15% would result in up to USD 1 trillion of losses; if prices drop by 30%, it could be over USD 2 trillion!

The losses reported up to December 2007 were in the order of $70-80 billion - chickenfeed in comparison. Yet look at the effects already!

Can anyone imagine such a scenario? Such numbers? -- Yet it appears entirely plausible, given the recent trends.

Note that there is no mention of "subprime" in any of this!

Could this happen in Australia?

Perhaps not quite to the same effect; our home loans are not typically structured like a put option, so if the bank can't sell for what it's owed, they are likely to chase the defaulting borrower for the difference. This mean that our own version of "jingle mail" is unlikely; however in case of higher unemployment and subsequent widespread defaults, banks would be looking at losing billions just the same, as many people are forced to declare themselves bankrupt.

It is not a nice scenario and I am personally increasingly worried about the possibility of it happening. The old saying that if the US sneezes, the rest of the world catches the flu is still very much the truth. Just look at the massive write downs at various European banks and the effect on the share price of our own listed financial companies, big 4 banks included, most of whom have not as of yet disclosed any substantial difficulties.   

The Chinese sovereign fund that a few months ago injected a very substantial amount into the US bank bailout has reputedly already lost about 30% of that investment. How long will the Chinese and others like them keep throwing good money after bad?

If the US financial system goes into a systemic meltdown, then we will be facing the most serious recession in at least 30 years. If that happens, I would hate to be a highly geared property - or share - owner.

Tom R.


----------



## MichaelWhyte (21 February 2008)

zt3000 said:


> lol you crack me up
> 
> im a builder/developer in WA
> 
> i dont know about the rest of the country but im getting friggen price hikes in everything it feels like on a weekly basis. Land prices are way way overvalued and its taking a lot longer to find profitable land.



Tell me about it!  I'm also a developer over here on the East Side, and my latest acquisition is a 700m2 block in the heart of Mona Vale on Sydney's Northern Beaches.  I paid $690K for it with an old house on it in Sep 2006 during all the doom and gloom.  It was originally listed for $770K but I talked it down.  I've just secured DA approval for three units with excavated basement parking for seven vehicles.  Average internal floor space is 140m2.  3 or 4 double bedrooms with 2.5 baths each.

Spoke to my REA and the scarcity of good sites in this postcode has other developers willing to shell out $1M even for it now only 18 months on.  I'm going to develop it myself as the GR is $2.7M today and my total cost including the site is around $2M.  I could sell the site and realise $300K or develop it and realise $700K in a growing market.  Mona Vale went up 10% in 2007 and is touted to do the same or better in 2008.  Its a leveraged play, so every 10% of growth in that segment improves the value of my site by $270K allowing for a constant $$$ profit margin on construction.  But I think I'll develop it and lock in some of that uside potential.  My yields make it neutral on completion and will probably be CF+ within another 12 months.  A $3M odd asset that has $1M equity and is CF neutral.  Sounds like a worthwhile prize...

My only question now is when to start.  Cost of capital is through the roof and the interest on $1.8M land and construction costs during the 12 month build period will be a big part of that total $2M cost figure quoted.

Ah well, at least it will help offset the locked in $180K loss I realised recently on the XAO.  Going back to my main game for a while to rebuild a nice equity base.

Cheers,
Michael.


----------



## tech/a (21 February 2008)

Michael.


NOW

You answered your own question here.



> My only question now is when to start. *Cost of capital is through the roof and the interest on $1.8M land and construction costs during the 12 month build period will be a big part of that total $2M cost figure quoted*


----------



## robots (21 February 2008)

hello,

great to see Michael posting, a regular at Somersoft,

I hope he can continually run some info on his development if it gets going,

will be interesting next few weeks as i notice SOLD stickers going up on places due to be auctioned in the forthcoming weeks,

so the play's are starting

thankyou

robots


----------



## robots (21 February 2008)

hello,

report by CommBank & HIA and also backed by the ABS (yes the ABS)

http://www.commbank.com.au/news/daily_news.aspx

great news for property owners, investors, speculators etc with the hard work paying off,

massive drop in building approvals, 

thankyou

robots


----------



## WaySolid (22 February 2008)

zt3000 said:


> lol you crack me up
> 
> im a builder/developer in WA
> 
> i dont know about the rest of the country but im getting friggen price hikes in everything it feels like on a weekly basis. Land prices are way way overvalued and its taking a lot longer to find profitable land.



A case of 'All theory, no experience' perhaps?

As well as huge cost increases for building there has been similar things happening with development costs imposed by councils, one of the ideas why we aren't seeing over supply at the moment in SEQ.


----------



## WaySolid (22 February 2008)

tech/a said:


> Ive come to realise that posting on these sort of threads is a waste of keyboard strokes.
> 
> People will defend their view with whatever they can find.
> Both for the positive and negative view of the topic.
> ...



Hey well said! I'm of the same line of thinking, but keep getting drawn back into posting, must be something that's feeding my ego with that sort of compulsive behaviour.


----------



## pepperoni (22 February 2008)

As a property investor from sydneys north shore, I can confirm prices are weak in all my areas except the absolute cream l(eg mosman), although even the best areas are now showing weakness.  Another .5 increase in interest rate rises will hit me hard.  

Cant comment on other areas but can see there are some pretty fundamental limitations of future increases in value unless there are major changes.


----------



## tech/a (22 February 2008)

.5 very likely.

I'm finding a lot of interest at Auctions here in SA from WA and Eastern States developers,making our job of finding good property harder and pushing our prices higher.
Still good demand.


----------



## wayneL (22 February 2008)

Meanwhile, in the UK:

http://business.timesonline.co.uk/t.../construction_and_property/article3406268.ece



> From The Times
> February 21, 2008
> *UK housing market close to collapse, analyst says*
> Robin Pagnamenta
> ...


----------



## robots (22 February 2008)

hello,

i find that interesting the comment regarding north shore, when jennings are doing well on pre-sales in new developments which typically helps existing stock

http://www.theaustralian.news.com.au/story/0,25197,23254135-25658,00.html

thankyou

robots


----------



## robots (22 February 2008)

hello,

here is one for the melbournians:

http://www.seek.com.au/users/apply/index.ascx?Sequence=65&PageNumber=1&JobID=11919493

turn up and off you go

thankyou

robots


----------



## tech/a (22 February 2008)

Wayne.

Your thetre in the UK.

How then would you handle the situation with regard to identifying opportunity?
Or in your view will there not be opportunity in this sector for years.
If so what in your view would indicate opportunity in years to come?


----------



## wayneL (22 February 2008)

tech/a said:


> Wayne.
> 
> Your thetre in the UK.
> 
> ...



As I said before, I'm not interested in development, not at this stage anyway. Perhaps a reno or two when the time is right... if I feel like it.

So opportunity would would be when prices are in line with historical vectors of value. In some instances, that is already incredibly close (Distress sales etc). The $64,000,000 question is the trough of the business cycle and approximately when that occurs. At the moment, we only just round the top turn here.

Looking at the macro-economic picture the end zone is still a long way off.

I think Crash Gordon and Alistair Daaaaaaaaaaahling will prop the economy and particularly the housing market desperately, in order to cling to power, so it may take some time.

On the other hand, it may crap itself sharpish, just have to see.

Like all value investors, I'll wait for the market to come to me. If it doesn't, time will catch up with the market. Same criteria in the end. I'm invoking the Buffet principle when it comes to property.


----------



## robots (22 February 2008)

wayneL said:


> As I said before, I'm not interested in development, not at this stage anyway. Perhaps a reno or two *"when the time"* is right... if I feel like it.
> 
> So opportunity would would be "*when prices are in line with historical vectors"* of value. In some instances, that is already incredibly close (Distress sales etc). *"The $64,000,000 question is the trough of the business cycle and approximately when that occurs."* At the moment, we only just round the top turn here.
> 
> ...




hello,

fascinating that,

I guess the audience allows many to continue going on with this sort of propaganda,

in the UK the BTL is being hit apparently, yet the media get some analyst who writes an article with as many if's, implode's, could's as I have highlighted and it is gospel

thankyou

robots


----------



## wayneL (22 February 2008)

robots said:


> hello,
> 
> fascinating that,
> 
> ...




I don't understand your point. Do you know what it is?


----------



## Tom Ronalds (22 February 2008)

wayneL said:


> Meanwhile, in the UK:
> 
> Britain’s housing market is a “house of cards” that is set to implode after years of reckless mortgage lending, chronic oversupply of new flats and widespread fraud, a leading analyst said yesterday.




This is not limited to Britain - it's the same story here, just with a bit of a delay:

http://tinyurl.com/2lzalv



> *Economic struggles producing more fraud: KPMG*
> 
> Posted Thu Feb 21, 2008 2:44pm AEDT
> 
> ...




And this is just early days...

Tom R.


----------



## gfresh (23 February 2008)

Well this has even made world news: http://www.reuters.com/article/worldNews/idUSSYD20239620080222?feedType=RSS&feedName=worldNews

Is anybdy really "stunned" by such stories however? With some areas of property development being very competitive, and of course lucrative it's no wonder people will resort to such steps. I'm sure it goes on in every council in Australia to some degree to be honest  

and the Gold Coast..need I say more


----------



## theasxgorilla (23 February 2008)

gfresh said:


> and the Gold Coast..need I say more




You could say what makes you think it was the Gold Coast...I saw that it was Woolongong, and thats quite a distance away.

ASX.G


----------



## tech/a (23 February 2008)

> Like all value investors, "I'll wait for the market" to come to me. If it doesn't, time will catch up with the market. Same criteria in the end. I'm invoking the Buffet principle when it comes to property.




Thats my whole point recognition of value.When has it come to you?

Wayne I see no other "valuation" here but gut feel.
Numerous "Conditions" have been suggested as leading indicators to a property top but other than historical vectors (Which are?,I mean the values and vectors of what?),Trough of the business cycle--which I doubt we will see more so a drifting----there precious little leading indicators suggested.


----------



## wayneL (23 February 2008)

tech/a said:


> Thats my whole point recognition of value.When has it come to you?
> 
> Wayne I see no other "valuation" here but gut feel.
> Numerous "Conditions" have been suggested as leading indicators to a property top but other than historical vectors (Which are?,I mean the values and vectors of what?),Trough of the business cycle--which I doubt we will see more so a drifting----there precious little leading indicators suggested.




I purposefully left out my criteria for value, to avoid argument over them. but rest assured, they are based on hard numbers. Yes, getting the trough of the business cycle is guesswork, but that is secondary anyway, and I have worked myself into a position at the coalface. I'm fairly confident of being a bit ahead of the curve.

First and foremost is that the numbers work for what I want to achieve.

Stay tuned for avatar changes.


----------



## Uncle Festivus (23 February 2008)

tech/a said:


> Thats my whole point recognition of value.When has it come to you?
> 
> Wayne I see no other "valuation" here but gut feel.
> Numerous "Conditions" have been suggested as leading indicators to a property top but other than historical vectors (Which are?,I mean the values and vectors of what?),Trough of the business cycle--which I doubt we will see more so a drifting----there precious little leading indicators suggested.




I would think interest rates (going up) & the housing affordability stats (going down) would be the most indicative of cycle tops and future direction? I'm not sure - are they factors for you?

Each interest rate rise takes out another potential group of home owners from the market, so the available pool of demand shrinks? They then become renters and all that entails eg the rental squeeze in progress.

You would have to think then that it's getting closer to the pointy end of the un-affordability triangle. (with the base of the triangle as potential purchasers and y scale unaffordability ie as rates rise your market diminishes)

Yes, interest rates will be the harbinger of the future of housing, combined with the rising $AU for housing demand for export industry/commodity communities eg Perth.


----------



## numbercruncher (23 February 2008)

As I mentioned in an earlier post, loads of RE coming to market, now confirmed, can only mean RE boom times ? 



> QUEENSLAND'S buoyant housing market is teetering on the edge of a downturn with new figures revealing a 38 per cent jump in homes for sale.
> 
> Home owners have become jittery about future market conditions, says Tim Lawless of RP Data who collated the figures.
> 
> In Brisbane the results are magnified with a *62 per cent leap *in new listings.




http://www.news.com.au/couriermail/story/0,23739,23259926-952,00.html

Be interesting to see over the next 12 months with possible 1pc rise in Interest rates.

RE bulls will probably want to be encouraging Union thugs to secure substantial pay rises for the peoples


----------



## tech/a (23 February 2008)

*Or if you selected these from the article you'd have a completely different slant.*



> It currently takes about 19 days to sell a house in Queensland and sellers are getting about 5.4 per cent below the original asking price, compared with 5.2 per cent the previous year.






> While house prices are not expected to drop, the surge of properties on the market is expected to slow price growth.






> "There has been a big pick-up (in demand) for finished product," she said.
> 
> Diana Howes, managing director of Resolution Research and Marketing Solutions, said the figures were high because consumer sentiment was so strong.






> Century 21 Westside principal Gerard Baden-Clay said the sudden jump in listings could be because new developments used to be advertised in a single listing, but now it was common to see developments advertised on a lot-by-lot basis.


----------



## GreatPig (23 February 2008)

Things not looking too hot in NZ at the moment either.

http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=132201

GP


----------



## wayneL (23 February 2008)

tech/a said:


> *Or if you selected these from the article you'd have a completely different slant.*




Haha! We get the same cognitively dissonant article in the UK all the time:

*Jupiter to Crash into London on Sunday Night.*
But property expert Krusty Allsnot says this will be good for house prices, adding to the current undersupply of housing. "We're advising people to secure property immediately to capitalize on the coming bonanza".


----------



## robots (23 February 2008)

hello,

anybody go to any auctions today?

thankyou

robots


----------



## numbercruncher (23 February 2008)

robots said:


> hello,
> 
> anybody go to any auctions today?
> 
> ...




Hello

Why would anyone go to a boring RE auctions on a Hot Saturday when many sexy alternatives are in abundance ?

Did you have a good day at the Auctions Robi ? I slurped pure Blondes around the pool, was even a RE bull there, telling us tales of the days gone by


----------



## robots (24 February 2008)

hello,

73% clearance rate for melb yesterday, yes yes thankyou

the huge no. of prop coming on gave many buyers a chance to look around, fair priced prop still got snapped up,

i think many sellers will halt putting RE on the market for a while and wait until winter,

i went to one auction in Mornington for a parcel of land (412sqM), opened at 400k by re, no bids then put in vendor bid of 450k, passed in, huge miss calculation of land price by vendor

thankyou

robots


----------



## numbercruncher (24 February 2008)

*hangover day*


So Robots, how do you get these clearance rates the next morning after auctions ? Is that for the entire Melbourne ?


----------



## robots (24 February 2008)

hello,

i get them,

that is for all auctions listed to take place on the day,

thankyou

robots


----------



## numbercruncher (24 February 2008)

Well this is what this mornings SMH has to say ....




> *Melbourne's property boom cools off*
> 
> Melbourne's rampaging property boom has cooled after many years of soaring prices, with a sign that auctions are now failing to fire.
> 
> ...




http://news.smh.com.au/melbournes-property-boom-cools-off/20080224-1u9b.html


Seems even people working in the Industry are running out of Spin to Spin !


----------



## tech/a (24 February 2008)

71% Clearance rate in Adelaide.

http://www.homepriceguide.com.au/saturday_auction_results/adelaide.pdf


----------



## numbercruncher (24 February 2008)

From todays herald Sun with examples of falling prices ...



> Auctions slump signals end of boom
> 
> MELBOURNE'S rampaging property boom has finally cooled after years of soaring prices.
> 
> ...




http://www.news.com.au/heraldsun/story/0,21985,23266297-661,00.html

haha I like that last line in Bold, will be a common line amoungst RE permabulls, Be interesting to see reactions after 4 more possible rate rises this year.


----------



## robots (24 February 2008)

hello,

still got 9x earnings though NC!!

oh the poor blighters

thankyou

robots


----------



## xoa (24 February 2008)

The writing must be on the wall if even the real estate agents have become bearish. Maybe we're not so different to the USA/NZ/UK after all.

It's a virtual certainty that speculators in Melbourne and Perth are going to get seriously burned this year. The party won't last much longer in other capitals either. Expect a crescendo of moaning when quarterly price results come out.

They have nobody to blame except themselves. We're on the dawn of the most predictable bust ever.


----------



## robots (24 February 2008)

xoa said:


> They have nobody to blame except themselves. *We're on the dawn of the most predictable bust ever.*




hello,

rubbish,

and even if it was to happen most are likely to be "gunna's"

gunna do this and that

thankyou

robots


----------



## Uncle Festivus (24 February 2008)

The trickle up effect? The herd panics! The real estate contagion has started? And, another 0.5% to go?



> IT started in the west, but the mortgage stress that has crippled thousands of families there has now hit Sydney's wealthy Eastern Suburbs.
> Dubbed the "affluent stressed'', eastern suburbs residents typically spend 38 per cent of their household income on mortgage repayments, have credit-card debts of between $8000 and $20,000, pay private-school fees and are more exposed to the volatile sharemarket.
> They're on good money, but many have borrowed huge sums to buy into the most expensive real-estate market in Sydney and are now facing the prospect of a nightmare in 2008 as rates continue to rise.
> In October, Fujitsu Consulting found 2.5 per cent of eastern suburbs families were in some degree of mortgage stress; *now it's 6.5 per cent*.
> ...



http://www.news.com.au/dailytelegraph/story/0,22049,23264814-5001021,00.html?from=public_rss


----------



## xoa (24 February 2008)

robots said:


> hello,
> 
> rubbish,
> 
> ...




Well let's see: We've seen every other developed nation enter a property slump. We've seen property prices here inflate to historically unsustainable levels. And we've seen warnings of interest rate rises. And you're surprised?

It's like standing on the railway tracks, and then being surprised when you get hit by a train. It wasn't a question of if, but when.


----------



## robots (24 February 2008)

hello,

send me a pm when the average median prices drops let say 10%, 20%, 30% or hell even 50% can you please, please

thankyou

robots


----------



## numbercruncher (24 February 2008)

" Stagnating for Years " will have exactly the same effect in real terms to people paying the expected 10pc variable rate 


Just wait till overseas Investors whom have seen stella returns including a strong AUD start cashing in.

Peak Debt folks, people cant borrow any more to keep the party going, imho  Not to mention growing sentiment, if enough believe the partys over, it will be over.

RE bulls have nothing to complain about though, has been a fantastic run for you all, congratulations


----------



## xoa (24 February 2008)

robots said:


> hello,
> 
> send me a pm when the average median prices drops let say 10%, 20%, 30% or hell even 50% can you please, please
> 
> ...




With interest rates rising, leveraged "property investors" will get raped even if prices don't fall. Who wants to pay $40k interest per year, on a non-performing asset in a weakening economic climate? 

The price drop and resultant negative equity will just clinch it, and be the icing on the foreclosure cake for speculators. Their insatiable greed will cause many to lose the family home.


----------



## explod (24 February 2008)

robots said:


> hello,
> 
> send me a pm when the average median prices drops let say 10%, 20%, 30% or hell even 50% can you please, please
> 
> ...




From an investors perspective, at the very best, property is going sideways on the chart.    

You have not convinced me that property is a good investment at the moment and your continued mantras based on crap indicate that you must be some sort of a nut.

If you look back over this thread you totally ignore good argument.  A constructive debate to aid investment knowledge requies one to deal with the issues raised in analytical fashion.

Move on Robots, for the time being the argument is lost.   We need to shift the focus to "when will we know the bottom in real estate has been reached?".   But the need for that thread is probably a ways off just yet.

Property fall in big letters ON THE FRONT PAGE of todays Melbourne Herald Sun.    HELLO


----------



## numbercruncher (24 February 2008)

Weve heard of Horse Flu - now House Flu is hitting 




> It started with a trickle in Sydney's west and quickly spread to Melbourne's battler suburbs of Mentone and Melton as it grew into a wave of house repossessions that is now claiming about 800 homes every week around the country, because families can no longer afford their mortgage repayments.
> 
> Now analysts are warning another 300,000 households are at risk, particularly if the Reserve Bank, as widely predicted, goes ahead with another rate rise next month - and that's regardless of whether the banks decide to pass on the estimated 35 to 40 basis points they are still carrying from the higher cost of credit.
> 
> "The American subprime virus has arrived in Australia," says Jonathan Pain, chief investment strategist with HFA Asset Management. "In an age of globalisation no nation can be viewed in isolation."




http://business.theage.com.au/house-flu/20080223-1u70.html


Experts predicting housing led recession ...




> RISING rents are forcing thousands of people to skip meals and admit they are too poor to send their children on school excursions, new figures reveal.
> 
> Housing experts warned yesterday that the home affordability crisis threatens to destabilise the economy and drive the country into recession.




http://www.smh.com.au/news/national/skipping-meals-to-pay-rent/2008/02/21/1203467286233.html


----------



## numbercruncher (24 February 2008)

To rub salt into the wound, could be a double rise next month ?




> CONSUMERS have been warned there will be no escaping an interest rate hike next month - and it could be a double whammy.
> 
> Explosive documents released yesterday showed the Reserve Bank Board almost went for the shock treatment earlier this month as it battles to control inflation.
> 
> Leading economists said yesterday there was a big chance the central bank would push up rates by half of a percentage point next month – double the usual increase.




http://www.news.com.au/comments/0,23600,23244958-462,00.html

Seems the 10pc mortgage may come sooner than later


----------



## Uncle Festivus (24 February 2008)

xoa said:


> With interest rates rising, leveraged "property investors" will get raped even if prices don't fall. Who wants to pay $40k interest per year, on a non-performing asset in a weakening economic climate?
> 
> The price drop and resultant negative equity will just clinch it, and be the icing on the foreclosure cake for speculators. Their insatiable greed will cause many to lose the family home.




Actually I think rental income will be one area that will not do too badly in the near future. Unless your circumstances require you to sell your investment property then a steady rental income is assured.

It must be very hard for those people (mortgagees) who are bearing the brunt, and loosing their homes, for our nations prosperity from the commodity boom. The disproportionate burden on them hardly seems equitable does it?

Punish the overconsumers - raise the GST to 15% instead?


----------



## chops_a_must (24 February 2008)

xoa said:


> The writing must be on the wall if even the real estate agents have become bearish. Maybe we're not so different to the USA/NZ/UK after all.
> 
> It's a virtual certainty that speculators in Melbourne and Perth are going to get seriously burned this year. The party won't last much longer in other capitals either. Expect a crescendo of moaning when quarterly price results come out.
> 
> They have nobody to blame except themselves. We're on the dawn of the most predictable bust ever.




I don't think Perth and Melbourne will crash.

Likely Sydney and Adelaide, Tasmania to be worst affected. They haven't got a mining boom, and Adelaide... well... why the hell would anybody want to live there? No jobs, no attraction for younger folks, no nightlife, no hub, nothing.

Melbourne's inner city is still comparatively low in its cost of living to most other places, hence I don't think it will crash.

I don't think Perth prices will crash, I don't think they can go higher either though. What will be interesting is what happens to prices here when the plans for ~200,000 (from memory) more people living in the inner city are finalised.

FWIW, another batch of houses in my area failed to sell, and got taken off the market recently. Makes about 50% of the houses for sale in my area not selling in the last year. And a completed redevelopment project in the area has only sold about 60% of the dwellings, after having been complete for 6 months.

Cheers.


----------



## robots (24 February 2008)

explod said:


> From an investors perspective, at the very best, property is going sideways on the chart.
> 
> You have not convinced me that property is a good investment at the moment and your continued mantras based on crap indicate that you must be *some sort of a nut.*
> 
> ...




Hello,

awesome stuff explod, dont really disagree with that highlighted

I wont be packing my bags like Tom R and others and moving on, 

and you ignore the facts out there in RE world that prices are still rock solid, I am not here to convince anybody

I am here to report the truth and to help people with financial advice (ps. since I dont charge I can offer all sorts of advice)

have a nice day

thankyou

robots


----------



## explod (24 February 2008)

robots said:


> Hello,
> 
> awesome stuff explod, dont really disagree with that highlighted
> 
> ...






I did not say the prices are not rock solid, my thrust is that they are going sideways and therefore from a cold hard investors point of view there are better opportunities out there in other investment areas.

Home ownership is a whole different ball game.   For investment there is no sentiment attached, we just look for the best yield or growth/ and or if you like short term spikes up or down for trading.

Robots my friend, you infer that property is the holy grail, it is not, no investment is the holy grail.   We can only speculate on the best information before us and let the market itself shine the torch.


----------



## robots (24 February 2008)

hello,

no not at all explod, you summed it up nicely that all investments have pro's and con's,

all I am getting at is that for an owner occupier RE is a fabulous passive investment,

even Tom R (the financial planner man) agrees buying a house/unit is one of the "biggest" investments a person makes,

so just by getting a home you are making investment decisions,

I keep referring to the stat from the ABS that indicates owners are 6x wealthier than renters, this is manily because renters WILL not save the required amount of money to match it with the INVESTMENT made when owning a home,

I am not here to justify why you should buy a property, 

how do I know what is going to happen in the future? but because I cant tell you I am a fool,

many here, even you explod will not discuss the "real return" of property ownership/investment,

what I mean by this is how you put down an amout of money to control a asset worth many times more (just like a margin loan), so the real returns are truly amazing and all capital gains tax free

thankyou

robots


----------



## gfresh (24 February 2008)

> You could say what makes you think it was the Gold Coast...I saw that it was Woolongong, and thats quite a distance away.




I think you may have misread what I was implying, I know that particular story was in Wollongong, but that is not to say it doesn't occur far and wide throughout Australia. I live on the Goldcoast, and know many things are not above-board here either. 

There was another example on the ABC news tonight.. seaside area in NSW (sorry I did not get the name) where the Labor polly receiving significant electoral contributions from property developers. Ultimately the decision to veto this controversial development was up to this Minister.


----------



## Temjin (24 February 2008)

robots said:


> I am here to report the truth and to help people with financial advice (ps. since I dont charge I can offer all sorts of advice)






Are you serious robot?

Are you RG145 accredited? Do you even know what it takes to give legal and appropriate financial advice? What kind of experiences do you have in terms of giving "financial advises"? Or you just have several investment properties that have given you cash flow (maybe positive or negative) and gave you unrealised (or some realised) capital gain over the last few years? 

Seriously, do you even realise your arguments for PRO property investment so far is completely weak, unintelligent, total disregard of risk and especially to one's financial circumstances? Anyone who is unbiased for property investment would be hard to find to agree with you in comparsion to the logical advises that Tom R have put professionally so far. 

Even Tech/A, who have several PIs and is more PRO PI put up a far more effective argument than you. 

So my ADVISE to you is to TAKE BACK what you just said by trying to tell the truth because you clearly have demonstrated no where near the knowledge or intelligence (by direct comparsion to those who FAVOUR properties). And not to mention no one on this planet would actually know the truth. 

As for giving "financial advise" part, I am seriously hoping you aren't really trying this in real life because you are NO WHERE NEAR qualified for it. And again, not to mention you are not licensed for it and it's illegal for you do so and against the rules of this board. 

One major flaw in your so called "financial advise" is that you do not give regards to anybody's own financial situation here and have a total disregard of risks that you perceived to be minimum (or even non-existence) BASED on your "knowledge" so far. 

I should be ignoring this thread because it is not getting anywhere due to the massive amount of trolling (from you!). But just can't help it to warn others who may stumble across this thread and "wrongly" took your advises and potentially lead to his/her financial ruin. 

And yes, I hope you don't go around in the real world telling everyone that it is time to buy property now and borrow as much as possible regardless of their financial circumstances and tell them to ignore all "negative" fundamentals both locally and globally right now.


----------



## robots (24 February 2008)

hello,

actually temjin you dont need to be licensed to give information about real estate or loans,

similar to taxation advice if you dont charge then no issue,

just doing my bit for the communiy again

thankyou

robots


----------



## Kimosabi (24 February 2008)

robots said:


> hello,
> 
> actually temjin you dont need to be licensed to give information about real estate or loans,
> 
> ...



You should be in Washington working for George W Bush, he'd love you..

Up is Down, Right is Left, Wrong is Right, Black is White, Waterboarding is not Torture and the Economy is in Great Shape...


----------



## numbercruncher (24 February 2008)

And house prices never go down in the long term ( just how long is piece of string ? )


----------



## robots (24 February 2008)

hello,

friends have just gone to live in washington and work with military,

I dont like the idea of having to carry an ak47, 9mm with laser, 303, uzi, rocket launcher, pen gun and rambo knife on my bicycle just to get around the neighborhood

i prefer the love, peace and happiness of life here in melbourne

thankyou

robots


----------



## explod (24 February 2008)

robots said:


> hello,
> 
> actually temjin you dont need to be licensed to give information about real estate or loans,
> 
> ...





Yeh, and I think you could be on slippery ground trying to say you dont' have to be registered to give advice because you dont' charge a fee.    That is why most posters are carefull to give qualification and reasons of substance for thier claims.   I think some latitude is given to ensure good spirited debate but that could change dramatically if push came to shove on the issue

Perhaps a qualified person could advise on the point.


----------



## explod (24 February 2008)

robots said:


> hello,
> 
> friends have just gone to live in washington and work with military,
> 
> ...




And what has that to do with the issue of real estate as an investment vehicle.     

My earlier comment that you may be some kind of nut was I thought in retrospect, a bit over the top and to some extent was tounge in cheek, but now you are making me believe it


----------



## numbercruncher (24 February 2008)

lol Robi I love how you attempt to change the direction of the debate, weve now changed countries and blown their crime rate out of all sort of proportion to boot, In some vague attempt to justify Melb house prices in bubble territory ?

Melbourne has stacks of crime and guns and drugs etc etc etc. Just the Crims and Police are the only ones with guns.


----------



## robots (24 February 2008)

explod said:


> And what has that to do with the issue of real estate as an investment vehicle.
> 
> My earlier comment that you may be some kind of nut was I thought in retrospect, a bit over the top and to some extent was tounge in cheek, but now you are making me believe it




hello,

hahahahahahahahahahahaha

thankyou

robots


----------



## robots (24 February 2008)

hello,

no bubble NC,

plenty who cant afford RE, but no bubble across AUS, go rent, no issue

it is tough for some people life but they need to take a walk in the other direction, against the flow,

see things from a different perspective

thankyou

robots


----------



## ROE (24 February 2008)

numbercruncher said:


> lol Robi I love how you attempt to change the direction of the debate, weve now changed countries and blown their crime rate out of all sort of proportion to boot, In some vague attempt to justify Melb house prices in bubble territory ?
> 
> Melbourne has stacks of crime and guns and drugs etc etc etc. Just the Crims and Police are the only ones with guns.




Maybe this is in a US city not Melbourne 

http://www.news.com.au/story/0,23599,23265393-421,00.html


----------



## robots (25 February 2008)

hello,

gee number you must have a lot of browser's open

thankyou

robots


----------



## Tom Ronalds (25 February 2008)

numbercruncher said:


> QUEENSLAND'S buoyant housing market is teetering on the edge of a downturn with new figures revealing a 38 per cent jump in homes for sale.




Interestingly enough I spoke with one of the top Cairns builders on Friday - a fellow who is certainly not cheap, but has a reputation for consistently outstanding quality. He reckons he's got no new work coming through after the current lot of homes are completed.

I wonder what this may mean?

Yet in other areas, the local market is undoubtedly still strong. A townhouse near where I live sold within a week from listing, for a price that implies a net rental yield of 2.8%.

Go figure. On this sort of data, I'd be pretty reluctant to believe that these purchasers are going to see strong capital growth over the medium term. Likely the contrary.

Tom R.


----------



## robots (25 February 2008)

hello,

ah yes, the old capital growth furphy Tom R

thats fine, I hope the builder doesnt build anymore houses and listens to your advice about how poor the rental yield's are and the horrorable truths of home ownership

let the wealthy enjoy life even more

thankyou

robots


----------



## Tom Ronalds (25 February 2008)

explod said:


> Yeh, and I think you could be on slippery ground trying to say you dont' have to be registered to give advice because you dont' charge a fee.    That is why most posters are carefull to give qualification and reasons of substance for thier claims.   I think some latitude is given to ensure good spirited debate but that could change dramatically if push came to shove on the issue
> 
> Perhaps a qualified person could advise on the point.




The guy's a troll. He's got no idea, as is plainly obvious from his posts.

Of course you have to be licensed to give advice. 

If you've ever been to a public, general presentation by, say, your bank's financial planners or a big investment manager like Colonial (CBA), Challenger or BT (Westpac), you'd know they go to great pains to provide adequate - i.e. mile long - disclaimers about any advice given being intended for general purposes only. 

This is and long has been a requirement by ASIC and one can get prosecuted if specific advice is given without a licence and without ensuring you "know your client" first. This applies even to advice given at a friend's barbecue and is the basis for cases like the one in Tasmania a couple of years ago where a financial planner got his licence suspended for several months because he gave - free - advice to his relative without providing him with a written Statement of Advice.

Simple bank products can be sold without a licence and so can real estate - however the difference there is that both the bank staff and the real estate agents are not supposed to give "financial" advice - that's why they are "clerks",  "agents" and not "advisers".

Agents supposedly work for the seller (although too often they just work for their own commissions), while advisers - at least the ethical ones operating on a fee-for-service basis - work for the buyer [of financial products/advice].

The fact that real estate agents, who more often than not have very little special skills and next to no idea about investing & tax and financial matters, do indeed give what amounts to financial advice, is a long standing issue the financial planning community has been trying to raise with the relevant authorities (ASIC). 

Unfortunately ASIC's excuse is that because real estate is regulated by the States, while financial planning is regulated by the Feds, they have no jurisdiction against the spruikers.

This is why so many real estate fraudsters like Henry Kaye can get away with consistent highway robbery for sometimes up to several years, before someone finally does something about it.

Tom R.


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## Joe Blow (25 February 2008)

robots,

Either contribute something worthwhile to the discussion or please just stay out of it.

Your trolling is becoming more and more irritating by the day.


----------



## numbercruncher (25 February 2008)

Tom Ronalds said:


> Interestingly enough I spoke with one of the top Cairns builders on Friday - a fellow who is certainly not cheap, but has a reputation for consistently outstanding quality. He reckons he's got no new work coming through after the current lot of homes are completed.







Also a couple of sizeable QLD building companies hitting the wall lately I notice.



> The Queensland Building Services Authority (BSA) has issued a warning about a second Sunshine Coast construction company less than two weeks after the collapse of Real Property Constructions (RPC).




http://www.abc.net.au/news/stories/2008/02/19/2166620.htm


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## robots (25 February 2008)

hello,

since you on to Henry Kaye, he is being acted upon for fraud against an insurer,

he sold property to people who were too lazy to do things themselves, so why shouldnt he earn money from that?

isnt that why financial "advisers" get a nice fat commission for selling products as you just told us, not a lot of difference really

both are taking a product to the consumer,

thats rubbish about ASIC, if you dont charge there is no way you can be prosecuted, its the same for tax advice, 

daily my work buddy's ask for advice on tax and financial matters and are more than happy to assist,

the best one at the moment is after the GST came in, alot of sole traders (mostly service providers) earning less that 50k (now 75k for non GSt registered) went to their accountant who proudly told them you will be better off being GST registered

what a croc, all of a sudden the BAS statements got sent to the accountants office, and the nice receptionist rings up said person informing they better come in to fill out quarterly BAS, thankyou $150

you are right about the clerk thing, but I think it is more prevalent in the accountancy and financial advise inductsy, glorified clerks

thankyou

robots


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## explod (25 February 2008)

Thanks Tom for you effort and comprehensive explanation.    

It is obviously an RE Robot and should be ignored by all.   Problem is a lot of newcomers can get the wrong idea from the crapola and one feels (not that I am any expert) compelled to ballance the scales.

I'd have thought some of the posts should have been deleted.  I suppose to some it is entertainment but to most, investing the hard earned is serious business.

Cheers explod


----------



## robots (25 February 2008)

hello,

okay yes I apologise to everybody,

sorry

have a nice evening

thankyou

robots


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## Tinpusher (26 February 2008)

Tom Ronalds check PMs pls.


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## tech/a (26 February 2008)

Tom Ronalds said:


> The guy's a troll. He's got no idea, as is plainly obvious from his posts.
> 
> Of course you have to be licensed to give advice.
> 
> ...




Tom

Your one of the few F/A's that have taken "Intellegent" part in discussion.
I have 2 very good friends who are F/A's and 2 who are F/P's (Financial Planners).To be honest only ONE of these has been honest to me with regard to F/A's very limited (due to hobbling regulation) role in financial education and advising for clients.
As is evidenced in this passage



> This applies even to advice given at a friend's barbecue and is the basis for cases like the one in Tasmania a couple of years ago where a financial planner got his licence suspended for several months because he gave - free - advice to his relative without providing him with a written Statement of Advice.




Its no secret here that I dont have a high regard for the vanilla variety of F/A/P's.



> Agents supposedly work for the seller (although too often they just work for their own commissions), while advisers - at least the ethical ones operating on a fee-for-service basis - work for the buyer [of financial products/advice].




Fee for result from F/A/P's would be much better.Perhaps then youd see the cream rise to the top.



> The fact that real estate agents, who more often than not have very little special skills and next to no idea about investing & tax and financial matters, do indeed give what amounts to financial advice, is a long standing issue the financial planning community has been trying to raise with the relevant authorities (ASIC).




Try getting an F/A or an F/P to speak frankly on Property OR share TRADING for that matter.Seriously and not pointing the bone at you Tom BUT those I have spoken to and (that now totals about 8) only one no 2 a CPA with property had even a passing knowledge of Property investment let alone developement and TRADING well-----when I asked what Risk management techniques they employed with their clients their command of the English Language turned to in coherent babble and their eyes glazed over.




> This is why so many real estate fraudsters like Henry Kaye can get away with consistent highway robbery for sometimes up to several years, before someone finally does something about it.




Personally I feel the Financial Advisory Industry "Generally" hinders personal wealth developement more so.Product orientated and a sad lack of even basic Business/Property and Trading practices sees either bad advice or NO advice.
There are exceptions as there are exceptions with your "spruikers".

I do not know of one advisor telling clients to buy as much property as they could in 1997----Infact those I know said I was nuts in 2000 they were asking to chat with me over a barbie or dinner.Strange???

Oh and only 1 bought an IP and 1 age (45) bought his own home---had and still has a Porsche!---whats that tell you other than Image?
(Tells me dumb debt --but in his game of smoke and mirrors---a requirement---who'd talk to an F/A in a 2000 Commadore?).

Just posting some balance.


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## Tinpusher (27 February 2008)

> Oh and only 1 bought an IP and 1 age (45) bought his own home---had and still has a Porsche!---whats that tell you other than Image?
> (Tells me dumb debt --but in his game of smoke and mirrors---a requirement---who'd talk to an F/A in a 2000 Commadore?).




*tech,*

I'd be more interested in his assets under management (ie practice what he preaches) than what he drives.

I have a colleague south with a couple of mil in net assets in Brisvegas and he drives a 20yr old wreck (he does own his own aircraft tho).

Within 5 years I hope to buy a 40 foot Hunter cruising yacht and ship it over from the states (boats are way cheaper there) - but hell, I like sailing, it soothes my soul and the wind in FNQ is free and over 15kts most of the year..

Maybe people will comment on my poverty since my car will be 8 years old then.

I reckon the local real estate agents with their 07/08 Audi's, Merc's and Lexus' are the ones that make me laugh. What does that tell you of our over heated R/E market?


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## Tom Ronalds (27 February 2008)

@ tech/a:

Look, I'd be the first one to admit that many financial planners are no more than product sellers. The big banks and the likes of AMP/AXA view their "wealth management" sections as "distribution channels" - they even refer to them as such.

You just need to go to an employment site like Seek to see that just about any bank ad will stress that to get the job, you must have "proven selling skills".

The fund managers make a lot more money out of managing your funds, than they would out of just taking a percentage of the financial planner's fee revenues in order to provide the compliance and other services that an Australian Financial Services Licensee is obliged to provide to its authorised representatives.

When you then look at the overall investment & taxation and other required technical knowledge that these planners exhibit, it tends to be woeful.

At the same time, however, top quality advisers do exist, and over the last few years in particular, they have been growing in numbers. They will typically work for boutique practices that in many cases have their own AFSL licence, so as to eliminate the product-related conflict of interest. They will work on a fee for service basis and will charge for advice, with product selection being only the last step of a comprehensive plan. In some cases, these guys will act solely as overall strategists and will pass the actual portfolio design to other specialists, who do nothing but that and hold the appropriate qualifications.

I think it is unrealistic to look back now and say "they should have known back in 1997 that it was a good time to buy property". The truth is that nobody could have known, just like nobody could really know that prices would grow still much further, considering there were all the indications around in 2004 that the property bubble would burst there and then. Just do a Google search for "Australian property bubble" to see what I mean.

Financial advisers are in fact not allowed to give direct property advice. If you come to me and ask "I'm looking at such and such a property - does it look like a good deal?" - then I can run the fundamental figures and say yes or no. I can also say that in the context of your overall portfolio, buying an investment property could be an appropriate strategy.

But I can't say "you should go and buy such and such a house over at Sheridan Street, because it's a bargain". That's not allowed under the general provisions of the AFSL licence.

On the other side of things, the vast majority of Australians will go and look at buying an investment property as their very first major investment. That is not a good idea in most cases, regardless of the overall appearance of the market. The minimum cost of such an investment means by definition that the person concerned will have a very large loan liability, concentrated into an illiquid, inflexible asset with very high entry and exit costs. It will also mean his/her investments will all be concentrated in the proverbial "one basket". Furthermore, they tend to lack the experience which comes over years of investing, so often get sucked in by smooth-talking salesmen into buying what turns out to be by far not the best option.

So in such cases, there is no way I'd say "yes, go and do it" - regardless of the broader property market outlook. I'd be much more likely to say "look, why don't you invest in a selection of listed property trusts - these will give you the exposure to a similar sector, and yet will be liquid, flexible, offer very low entry and exit costs and you can size your position to allow you to diversify elsewhere; say into some top blue chips, to get the benefit of franking as well."

Top financial advisers do not pretend to be the pickers of the next best investment sector. They are also reluctant to trade clients' portfolios too much; the costs of that tend to be high, it simply is not what is expected from us and in the context of running a practice, it generally cannot be done anyway. 

In any case, you can often save clients a lot more through a strategic restructuring of their affairs than by trying to find the best investments and manage them overly actively. To give you an example, a couple I have been working with recently can expect tax savings alone in the vicinity of $350,000 over the next 10 years or thereabouts - purely through taking advantage of the relevant legislative rules and arranging their affairs accordingly. There is no product sale involved and they are happy to pay $10K/annum to have this strategy managed. 

The risk of under-delivering is then also a lot lower than with chasing high returns; we are simply taking advantage of existing tax rules. If those change, we will change our strategy accordingly. We will not have to worry about a high performing investment suddenly doing a Centro/ABS/AFG/MFS on the background of greatly positive analysts' recommendations, coupled with a market downturn.

This is where good advisers add value, without having to be overly active portfolio managers and without pretending to know whether buying a property today will see you double your investment over the next 5 years.

Good advisers will, however, not hesitate to tell their clients that on any fundamental measure you care to use, residential property is now grossly overvalued, that many Australians are overloaded with debt and that if the economy slows down sufficiently - which is likely considering the developing situation in USA/Europe, we will have a substantial problem on our hands. This is just employing some common sense and being prudent.

It doesn't mean I'd be telling everyone to go 100% cash though. It also doesn't mean that I will say to a long term investor "get out of CBA; it's dropped by 25% from its peak and the chart is quite bearish at the moment". 

Alas, sometimes it does mean that you will have the CNP/AFG and so on in some of your clients' portfolios. Nobody is infallible and if the track record has been top-notch, the fundamentals look good and you get consistent commentary from the analyst "gurus" that getting into AFG at $6 is a bargain, then you are likely to crash and burn very quickly from time to time. This is why you do not allocate 100% of your money into any one asset; property inclusive.

Am I certain I am right? -- Of course not. Nobody can be. But that's the best I can do and I don't pretend to be able to do better. There is only one Warren Buffett and even he does not give tax and superannuation advice! 

Cheers,

Tom R.


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## KIWIKARLOS (27 February 2008)

Ok so lets look at the facts house prices and indeed asset prices are going down in the US , UK and Spain whilst Austalia house prices continue to climb.
I live in a group of townhouses I bought 18months ago at 425K one just sold in our group with a smaller yard and two common walls for $460K thats a good return in 18 months. I was speaking to the agent he also recently recorder a record sale price at a large townhouse complex down the road. 

Given this is one suburb we are talking about but many are in the same situation. 

Anyways the big difference between US, UK, Spain and OZ is that although we all have very large current account deficieits ours is in private debt. Also
the US, and UK economies in particular run on asset prices increasing ours runs on commodity's. Since 1980 the US has been growing on the back of consumer spending and asset price increases which have been increasing the goverment and personal debt levels to huge hieghts.


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## KIWIKARLOS (27 February 2008)

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

most countries will not experince asset price decreases really its only the ones with very high foreign government debt.

http://en.wikipedia.org/wiki/Current_account

"It should be noted that a current account deficit is not always a problem. The "Pitchford Thesis" states that a current account deficit does not matter if it is driven by the private sector. Some feel that this theory has held true for the Australian economy, which has had a persistent current account deficit, yet has experienced economic growth for the past 16 years (1991-2007). Others argue that Australia is accumulating a substantial foreign debt that could become problematic, especially if interest rates increase. A deficit in the current account also implies that the country is a net capital importer."


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## Tinpusher (27 February 2008)

> the US, and UK economies in particular run on asset prices increasing ours runs on commodity's. Since 1980 the US has been growing on the back of consumer spending and asset price increases which have been increasing the goverment and personal debt levels to huge hieghts.




*Kiwi,*

The Americans are smart and savvy, if you are using windows or mac software to write on a machine licenced to a US firm (made in China of course) think about it (and the web is their invention).

Australian's can only dream of being as innovative and inventive. Mate we don't even ship steel anymore in any quantity we just send the iron ore AND we allow the Chinese to buy the mine (???).

Australian personal debt levels exceeds US debt as does our consumerism. Our P/E (rental yields for the E) on our Real Estate exceeds theirs before their recent bang. 

As with everything we lag the 'old' economies of the US and the UK. The 'bang' won't happen overnight but it will happen. Who will get burned first with the 'negative equity' fuelling the runaway train? The owner occupier or the negatively geared investor?

It will be the investors with high gearing ratios.

"I hear a-train a-coming.."

http://www.whocrashedtheeconomy.com/?cat=2


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## ROE (27 February 2008)

KIWIKARLOS said:


> Ok so lets look at the facts house prices and indeed asset prices are going down in the US , UK and Spain whilst Austalia house prices continue to climb.
> I live in a group of townhouses I bought 18months ago at 425K one just sold in our group with a smaller yard and two common walls for $460K thats a good return in 18 months. I was speaking to the agent he also recently recorder a record sale price at a large townhouse complex down the road.




That's 5% increase a year... you actually going backward if you sell at that price and live in it. You would pay 7%-8% interest Plus 1.5% stamp duty and sale commission 

It doesnt pay to get in and out of property 

Just imagine if price doesn't move at all.


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## Aargh! (27 February 2008)

KIWIKARLOS said:


> Ok so lets look at the facts house prices and indeed asset prices are going down in the US , UK and Spain whilst Austalia house prices continue to climb.
> I live in a group of townhouses I bought 18months ago at 425K one just sold in our group with a smaller yard and two common walls for $460K thats a good return in 18 months. I was speaking to the agent he also recently recorder a record sale price at a large townhouse complex down the road.




I'd say that that return is quite poor.... Depending on a few factors.

Say that you bought the property at 80% Leverage = 0.8 x 425,000 = 340,000

Interest at 7.5% p.a. for 18 months = 340,000 x 0.075 x 1.5yrs = 38,250

Maintenance and RE fees for sale say = 10,000

Cost of ownership = 38,250 + 10,000 = 48,250

Current approx value (based on similar recent sale) = 460,000

Net postion if sold = 460,000 - 48,250 = 411,750

Profit/Loss = 425,000 - 411,750 = 13,250 Loss = -3.1%

Now my figures assume no tax concessions for interest (if it were a IP) and a few other things but even so the figures are quite poor IMHO.


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## numbercruncher (27 February 2008)

Aargh! said:


> I'd say that that return is quite poor.... Depending on a few factors.
> 
> Say that you bought the property at 80% Leverage = 0.8 x 425,000 = 340,000
> 
> ...





And the other one RE bulls forget to mention is the 10k stamp duty - not to mention Conveyancing, rates, Loan establishment fees etc and that variable Interest rates are now 20pc higher. They are predicting 10pc mortgages this year !

If there is indeed a downturn you can easily see how walloped people will get.

Property bulls should be begging China to buy more stuff and lobbying the Unions to doll out payrises to keep this baby going


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## Aargh! (27 February 2008)

numbercruncher said:


> And the other one RE bulls forget to mention is the 10k stamp duty - not to mention Conveyancing, rates, Loan establishment fees etc and that variable Interest rates are now 20pc higher. They are predicting 10pc mortgages this year !
> 
> If there is indeed a downturn you can easily see how walloped people will get.
> 
> Property bulls should be begging China to buy more stuff and lobbying the Unions to doll out payrises to keep this baby going




I agree with your view of where this one is headed.

I've done the number on numerous properties but I always come to the same conclusion which is to leave RE alone at these levels. Friends and colleauges tell me about their RE profits but after analysis only one modestly beat the cash rate while all others went backwards.

I continually can't believe the level financial education the majority of people have. In my profession I'm surrounded by intelligent people who are just outright stupid when it comes to dealing with money. I could vent all day about examples and especially ones about RE.


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## KIWIKARLOS (27 February 2008)

Who said anything about property as an investment ?
The title of this forum is "house prices to keep rising for years"

I would argue that property hs always been a poorer investment than things such as investment funds and sharemarkets for almost 100 years. Really if you take inflation out of the price between 1950 and now most people would be loosing.

I live in my house not only becuase of the "safety" of the investment but also the lifestyle. I wouldn't personally invest in real estate any more I think people 5-10 years ago were lucky with the boom. As for rental properties the returns are poor and its just a pain in the @ss to manage. Not like investment funds which require far less capital outlay, little follow up work and better returns.

I think the discussion has lost focus I'm simply saying I don't believe we will experience an overall asset depreciation like the US is and UK, Spain might.
Its not just house prices tanking in the US its all the big banks investments , bonds, insurance. Our financial markets pail in comparison to the US and haven't been as infiltrated by these dodgy new economic vehicles and deregulation that the big US banks pushed on the congress and US people. 

Can anyone provide any information that gives good reason to believe that large portions of the OZ market will have 10%+ declines ? becuase there is a lot of data and info showing the opposite.


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## KIWIKARLOS (27 February 2008)

Also in regard to the U been "innovative" and everyone using their technology etc. Their biggest innovations are based around military technology. Sure they control the computer market and companies such as IBM, HP etc are doing ok but as a % of the total US economy this sector I imagine would be a very small portion, most of the computer components are built overseas anyhow?

Major oil producing countries aren't "innovative" but they are looking much healthier economically than the US. They ship raw product which gets refined and turned into fertilizer, plastics and a huge variety of fuels. It actually works in our advantage to not turn ore into steel here as the steel is made where the market is. The huge capital costs etc involved and the fact that other countries have well established industries means we essentially get lots of money for little outlay.

Indeed the US was innovative for any years but I believe they have been neglecting their science and technology for a long time now. Europe, australia and asia are now just as innovative as they are in certain fields. 
Besides the fact that industrial piracy pretty much nullifies as large scale benefit the US might of had from its tech edge.


----------



## explod (27 February 2008)

robots said:


> hello,
> 
> ////
> 
> robots




What has this post got to do with house prices.

Amazed that you have come back after the weekend results.   You must have a bit of an in with the establishment too, never a cross word for nought.

Yes this thread is about rising property prices as No. 1 but upper most on ASF is good investing, and property at the moment has a cloud over its head.


----------



## tech/a (27 February 2008)

*TOM and co*



Tom Ronalds said:


> @ tech/a:
> 
> Look, I'd be the first one to admit that many financial planners are no more than product sellers. The big banks and the likes of AMP/AXA view their "wealth management" sections as "distribution channels" - they even refer to them as such.
> 
> ...




This seems to be more the norm than the exception.



> At the same time, however, top quality advisers do exist, and over the last few years in particular, they have been growing in numbers. They will typically work for boutique practices that in many cases have their own AFSL licence, so as to eliminate the product-related conflict of interest. They will work on a fee for service basis and will charge for advice, *with product selection being only the last step of a comprehensive plan.* In some cases, these guys will act solely as overall strategists and will pass the actual portfolio design to other specialists, who do nothing but that and hold the appropriate qualifications.




I have been to 2 of these so called Boutique type practices and each time upon recommendation.I'm very serious when I say that these guys really had no idea.One suggested I place $57,000 a year in super.Bloody hell if I cant make $57k a year work harder than a one off tax break I'll go he.



> I think it is unrealistic to look back now and say "they should have known back in 1997 that it was a good time to buy property". The truth is that nobody could have known, just like nobody could really know that prices would grow still much further, considering there were all the indications around in 2004 that the property bubble would burst there and then. Just do a Google search for "Australian property bubble" to see what I mean.




Tom.
Of course you could.
(1) You could buy established property cheaper than new property,carpets tiling,Gardens,drives paving all done way way under the cost of replacement.
(2) You could go out and buy just about any property 20% down and be positively geared---a complete no brainer.
(3) by 2000 commercial and Industrial property relative to general housing was amazingly cheap.Here you could and I did buy industrial land for $120K an acre,domestic was $120k for 400 square meters that to was a no brainer.

Now seriously you cant tell me you cant identify areas of stalling/reversal and opportunity in the property market---today?



> Financial advisers are in fact not allowed to give direct property advice. If you come to me and ask "I'm looking at such and such a property - does it look like a good deal?" - then I can run the fundamental figures and say yes or no. I can also say that in the context of your overall portfolio, buying an investment property could be an appropriate strategy.
> 
> But I can't say "you should go and buy such and such a house over at Sheridan Street, because it's a bargain". That's not allowed under the general provisions of the AFSL licence.




You dont have to be specific,you just have to recognise opportunity for your clients.



> On the other side of things, the vast majority of Australians will go and look at buying an investment property as their very first major investment. That is not a good idea in most cases, regardless of the overall appearance of the market. The minimum cost of such an investment means by definition that the person concerned will have a very large loan liability, concentrated into an illiquid, inflexible asset with very high entry and exit costs. It will also mean his/her investments will all be concentrated in the proverbial "one basket". Furthermore, they tend to lack the experience which comes over years of investing, so often get sucked in by smooth-talking salesmen into buying what turns out to be by far not the best option.




Cant disagree more.If you can clearly buy with positive gearing from the get go with ALL costs covered its like buying BHP at $10.



> So in such cases, there is no way I'd say "yes, go and do it" - regardless of the broader property market outlook. I'd be much more likely to say "look, why don't you invest in a selection of listed property trusts - these will give you the exposure to a similar sector, and yet will be liquid, flexible, offer very low entry and exit costs and you can size your position to allow you to diversify elsewhere; say into some top blue chips, to get the benefit of franking as well."




Well one huge tactic for massive growth potential is immediately lost.I cant go to a bank and say I have $50K now loan me $200K so I can buy property trusts.When I bought houses then my money down was $40 k on $200k my return on the 40k is now 700% by doing this multiple times diversification was/is pure lunacy.  *"Go where the money is and go there often!"*



> Top financial advisers do not pretend to be the pickers of the next best investment sector. They are also reluctant to trade clients' portfolios too much; the costs of that tend to be high, it simply is not what is expected from us and in the context of running a practice, it generally cannot be done anyway.




So what we can expect is expensive mediocrity! 



> In any case, you can often save clients a lot more through a strategic restructuring of their affairs than by trying to find the best investments and manage them overly actively. To give you an example, a couple I have been working with recently can expect tax savings alone in the vicinity of $350,000 over the next 10 years or thereabouts - purely through taking advantage of the relevant legislative rules and arranging their affairs accordingly. There is no product sale involved and they are happy to pay $10K/annum to have this strategy managed.




Excellent so what are you doing with their extra 250K they will have available after your fees? 



> The risk of under-delivering is then also a lot lower than with chasing high returns; we are simply taking advantage of existing tax rules. If those change, we will change our strategy accordingly. We will not have to worry about a high performing investment suddenly doing a Centro/ABS/AFG/MFS on the background of greatly positive analysts' recommendations, coupled with a market downturn.




Any accountant worth their fee can do that.Not *ANY* consultant can place you into a trading stratagy which will weather a centro or 2 in their portfolio which consistently out performs the white elephants called Managed funds or worse a portfolio selected on some "experts" valuation of prospects.
Those that can will return you the riches you seek,those who pedal conservatism will return exactly that. If I or 90% of the population had the choice I know which one we would take.



> This is where good advisers add value, without having to be overly active portfolio managers and without pretending to know whether buying a property today will see you double your investment over the next 5 years.




but thats what we want---we want EXPERTS who DO recognise opportunity well before we do---thats what experts do---then give us the heads up so we can take advantage of it NOW---not look back with everyone else and say bugga missed the strongest bull run in housing history---your kidding your lot didnt/couldnt see it coming---it lasted 8 yrs!



> Good advisers will, however, not hesitate to tell their clients that on any fundamental measure you care to use, residential property is now grossly overvalued, that many Australians are overloaded with debt and that if the economy slows down sufficiently - which is likely considering the developing situation in USA/Europe, we will have a substantial problem on our hands. This is just employing some common sense and being prudent.




Terrific they can un catagorically tell me when a run is OVER but cant ell me when its in its developement phase so I can take advantage of it. I'm no expert but I can also spruik exactly the same.I can also tell you that there STILL is opportunity in property if you know what to look for.
Thats what Id want to know from an EXPERT---what to look for---the signs---setups---wahts an opportunity look like?

See below


----------



## tech/a (27 February 2008)

> It doesn't mean I'd be telling everyone to go 100% cash though. It also doesn't mean that I will say to a long term investor "get out of CBA; it's dropped by 25% from its peak and the chart is quite bearish at the moment".
> 
> Alas, sometimes it does mean that you will have the CNP/AFG and so on in some of your clients' portfolios. Nobody is infallible and if the track record has been top-notch, the fundamentals look good and you get consistent commentary from the analyst "gurus" that getting into AFG at $6 is a bargain, then you are likely to crash and burn very quickly from time to time. This is why you do not allocate 100% of your money into any one asset; property inclusive.




Well I dont agree,there are ways of mitigating risk without the necessity of diversification.You can take FULL advantage of opportunity with confidence and still protect yourself from failure in one asset class.
But ofcourse as an expert you know this!



> Am I certain I am right? -- Of course not. *Nobody can be.* But that's the best I can do and I don't pretend to be able to do better. There is only one Warren Buffett and even he does not give tax and superannuation advice!
> 
> Cheers,
> 
> Tom R.




Tom of course *they CAN BE*. If they couldnt then there wouldnt be a growing number of Millionaires in Australia or elsewhere.
Some get it right---are they just lucky gamblers--I think not.
What sets them apart is---- the ability to recognise opportunity,work out what to do with it and do something immediately.

Unfortunately for the masses they dont reside in the Financial Advice fraternity.
Where like the majority of the populace they are frozen by fear of loss,getting it wrong,without a clear understanding of how to manage investment IF IT DOES GO WRONG.

Know this---NO FEAR.
The only risk management stratagy I see or hear pedelled is Diversification.
Is that ALL that Experts can offer------??

I rest my case.


----------



## wayneL (27 February 2008)

Tech,

With so much knowledge, confidence and ability, it sounds a bit like you've underperformed. You should own half of Adelaide by now.


----------



## tech/a (27 February 2008)

wayneL said:


> Tech,
> 
> With so much knowledge, confidence and ability, it sounds a bit like you've underperformed. You should own half of Adelaide by now.




Wayne.

There you go again.

Everytime I post up anything you have to turn it into something where you think I'm doing this for my own personal benifit.
The only thing about me in this is the example of one deal.

Property is a part of business---so---

Whats with the sarcastic crap.
About time you moderated yourself.


----------



## wayneL (27 February 2008)

tech/a said:


> Wayne.
> 
> There you go again.
> 
> ...



I suggest you read Nassim Taleb's "Fooled By Randomness". Perhaps you may see some ironies... perhaps not. 

Re moderating: The roll of moderator is to uphold the code of conduct. It does not mean that the moderator is precluded from opinions disagreeing with others or refraining from normal conversational banter.

Re "sarcastic crap": It was not sarcastic, merely an honest observation on the divergence between your financial performance and your assertions in the above posts. That ain't sarcasm.

You have to be able to take as good as you give.


----------



## tech/a (28 February 2008)

> divergence between your financial performance and your assertions in the above posts. That ain't sarcasm.




This is going to be good.


How do you know my financial performance?
Id love to shut you and a few others up here perminently.

What would you like to see Wayne.
The magic Million is far gone.
A public apology will be required upon fulfilment.
Far from Hot air I'm involved in it----live it and APPLY it.


----------



## wayneL (28 February 2008)

tech/a said:


> This is going to be good.
> 
> 
> How do you know my financial performance?
> Id love to shut you and a few others up here perminently.



Tech,

You can't shut me up because... well, you can't. LOL 

But FWIW, it's not to hard to get a fair idea of your performance from publicly available information. You're doing OK for yourself, business is going well, a few projects on the go. Fine, good on you, life is good apart from the yearning for kudos.



tech/a said:


> What would you like to see Wayne.
> The magic Million is far gone.
> A public apology will be required upon fulfilment.
> Far from Hot air I'm involved in it----live it and APPLY it.




But according to you, this bull run was totally predictable. The question then becomes: Why didn't you hock yourself to the eyeballs on property and acquire 800 properties since 1996, like the couple I met here recently (putatively worth about £120 million)? Why did you plonk a miserable $30k in the stock market when you started Techtrader? Why not a hell of a lot more?

Fear?

Lack of foresight?

Unable to predict the bull run?

You've done OK, but I'll bet there are some here that could buy and sell you a few times over on a rainy Wednesday afternoon over a few tinnies.


----------



## tech/a (28 February 2008)

wayneL said:


> Tech,
> 
> You can't shut me up because... well, you can't. LOL
> 
> But FWIW, it's not to hard to get a fair idea of your performance from publicly available information. You're doing OK for yourself, business is going well, a few projects on the go.




Really.



> Fine, good on you, life is good apart from the yearning for kudos.




You know this gets up my nose. Using personal examples is part of discussion,If I didnt have any then my arguement would be pretty limp.

Personally my view is a great deal of the information given on here and by many professionals,is pretty average. Your contributions Wayne tend to fall in this catagory.Average is fine if you wish to be average.
I stepped out of Average years ago so I'll post some stuff that challenges conventional thinking,so that readers can challenge their conditioned thinking and investigate ways of returning un conventional results.

I enjoy discussion particularly on the topics of Business Trading and Property.



> But according to you, this bull run was totally predictable. The question then becomes: Why didn't you hock yourself to the eyeballs on property and acquire 800 properties since 1996, like the couple I met here recently (putatively worth about £120 million)?




I did 10 was enogh for me to handle.Why didnt 90% of the population not buy one?



> Why did you plonk a miserable $30k in the stock market when you started Techtrader? Why not a hell of a lot more?
> 
> Fear?
> 
> Lack of foresight?




$30k was chosen for the public exercise as a figure that Joe Average would likely use for a margin loan.It was a figure agreed upon by those who followed the developement.Personally and its public knowledge I traded 3 variants of the method until July last.



> Unable to predict the bull run?




I'm sure you have the intelligence to realise that its not about picking anything its ALL about placing yourself in the position to take advantage of *OPPORTUNITY*--------bullruns OR bear runs for that matter in a trading sense.
In a property sense owning one home keeps you up with the price spiral but at best gives you replacement value.2 or mare gives you that edge.



> You've done OK, but I'll bet there are some here that could buy and sell you a few times over on a rainy Wednesday afternoon over a few tinnies.




I bet there is------pity they dont offer practical information more often to those who would benifit most.

*Wayne* Rather than continually attempting to shoot me down personally or cut me down a peg or two---*why not get involved in constructive discussion* on the issues being talked about?


----------



## nizar (28 February 2008)

wayneL said:


> Why did you plonk a miserable $30k in the stock market when you started Techtrader? Why not a hell of a lot more?




I have often pondered over this myself.


----------



## BradK (28 February 2008)

crikey... didn't realise you guys had so much bad blood between each other. Its better than Obama and Hilary. 

I think you both need to sit down together, crack open a beer, and watch the most inspiring speech their ever was... its at the end of Rocky IV. 

http://www.youtube.com/watch?v=261sgYPcjes

'If I can change... and you can change... we ALL can change... da da daaa. da da daaa.. da da daaa.. da da dooo... dub a da da du da... ' 

So inspiring! 

Cheers
Brad


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## doogie_goes_off (28 February 2008)

Has anyone considered the inflationary spiral on construction due to increased material cost, particularly steel and copper which are integral to modern building, with the raw materials in more demand I reckon the "real cost", not just percieved value of bricks and mortar is on the way up, this makes houses a sure bet for me at this stage, my guess is there is no better time to build than when you are ready because there will still be material demand in 200 years! Until the world is overpopulated and nuclear war breaks out of course.


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## tech/a (28 February 2008)

nizar said:


> I have often pondered over this myself.




I'm here all you need do is ask.
Scroll back a page for the answer.

Doggie.
Absolutely.
My import indent offer for structural steel increased 15%. Watch what inflation does to pricing.


----------



## numbercruncher (28 February 2008)

Anyone in this thread a member of "The Investors club" ?


----------



## wayneL (28 February 2008)

tech/a said:


> Really.



 Yep



> You know this gets up my nose. Using personal examples is part of discussion,If I didnt have any then my arguement would be pretty limp.
> 
> *Personally my view is a great deal of the information given on here and by many professionals,is pretty average. Your contributions Wayne tend to fall in this catagory*.Average is fine if you wish to be average.
> *I stepped out of Average years ago* so I'll post some stuff that challenges conventional thinking,so that readers can challenge their conditioned thinking and investigate ways of returning un conventional results.



[sigh] So true to form it's boring. In your thinking, everybody else is a muppet, but you on the other hand, belong to the corporate and intellectual elite and we should all gather round and bask in your excellence. LOL

Your efforts and input are interesting and valuable, but it's the de-edification of everybody else that exposes the fragile self image.



> I enjoy discussion particularly on the topics of Business Trading and Property.



Of course! We all do. That's why we're here.



> I did 10 was enogh for me to handle.Why didnt 90% of the population not buy one?



Is this above average for a property investor? Maybe it is I don't know.



> $30k was chosen for the public exercise as a figure that Joe Average would likely use for a margin loan.It was a figure agreed upon by those who followed the developement.Personally and its public knowledge I traded 3 variants of the method until July last.



The three variants are undisclosed, so maybe you did, maybe you didn't. But I recall in 2003-2004 you stated that anyone that traded a large amount (a figure of $250k was used) had rocks in their head.

That is on the public record.... somewhere.



> *Wayne* Rather than continually attempting to shoot me down personally or cut me down a peg or two---*why not get involved in constructive discussion* on the issues being talked about?



You misunderstand my motive. It is for you to have a little respect for others, whether average, muppets, or supertraders.

As we are seriously off-topic, my last post on the matter.


----------



## IFocus (28 February 2008)

Wayne an observation.... you have moved the discussion from Housing to Tech.

As a keen student of psychology myself I am not qualified to lecture as to why this is. But I will say a lot of people post here for the very reasons you are pushing Techs buttons for and yes you can put my name at the top of the list.

I cannot remember the 1st post I every read of Techs maybe on Reef maybe on the old stock forum (cannot remember the name was it Central) but as a long term lurker I have certainly have only gained as a result.

You are a very smart guy and I respect you for it, so there are hundreds of ways you can engage people, lifes short stay away from the dark side its much more fun being positive.

Focus


----------



## tech/a (28 February 2008)

*Wayne*

I to will also make this my last post on the "Me" topic.

I'll give credit where its due and have done so in the past.There are quite a few I respect for their input albeit it vastly different in some terms to my own others not so disimilar.
Young Trader is one of those.The guys out of the square.
There are others who I can no longer mention particularly in directing people to their sevices.

*IFocus*



> I have certainly have only gained as a result.




Regardless of opinion this *IS* my only motivation for posting.

Back to discussion---anything on the topic or my comments on the topic you wish to address Wayne?


----------



## pepperoni (28 February 2008)

Robots is in retreat .. get him spruiking again so me and my rich friends can laugh at his ignorance.

Syd west is still falling ... one street in north west down almost 50% ... all the losses being taken by experts like robots haha.

And right now this is really hitting in the last few weeks (ie since my post) listings going up in mosman, cremorne and unlike last year no sold priors and many withdrawals and passed ins.

Ive watched a for sale drop 20k every few days with an asking price down over 100k now.

The robots of this world dont have the big picture view to understand the impact of 12 small rate increases but as the water nears boil they are almost working things out.  Almost. Too slowly though.

The property market has managed to soak up some loose change in the economy but its just another market and given the drops we have already had in syd its easy to see it will become more volatile (not quite the asx but not up 10% each an every year either).

Keep it going ... laughing at the impoverished melbornian expert will make this so much sweeter.


----------



## pepperoni (28 February 2008)

ROE said:


> That's 5% increase a year... you actually going backward if you sell at that price and live in it. You would pay 7%-8% interest Plus 1.5% stamp duty and sale commission
> 
> It doesnt pay to get in and out of property
> 
> Just imagine if price doesn't move at all.




And dont forget stamp duty ... I flipped a property from $1.2m - $1.4m in 18 months ... the robots of the world think thats incredible but factor in $60k stamp duty and $30k agents/advertising etc its $100k or about what a term deposit gives you.

And I was lucky to sell to a property ignorant robot ... but once they have all been parted with the money burning a hole in their pockets (which is actually the banks ha ha) the market will change ... Robots are becoming rarer this year as you will see with auction results and more importantly prices over the next 12 months.

I saw a similar robot on a thread in the US before the crash ... I still lol .. LONG LIVE LOLBOT!


----------



## wayneL (28 February 2008)

IFocus said:


> lifes short stay away from the dark side its much more fun being positive.
> 
> Focus



Yup,

That's what I'm trying to get at.

Cheers


----------



## pepperoni (28 February 2008)

wayneL said:


> Yup,
> 
> That's what I'm trying to get at.
> 
> Cheers





Bah - Life is more fun when you dont take the internet too seriously ... especially off topic.  

Anyway where is the fun in giving unqualified ..... and unsolicited .... psyche advice ... not exactly ray of sunshine stuff its!


----------



## Temjin (28 February 2008)

Tech/A, I can sort of understand you because I have been in your position before (for a short while). That is, being quite biased against the so called "professional financial advisers" because I felt they don't know how to advise their clients to act on opportunities to produce "wealth". (i.e. identify the bull run in properties, identify the opportunities in share trading, identify resource boom, etc) I was also against their risk management and investment advise, that is to diversify and invest for the long term. (buy and hold) And then their salesman attitude to maximise commissions and to make recommendations not in the best interest of their clients. 

As someone for me who is very much into future/forex tradings, and investment in "a single basket" without much diversification, I am actually trying to change my career into the financial planning industry even with those biases. 

The fact is, FINANCIAL ADVISERS have NEVER been responsible for helping their clients to speculate and/or recommend actions on opportunities based on predicting economic cycle turn around and/or other contrarian "alternative, non-mainstream" investments. This include trading and how to succeed in it. They are not here to help you to create extraordinary wealth, and I never expected to see anyone who would give you that advise in the first place. 

If you want a "professional" to help you with that, then well, I doubt there is anyone out there that could help you. Maybe the best person you could talk to on "investment ideas" is YOURSELF. 

The fact is that a great majority of the population are not spectuators or professional/dedicated investors. Even highly successful entreprenuers are not as investment minded and focus more on their business. This is where financial advisers come into play, to assist them with "general" strategies to protect wealth, minimise tax and basic wealth creation. 

The stuff that a lot of us are doing, speculations in shares/futures, properties, are not mainstream stuff. Mums and dads, rich retirees, and successful businessman do not want advise in such stuff. Maybe they do, but why would any financial advisor would put themselve and their career at risk by advising on speculating for massive wealth creation?

Maybe your circumstance do not require the service of any financial planner. A specialist in taxation, accounting, legal stuff or business planning might be more suitable for you and your investments. 

But I agree with Tom still, there ARE some high quality financial advisors out there who aren't just trying to hard sell their "recommended list of products" just for the sake of commission. I don't plan to be that at all, hate to be a hard sale guy anyway. (that's why I hate those credit cards salespeople) 

My 2 cents worth.

P.S: yes, sorry, another out of place post. Let's back to the property talk.


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## tech/a (28 February 2008)

Temjin

Thanks for your reply thank Goodness someone see's where I'm coming from.
There is a thread on Financial advisors

https://www.aussiestockforums.com/forums/showthread.php?t=3086&highlight=Financial+advisers

Perhaps Mods can clean this thread up and over to there.

I have a suggestion which I'll post a little later on the suggested thread which hopefully You/ Tom /Wayne /and Peppi and others who live outside the square may be interested in contributing.


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## ROE (28 February 2008)

I don't like bagging out anyone for their investment decision it's their call and it's their lost/benefits. But the way I see it is

If you buy a property, it's not much difference from leveraging into a stock in a big way. The only way you make money out of property is price going up.

If it stand still you are stuffed and if it's going down you go straight to hell 
Because your loss will be multiplied. 

I actually know people who bought property and they are force to sell in the next few weeks to meet repayment. I don't think they want to admit that they are over leveraging but down inside I know they feel the pain. 

I'm actually in the market in  2 years for a property but I will pay it with cash and no mortgage so I'm just buying my time
and I know a bargain when I spot one.

Amen


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## pepperoni (28 February 2008)

Like I was saying ....

http://www.bloomberg.com/apps/news?pid=20601081&sid=acMZzoeZmnLc&refer=australia


Sydney Prestige Property Sales Fall 35 Percent, Review Says 

By Robert Fenner

Feb. 26 (Bloomberg) -- Sales of Sydney prestige homes, properties worth more than A$2 million ($1.8 million), slowed more than 35 percent this year, the Australian Financial Review reported. 

There have been 190 such properties sold since the start of 2008, compared with 295 in the year-earlier period, the newspaper said, citing the Dyson Austen Prestige Residential Survey. 

Similarly priced properties in Melbourne continue to ``flourish'' after a record 2007, the newspaper said, without providing specific numbers. 

To contact the reporter on this story: Robert Fenner in Sydney 


This is my market so I would know first hand, unlike Robots with his penny dreadful melbourne properties :headshake

Robot types think property is wonderful because they can leverage, but if there isnt all the credit sloshing around when you go to sell the other robots simply dont have the option to burn the extra cash needed to make the market go up .... and thus starts the vicious cycle ... unless credit markets turn around 180 degrees soon :silly:.


----------



## Tom Ronalds (28 February 2008)

OK; I'm not going to engage in a long OT discussion about what financial planners should or should not do according to some people's opinions. I think Temjin has made some good points in his post, so I'll leave it at that.

Perhaps just a short addendum for the benefit of tech/a:

You may have good reasons for disliking financial planners and as I pointed out in my previous post, many of those reasons are fully justified. However what you would clearly like to see financial planners deliver is simply not going to happen for all sorts of reasons, several of them being legislative ones. 

Financial planning is one of the most tightly regulated industries out there and unless you are very familiar with the regulatory framework, you will simply have no appreciation of the fact that no Australian Financial Services licensee will allow you to provide the type of service/approach to investing you clearly favour; regardless of whether you as a professional are able work that way & deliver for your clients or not. 

If you advise a client to concentrate all his/her investment assets into one asset class, you will get into trouble because no AFSL licensee compliance officer will let you do that. Even if you get your own licence, you will be playing with fire because you can never be certain that a black swan event will not occur, which will wipe your client out. Consequently no professional indemnity insurer will cover you when you inevitably get sued.

Unfortunately - or perhaps fortunately, depending on one's POW - we all have to comply with lots of regulations many of which we sometimes do not agree with. That is the condition of obtaining and working under an AFS licence.

With respect to your comment about how a good accountant could give the sort of tax advice I mentioned before: Sure s/he could. But show me one who will. The majority of accountants are reactive rather than proactive and not trained to employ creative thinking. You may not believe me, but as a SMSF specialist I deal with accountants all the time, so I do know what I'm talking about.

Anyway, enough on this topic. It was not my intention to divert this thread from property to financial planning; these have been responses to some points raised by others.

I'm going away overseas for the next 3 weeks so there will be no further postings from me for at least that long. I mention this so nobody thinks that I ignore private messages or other relevant posts.

Cheers,

Tom R


----------



## explod (28 February 2008)

A great post Tom and hope it goes well for you on the trip.

Property will rise and fall but we do not know when.   As with all investments we are limited to following the trend and when stripped bare, fundamental and technical does just that.

From Buffet's idea I learnt to use my own ruler; but we also need good counsel sometimes and financial advice from the proper source is never wasted.


----------



## numbercruncher (28 February 2008)

Just saw the Fire Fighters Union on TV, protesting for a payrise, Firefighters earn $21 per hour , shave off some tax and it gives you a perfect example of why the RE boom is over. If the people that stop your house from burning down cant afford to buy one, why should they bother ?

You need massive wage Inflation to keep RE going. But that would mean massive Interest rates.

I cant see any logical reasons why the title of this thread on average is going to prove true.


----------



## robots (28 February 2008)

hello,

how we going, everybody having a great day

road my bicycle round the streets today all's going well, didnt see any re agencies closing down so all in all things still pretty good,

great to see developers constructing quality apartments for owner-occupiers as Aus embraces this style of RE, 

still is great value in the 1970's blocks, this weekend should hold around the 70% rate which is good,

was interesting to see adelaide go to 71% last week as posted by Tech, so very interesting to follow the capital city prices as one changes

thankyou

robots


----------



## Sean K (28 February 2008)

robots said:


> still is great value in the 1970's blocks, this weekend should hold around the 70% rate which is good,



All the firefighters must be rushing to snap them up. 70s was a quality style that will last through the ages.


----------



## explod (28 February 2008)

robots said:


> hello,
> 
> how we going, everybody having a great day
> 
> ...




When you are saying 70% I take it you are talking the % of sales, i.e. clearance rate.

Why do you say it should hold, you give no reasons.

Of course clearance rates tell us nothing about the value of the market or the volume.   If more people try to sell and are prepared to drop prices then the clearance rate could go up, you would say 80% is good, when in fact an examination of all the demographs could paint an entirely different picture.  Clearance rates on thier own are absolutely meaningless.

I wonder why you post if you have little or nothing to say or is it amusement at creating ripples on the pool?

I would be most interested if you would kindly answer the above points


----------



## robots (28 February 2008)

hello,

another great article:

http://business.theage.com.au/housing-affordability-slumps-to-new-low/20080228-1vhe.html

this is interesting because with maybe 12 rises happening the prices are still SOLID (not rising 20%/pa, I said solid)

it also highlights the room for rent increases in the future, as at 26% of wage is still very low I believe and will be interesting to watch,

thankyou

robots


----------



## robots (28 February 2008)

hello,

I have been advised to keep things "on topic" I can only encourage you to do the same,

therefore please stick to the discussion regarding "house prices to keep rising for years",

thankyou 

robots


----------



## wayneL (28 February 2008)

robots said:


> hello,
> 
> I have been advised to keep things "on topic" I can only encourage you to do the same,
> 
> ...



Presuming you were answering explod, his questions are very much on-topic, i.e. the reasons behind house price rises or falls.


----------



## robots (28 February 2008)

wayneL said:


> i.e. the reasons behind house price rises or falls.




hello,

any chance of telling me which part of the explod post related to this?

thankyou

robots


----------



## gfresh (28 February 2008)

How can you say rising rents are really a good thing without being incredibly selfish? 

Would you prefer people to be spending 90% of their income on rent, and therefore unable to afford food, clothing, and money to be able to send their kids to school each week? As long as it's making you wealthy, who cares right?

Because eventually something has got to give, and people will refuse to pay those prices. They'll either move outwards, or share cooped up five deep with others (such as London), which really isn't improving demand. Or eventually skip the rent altogether. Last 2 renters next to me have done this, taken a few weeks until they've been able to be kicked out too. This is rampant on the Gold Coast. Extra insurance costs to you again can't be good there. 

As well as driving rents higher, it eventually shoots demand for buying, as nobody can afford to save enough to ever purchase. 

Also rising rents are included in inflation figures, which of course drive up interest rates - meaning you the owner is also squeezed eventually. 

One thing that does confuse me a little is this much touted "shortage" in rental property. Last I checked on any of the property websites, there is pretty much rental available in any suburb you could care to name in QLD. So there does appear to be any shortage of rental at all.. What there is a shortage of is *affordable* rental, that the average family can afford. Some of the upper end of market confuses me a little - if you can afford $800/wk for rent, wouldn't you be obviously in a position to buy a place? Obviously I see a place for professionals that may move around a bit, however seems a lot out there. It's easy to scale back into a cheaper property at that end, but on the lower end, it's probably a case of scaling into the street 

I'd be interested in any views on this by those who may know a little more as to how it may pan out eventually with things going this way. Maybe I'm the wrong demographic, however most of my friends and collegues are not receiving 10% pay rises each year to put up with large increases in mortgages, or rental, and rising costs for many other things - despite some of the wage inflation claims put out there.


----------



## robots (28 February 2008)

hello,

this is off topic, more of a community service announcement:

public housing service exists in each state and I advise anybody to put their name on the waiting list

thankyou

robots


----------



## tech/a (28 February 2008)

gfresh said:


> How can you say rising rents are really a good thing without being incredibly selfish?
> 
> Would you prefer people to be spending 90% of their income on rent, and therefore unable to afford food, clothing, and money to be able to send their kids to school each week? As long as it's making you wealthy, who cares right?




There has to be people who invest in property for rental.They should be entitled to recieve that which the market is prepared to pay---just like anyone in business they are entitled to profit.Do you shoot the butcher down because his prices are amazingly high for a piece of Fillet Steak---no you buy what you can afford and do all you can to better yourself so you can afford that which you wish.



> Because eventually something has got to give, and people will refuse to pay those prices. They'll either move outwards, or share cooped up five deep with others (such as London), which really isn't improving demand. Or eventually skip the rent altogether.




And if the owner skips payments he gets repossesed by the bank!



> Last 2 renters next to me have done this, taken a few weeks until they've been able to be kicked out too. This is rampant on the Gold Coast. Extra insurance costs to you again can't be good there.




And so they should and so should those who cant pay for their IP.As cruel as that is in some circumstances.



> As well as driving rents higher, it eventually shoots demand for buying, as nobody can afford to save enough to ever purchase.
> 
> Also rising rents are included in inflation figures, which of course drive up interest rates - meaning you the owner is also squeezed eventually.




Yes a fact of life the CYCLE will come and go again and again probably twice in your lifetime and possibly once again in mine.We ALL (Investor and consumer) need to take care of our OWN business. 



> One thing that does confuse me a little is this much touted "shortage" in rental property. Last I checked on any of the property websites, there is pretty much rental available in any suburb you could care to name in QLD. So there does appear to be any shortage of rental at all.. What there is a shortage of is *affordable* rental, that the average family can afford. Some of the upper end of market confuses me a little - if you can afford $800/wk for rent, wouldn't you be obviously in a position to buy a place? Obviously I see a place for professionals that may move around a bit, however seems a lot out there. It's easy to scale back into a cheaper property at that end, but on the lower end, it's probably a case of scaling into the street




Then affordable rental is at a shortage.



> I'd be interested in any views on this by those who may know a little more as to how it may pan out eventually with things going this way. Maybe I'm the wrong demographic, however most of my friends and collegues are not receiving 10% pay rises each year to put up with 10% increases in mortgages, or rental - despite some of the wage inflation claims put out there.




There will be hardship for some in both the Owner and the Rentor sectors.
Rent/Wages and affordability will eventually return to a more normal status and in time will fall to the low ebb (Opportunity) and rise eventually again to similar to today (Hardship).The only difference is that perhaps next time round you'll possibly recognise it---what you do then will be an individual thing.


----------



## gfresh (28 February 2008)

t/a - I'm not attacking property owners for wanting to receive good returns for their property, make a profit, or property investment at all. I have no sympathy for renters who do not pay their rent, or do not appreciate what they are given. Sorry if it seemed I was somehow attacking the concept of renting or property investment. 

I'm just worried about the end result of affordability for everybody, whether you are an owner/occupier, investor, renter or even developer. Robots seems to be implying it's a good thing that rents are going up and affordability is going down. 

Maybe it's just the cycle changing as you say, but I am hoping it's not a painful shift. It looks like it's worrying at the moment for quite a few people no matter where they sit. I may have not lived through many boom and bust cycles, but the last big bust cycle in the early 90's that I can remember resulted in a lot of pain for many people. It's depressing to be honest that we may be heading back to that sort of situation.


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## moses (28 February 2008)

gfresh said:


> I'm just worried about the end result of affordability for everybody, whether you are an owner/occupier, investor, renter or even developer. Robots seems to be implying it's a good thing that rents are going up and affordability is going down.




Its trickle down.

Lots of people have been saying that RE is a bad investment, too pricey, not good enough rental returns. Thats another way of saying that there is too much rental stock, too many investors competing with each other for too few renters. The inevitable happens...investors stop investing until there are enough renters desperate enough to rent for the rent to go up enough to make property worth investing in again.

So we have a correction happening.

Rent is too cheap at the moment.

Or property is too expensive.

Or both.

Which of these conclusions we make will determine which way we invest in the future, even if we stand by and do nothing but watch.

To my mind, rent is way too cheap. I think there is going to be a wage breakout and inflation. House values may go down a little for a while with respect to an increasing average wage, but property prices (with land) will continue to rise in dollar terms.

My  fwiw


----------



## pepperoni (29 February 2008)

Newsflash ... distresssed property owners on the increase ... look



robots said:


> road my bicycle round the streets today




Bwahahaha ... the re agents wont go broke .. they are making a killing off ignorant morons who bury themselves in debt to buy properties which they then need to sell after they have to sell their bike ..... having already sold their car. 

Property will go up forever ... I read it in the daily telegraph and heard about it on the block before they lost their shirts .... just read this link to zoo magazine ... bahahaha classic thread dont let it stop pleeeeeese!!!!! hahahaha


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## robots (29 February 2008)

hello,

sorry about that dreadful typo,

this is amazing, people ride JB HiFi from $2 to $12 because they are making 5000% on dvd, plasma and lcd's but thats okay, lets not worry 

if property owners want to make something on their hard earned they are satan or the devil,

all I know RE has helped me reach utopia 

and rent increases will play a large factor in maintaing prices I believe

thankyou

robots


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## tech/a (29 February 2008)

> a killing off ignorant morons who bury themselves in debt to buy properties




This demographic---can you supply me with some figures relating to % of buyers which fit here?

Of property sold in any one weekend what % of buyers are ignorant morons burying themselves in debt to buy?

Is anyone who buys NOW automatically classified in this demographic?


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## stock_man (29 February 2008)

gfresh said:


> One thing that does confuse me a little is this much touted "shortage" in rental property. Last I checked on any of the property websites, there is pretty much rental available in any suburb you could care to name in QLD. So there does appear to be any shortage of rental at all.. What there is a shortage of is *affordable* rental, that the average family can afford. Some of the upper end of market confuses me a little - if you can afford $800/wk for rent, wouldn't you be obviously in a position to buy a place? Obviously I see a place for professionals that may move around a bit, however seems a lot out there. It's easy to scale back into a cheaper property at that end, but on the lower end, it's probably a case of scaling into the street




This may really depend on where you are looking. We have all heard the horror stories of people basically auctioning of rental properties in Sydney. Well, I can confirm that this has happened to me. My last move, I turned up early to the arranged inspection to find 8 other couples there as well (and this is in North-West Sydney). After submitting my application, the agent got back to me asking if I can "sweeten" the deal. In the end I ended up paying an extra $5 on top of the asking rent, plus 6 months in advance! Luckilly for me we just sold our house, and had that sort of spare change lying around.

This compares to 4 years ago when I was looking for rentals in Sydney's North -  I had the pick of the bunch, no one else "bidding" and could even negotiate the price down!

My conclusion - rental shortage is real in Sydney!


----------



## numbercruncher (29 February 2008)

So are the people from the REIA a pack of muppets as well ? are they as stupid as us RE bears in this thread ? When do RE bulls begin to think " Houston we have a problem " , will the 10pc mortgage get you thinking ?




> Rate rise will 'bring down' house prices
> Friday Feb 29 11:46 AEDT
> *Big city house prices will fall if interest rates continue to climb, Australia's peak real estate body says.*
> 
> ...




http://news.ninemsn.com.au/article.aspx?id=308694


Peak Debt



> Mortgages payment highest on record
> Friday Feb 29 05:46 AEDT
> Families are paying more than a third of their income to meet the average home loan.
> 
> ...




http://news.ninemsn.com.au/article.aspx?id=87372


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## robots (29 February 2008)

hello,

good to see you still trolling around number,

not much has changed since last week though with RE prices still up there

thankyou

robots


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## explod (29 February 2008)

robots said:


> hello,
> 
> good to see you still trolling around number,
> 
> ...




Please explain why you conclude that the numbers are still up there.  I spoke to a real estate agent today who said they are knocking back stock because there is more coming in than going out and this has been the case for 3 months here on the Mornington Peninsula.

Signs are up everywhere and "for let" everywhere here too.  A lot of people trying to get rid of the second coastal property/investment big time.

Looking bad to me.

thankyou


----------



## numbercruncher (29 February 2008)

robots said:


> good to see you still trolling around number,
> 
> not much has changed since last week though with RE prices still up there





Trolling ?


Least my input is Generally backed by news articles etc ....

Do you have anything to add to the REIAs prediction that prices will fall if rates continue to rise ? are they wrong ? and if so, why ?


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## robots (29 February 2008)

hello,

to me you just trolling with the usual statements:

peak debt, X times earnings, wage inflation, re going to crash, nusres and school teachers cant afford a house

look at it from my point of view,

I have already stated I wouldnt have a clue what is going to happen and nor do you, but I am invested in direct property and direct shares and will go with the flow

ps. financial planner wouldnt like that, no rolling commission there

thankyou

robots


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## Happy (29 February 2008)

Best to buy property with few reserves.

Interest rates go up and go down, so good to be able to absorb 5% to 7% rates increase.
Another nice reserve would be to have enough cash to be able to continue repayments for 2 to 5 years after heaven falls in and no income.

Such a proposition is probably impossible to accept and will be ridiculed, but there are some good points in having capacity for unexpected events.


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## robots (29 February 2008)

hello,

great to hear from you happy,

spot on bro, just go with the flow, have bit up you're sleeve and life becomes very easy,

gets back to my number one financial tip and that is to save the $, 20-30% of gross income is a great start,

thankyou

robots


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## Snakey (1 March 2008)

My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits, he said "Oh no Ill keep them for another two years then Ill sell on the top because the newspaper said it would go up for another two years. 
People get very used to the good times and forget that things can get tough.
Once the newspapers say its all turning to crap, selling wont be easy.
The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket. As soon as investors see its going down in price, they are all going to be running for the exit door. And dont worry it will go down in price at some stage (it has before and it will again, guaranteed).
My two bucks 
I think a lot of toolbots will be burnt..... money + stupidity = losses
Greedy pigs will be slaughtered IMO.


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## Kimosabi (1 March 2008)

Snakey said:


> My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits, he said "Oh no Ill keep them for another two years then Ill sell on the top because the newspaper said it would go up for another two years.
> People get very used to the good times and forget that things can get tough.
> Once the newspapers say its all turning to crap, selling wont be easy.
> The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket. As soon as investors see its going down in price, they are all going to be running for the exit door. And dont worry it will go down in price at some stage (it has before and it will again, guaranteed).
> ...



Yep, the greatest trap is to start believing your own bullsh1t.

Analyse everything with the cold, hard spotlight of reality...


----------



## tech/a (1 March 2008)

Kimosabi said:


> Yep, the greatest trap is to start believing your own bullsh1t.
> 
> Analyse everything with the cold, hard spotlight of reality...





Ok

In Snakeys post and replies to it.

What is a property speculator?
What is a property Investor.



> The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket.




I think you guys have a sad misconception of what BOTH a property Investor and a Sharemarket Investor look for and implement in their growth stratagies.

There are very few property investors V the total property holdings.
How many speculators are in the market do you think---more?
Dont forget those serious in Property investment bought $400k houses back when they were $150-200k.Their interest rate rises are relative to (In the worst cases) now 50% of their properties value.Their rents are rising more than enough to cover Interest Rate rises.



> My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits,




He could do that. But if he has more than 3 properties all he need do is keep an eye on his gearing and servicability.Selling half may not be required one or two may balance the portfolio just fine.

Taking this approach is more in line with this quote---



> Analyse everything with the cold, hard spotlight of reality..




Speaking of which (Reality).
While in SOME areas of over pricing and depressed demand prices will fall,others wont fall or fall moderately.
The cost of building has already climbed 20% and will do that again this year.
Housing replacement costs increase pricing of established homes.

Inflation will only help to quell any depression in prices rather than exacerbate.
Rather than getting carried away in all this doom and gloom spewed out in copious amounts ---- is it not best to handle that which you are dealt with in your own situation rather than being one of the crowd manipulated by "Expert" news?



> I think a lot of toolbots will be burnt..... money + stupidity = losses
> Greedy pigs will be slaughtered IMO.




Hell is this Brother envy I see.
Those who get slaughtered WONT be the greedy(Whatever and whoever they are) it will be the badly informed and often these cases will be more tragic than euphoric.

Im actually interested in what makes in your or anyones veiw----



> Greedy pigs




When does one who trades or Invests/Speculates in Property or runs a business become one of these?
I'm interested in the justification for such a label.
Personally I can only think of one case where this would apply (In my veiw of course) but will leave that till after any replies.


----------



## Snakey (1 March 2008)

Tech, look overseas, do you think Australia in going be immune from RE falls in price as is happening with other countries right now. If so why??? migration to AU??? America has heaps of that yet it still falls there.
Tech if you think RE is such a good investment to pour your money into right now, does this mean your still buying right now????
What is tech's thoughts on RE right now please pick one of the following;
Buy
Hold
sell
I want my brother to do well thats why I gave him my thoughts on the matter.
Rose coloured glasses syndrome is very common for people in paper profits. Is this you?
Greedy pig - "Oh I've made shyt loads of money from RE... Best I double my position now so I can make double a shyt load in the future".
In investing taking profits is as important as buying the investment.
Sure if you buy now in 50 years your sure to make a profit but RE has cycles and it can fall in price just like anything else.
My money stays in the bank until I can buy a house in a buyers market.
Sell in strength buy in weakness - very common successful investment strategy. 
My call on RE is - its at the top now. (gold coast, melbourne, adelaide)Sydney top has been reached already.At least until the next RE bull when ever that is.
I hope im right because I look to enter in a couple of years though I have had a small position since 2000
My last post on the matter.
Good luck shooting bears Tech... I hope to prove you wrong again 
Time will tell


----------



## tech/a (1 March 2008)

Snakey said:


> Tech, look overseas, do you think Australia in going be immune from RE falls in price as is happening with other countries right now. If so why??? migration to AU??? America has heaps of that yet it still falls there.
> Tech if you think RE is such a good investment to pour your money into right now, *does this mean your still buying right now????*




Not for investment but I am building my own Poderosa right now---infact footings are being poured next week.I have a fixed price contract at $1300/ square meter and if I wanted to sign a contract for the same quality home right now it would be $1600+
I wont be able to build cheaper than right now.

As for right now on investment I have written much on this.The answer personally is no purely as I am doing other things and havent got any irons in the fire---mind you opportunity is STILL out there in some isolated areas here in Adelaide.




> What is tech's thoughts on RE right now please pick one of the following;
> Buy
> Hold
> sell




If your geared sensibly and generate a pasive income---then hold
If your over your head then sell.
If you see opportunity and that means you are in the position to take advantage of it then buy.



> I want my brother to do well thats why I gave him my thoughts on the matter.
> Rose coloured glasses syndrome is very common for people in paper profits. Is this you?




I love this paper profit stuff---and paper losses for that matter.
Rest assured that "Paper Profit" is YOUR $$s as is that Paper loss.



> Greedy pig - "Oh I've made shyt loads of money from RE... Best I double my position now so I can make double a shyt load in the future".
> In investing taking profits is as important as buying the investment.
> Sure if you buy now in 50 years your sure to make a profit but RE has cycles and it can fall in price just like anything else.
> My money stays in the bank until I can buy a house in a buyers market.
> Sell in strength buy in weakness - very common successful investment strategy.




There is much to comment on here and I dont have the time right now but will re visit.Money in the bank in times of Inflation is counter productive your actually losing money.



> My call on RE is - its at the top now. (gold coast, melbourne, adelaide)Sydney top has been reached already.At least until the next RE bull when ever that is.
> I hope im right because I look to enter in a couple of years though I have had a small position since 2000




Why do you keep your small position?

*My last post on the matter.*

Why you bring topics for discussion and opinion.



> Good luck shooting bears Tech... *I hope to prove you wrong again*
> Time will tell
> P.s. Toolbot is an absolute tool of a robot




Why do you wish to do that.I hope you reach your financial goals regardless of how you play it.


----------



## numbercruncher (1 March 2008)

Another sign and one I pointed out earlier in the thread, Boomers whom are retiring (at the rate of over 100k a year) and cant take advantage of Neg Gearing much anymore are bailing.



> Queensland's older property investors are benefiting less from negative-gearing tax benefits because of rising interest rates, instead choosing to sell up and cash in on capital gains, one real-estate agent believes.
> 
> Recent changes to superannuation had resulted in a "constant stream" of investors leaving Brisbane's inner-city market and being replaced by owner-occupiers, LJ Hooker principal Brett Greensill said.
> 
> ...




http://www.brisbanetimes.com.au/news/queensland/older-property-investors-bailing-out/2008/02/28/1203788532513.html

Seems the older ones whom have lived through market cycles are a little wiser 


I can just imagine the mad rush out when bubblevision starts mentioning falling prices 

RE bulls surely must know that the RBAs war on Inflation is war on inflated asset prices to ?

Modest 2.5pc fall in US stocks last night, bit more carnage for us on Monday, might play on buyers minds this W/End?


----------



## robots (1 March 2008)

Snakey said:


> <deleted>




hello,

i hope the mods are dishing out the warnings appropriately, fair game 

thankyou

robots


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## numbercruncher (1 March 2008)

Mornin' Robi


We havnt seen perma bull Davo in this thread for a long time, I wonder how he went with his no-doc flip deal that was being build for an expected 100pc profit ?

Whats Melb looking like this w/end, another record amount of property come to market ?




Listings continue to spike here in QLD, the reseting fixed rates also mentioned.



> Fears property has hit peak
> 
> Nervous property investors are selling up over fears Brisbane's real estate market will deteriorate later this year, a local analyst believes.
> 
> ...




http://www.brisbanetimes.com.au/articles/2008/02/27/1203788411597.html

Well they sure wont be raising rents 1k a month or 250 p/w, so whaddaya do ?


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## robots (1 March 2008)

hello,

yes big weekend of auctions, already seen lots of flags up on the boards 

the good stuff will sell well, I believe the clearance rate will be around the mark I have mentioned previously (70%)

thankyou

robots


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## wayneL (1 March 2008)

robots said:


> hello,
> 
> i hope the mods are dishing out the warnings appropriately, fair game
> 
> ...




*'bot,*

Mods can't be everywhere all at the same time. If you see a contravention of the code of conduct, you can report it via the button at the top. That way, we are alerted quickly. (It's the triangular icon to the right of the post number)

*All,*

Let's not turn this thread into an _ad hominem_ sh!tfight.

A bit of respect for each other's view, even if we disagree, makes for much better discussion.

Cheers


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## xoa (1 March 2008)

Rents are determined by supply and demand, not landlords' costs. The horde of property "investors" are free to pass on their increased mortgage costs, but unfortunately they won't have tenants. Speculators can drive up property prices with their borrowed money, but they're almost powerless to influence rental returns. In fact, speculative activity can depress rents, by creating artificial housing demand. Rents won't increase just because people think "it's time" for renters to pay more. 

If my landlord wants to ramp up my 160pw rent by too much, he can look forward to no rent. .


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## tech/a (1 March 2008)

xoa said:


> Rents are determined by supply and demand, not landlords' costs. The horde of property "investors" are free to pass on their increased mortgage costs, but unfortunately they won't have tenants.




If there is demand then they will get it.
I have increased rents on mine by 40% over the last 3 years with the biggest rise passed on This Janurary.All tennents stayed on.They know that they are paying market value.



> Speculators can drive up property prices with their borrowed money, but they're almost powerless to influence rental returns. In fact, speculative activity can depress rents, by creating artificial housing demand. Rents won't increase just because people think "it's time" for renters to pay more.




True but thats not whats happening.All seem to agree that affordability is an issue so demand for rentals is high and remains so while people see this as the only affordable way to get into a house.



> If my landlord wants to ramp up my 160pw rent by too much, he can look forward to no rent. .




If your rents below market then youll get a rise sooner or later,if you choose--no Rent--- he will choose new tennent.You will then either settle for a lower quality rental,buy a tent,live back with mum and dad or pay the rent.


----------



## ROE (1 March 2008)

Anyone gone through the process of the tenant spit the dummy and not paying rent.. how hard is it to get them out ? 

No I'm not in this boat but if rent go up too far would this be a problem?
They decided not to pay because they have to eat


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## xoa (1 March 2008)

tech/a said:


> If your rents below market then youll get a rise sooner or later,if you choose--no Rent--- he will choose new tennent.You will then either settle for a lower quality rental,buy a tent,live back with mum and dad or pay the rent.




I'll just go to another landlord and rent an equivalent flat. There's plenty of <160pw properties in my suburb.


----------



## numbercruncher (1 March 2008)

Yes I understand its a long drawn out affair and the tenants have some pretty strong rights, I wouldnt want to be a highly geared investor in a recessionary enviroment faced with that 

Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?

You need serious equity to survive continual rate rises, but then serious equity gets a better return in a bank account in the absense of capital growth as seems increasingly likely.

Im willing to bet prices have already started retreating, just a matter of time for it to show in the offical reports.

I have no doubt demand for rentals is there, but the ability to continually pump up rents and prices just isnt consistent with the current enviroment.


----------



## tech/a (1 March 2008)

xoa said:


> I'll just go to another landlord and rent an equivalent flat. There's plenty of <160pw properties in my suburb.




That being the case then your paying market rate---all good.



> No I'm not in this boat but if rent go up too far would this be a problem?




I presume your talking Sqatters. Yes they can be a problem and the landlord can also be the landlord from hell.Thats what tennency agreements are for.



> Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?




Youve given an example very close to reality on one of mine.
Starting rent 4 yrs ago was $250/week today its $330.Not far short of your example.Agree at the higher end this is not possible $500k plus and yes there will be disasters for both tennents and landlords.


----------



## Bill M (1 March 2008)

numbercruncher said:


> Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?




My neighbour has been next door to me for a year. He is paying $300 p/w for newish bedsitter in a very good location. He just got a 10% increase in rent which will bring him up to $330. The only problem is that when there is an open for renters inspection people turn up in droves wanting to rent the property, the demand is there but he is still considering moving.

In another case I had some friends about 6 years ago that were renting a 2 b/r unit, again in a centrally located area. They were very good tenants and had been living there about 5 years. Over the 5 years it went from $280 to $330 a week which is reasonable. Then one day the greedy landlord wanted to cash in on them and raised the rent from $330 to $400 p/w.

As much as these 2 renters did not want to move they did and the left the area and got a better deal in another suburb. There was a bit of renting slump soon after they moved and I walked past this unit for 5 Months and it was vacant all that time. Now if I was the owner of this unit I would have much rather have kept these blue chip tenants than let them walk and get no rent for 5 Months.


----------



## communique (1 March 2008)

House prices are set to fall.  Worst affordability for 22 years.  Increasing costs for rents, fruit/veges, electricity, petrol,  water, health care causes wages to rise, causes inflation causes interest rates rises.  I remember when they were 18%.
I find it strange that we live in a country similar to the size of the United States. Our population just over 20 million and theirs 300 million and we have the most expensive real estate in the world.   You only have to drive west of where everybody is living on top of each other i.e. east coast of OZ to realise that our town planners could create major opportunities for huge development with the proper infrastructure in place.  Yes, we have water challenges but  that only 10 years ago it was illegal to have a home water tank in urban areas and now having a tank in your yard is now mandatory for some new developments (in Qld)   We have to get creative about where we live and how we live and that doesn't mean living on top of each other in ever decreasing small lot development close to the current major urban centres.


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## Julia (1 March 2008)

Bill M said:


> As much as these 2 renters did not want to move they did and the left the area and got a better deal in another suburb. There was a bit of renting slump soon after they moved and I walked past this unit for 5 Months and it was vacant all that time. Now if I was the owner of this unit I would have much rather have kept these blue chip tenants than let them walk and get no rent for 5 Months.



You could have used this as a prime example in the "Greed" thread, Bill!
Serves him right.


----------



## SM Junkie (1 March 2008)

I've really enjoyed reading this thread, finding it quite informative and realising that I have a lot to learn about property investments.  However I have found it a little intimidating posting because everyone seems to have such an enormous wealth of knowledge around property and a lot of what I read tends to go straight over my head. But I am learning from you all.

So for some of my thoughts (that I'd welcome your opinions on providing you don't call me a moron):

Firstly not all landlords are out there to screw every cent out of their tenants. It is really unfortunate that in order to keep a property, some investors need to put up the rents.  My tenants are still on a good wicket and are paying $70pw below market value, I was just very fortunate to have a fixed loan in place before any of the rate rises.  Most of us have been a tenant ourselves at some point and know how difficult it is to deal with landlords and to keep a roof over your head at a reasonable price. So we are not all heartless money grabbers. By the way if you think rents are bad in the Eastern States, here in the Pilbara WA, houses are reaching up to $1,600 pw, totally incredible

Secondly I don't have the same negative opinions on the current market, it seems to me that some areas are growing in value, some stagnant and some decreasing, guess 'location' is more important than a bargain buy.  So far my locations have remained stagnant, which is ok with me because I've already done extremely well as a result of the property boom in Perth, so I'm happy to let it sit.

But I've not pulled back and although many of you would disagree in the current environment, I'm still purchasing.  I think there are some great opportunities out there to be had.  I managed to pick up a triplex block, 5 mins to beach, walking distance to station and many many other things going for it's location.  It was fortunate timing with the developer looking to get rid of the last remaining blocks and reduced the price by $50k. As a long term buy I'm confident it will do well, I'll ride through the cycles to come.

Overall I don't think the stock market is fairing any better than property at the moment.  I like the fact of security in bricks and mortar and therefore like to have a foot in both camps.  If not for my properties, I probably would not have started down the path of financial education.

My last point is on the unaffordability of housing. Isn't the high entry costs relative to the lifestyle we lead.  Sure it costs more, but we have more luxuries, more disposable income, higher wages and obviously people were willing to pay these infated prices, otherwise there would have been no need to put the breaks on the economy.  

Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.'

Thanks


----------



## theasxgorilla (1 March 2008)

SM Junkie said:


> My last point is on the unaffordability of housing. Isn't the high entry costs relative to the lifestyle we lead.  Sure it costs more, but we have more luxuries, more disposable income, higher wages and obviously people were willing to pay these infated prices, otherwise there would have been no need to put the breaks on the economy.
> 
> Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.




Thanks SM, that was a great post.  I enjoyed all of it as a matter of fact, something to think about over a late Saturday morning breakfast here...keep it up!

I like the insight from these last couple of paragraphs. To build on the idea of affordability a cynical step further, I have found that almost everyone has an affordability self-concept.  Where that self-concept is low to moderate, today's big house price numbers have these people declare: "no, we can't afford it".  For some, it doesn't seem to matter how much money they have or earn, they can't redefine their affordability self-concept.  In a way, I think that is nice.  We shouldn't feel like we need to go out and upgrade to a mini-castle or become moguls just because we're so much wealthier.  But on the other hand, if the people in question deserve better (I don't know what you call it, but I'm of those people who think we all deserve better, no-one should settle for less than 'better'), it's a shame that they see big numbers as an excuse for 'affordability'.

When the economic cycle turns these won't be the people who take advantage of lower prices...instead, they'll be saving for a rainy day, in case they lose their jobs during the down turn.  It doesn't matter what happens, they can't win...you can't help them win.

ASX.G


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## theasxgorilla (1 March 2008)

wayneL said:


> If you see a contravention of the code of conduct, you can report it via the button at the top. That way, we are alerted quickly. (It's the triangular icon to the right of the post number)




Thanks for the heads up Robots.  As Wayne has pointed out, click the 'report post' button.  A notification will be sent directly to our respective email accounts.  ASF has 'follow- the-sun' moderation.  Wayne and I are in the UK/Europe, Kennas is in the Americas and the mods in Australia are all in different local timezones.  Many reported posts are taken care of before the rest of you wake up 

Keep in mind though, we're here to discuss too.  We'd rather do that than play umpire.

ASX.G


----------



## tech/a (2 March 2008)

> When the economic cycle turns these won't be the people who take advantage of lower prices...instead, they'll be saving for a rainy day, in case they lose their jobs during the down turn. It doesn't matter what happens, they can't win...you can't help them win.




On a Sunday Morning ---Amen


----------



## robots (2 March 2008)

hello,

good morning,

auction clearance rate at 72% for melb yesterday,

plenty of fun and games out there at the moment, low bids etc

definitely not as many bidders at the auctions I visited but all in all a healthy result,

the RBA will be well excited by this figure,

thankyou

robots


----------



## IFocus (2 March 2008)

SM Junkie said:


> I've really enjoyed reading this thread, finding it quite informative and realising that I have a lot to learn about property investments.  However I have found it a little intimidating posting because everyone seems to have such an enormous wealth of knowledge around property and a lot of what I read tends to go straight over my head. But I am learning from you all.
> 
> So for some of my thoughts (that I'd welcome your opinions on providing you don't call me a moron):
> 
> ...




Hi SM

I think here in the west its currently another world compared to the rest of Oz. The current expansion is just off the dial no matter which measure you use. 

The coming Gorgon gas project numbers off their web site



> The estimated economic benefits for the nation, the state and the region that would flow from the development of the Gorgon Project include:
> 
> * $11 billion initial investment
> * $17 billion in taxes and royalties
> ...



I saw the average wage in the NW of $125K quoted earlier the cleaners will most likely start some where above that on the project, image the cash sloshing around from this project alone that flows back feeding property.


All this underpins property, where it ends I how no concept but do notice that  currently the $1mil to $2mil levels seem to be booming.


----------



## communique (2 March 2008)

SM Junkie said:


> Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.'
> 
> Thanks




It should be noted that it probably only took your parents 5 years to pay off their house at that time.  The wages to loan ratio at that time was 2 : 1 now it is 5 : 1. There was a very interesting documentary on 4 Corners not so long ago looking at issues of the sub prime fallout.  They gave an example of house prices in Amsterdam over a 500 year period.  The reality was that prices had not increased over this period subject to wages.  There were peaks and troughs and as for all investment the key is when to buy and when to sell to take advantage of this.  When you refer to their children all having several properties, are we talking about owning debt as opposed to owning property?


----------



## IFocus (2 March 2008)

Perth has 22 suburbs with $1m values

http://www.news.com.au/perthnow/story/0,21598,23302781-2761,00.html


SM pass the $100 bills so I can light my cigar......


Then this

Perth property boom: metro market still strong

http://www.news.com.au/perthnow/story/0,21598,23302708-2761,00.html


----------



## numbercruncher (2 March 2008)

Bit more pain coming next week for those renting money 




> INTEREST rates are set to rise by up to 0.4 percentage points within weeks of the Reserve Bank board meeting on Tuesday.
> 
> The Reserve Bank is almost certain to lift rates by 0.25 percentage points, which would flow on to mortgages by the end of the week. But a big jump in rates in the money market, where banks source about half their funds for lending, has meant they are likely to load the official rise with another 0.1 or 0.15percentage points, possibly at the same time or within weeks.




http://www.smh.com.au/news/national/ratehike-pain-passed-on-to-borrowers/2008/03/01/1204227048589.html


----------



## SM Junkie (2 March 2008)

> It should be noted that it probably only took your parents 5 years to pay off their house at that time.




This is not the case, my parents were at the time middle class workers who brought their first home just prior to the recession and were then hit with the big interest rate rises. They struggled through and I guess tought their children some valuable lessons as a result. I certainly remember what a big deal it was to get their first loan, how hard it was to get credit even with a deposit.  They tried several banks before they got an approval. The banks have certainly relaxed their criteria since this time.



> When you refer to their children all having several properties, are we talking about owning debt as opposed to owning property




Both, we all own at least 1-2 properties that have paid for themselves and are therefore positively geared.  So we keep buying more to offset our taxes.  Initially I really do think it was part luck and being in the right place at the right time with the Perth boom. But in saying that we also all uprooted our families and moved to the NW because this is where the opportunities were, so sometimes you have to take the necessary steps to create your own success.


----------



## xoa (2 March 2008)

IFocus said:


> Perth has 22 suburbs with $1m values
> 
> http://www.news.com.au/perthnow/story/0,21598,23302781-2761,00.html




Read your article again. It says that Perth property prices have been falling for months. If there are 22 suburbs with average house prices above $1m, it just goes to show how far the market could slump. Who are buying these properties? Even a cashed up geologist or mining engineer would struggle.

If you want to speculate in this environment, go ahead. Personally, if I wanted to spend more than a million dollars on a house, I'd buy somewhere that isn't dependent on speculation and a short lived resources boom - Hong Kong or New York or Shanghai.


----------



## numbercruncher (3 March 2008)

The massive losses of some Sydney suburbs being exposed by the daily telegraph.



> HOMEOWNERS in Sydney's outer suburbs have been losing as much as $450 a week every week since early 2004 on the value of their properties as *the real story *of mortgage belt misery begins to emerge.
> 
> With the Reserve Bank likely to announce yet another interest rate hike tomorrow, a Daily Telegraph investigation reveals hundreds of streets in Sydney's outer suburbs now have houses that have been bought and sold at a loss - in rare cases more than 40 per cent in value.




http://www.news.com.au/business/story/0,23636,23309209-5013951,00.html


Wouldnt be much fun paying $500 a week interest and having your " investment " tank another 450p/w on top !


----------



## ROE (3 March 2008)

The richest investment man in the world has this to say in his annual address to his share holders

"Buffett said in the letter that Berkshire plans to still focus mainly on US investments, despite the country's "many imperfections and unrelenting problems." That includes housing, where Buffett ladled blame on lenders who weakened their underwriting standards in the false belief that housing prices would go up and keep going up."

"Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out -- and what we are witnessing at some of our largest financial institutions is an ugly sight."


----------



## IFocus (3 March 2008)

xoa said:


> Read your article again. It says that Perth property prices have been falling for months.




Ah confused as I couldn't find that bit but found this



> And even for those who bought in the past year, when the market flattened, only six Perth suburbs slumped in value, with Guildford being the worst.




And if people research investing in property this will be no surprise



> Experts predict further slow growth and up to a 15 per cent decline in values in some of Perth's outer suburbs.







> If you want to speculate in this environment, go ahead.




No thanks I got in 5 to 6 years ago and don't understand the current pricing however the beach and riverside areas quoted have always been mainly occupied by the money in this town I don't think that end is so much speculation.


----------



## Kimosabi (3 March 2008)

xoa said:


> Read your article again. It says that Perth property prices have been falling for months.



Once prices start falling, it starts feeding on itself, because the next question is, how far will prices fall, because no-one wants to be hit with negative equity as soon as they're bought a house...


----------



## KIWIKARLOS (3 March 2008)

numbercruncher said:


> The massive losses of some Sydney suburbs being exposed by the daily telegraph.
> 
> 
> 
> ...




Such a load of cr@p from the tele. That was one street in a dodgy area. They also showed the five worst affected suburbs showing over all about 5-6 % decreases but the five best performing had increases over 20% PA. There is alwys going to be dodgy places where propoerties can't hold their value.
From the photo in the paper that suburb looked to be almost farming land with very little density at all and fibro houses trying to sell for 400K + 

Tell em their dreamin :

I would say that most north shore suburbs of sydney and most inner west suburbs have increased. It's the areas with lowr household incomes that will take a pounding on the back of rates. Thing is these areas also happen to be the favourites of small time property investors because they are relatively cheap. I mean how many people buy investment properties in Mosman compared to Bankstown


----------



## wayneL (3 March 2008)

KIWIKARLOS said:


> Tell em they're dreamin :



I gotta try and get The Castle on the Beeb over here, if only so we don't get blank stares when we say that.


----------



## IFocus (3 March 2008)

xoa said:


> Read your article again. It says that Perth property prices have been falling for months. If there are 22 suburbs with average house prices above $1m, it just goes to show how far the market could slump. Who are buying these properties? Even a cashed up geologist or mining engineer would struggle.
> 
> If you want to speculate in this environment, go ahead. Personally, if I wanted to spend more than a million dollars on a house, I'd buy somewhere that isn't dependent on speculation and a short lived resources boom - Hong Kong or New York or Shanghai.




This is a year or so old I think but do you think it might impact on WA property a state with 2 million people.....the bottom end will suffer if left out of the boom / bubble / balloon. 




> WA continues to lead the way as Australia's number one resources investment destination with about *$100 billion* worth of projects either committed, under construction or under consideration in the State over the next few years.




Link here http://www.cciwa.com/reps/WA_Resource_Development_Services_Directory.aspx#12914


----------



## numbercruncher (3 March 2008)

KIWIKARLOS said:


> Such a load of cr@p from the tele.





The article was a compilation of Data / opinions from various sources such as Australian Property Monitors , MVS Valuers , John Symonds , RP Data , maybe they are _all_ full of cr@p .....

You should read the article its quite interesting.

Cheers.


----------



## IFocus (3 March 2008)

numbercruncher said:


> The article was a compilation of Data / opinions from various sources such as Australian Property Monitors , MVS Valuers , John Symonds , RP Data , maybe they are _all_ full of cr@p .....
> 
> You should read the article its quite interesting.
> 
> Cheers.




NC likely story to to happen here in Perth I think also once the boom slows down the people who can least afford at the bottom end lose out.....


----------



## KIWIKARLOS (3 March 2008)

numbercruncher said:


> The article was a compilation of Data / opinions from various sources such as Australian Property Monitors , MVS Valuers , John Symonds , RP Data , maybe they are _all_ full of cr@p .....
> 
> You should read the article its quite interesting.
> 
> Cheers.




I did read it mate, the tele could have just as easily picked a street on the north shore with a size 100 font heading stating " HOUSE OWNERS MAKING $1000 A WEEK! " but that wouldn't sell papers would it 

I totally agree there are people doing it tough a friend of ours bought a place out blacktown way for about $250 K and has a $35 K wage to repay it with I think it was a 70% loan or something so im guessing it equates to about $300 a week. Thats like 50% of her pay and she drives from blacktown to Epping everyday to work ! doesn't leave much for a lifestyle. But $35K is pretty low.

A electrical tradie straight out of apprentishipo can make easily $60K a year with a van / phone included. Thats over $1000 a week clear, easily enough to service a $200 K loan by yourself. So add another person to that equation say a brother or Misses or if you live at home for a couple years and hammer down the morgage and you can quite easily afford $300-350K. 

Another "article" in the tele stated average wages are $65 K PA now. 

Maybe people will have to start been more sensible with their cash now instead of going to Harvey Normal and buying a 52 incl LCD on finance from GE Money :


----------



## numbercruncher (3 March 2008)

Thats nice, how about firemen 21ph, coppers 25ph, soldiers 25/30 p/h , nurses 30p/h, childcarers 18p/h etc. They should all throw in the towel, as a society we dont really need them, just need those with the capacity to push up house prices ?

How about 1 in 3 Aussies work full time, 2m get about min wage, not all of us can earn a good income.

I get your point though, anyone tettering in the edge is getting there just deserves eh ?

By the way there is a hell of alot more Houses in the mortgage belt than the affulent Northern suburbs.



> but that wouldn't sell papers would it




It did in the past, even sold a bunch of TV shows.

Australias _different_ though, nothing but up up up  Just ask the Bank shareholders.


----------



## KIWIKARLOS (3 March 2008)

numbercruncher said:


> Thats nice, how about firemen 21ph, coppers 25ph, soldiers 25/30 p/h , nurses 30p/h, childcarers 18p/h etc. They should all throw in the towel, as a society we dont really need them, just need those with the capacity to push up house prices ?
> 
> How about 1 in 3 Aussies work full time, 2m get about min wage, not all of us can earn a good income.
> 
> ...




Firefighters and coppers make $25 BASE add in allowances for shift work, meal breaks + others and the OT and your well well above that. Nurses and Childcare get raw deal my missus is a childcare worker. Still doesn't change the fact that the average wage is $65 K and that most trades eg. Plumber , builder, electrical all make that at least ! and thats only in SYdney you take a skill to WA or QLD you get twice that even unskilled is twice that. 

Also anyone can make more money you just need to further educate yourself. Base childcare wage is $16 but if you do you advanced dip its $20 go to uni your on $50+ for early childhood teacher. You can't have basic training and expect to get paid alot.


----------



## chops_a_must (3 March 2008)

I have half as much training for my occupation that a nurse gets for theirs, yet I get paid more.

I don't think that's fair, I think that's rubbish to be honest...


----------



## KIWIKARLOS (3 March 2008)

your story is prob an exception as is my dads. He left school at 15 and owns his own bus now. But those days are coming to an end my friend. Back in the day you could leave school early get little training and be well off but economies (particulariily western ones) are becoming more hightech. I think if your a good entrpreur or saleman you can make a good living without education but that only applies to a small % of the pop. 

As for those 2 mill people on min wagemost of those are teen's  and unskilled workers. 

You can not say that in general people with more education don't make higher wages thats just nonsense.


----------



## numbercruncher (3 March 2008)

KIWIKARLOS said:


> Still doesn't change the fact that the average wage is $65 K .




You need to let the ABS in on your findings, seems they are unaware of this 20pc jump in the last couple of months.. 



> Posted Thu Feb 21, 2008 1:41pm AEDT
> Updated Fri Feb 22, 2008 8:26am AEDT
> 
> The average Australian employee earned $1,109 per week over the three months to November, official data out today show.




http://www.abc.net.au/news/stories/2008/02/21/2168841.htm


----------



## chops_a_must (3 March 2008)

KIWIKARLOS said:


> your story is prob an exception as is my dads. He left school at 15 and owns his own bus now. But those days are coming to an end my friend. Back in the day you could leave school early get little training and be well off but economies (particulariily western ones) are becoming more hightech. I think if your a good entrpreur or saleman you can make a good living without education but that only applies to a small % of the pop.
> 
> As for those 2 mill people on min wagemost of those are teen's  and unskilled workers.
> 
> You can not say that in general people with more education don't make higher wages thats just nonsense.




In the main I agree, but certainly in WA at the moment, people aren't paid based on their education levels, and that's why we are in real strife.

Nurses are paid less than average wage, in fact I do a lot of extended training with an ex nurse, who works in my industry because it pays better. Admittedly, if we worked for anyone but ourselves, we probably wouldn't be better off, and I work weird hours. But still, nurses are clearly paid less than their training and education would dictate.

Going back to the WA situation, high end essential service staff are paid between 50 and 75% of their market rate. That's not something that can continue when you can earn twice as much not using your brain out in whoop whoop. When you have country teachers targeted by mining companies out in the bush, and giving them irresistable deals, you have a serious problem...


----------



## Happy (3 March 2008)

Heard that last 4 years Sydney west suburbs drop in price more than $400 per week, every week.

If true, prices do not go up all the time everywhere.


----------



## KIWIKARLOS (3 March 2008)

numbercruncher said:


> You need to let the ABS in on your findings, seems they are unaware of this 20pc jump in the last couple of months..
> 
> 
> 
> http://www.abc.net.au/news/stories/2008/02/21/2168841.htm




hahaha 52 x 1109 = $57700 thats 11% diff mate :

anyways my point was most aussies aren't on the breadline and most aussies have a partner making a wage aswell, or live with their folks.


----------



## gdaf (3 March 2008)

do you have parents? If so, what is their house worth? how much do they owe on it? This is the single most important fact that people on this thread have ignored so far. I would argue that there is a currently a massive transfer of generational wealth going on, and this will continue to go on for years (until the end of the baby boomer generation). The BB generation is the single largest group of 0% LVR owner occupied dwellings the country has seen. This may help people understand why gen x and gen y feel comfortable taking on such debt. Why do you think banks want to slice of the action by offering advances on a proportion of home equity to retirees. The 'family home' is the x factor in all this, and it represents the largest chunk of Austrlian wealth. This has become, or is about to become liquid, and the cash re-disbursed to the offspring's fledging mortgage accounts. For Tom the property bear, and financial adviser, maybe this is the factor you're missing.

So as residential property wealth is redistributed to younger generations, they go and buy houses, pay of the credit cards etc. etc. 

The government could also knock billions and years off home buyers debt today by allowing a proportion of their super to be paid directly into the principal of their home loan. Any panic stations suggesting a crash could occur very quickly completely discounts government intervention. 

This thread has identified the over stretched mortgage holder as the biggest threat to the Australian economy. But it seems obvious to me that there is a lot more money and confidence out there that the headlines and figures suggest. 

I wouldn't be surprised if Australia's GDP picks up considerably over the next few years, along with interest rates, house prices, wages, rents, food, and petrol. Just go and live in Scandinavia, and you'll get an idea of where things are headed here. The only difference may be that taxes will continue to go down, and coffers are supplemented by more and more billions of dollars in  surpluses generated by company tax. It'll be more about managing the huge increases in wealth, rather than contemplating anything like the fear and doom predicated by the panic mongers. Didn't anybody tell you that Australia is experiencing its largest economic expansion in history?


----------



## gfresh (3 March 2008)

Thoughts? 



> http://www.theage.com.au/news/national/pm-doubles-rental-aid/2008/03/03/1204402337664.html
> 
> 
> PM doubles rental aid
> ...


----------



## theasxgorilla (3 March 2008)

numbercruncher said:


> You need to let the ABS in on your findings, seems they are unaware of this 20pc jump in the last couple of months..




The difference between 65k and 57k is 12%, not 20%.

As we've come to learn, numbercruncher is not much of a numbercruncher.  I'd be interested to know the avg. for NSW, since there is no point doing a nat. avg. when we're talking NSW.

Maybe Kiwikarlos was referring to the avg. male wage?

http://www.news.com.au/dailytelegraph/story/0,22049,23250909-5015795,00.html

ASX.G


----------



## theasxgorilla (3 March 2008)

gdaf said:


> So as residential property wealth is redistributed to younger generations, they go and buy houses, pay of the credit cards etc. etc.




How is it redistributed exactly?  Are you talking about over a very long time frame?



gdaf said:


> I wouldn't be surprised if Australia's GDP picks up considerably over the next few years, along with interest rates, house prices, wages, rents, food, and petrol. *Just go and live in Scandinavia, and you'll get an idea of where things are headed here.* The only difference may be that taxes will continue to go down, and coffers are supplemented by more and more billions of dollars in  surpluses generated by company tax.




I'm curious what you see in the Australian future compared with Scandinavia.

ASX.G


----------



## Aargh! (3 March 2008)

theasxgorilla said:


> The difference between 65k and 57k is 12%, not 20%.
> 
> As we've come to learn, numbercruncher is not much of a numbercruncher.  I'd be interested to know the avg. for NSW, since there is no point doing a nat. avg. when we're talking NSW.
> 
> ASX.G




Um, difference of 65k - 57k = 8k

Increase of 8k from 57k = 8/57 = 14%

Decrease of 8k from 65k = 8/65 = 12%

Since wages are increasing we use 14%.

Correct me if I'm wrong.


----------



## KIWIKARLOS (3 March 2008)

gdaf said:


> do you have parents? If so, what is their house worth? how much do they owe on it? This is the single most important fact that people on this thread have ignored so far. I would argue that there is a currently a massive transfer of generational wealth going on, and this will continue to go on for years (until the end of the baby boomer generation). The BB generation is the single largest group of 0% LVR owner occupied dwellings the country has seen. This may help people understand why gen x and gen y feel comfortable taking on such debt. Why do you think banks want to slice of the action by offering advances on a proportion of home equity to retirees. The 'family home' is the x factor in all this, and it represents the largest chunk of Austrlian wealth. This has become, or is about to become liquid, and the cash re-disbursed to the offspring's fledging mortgage accounts. For Tom the property bear, and financial adviser, maybe this is the factor you're missing.
> 
> So as residential property wealth is redistributed to younger generations, they go and buy houses, pay of the credit cards etc. etc.
> 
> ...




Totally agree mate my folks went guarentaur on my place which saved me about 8 K in morgage insurance (they fully own the place) so they basically insure 80K of my house. I wouldn't advise this for many people though I felt really bad about it and worried about effecting my folks retirement. The only reason i did it was because I knew i hd a very secure job, good wage and cover for diability etc which would make it virtually imposible for there to be any chance of foreclosure.

Heaps of people though sand to inherit houses and heaps of assets. I doubt that the baby boomers will spend all their inheritance but to be honest I would galdly help my kids out if I could and i would rather do it earlier than later as a dollar now saves 10 in future. I personally believe that "spending allthe kids inheritance" on stupid stuff is just selfish and shortsighted. Sure go have some fun go oversea's but the alot of the richest and well off people in this world have to thank many generations of passing on wealth creation for there good position.

After all they are your flesh n blood (we justfound out my wifes expecting its changed my view on things quite a bit)


----------



## gdaf (3 March 2008)

govt' intervention:

http://www.theage.com.au/news/national/pm-doubles-rental-aid/2008/03/03/1204402337664.html


----------



## numbercruncher (3 March 2008)

theasxgorilla said:


> The difference between 65k and 57k is 12%, not 20%.




Sure it is ....

Happy Investing


----------



## theasxgorilla (3 March 2008)

Aargh! said:


> Um, difference of 65k - 57k = 8k
> 
> Increase of 8k from 57k = 8/57 = 14%
> 
> ...




OK.

$1,109 p.w. * 52 = $57,668.

$65,000 - $57,668 = $7,332

$7,332 / $57,668 * 100 = *12.7%*

Closer to 13% than 12%, certainly not 14%, and no where near the 20% our local doom and gloom troll threw up.

IF you take the average male wage, including overtime, from the ABS, you get $64,875 p.a.  The difference between this figure and $57,668 is 12.49%...or closer to 12 .

ASX.G


----------



## theasxgorilla (3 March 2008)

robots said:


> the actions by the gov indicate they also believe the affordability issue is non-existent




Robots, can you elaborate?  Which actions exactly?


----------



## numbercruncher (3 March 2008)

theasxgorilla said:


> OK.
> 
> $1,109 p.w. * 52 = $57,668.
> 
> ...




Ahhh .... nice work, got to love the splitting hairs thing you guys are into.

Now tell me had I not bumped the 2 (in 20pc) button when dropping in a hasty reply and had instead hit the 1 (as in 10pc) , would you all have taken so much time and effort in discussing the Average wage and Informed me how I undercalculated ?

Funny ole thread this one.

Anyway, havnt heard of any RE price rises all YEAR, whats up with that ? Heard all about rising rates, falling clearance rates, affordability blah blah, but not one iota about rising prices in the media as this thread claims !

Link us some price rises RE bulls for the love of god!


----------



## theasxgorilla (3 March 2008)

KIWIKARLOS said:


> After all they are your flesh n blood (we justfound out my wifes expecting its changed my view on things quite a bit)




Big congratulations KIWIKARLOS!


----------



## grace (3 March 2008)

Don't know if this is the place to put this info but a new website started today with free info on recent price sales (we have always paid for this info in the past).  It looks fairly up to date.

www.onthehouse.com.au


----------



## theasxgorilla (3 March 2008)

numbercruncher said:


> Ahhh .... nice work, got to love the splitting hairs thing you guys are into.




Hey, he was right!  $57k to $65k is 14%...but I had to get myself out of being wrong somehow 

To my mind it proves a point though...you can substantiate all kinds of things with the right numbers.  Which is why I give you in particular, amongst other bears, a hard time.  Back of the napkin calculations are interesting, but maketh a bear market in real estate, they do not.

ASX.G


----------



## Aargh! (3 March 2008)

theasxgorilla said:


> Hey, he was right!  $57k to $65k is 14%...but I had to get myself out of being wrong somehow
> 
> To my mind it proves a point though...you can substantiate all kinds of things with the right numbers.  Which is why I give you in particular, amongst other bears, a hard time.  Back of the napkin calculations are interesting, but maketh a bear market in real estate, they do not.
> 
> ASX.G






Sorry for not adding anything to the thread other than correcting a (14% - 12%) / 12% = 16.7% error.


----------



## AAA (3 March 2008)

numbercruncher said:


> Funny ole thread this one.
> 
> Anyway, havnt heard of any RE price rises all YEAR, whats up with that ? Heard all about rising rates, falling clearance rates, affordability blah blah, but not one iota about rising prices in the media as this thread claims !
> 
> Link us some price rises RE bulls for the love of god!




http://reareports.realestate.com.au/viewFreeReport.do?suburb=Oxley&state=QLD&step=getRecommend&productId=1&postcode=4075&actionTarget=viewFreeReport&y=10&x=40

Scroll down the report to the table listing the last 12 monthly Brisbane median house prices. Nice trend including a nice jump for January this year.

Units are doing ok as well.


----------



## numbercruncher (3 March 2008)

Thanks AAA


Yes according to that 16pc+ across the board for Brisbane in Jan/Feb alone, who verifys and compiles this data ? Just seems a little suspect considering the current enviroment, I have no proof its false or anything, but it seems a little suspicious is all. Annualised its like 100pc, If it really is climbing at this rate, the RBA is way behind the curve and needs to start raising 1pc a pop.

The other thing I find odd, reports say Brisbane growth 07 was 20pc but that report shows 15.6.

Anyway folks keep the price growth news coming its interesting to keep track of in the current enviroment!


----------



## tech/a (3 March 2008)

> Households in Oxley are primarily couples with children and are likely to be repaying between $600.00 - $800.00 per month on mortgage repayments. In general, people in Oxley work in a non-specific occupation. In 2001, 70% of the homes in Oxley were owner-occupied compared with 71% in 2006.




Found this stat interesting with regard to loan commitments.
Whats "Likely" mean? ---A guess?


----------



## gfresh (3 March 2008)

> Yes according to that 16pc+ across the board for Brisbane in Jan/Feb alone, who verifys and compiles this data ? Just seems a little suspect considering the current enviroment, I have no proof its false or anything, but it seems a little suspicious is all. Annualised its like 100pc, If it really is climbing at this rate, the RBA is way behind the curve and needs to start raising 1pc a pop.




Here is some more stats and info for January

http://www.residex.com.au/newsletter/source2008_02cMC.html

Again, it really depends what you read, as you often get different figures. These guys say Brisbane over 2007: Up 23.3% for houses, 17.05% for units.. 10yr average they quote for houses is 12.21% and units 9.9%


----------



## AAA (3 March 2008)

I think the latest 16% increase is comparing the January median with the median for the previous 12 months. Have a look at the table of prices- not the % increases. It goes like this:
410k  Feb07
405
410
410
430
447
445
456
465
470
479
502 Jan08

That's about a 5% rise from Dec 07 to Jan08 and a 22% rise from Feb07 to  Jan 08. The 16% rise would mean the median price for the year was around 435k which sounds consistent with what I have heard.


----------



## AAA (3 March 2008)

tech/a said:


> Found this stat interesting with regard to loan commitments.
> Whats "Likely" mean? ---A guess?




I think they take the information from the latest census. I don't know if they adjust it for interest rate rises. I think it is a fairly meaningless stat.

I really like the household income graphs. I think it gives a good indication whether a suburb is overpriced and vulnerable in a slump.


----------



## chops_a_must (3 March 2008)

Sentences like this, really get my eyes open:



> In general, people in Oxley work in a non-specific occupation.




Does that mean, that specifically, these people work in a general occupation?

Do all the people in this area work in exactly the same, "non-specific occupation"?

Do they all have 5 jobs? Meaning their job couldn't be specified?

Or is this an occupation that hasn't been formerly recognised in a dictionary, and native to this area?

Or more likely, does the author of this sentence really have no clue?


----------



## Snakey (3 March 2008)

chops_a_must said:


> Sentences like this, really get my eyes open:
> 
> 
> 
> ...




classic stuff chops.. get into those delusional RE bulls and multi home investors who have stolen the chance for a first home buyer.
I guess their day will come...higher interest rates, devaluing properties, pity we cant see their red faces when the proof is there in black and white.
Fence sitter Tech/a - Please answer this question so I know where you stand - I am an average man on an average wage  with a average deposit living in lets say Adelaide in Feb 2008. Is now a good time to buy an average house with a average price tag in an average area. Please no rambling just a simple yes or no answer. Do you have the balls to answer that question? I doubt it . straight yes or no pleeeaasase,    any other RE bulls or bears for that matter care to put it down in history with your name attached to it. Please reply as such - 
In answer to Snakeys Question : Yes or no
P.s. Snakey's answer to Snakeys question : NO


----------



## robots (4 March 2008)

hello,

just to clarify what average deposit is, banks take this as 20%, so snakey do you have 20% deposit, 

if so, then yes buy, if you have say 15% deposit and get FHOG then yes,

if you basically cant afford it because you have no deposit then no, go rent no issue with that as many here are telling us its gold to rent as its so cheap,

thankyou

robots


----------



## tech/a (4 March 2008)

> Fence sitter Tech/a - Please answer this question so I know where you stand - I am an average man on an average wage with a average deposit living in lets say Adelaide in Feb 2008. Is now a good time to buy an average house with a average price tag in an average area. Please no rambling just a simple yes or no answer. Do you have the balls to answer that question? I doubt it . straight yes or no pleeeaasase, any other RE bulls or bears for that matter care to put it down in history with your name attached to it. Please reply as such -




Lets take some avarage areas.
Davoran Park
Elizabeth
Salisbury
Para hills.
Gawler.
And all surrounding Average areas within 5k

These types of areas a resounding *YES YES YES YES YES*.
Ill see if I can find some examples.
Will also keep an eye on growth in these Suburbs.

As I said I have the plans for the Northern Expressway on my desk.
Its a Monte these areas are going to *RISE YES RISE* in price.

For you *Snakey*.
Your this guy how would you *structure* your purchase what would you be *looking *for?

Just plain bullet points---1-2-3-4 etc

Some great buys here.







*YES YES YES YES!!!!*


----------



## krisbarry (4 March 2008)

tech/a said:


> Lets take some avarage areas.
> Davoran Park
> Elizabeth
> Salisbury
> ...





lol tech, what you are really saying is yes to drug deals, yes to prostitution, yes to bashings, and yes to murders, and yes to tennants trashing your investment properties etc etc. 

If you are really honest tech/a these area are horrible crime ridden suburbs.

It is amazing how even the real estate headstrong gurus in the property market are talking up the most filthiest crime infested suburbs.  What gives?


----------



## krisbarry (4 March 2008)

tech/a said:


> Lets take some avarage areas.
> Davoran Park
> Elizabeth
> Salisbury
> ...




I say NO NO NO, these are the first suburbs to be hit, with lower house prices as interest rates keep on rising.  High morgagte belt areas with low wages, ouch!  I say stear clear!


----------



## tech/a (4 March 2008)

And therin lies the difference between people like you and people like me,*Stop*.

Mr Average would be best to seek out opportunity so he departs from the "Average crowd".Where as those who remain Mr Average will find a reason to turn that or any opportunity into a liability.

One of the qualifications for MR average *wasnt *(Well I couldnt find it) *that he was a Moron.*

MR Average would do his due diligence.

There are by far a vast majority of honest hard working people living in these areas who do take pride in their efforts to get ahead in their world.
You under estimate human nature!

I'm sure you have come across this with your own rentals


----------



## numbercruncher (4 March 2008)

This following article is about the massive spike in Repos in Sydney, but just check out the huge spike in listings !



> Following the February 5 rise, there were an average 31,160 properties a week listed for sale in NSW, more than double the 15,888 listed during the same period the previous year.
> 
> In Sydney, there were an average 11,638 properties listed up from 7849 during the same time in 2007, according to RP Data.
> 
> ...




http://www.news.com.au/dailytelegraph/story/0,22049,23314150-5001021,00.html


----------



## KIWIKARLOS (4 March 2008)

http://www.rpdata.net.au/

Shows that the only real average decrease has been in WA 

Although median house price is a load of BS as houses can not be priced as a commodity as there are so many variables between each and every property. There are stark differences between areas though, at the moment south west and western Sydney are decreasing in value whilst inner west and north increasing quite alot.


----------



## xoa (4 March 2008)

"Investors" accounted for half of all new home loan borrowings last year. It'll be interesting to see how many more interest rate hikes they can absorb before running for the exit. 0.25%? 0.5%? When will the house of cards collapse?


----------



## wayneL (4 March 2008)

KIWIKARLOS said:


> http://www.rpdata.net.au/
> 
> Shows that the only real average decrease has been in WA
> 
> Although* median house price is a load of BS* as houses can not be priced as a commodity as there are so many variables between each and every property. There are stark differences between areas though, at the moment south west and western Sydney are decreasing in value whilst inner west and north increasing quite alot.



Not to mention the role of gentrification.


----------



## numbercruncher (4 March 2008)

http://www.rpdata.com/


Another thing I find very interesting on RPdata ....


They list amoungst other things " 29.2m property records, 17.6m property atrributes and features, 12.1m land parcels, 13.8m on market records "


Australia with 22m people and 2.6 pp household, so where is the shortage again ? Specific desirable areas obviously, urban consolidation will eventually cure that anyways.

Seems to me this demand exceeding supply is just propaganda ?


----------



## explod (4 March 2008)

numbercruncher said:


> http://www.rpdata.com/
> 
> 
> Another thing I find very interesting on RPdata ....
> ...




Australians are the highest percentage in the world owning pets.   In the US now it can cost 50g for a burial service for a pet (hoolypoodle) so the impact of pets on aussie home demand is yet to hit.


----------



## krisbarry (4 March 2008)

tech/a said:


> And therin lies the difference between people like you and people like me,*Stop*.
> 
> Mr Average would be best to seek out opportunity so he departs from the "Average crowd".Where as those who remain Mr Average will find a reason to turn that or any opportunity into a liability.
> 
> ...




Building a piece of infratructure doesn't make you an expert in the current climate.  The southern expressway was built before a housing boom and in a period of low interest rates, the northern expressway will be built after a boom and in a period of high interest rates.  Beats me why you are still beating the housing drum...for what purpose?


----------



## tech/a (4 March 2008)

*stop.*
Taking an alternate view in the discussion and answering questions relative to other submittions by others including yourself.
No other purpose.


----------



## Mofra (4 March 2008)

numbercruncher said:


> Link us some price rises RE bulls for the love of god!



Well, is only an individual case:

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=37013264&s=vic&tm=1204628803

2 other identical properties in the same complex sold for $324k & $330k respectively late last year (November). Inner city properties have been scewing the figures for some time though - I could have just as easily posted the West Sydney mortgagee auction results & scared the pants off the bulls.


----------



## pepperoni (5 March 2008)

Yes the thread is "House prices to keep rising for years"

Rising at least 10% per year in fact. No question about it.  In 10 years the average syd house will be 1.4m.  In 20 Years it will be 3.7m.  

In 50 years it will be $65m. This will be possible as average salaries will be over $15m a year.  Of course if you have a uni degree you should earn this first year out as many graduates today make the average earnings.

Warren buffet is saying you are unlikely to get this sort of return on equities so get on the fast train to mega riches now people! 

Im only getting 8% in term deposits on 1.8m as all the robots are crying out for my money to make the returns ... I must be crazy!  And im paying penal rent of $260 per week on a huge 2 bedder in cremorne. What am I thinking?????

I need to rush out and become a slum lord asap.  With the added bonus that I get to deal with tennants and real estates regularly.  Cant wait! :


----------



## ROE (5 March 2008)

pepperoni said:


> Yes the thread is "House prices to keep rising for years"
> 
> Rising at least 10% per year in fact. No question about it.  In 10 years the average syd house will be 1.4m.  In 20 Years it will be 3.7m.
> 
> ...




You breaking the dream of house price double every 10 years.... 
but here is some facts to back it up

House price in US last 116 Years
http://mysite.verizon.net/vodkajim/housingbubble/shiller_graph.gif

House in Australia vs USA in the last 100 years
https://www.aussiestockforums.com/forums/attachment.php?attachmentid=18783&stc=1&d=1204685897

so if you start at 25 (very very low compared to the graph) and compound at 8% for 100 years you should get 54,994.03.

look at the number on the graphs 

some people will have a rude awakening soon


----------



## numbercruncher (5 March 2008)

Effectively will push down the demand and probably the price of *established* IPs ..... why ?


Lets say you have a rattly old IP rented for 300p/w.

New investor comes along Builds new place and rents it out for 240p/w (20pc below market val), but the Government gives you 6k a year or 120pw in tax credits (giving effective 360pw return), thats without even taking into consideration the state/territory contribution. States and Territorys seem to have lots of Property plans in the pipe line that seem to equate to downward price pressure.


Wouldnt want a ratty old IP when you can get a shiny new one and take advantage of this genorous concession.








gfresh said:


> Thoughts?
> 
> http://www.theage.com.au/news/nation...402337664.html
> 
> ...


----------



## pepperoni (5 March 2008)

Citibank now has an 8% pa at call account ... bwahahaha. We should rename the thread money prices to keep rising for years.

And thats without 60k stamp duty and 30k agents fees.  And it doesnt require you to waste saturdays house hunting or getting properties ready for open houses.  No property management fees, plumbers, delinquent tennants, land tax bills, strata levies, special levies and all the other costs moronic mum and dad property investors conveniently overlook. 

And being "at call" it doesnt require dealing with a greasy re agent, 8-80 week for sale period, low balling buyers, conveyancers, and 6 week settlement period.

Life is too short for all the nonsense that comes with property investing ... Even if the returns were good (which they arent) Id gladly get a lower return with less running around.  You only live once and have to put a value on your time people!


----------



## robots (5 March 2008)

hello,

go for it peepperoni,

i like to listen to the authority on these issues like the ABS who document that home owners worth 6x more than renters, a HUGE 6x

no-one stopping you from doing as you please, goodluck

thankyou

robots


----------



## nioka (5 March 2008)

pepperoni said:


> Life is too short for all the nonsense that comes with property investing ... Even if the returns were good (which they arent) Id gladly get a lower return with less running around.  You only live once and have to put a value on your time people!



Ah! The young and the restless. Maybe it should be the young and the reckless.


----------



## pepperoni (5 March 2008)

robots said:


> hello,
> 
> go for it peepperoni,
> 
> ...





Because historically people who bought houses could afford them but with the recent credit bubble you and the other robots are forming the new home owner poverty class.  

A period of house sales in melbourne (of all places) at 20% above historical averages towards the end of a credit bubble does not mean house prices are increasing to that extent.

Have fun wasting you life at auctions while the rest of us live the high life


----------



## pepperoni (5 March 2008)

nioka said:


> Ah! The young and the restless. Maybe it should be the young and the reckless.




Errr ... getting an education and earning a solid 4 figures a day is hardly reckless .. flittering around auctions with money you dont have in the hope of making 4 figures a day is though.


----------



## pepperoni (5 March 2008)

Adelaide Bank ups rates by 0.4%
Email Print Normal font Large font AdvertisementMarch 5, 2008 - 2:56PM 

http://business.smh.com.au/adelaide-bank-ups-rates-by-04/20080305-1x3u.html


In related news, return on property investments has fallen by around that much depending on gearing (but ignoring the dampner this will be for capital gains).


----------



## MichaelWhyte (5 March 2008)

Hi Guys,

Just put the rent up on my IP by $100 from $550 to $650pw.  Not much more to add really.  Just an 18% increase from where it has been for the last 6 months.  I'll probably go again in 6 months time too.  She's almost neutral now, and if rates come off a bit she will be.  I think I factored that I need 1%pa Capital Gain to offset my negative holding costs.  Of course, that would need to be above inflation if it is to be an effective store of wealth. 

But I'm gonna hold.  Its in a seachange suburb in a saught after part of Sydney that's been doing 8% pa growth for the last three years.  When the credit squeeze washes out, this postcode will do a lot more than 8%.

Oh, and every 10% growth adds $270K to my net worth.   Oh, and don't do the math on yields as its a leveraged play so they won't add up.  Its a bit like a stock option as its a DA approved site that I'm holding for a fraction of its actual Gross Realisation potential.

Its not all doom and gloom in IP land.

Cheers,
Michael.


----------



## pepperoni (5 March 2008)

MichaelWhyte said:


> Hi Guys,
> 
> Just put the rent up on my IP by $100 from $550 to $650pw.  Not much more to add really.  Just an 18% increase from where it has been for the last 6 months.  I'll probably go again in 6 months time too.  She's almost neutral now, and if rates come off a bit she will be.  I think I factored that I need 1%pa Capital Gain to offset my negative holding costs.  Of course, that would need to be above inflation if it is to be an effective store of wealth.
> 
> ...




With a 1% capital gain you break even!!!!!? Its not exactly bright sunny skies either!

And how long have you had 90% of your eggs in this basket?  And how much longer will you need to before you can take the hit that comes with selling?

IMO it starts looking real doom and gloom when you consider alternative investments.

And Im not too sure capital gains will be great.  In 1994 as a young full time professional with 300k in assets, no debt, and on 50k pa CBA would only lend me 200k .... since around 2000 Ive seen lenders offering to 350k and more to people on that money.  With much higher costs of living. 

That and low interest rates account for 99% of capital gain but rates are up and credit supply is on the way down ...


http://business.smh.com.au/macquarie-to-scale-back-mortgage-business/20080305-1x0f.html

Macquarie to scale back mortgage business
Email Print Normal font Large font AdvertisementJacob Saulwick 
March 5, 2008 - 11:37AM 

Australia's non-bank mortgage market continues to contract after Macquarie Group announced it would substantially cut the number of new mortgages it offers.

Macquarie's decision follows the decline of Mobius, the mortgage business of the embattled Allco Finance, and the sale of most of RAMS Home Loans to Westpac.

Macquarie blamed the higher cost of finance caused by the international credit crisis for the move, but said services to existing Australian customers that hold 95,000 loan facilities would continue.

The heat being applied to mortgage providers that draw funding from international money markets is expected to reduce the rapid pace of lending in Australia.


----------



## MichaelWhyte (5 March 2008)

pepperoni said:


> With a 1% capital gain you break even!!!!!? Its not exactly bright sunny skies either!
> 
> And how long have you had 90% of your eggs in this basket?  And how much longer will you need to before you can take the hit that comes with selling?



Still, I'm happy investing in an asset class where all I need is 1% growth to be in the black after all costs are covered...  Particularly given the potential for significantly more than this given basic demand/supply economics.  In the postcode I'm invested in over 80% of properties are owned outright with no debt outstanding.  And the median price is well over $1M.  Who cares what happens with global credit markets when you can pay cash for properties at well over the $1M mark...

And, as for the "hit", I'm actually up already to the tune of some $300K profit over my purchase price of 18months ago (or a 28% annualised return over that period.  That's the payoff from getting my DA approved).  So, even selling today I'd pocket a nice little margin.  No downside there...

Horses for courses, but property is a good game too if you know how to play by the rules.  I don't expect there to be as many property experts on a stock forum though as there are stock experts.  Its a different game, but a profitable one for those that know how to play it.

Cheers,
Michael.


----------



## pepperoni (5 March 2008)

.. and 8 months into the credit crisis mac bank says there is absolutely no sign of it abating.

Others have good cause for expecting it to worsen. 

http://www.telegraph.co.uk/money/ma...1YourView&xml=/money/2008/03/03/ccview103.xml

Interesting to note that house prices are flat or going backwards in most of the developed world ... which presumably doesnt include melbourne.  

Consider the fundamentals and ignore the bubbles caused by fools that are cashed up with other peoples money.

Continue with the ignorant bliss at your own peril.


----------



## pepperoni (5 March 2008)

MichaelWhyte said:


> Still, I'm happy investing in an asset class where all I need is 1% growth to be in the black after all costs are covered...  Particularly given the potential for significantly more than this given basic demand/supply economics.  In the postcode I'm invested in over 80% of properties are owned outright with no debt outstanding.  And the median price is well over $1M.  Who cares what happens with global credit markets when you can pay cash for properties at well over the $1M mark...
> 
> And, as for the "hit", I'm actually up already to the tune of some $300K profit over my purchase price of 18months ago (or a 28% annualised return over that period.  That's the payoff from getting my DA approved).  So, even selling today I'd pocket a nice little margin.  No downside there...
> 
> ...




I sold my property on edcliffe bvd collaroy for 1.4m a year ago.  Owned outright of course. The sale included a sepp 5 approval (obtained by prev owner) for 3 dwellings that added $0 to the value.  Ive built in golden grove beacon hill, norfolk ave, suffolk ave collaroy plat, barcoola place and minkara road bayview. All million dollar properties ... some over 3m by now  ... I know the market.  And I know development.  From years of experience.

Once re investing and development returns were good but no more.

You wont get that return with a DA. And if you build it yourself you will find the only prices that have really risen are development costs which seemed to irrevocably double overnight.  You will be lucky to have 10% return when all is done and dusted if you account for every cost including holding costs. Very lucky.

I do expect that area to outperform most of syd for years to come but outperforming going backwards fast aint that flash.


----------



## robots (5 March 2008)

hello,

10% return on what? pepperoni

thankyou

robots


----------



## jet328 (5 March 2008)

robots said:


> i like to listen to the authority on these issues like the ABS who document that home owners worth 6x more than renters, a HUGE 6x




What If I told you Lear-Jet owners are 100x wealthier than the non-LearJet owners?

or 

Rolls Royce drivers are 50x wealthier than non-Rolls drivers

or

Old people are 10x wealthier than non-old people





Off to the shops to pickup my Lear, Rolls & grey hair to make myself 100x50x10 times wealthier than average


----------



## robots (6 March 2008)

hello,

anything been happening today,

went for a ride early this morning into melb, its great getting some bargains at the cafe's these mornings,

can see why melb has plenty more run in it

couldnt believe my eyes when the stack of crispy bacon came out on my plate, surely to try and entice a few more orders

thankyou

robots


----------



## numbercruncher (7 March 2008)

Hows the " House prices to keep rising for years " theory going folks ? 



> Credit crisis turning the screws on bank lending
> 
> Many analysts, including assistant governor of the Reserve Bank Malcolm Edey, believe banks will be forced to adopt tighter lending criteria now that their access to international finance has been limited by the credit crunch.




http://www.abc.net.au/news/stories/2008/03/06/2182180.htm



> Speculation that recent interest rate rises might start to impact on Australia’s property market was today confirmed in the latest RP Data Property Pulse. Over the past two weeks 34,000, or 17,000 listings per week of new properties for sale entered the market compared to just 26,000 for the same period in 2007.




http://www.rpdata.net.au/news/rp/20080225_media.html

Anyone planning on taking Ruddy up on his new offer and build a IP for the Juicy new incentives ?


----------



## gfresh (7 March 2008)

Funny how all this instant supply of housing comes onto the market soon as there is a slight wiff property values might not increase by 10%+ a year.

I wonder how the demographics shift will really change things in the next decade or more, above and beyond any short-term impact. When the bulk of the 'baby boomers' hit 70 or 80 in another 10-30 years, most won't be living in a large 3 bedroom family home. While our population is growing, it's not growing enough to replace those getting older.


----------



## KIWIKARLOS (7 March 2008)

Banks tightening lending standards is a good thing and everybody knows interest rates move in cycles. With the economy showing signs of slowing and people at the lower end starting to do it tough we could see a interest rate peak soon. 

Besides that you are ignoring the fundamentals of the housing markets. Population growth and density can only lead to higher prices. Melbourn is hammering along, sydney is going through massive urban consolidation and i can tell you To highlight know development is not slowing. 

How do I know this? I work for energy australia and plan the electrical requirements o=for the inner west and eastern suburbs. We are seeing unprecedented levels of consumption due to development. The once mainly industrial areas are been trtansformed into multi thousand dwelling + commercial areas. Zetland, Green Square, Redfern all are forecast to grow 25% over the next ten years. Macquarie Goodman and SOPA (sydney olympic park authority) are basically turning Homebush into a mini CBD. Rhodes, Turramurra, Hornsby. The list goes on and on.

No only are we seeing huge amounts of development but huge general load growth because of descretionary spending by people on things such as air conditioners and fancy lighting. 

Sydney Ports are now expanding 50% and converting all diesel cranes to electric they are building new rail lines to distribute the cargo and remove trucks from the road. There forecast increase in goods traffic for the next 10 years is at least 50%. 

Please show me any signs of significant economic factors that are going to make house prices decrease. Were not talking about property as a investment simply the fact that HOUSE PRICES WILL NOT DECREASE. 

Our exports of coal are predicted to double in the next 12 months and iron ore by 60% our farmer are getting good rains and the demand for fertiliser is increasing. Our economy is showing no signs of weakness, the only companies that are have significant exposure to the US market or are up to their eyeballs in debt.


----------



## KIWIKARLOS (7 March 2008)

Sorry in the first sentence where I mentioned the economy slowing I meant moderating to a point where interest rate hikes do appear to be dampening consumer spending. The first thing people cut back on is discretionary spending.


----------



## kyme (7 March 2008)

Population growth is a factor in normal housing demand. Not really relevant now though with Australia's current record housing unafforability.
The USA has population growth of millions each year. So on that basis, one could have been arguing last year or so that USA house prices will never go down. If I was resident in USA I would now be a buyer of property with their big falls in prices. Overvalued prices in Australia at moment though don't demonstrate a compelling case of value to me at moment.


----------



## robots (7 March 2008)

kyme said:


> Overvalued prices in Australia at moment though don't demonstrate a compelling case of value to me at moment.




hello,

whats overvalued, look at Melton here in Melb you can get house for 200k, frankston for 220k, plenty of others around

the US is being exposed for the place it is, ordinary, while aus keeps showing the world its style

thankyou

robots


----------



## KIWIKARLOS (7 March 2008)

kyme said:


> Population growth is a factor in normal housing demand. Not really relevant now though with Australia's current record housing unafforability.
> The USA has population growth of millions each year. So on that basis, one could have been arguing last year or so that USA house prices will never go down. If I was resident in USA I would now be a buyer of property with their big falls in prices. Overvalued prices in Australia at moment though don't demonstrate a compelling case of value to me at moment.




Mate I dont think you can compare the US to OZ they have the ability to sustain many millions more people than us due to climate etc. We barely have enough water and arible land for 30 Mill people. Supply vs demand they have millions of houses available and no demand we have little to no space available and moderate demand.


----------



## KIWIKARLOS (7 March 2008)

There is also heaps of cheap land available in oz hell they are basically giving it away in rural areas eg. broken hill etc. 

But nobody wants to live there, everyone flocks toward the ocean especially after years of drought. There is just no prospects outside of the major cities (with the exception of mining towns) but those guys won't live in demountables for ever either. Where do you think the 100000's of peple making big bucks in WA will go with their cash after they get jack of 12 hours days in the middle of the desert.


----------



## gfresh (7 March 2008)

> While our population is growing, it's not growing enough to replace those getting older.




Bzzzt.. Further to my earlier comment, population growth seems to be larger than I thought.. 

Right now, to the minute, according to the ABS our current population is 21,229,903.. 

Our population at June 2000 was 19,153,380.. So we've had +2,076,523M or +10.84% in the last year, or approx +1.36% each year. They need somewhere to live, and we need more places to house them. Therefore the next couple of years may provide a great buying opportunity to be honest.. if prices stay flat, or even decrease in some areas. 

Lots of interesting stats and figures on abs.gov.au free to all. Worth a read!


----------



## Snakey (7 March 2008)

gfresh said:


> Bzzzt.. Further to my earlier comment, population growth seems to be larger than I thought..
> 
> Right now, to the minute, according to the ABS our current population is 21,229,903..
> 
> ...




All you need is those 2000000 babys to save a deposit to buy into the ridiculously priced market and it will drive up prices


----------



## tech/a (7 March 2008)

Instead of whinning and whinging why arent you guys finding ways to be in the top 5%.
90% of these posts reflect the thinking of the 95% who will never be any better off than the other guy.
What are you doing even being involved in discussions on wealth creation.

To this statement


> Funny how all this instant supply of housing comes onto the market soon as there is a slight wiff property values might not increase by 10%+ a year.




House prices dont have to increase 10% BUT.

Its pretty simple to get 10% return on your money in a leveraged product.
Property is one.
At 20% down 2% increase in pricing is a 12% return on investment.
And if it does that in the next year its a 30% return in 2 yrs.

Your freezing your self out of opportunity with fear.
I'm not saying buy anything thats got a for sale sign on it I'm saying search out opportunity and grab it with BOTH hands.

Do the numbers above on 5% then 10%.
Anyone can do it evidently Morons like myself who do this for a living.


----------



## explod (7 March 2008)

tech/a said:


> Instead of whinning and whinging why arent you guys finding ways to be in the top 5%.
> 90% of these posts reflect the thinking of the 95% who will never be any better off than the other guy.
> What are you doing even being involved in discussions on wealth creation.
> 
> ...




Yes that's fine, and you can claim the interest as a deduction but one still has to service the loan, the upkeep and respective rates...etc etc.

Recent trade on OXR, 35% up in one month, if I was to borrow a further 80%, short term loan, and some do it this way, you figure.  And OXR is a safe mid tier stock, and the other great thing is that the moment a trade looks a bit dicey I am out at the click of a mouse.

I follow strong uptrends, I have invested nicely in property in the past but figure it is a very poor proposition at the moment.

Each to his own I suppose, but at best I believe property overall is trending sideways.


----------



## tech/a (7 March 2008)

> Recent trade on OXR, 35% up in one month, if I was to borrow a further 80%, short term loan, and some do it this way, you figure. And OXR is a safe mid tier stock, and the other great thing is that the moment a trade looks a bit dicey I am out at the click of a mouse.




Very true but I doubt there would be many here that trade the price of a house on any trade let alone 2,3,5+ trades consecutively.
Regardless of market conditions people understand housing---over the longterm it goes up---it was cheaper for our parents and will be dearer.

So to was and will the stock market.But what vehical will be used most for Joe Average do you think?


----------



## numbercruncher (7 March 2008)

Anyways .... so besides property skyrocketing like Bank shares for the next few years, how do people feel about the new Gov incentive of getting 6k p/a plus 2k I understand from state govs to rent out new builds 20pc below market ? Surely will reduce the demand for established Investment props yes/no ?


So you new build and intend to rent for 300p/w but let it for 240p/w and get all this Gov juice, thatll help push up established places prices just like rising interest rates do yes ?


----------



## explod (7 March 2008)

tech/a said:


> Very true but I doubt there would be many here that trade the price of a house on any trade let alone 2,3,5+ trades consecutively.
> Regardless of market conditions people understand housing---over the longterm it goes up---it was cheaper for our parents and will be dearer.
> 
> So to was and will the stock market.But what vehical will be used most for Joe Average do you think?




The average Joe does not even think of trading.  An investment in an extra property or two, yes.   And as you infer the average Joe does not put the price of a house on OXR.

There are big differences between, owning real estate, which is accumulating assets as a form of saving and trading or speculating.  I have an Uncle who has brought and sold huge properties on the gold coast over the last 30 years.  I regard him as a speculator/trader and because of his eye, and knowledge of that neck of the woods will make money in any market conditions.

The average Joe cannot do this and I think that some of the rampers on this thread who say it is just plain sailing ought to have a look at themselves.  And I am continually amazed at the unsubstanciated rubbish that is allowed to be put forward.


----------



## xoa (7 March 2008)

The Australian housing bubble is 99% debt, 1% shortage.

We are so indebted, we make the Americans look like spendthrifts. Every baby boomer and his dog has bought a highly leveraged "investment" property. These amateur property tycoons accounted for 45% of new home loans last year. :


----------



## numbercruncher (7 March 2008)

Precisely and as money gets dearer and harder to borrow house prices can surely only keep rising for years as the OP demands ?


----------



## robots (8 March 2008)

numbercruncher said:


> Anyways .... so besides property skyrocketing like Bank shares for the next few years, how do people feel about the new Gov incentive of getting 6k p/a plus 2k I understand from state govs to rent out new builds 20pc below market ? Surely will reduce the demand for established Investment props yes/no ?
> 
> 
> So you new build and intend to rent for 300p/w but let it for 240p/w and get all this Gov juice, thatll help push up established places prices just like rising interest rates do yes ?




hello,

I dont think it will get off the ground, its Ruddie just trying to be everybody's friend,

will this information be in the Section 32 (sale document) for purchaser's, what happens with new owners when the property is sold or do they have to hold for a period of time,

it will push up cost of new home just like FHOG, 

we dont have enough workers as is,

things are rolling along fine, the affordability crisis is a myth,

hey explod, why dont you send an email to the RBA why they like to look at clearance rates?

30-40% on most inner melb prop's last year on a massive capital base, have some of that 

thankyou

robots


----------



## robots (8 March 2008)

hello,

just a note on auctions this week,

i think the weekend will be pretty ordinary, probably around mid 60's

thankyou

robots


----------



## numbercruncher (8 March 2008)

I dont understand I thought that when Interest rates are rising and stock portfolios where getting annhialated that Aussies poured their cash into Realestate ?

Is that another one of those Urban Legends they speak about ?


----------



## robots (8 March 2008)

hello,

is it all that easy nc?

thankyou

robots


----------



## Kimosabi (8 March 2008)

Real Estate in New Zealand is getting slaughtered, found this on the Global House Price Crash Forum.



> 1) Sales volume showed NO increase from Jan to Feb (in almost all previous years there has been a jump in sales between those months).
> 2) Average house price of those sold has now declined from $559K in December to $495K in February.
> 3)A decline of $64K in just 2 months.
> 4) That is a staggering 11% decline in just 2 months!




http://forum.globalhousepricecrash.com/index.php?showtopic=28660


----------



## ROE (8 March 2008)

numbercruncher said:


> I dont understand I thought that when Interest rates are rising and stock portfolios where getting annhialated that Aussies poured their cash into Realestate ?
> 
> Is that another one of those Urban Legends they speak about ?




Let it go the fatter it goes the heavier the fall...you just save your cash in the bank at 8% compounding each year till that day. Here is what the richest man (Warren Buffett) on earth have to say about compounding 10% a year which is the story real estate agent put out 

 " I should mention that people who expect to earn 10% annually from equities during this century – 

envisioning that 2% of that will come from dividends and 8% from price appreciation – are implicitly 

forecasting a level of about 24,000,000 on the Dow by 2100.  If your adviser talks to you about double-digit returns from equities, explain this math to him – not that it will faze him.  Many helpers are apparently 

direct descendants of the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as many as six impossible things before breakfast.”  Beware the glib helper who fills your head with fantasies while  he fills his pockets with fees."


----------



## tech/a (8 March 2008)

Kimosabi said:


> Real Estate in New Zealand is getting slaughtered, found this on the Global House Price Crash Forum.
> 
> 
> 
> http://forum.globalhousepricecrash.com/index.php?showtopic=28660




*Do you ever think past the face value of everything you read?*
Robotic posting of someone elses thinking.

(1) You cant tell me the "Average price for a home in Auckland is $500,000?????
So the top end is (On face value) returning to parity.

*OR*

(2) What if last month those listed and sold were more expensive purely because they were better houses than those listed this month.What if last month 10 multi million dollar waterfront homes changed hands and none did this month?

People talk about balance in a thread---its black and white here.


----------



## KIWIKARLOS (8 March 2008)

sure interest rates by the reserve bank and by the banks themselves are hurting people and decreasing house prices in some areas but do you really think interest rates will stay this high forever ?

At most there may be one or two more RBA rises and prob the same bank rises but I would bet my @ss that interest rates will start coming down by end of 2008 - midway through 2009.

So lets say that there is a good chance of house prices remaining stagnant in some areas and decreases in others for maybe 12 months or so (hence the 8 year economic cycle). But the Sydney housing market experienced its peak well before the US and we're still doing ok. They went from peak to downhill very rapidly.

Also we are in debt but its personal debt not government debt there is a massive difference. There is a whole economic theory based on the fact that Goverment debt related current account deficiets are completely different to government debt related current account deficiets. 

We have budget surpluses people and a future fund that will most likely meet and go beyond our future requirements. The US goverments medicare program is sinking the whole country they estimate by i think it was 2050 or so the ENTIRE US BUDGET would be neccessary to meet the medicare requirements alone. Our banks may be cutting back on dodgy lending, so what we go back to responcible lending pratice  Sure i doubt we will see another housing boom in the next 10-20 years like the one we just had but there is no reason for house prices to decrease.

We also have to remember that its not that house prices in the US are just diving their whole economy is sinking and they now have an across the board asset depreciation. Auction bonds are r00ted, people loosing jobs, banks loosing billions. The negative feedbacks are pushing down prices faster and faster. Their country is sinking, the dollar is gone. The only reason it aint a paso is because you can only buy oil in US peso's now. 

The only negative we have is interest rates via inflation and the cost of debt. Our economy is going gangbusters and will do so for at least 10-20 years IMO we aren't running out of coal, iron, uranium, geothermal energy any time soon and China and India have decades of growth left in them. Not to mention the other next potential big industrialisations how about south america and africa ?


----------



## KIWIKARLOS (8 March 2008)

Does any one actualy beieve median house price reflects anything in the hosuing market ? medians only work effectively with bell curves the opposite it true with property most of the cases are suburbs that are well well above the median or well well below the median. You can still buy a house for $250 at Blacktown and a unit in parramatta for 200-250K. So what if everyone can't afford a quarter acre block.


----------



## tech/a (8 March 2008)

> forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser talks to you about double-digit returns from equities, explain this math to him – not that it will faze him. Many helpers are apparently
> 
> direct descendants of the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Beware the glib helper who fills your head with fantasies while he fills his pockets with fees."




*Linier thinking.*




Help yourself I say!


----------



## xoa (8 March 2008)

Hypothetical future interest rate cuts won't save us. They're not saving the USA either. Australian house prices fell in real terms in the decade to 1998, even though interest rates almost halved.

Once you remove the speculative element of demand, prices will plummet. Once people come to the realisation that prices can fall, they won't speculate, regardless of how cheap credit becomes. Statistics tell us that "investors" are a bigger share of our market (45% of new home loans last year) than they ever were in the USA. With the average house valued at an insane $497k, there's a long way to fall.


----------



## tech/a (8 March 2008)

> With the average house valued at an insane $497k, there's a long way to fall.




Where do you get this rubbish.
Ive just sold one 50% under market value then----- and made 250% on my initial investment.
Actually it was $zero down so work out my return on my money invested.
Bloody hell get educated!


----------



## wayneL (8 March 2008)

Observation:

It's futile arguing macro against micro. In other words, when someone has a macroeconomic argument, it's kinda dumb using specific examples to counter; and visa versa. 

Unverifiable chest thumping doesn't add much either.


----------



## Uncle Festivus (8 March 2008)

> *AUSTRALIA'S financial institutions have lent billions of dollars to home buyers who were not subject to basic credit checks and had a history of defaults, putting them in the "sub-prime" category that continues to terrorise world financial markets.*
> The revelation, contained in research conducted by Dun & Bradstreet exclusively for The Weekend Australian, will add to investor fears about Australian banks' exposure to the global turmoil caused by the collapse of the sub-prime mortgage market in the US.
> Shares in the Big Four banks, which have already lost $100billion in value since their highs last year, yesterday led the stock market sharply lower. The benchmark S&P/ASX 200 index slumped 3 per cent after concerns about the international credit crisis again stalked Wall Street.
> The value of the Australian stock market has now shrunk $400 billion - or 25 per cent - since the sub-prime problems were first revealed in mid-last year.



http://www.theaustralian.news.com.au/story/0,25197,23338906-601,00.html

And these are the companies home buyers will be going to to get a loan. Do you think they will be scrutinising things a bit more these days, ie it will be harder to get finance. And increasing rates above the RBA benchmark sort of tells us the real story that's unfolding here. The credit givers don't trust anyone any more. 

Something about the wealth effect used to support the house bulls in the past, but it is now coming back to haunt them - negative wealth effect - up by the stairs, down by the bat pole.

Cycle end! Wait for the carnage, then buy! Mind you, the bottom could be several years away yet.


----------



## xoa (8 March 2008)

tech/a said:


> Where do you get this rubbish.
> Ive just sold one 50% under market value then----- and made 250% on my initial investment.
> Actually it was $zero down so work out my return on my money invested.
> Bloody hell get educated!




You don't understand the concept of market value. Half of properties sell for more than $497k, half for less. Those that sell for less, aren't necessarily "under market value". You can be sure there is a reason for their lower valuation.

Obviously the past 5 years have been very kind to property investors of subprime IQ. Any ape could make an unrealised profit, by just buying random houses. Let's see what the next 5 years has in store for you.


----------



## KIWIKARLOS (8 March 2008)

wayneL said:


> Observation:
> 
> It's futile arguing macro against micro. In other words, when someone has a macroeconomic argument, it's kinda dumb using specific examples to counter; and visa versa.
> 
> Unverifiable chest thumping doesn't add much either.




Totally agree and thats why i believe we are seeing the price decreases we are in the US because their economy as a whole is screwed and the governments only solution is to dig itself in deeper to try prolong the pain. 

Sure house prices may decrease in real terms over years due to inflation and stagnant prices but that is far more preferable to asset deflation. Remember as your houses real value decreases with inflation so does the % of your wage that it takes to service the loan. So bank and owner loose equally but if your house decreases 10-20% its only you loosing out the bank is still owed the full amount.

Massive difference in oz to is that you can't just walk away from your house if you have negative equity you just have to suck it up and either deal with it and stay put for years or sell at personal loss. In the US these people with negative equity give the keys to the bank and say to bad so sad see ya later suckers with no personal responcibility for any amount the may still owe. So instead of them taking the hit the bank does.


----------



## chops_a_must (8 March 2008)

robots said:


> hello,
> 
> the US is being exposed for the place it is, ordinary, while aus keeps showing the world its style
> 
> ...




Ah yeah, so why have Adelaide and Tasmanian house prices gone nuts in recent years as well?

Most would rather drink battery acid than live in these places.

Report out last night saying 25% of all kids in WA are going hungry each night. No affordability/ cost of living problem at all... clearly. 

Thankyou.


----------



## KIWIKARLOS (8 March 2008)

chops_a_must said:


> Ah yeah, so why have Adelaide and Tasmanian house prices gone nuts in recent years as well?
> 
> Most would rather drink battery acid than live in these places.
> 
> ...




a quarter of children going hungry thats a big claim by the "report" doesthis mean 25% of kids there are starving or simply not getting dessert

Sounds to far out to be true where bouts did this report come from, got a link ?


----------



## tech/a (8 March 2008)

wayneL said:


> Observation:
> 
> It's futile arguing macro against micro. In other words, when someone has a macroeconomic argument, it's kinda dumb using specific examples to counter; and visa versa.
> 
> Unverifiable chest thumping doesn't add much either.




Wayne.
I think its kinda dumb using macro economic arguement as a complete blanket.
I put up specific examples to "balance" the discussion.Just as a profitable trader would use specific examples of profit in this Doom and Gloom market.

The point Ive been making all along and will continue to make is.
Forget about masses of armaggedon news. If you wish to survive and prosper look at those things that 95% of the population DOSENT. 95% read agree with and act relative to "News".Their results are congruent with that which they BELIEVE.

What you see as chest thumping are simply real life examples of what others (myself in this case) are achieving,would it be less offensive if I said "A guy I know well"? 



> Obviously the past 5 years have been very kind to property investors of subprime IQ. Any ape could make an unrealised profit, by just buying random houses. Let's see what the next 5 years has in store for you.




This attitude that people who invest in property have to be mindless morons is seen in all bull markets of anything.
The last 7 yrs of trading has seen the often touted "Any Idiot can turn a profit in a bull market"
Strange seems only 5% of the idiots can actually achieve that---a consistent profit.

Those that tout these chants are by and large those who look back with dispair at what THEY missed out on.
 I keep using THIS APE as an example as I know what he's doing intimately.
While at the height of his lunacy he was 85% geared he is now 32% geared,still with 70% of his bannana's.

There are few monkeys here speaking from experience and that is as clears as day in their musings.

Wayne any verification you need happy to have my legal people forward to you in form of *affidavit*---any time you think I'm full of bannana crape you just let me know,Private mail me with postal details.(Yeh I'm sick of your snipping).
And everytime I satisfy your scepticism I expect an apologie publicly--here.


----------



## Kimosabi (8 March 2008)




----------



## tech/a (8 March 2008)

Ah I see.
From new paradim to despair EVERYONE goes broke.
Ill be sure to remember that.


----------



## Kimosabi (8 March 2008)

tech/a said:


> Ah I see.
> From new paradim to despair EVERYONE goes broke.
> Ill be sure to remember that.




Robert Schiller (author of irrational exhuberence) likes to use the Amsterdam house example (from University of Maastricht professor Piet Eichholtz) where records are kept dating back to 1650. 



> The average house on the Herengracht now costs 2.6 million euros. That is, on an inflation-adjusted basis, just a bit less than in 1736, when house prices along the Herengracht were at their historical high. If house prices keep rising at their current tempo, the 271-year-old record will be tied in 2008…










Sorry Tech/A, but the FACTS and HISTORY seem to be conspiring against you...


----------



## chops_a_must (8 March 2008)

KIWIKARLOS said:


> a quarter of children going hungry thats a big claim by the "report" doesthis mean 25% of kids there are starving or simply not getting dessert
> 
> Sounds to far out to be true where bouts did this report come from, got a link ?




The transcript is not up yet, but I will put it up when it is. The jist of it was that hungry kids are now no longer just in the poorer areas, there are now just as many kids going hungry from traditionally well to do suburbs.

I know you are a property perma-bull, but in WA at least, we are bumping up against where fundamentals drive prices higher, and where ordinary people can not afford to pay to even rent.

Here are some clippings from the same programme last week, in the same vein:



> First tonight, the flip side of WA's V8 economy. A report published today has documented a dramatic increase in the cost of living. Welfare groups say they're already seeing the fallout with a surge in the number of families seeking support. An overheated rental market and a shortage of public housing are not helping and charities say they're witnessing a new population of homeless seeking crisis accommodation.
> 
> ...
> 
> ...




So tell me what happens to society when EMPLOYED people can't afford to house themselves?

Tell me what happens when essential service staff are getting paid less than the average wage, and are being offered pay increases less than the local inflation rate, and cost of living increases?

So something has to give... and if people can no longer afford to pay... the conclusions are obvious.

And besides that, you'd be stupid to buy a house in Perth now, unless you were planning on living in it for the next 30 years, because the amount of infill planning is enormous... and if you aren't near one of those centres, you will be left without transport and services.

Cheers.


----------



## chops_a_must (8 March 2008)

Kimosabi said:


> Robert Schiller (author of irrational exhuberence) likes to use the Amsterdam house example (from University of Maastricht professor Piet Eichholtz) where records are kept dating back to 1650.
> 
> 
> Sorry Tech/A, but the FACTS and HISTORY seem to be conspiring against you...




Unfortunately European and Australian property isn't comparable because of the different urban design dynamic. And the changing European city design post wwII, i.e. for cars, has meant an artificial inflation in the previously highly concentrated and mass transit oriented areas.

Luckily, thanks to the end of cheap oil, this will all close up. And certain property values will decrease in relation to the comparable rise in cost of living it takes to live in those areas...


----------



## tech/a (8 March 2008)

> Tell me what happens when essential service staff are getting paid less than the average wage, and are being offered pay increases less than the local inflation rate, and cost of living increases?
> 
> So something has to give... and if people can no longer afford to pay... the conclusions are obvious.




Happens at peaks and happens WORSE in troughs.
I dont think its that obvious what WILL happen.

What is needed though and has been an emerging trend in Australia and well heeeled in other countries is higher density housing.
No they dont have to be ghetto's.Mind you its the lack of pride many have which turn good housing areas into ghetto's.

For investors this is the new era in housing,for those who are finding it tough they will--and some will--have to adapt to what life is throwing at them.

Wonder what the reaction would be if a levy was passed to tax everyone owning a home (read mortgage) $5 a week to help those less fortunate?
What a can of worms!


----------



## chops_a_must (8 March 2008)

tech/a said:


> *What is needed though and has been an emerging trend in Australia and well heeeled in other countries is higher density housing.
> No they dont have to be ghetto's.*Mind you its the lack of pride many have which turn good housing areas into ghetto's.
> 
> For investors this is the new era in housing,for those who are finding it tough they will--and some will--have to adapt to what life is throwing at them.



Pretty much tech.

Most of my friends, just about everyone I know my age, wants to live in smaller places so long as they are closer to everything.

But in Australia, and certainly in Perth, you just don't get a choice.

I couldn't service a mortgage, even if I wanted to, but by the time I could/ want to, hopefully there will be many more options.

You've been to WA tech, so obviously you've seen what can be done i.e. Subiaco, under the better cities programme. East Perth is another example.

It's then going to be a matter of choosing the correct area. No point in buying a dog box in the middle of nowhere, with no transport.

The secret is going to be buying along railways. Subiaco is a great example of why. In WA at least, you'd want to be looking at Claremont, North Freo, Cott, Maylands, Vic Park (if you could afford these areas). But what will be most interesting will be the Murdoch and inner city plans. By the time I'm ready and wanting to have my own place, these areas will probably be available, and in my price range.

I'll see if I can get the Murdoch plans on here for the reasons why I would be very interested in it...


----------



## robots (8 March 2008)

chops_a_must said:


> Ah yeah, so why have Adelaide and Tasmanian house prices gone nuts in recent years as well?
> 
> Most would rather drink battery acid than live in these places.
> 
> ...




hello, 

no there isnt an affordability crisis

thankyou

robots


----------



## robots (8 March 2008)

hello,

since we on about everything, 

how is Ruddie looking at taking away the $500 bonus for pensioners,

crikey is this guy for real, oh rudd is such a nice guy

thankyou

robots


----------



## tech/a (8 March 2008)

chops_a_must said:


> Pretty much tech.
> 
> Most of my friends, just about everyone I know my age, wants to live in smaller places so long as they are closer to everything.
> 
> ...




Chops.

Im thinking more rental.
Sure there will be some buying but more rental.
See with land being so expensive the only way to do it is to have multiple story.
Have you seen what they do with prefabricated high rise housing out of Europe.
I saw an 8 story 100 odd unit developement built foundations up in 3 weeks on Fox the other day--bloody hell thats cheap!

Something will pop up and I may be involved---probably not in Perth but a mate of mine could be---my lips are sealed he is currently in the Industrial developement area ---lucky bastard.


----------



## chops_a_must (8 March 2008)

robots said:


> hello,
> 
> no there isnt an affordability crisis
> 
> ...




Geez... my argument got trashed didn't it?



tech/a said:


> Chops.
> 
> Im thinking more rental.
> Sure there will be some buying but more rental.
> ...



Yeah, I have seen that stuff, it is pretty impressive. Last I heard was that BP owned a lot of the patents for those quick high density pre fab stuff. 

I'd only be interested in buying where you could get good rental occupancy as well... it's why I like the murdoch plans... the hospital right there, the uni as well. I doubt you'd have many vacancies...

Here is a pictorial of the plans for anyone (especially in perth) interested.


----------



## Kimosabi (8 March 2008)

Housing Bubble, What's the Trouble


----------



## wayneL (8 March 2008)

tech/a said:


> Wayne.
> I think its kinda dumb using macro economic arguement as a complete blanket.



No it isn't. I know of many good businesses that went broke through failing to look at the macroeconomic picture. 

The most successful businesspeople in the long term are those who are adept at anticipating economic cycles. This means looking at the macro picture.



> The point Ive been making all along and will continue to make is.
> Forget about masses of armaggedon news. If you wish to survive and prosper look at those things that 95% of the population DOSENT. 95% read agree with and act relative to "News".Their results are congruent with that which they BELIEVE.




As above, good businesses go down the toilet by forgetting armageddon news. This is where the now cliched' 95/5 ratio comes in. The 5% will anticipate and/or adapt to the macroeconomic as it unfolds, to ensure their own microeconomic circumstances continue to survive and prosper. We see this in the fortunes of share market/futures traders right now. We see it in the participants of the housing markets here in the UK and the USA.

Ignorers of housing Armageddon are in deep doodoo, whereas those who anticipated and hedged or adapted continue to do just fine.



> I put up specific examples to "balance" the discussion.Just as a profitable trader would use specific examples of profit in this Doom and Gloom market.
> 
> What you see as chest thumping are simply real life examples of what others (myself in this case) are achieving,would it be less offensive if I said "A guy I know well"?




Tech,

You were one of the first on this forum to pull up hindsite traders who failed to verify their trades, and rightly so. You may have made 500%, but it is just a number plucked out of your @rse until it is verified. It's a hindsight trade until you can prove it.

Therefore, practice what you preach and verify personal examples.

It's all in the delivery. You continue to inflate your ego by finding it necessary to de-edify others. If you would only cease and desist this practice, your contributions would be fully appreciated.


----------



## pepperoni (9 March 2008)

There IS an affordability crisis .... debt affordability!

Finance costs as much as the mythical returns property robots expect from simply buying a property with no value add. All their property leverage fantasies are dying a sudden death.  If i didnt think these baby boomer and gen x morons were I dying breed I be all over bank stocks right now.

Speculating with borrowed money has never been a good idea, especially at the levels favored by auction squad robots.

This thread is one big lol session .... cant wait to see who wasted their weekend at open houses and talking to slimy re agents.  Time is money people! If you have that much spare time get a second job stacking shelves and try a well proven path to long term riches  SAVING MONEY hahahaha


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## pepperoni (9 March 2008)

Kimosabi said:


>




New paradigm hahaha ... what did buffet say years and years back ... markets are mechanisms to transfer wealth from the impatient to the patient.   Banks are the only people making money out of the recent property frenzy and even they are taking some hits.  10% return on your principal year in year out is a realistic stretch return to shoot for.  Slow and steady really does win the race.


----------



## xoa (9 March 2008)

Walked down to the supermarket this morning and took a look at the local Ray White real estate office. I remember they were trying to rent a modern two storey house in Deagon about 6 weeks ago at $540pw. They're asking $420pw now, which is still pretty optimistic.

The debt-owners must have been smoking some strong stuff to expect such a high rent in one of the poorer suburbs of Brisbane. So many self-proclaimed investors have naively entered the property market, with little or no understanding of their responsibilities or what they can expect from their investment. Weeks of no rent with rising interest repayments gradually beats some sense into them.


----------



## robots (9 March 2008)

robots said:


> hello,
> 
> just a note on auctions this week,
> 
> ...




hello,

yes yes, thankyou

67% clearance for yesterday, no problem

next week will probably be interesting as a huge no. go up for sale, mid 60's again, the trophy houses/units are still being snapped up at realistic prices 

get in over the next few months if looking to buy a "home"

thankyou

robots


----------



## numbercruncher (9 March 2008)

Yes yes plenty of news today and of late of absolutely soaring property reposessions, record amounts of RE coming to market, falling clearance rates, sellers accepting less for properties, only a matter of time till falling prices show in the official dodge brothers figures.

So much for " House prices to keep rising for years "

Must be obvious to people by now that a soaring Share market of the last few years contributed massively to the old days of rising RE prices.






> The Real Estate Institute of Victoria blamed the 67% clearance rate on surging interest rates and the fact that the number of properties for sale was *double* that for the Labour Day weekend last year. The clearance rate is the lowest recorded for Saturday auctions since September 2006, and 16% below last year.
> 
> REIV chief executive Enzo Raimondo sounded a *warning*: "The real test will be next weekend, with a record 1400 auctions scheduled. If the clearance rate is similar, than we'll know this is a *sign of things to come*."




http://www.theage.com.au/news/national/were-feeling-it-as-us-economy-worsens/2008/03/08/1204780131613.html

Even the head of the REIV is starting to see reality.


----------



## explod (9 March 2008)

robots said:


> hello,
> 
> yes yes, thankyou
> 
> ...




Disagree, wait for at least 3 years and get in near the bottom.  However protect your cash in the meantime by putting it into prescious metals, oil and alternative energy stocks.


----------



## robots (9 March 2008)

hello,

explod, do you think prices are going to drop?

i definitely dont

it wasnt long ago 02-04 that auction clearance rates were the same, it was a primo buying opportunity and many who bought have got good gains

thankyou

robots


----------



## tech/a (9 March 2008)

> 67% clearance for yesterday, no problem




Well 67% properties at auction had punters agree with prices asked.

All clearance rates prove is just that.

When we see auctions being handed with a rejection of prices below say a 50% clearance I think we can safely say prices will continue to correct to a parity.
With high clearance rates its not telling me on a whole property is out of favour.
Infact 67% high.

Still you guys will beat your brains out trying to win a pointless arguement.
There is great value,avaerage value and terrible value out there.


----------



## krisbarry (9 March 2008)

Bad weekend in Adelaide for Auction clearance rates (about 55%), way down from the 77% a few months back.  Any property bulls still left?


----------



## numbercruncher (9 March 2008)

tech/a said:


> When we see auctions being handed with a rejection of prices below say a 50% clearance I think we can safely say prices will continue to correct to a parity.
> .




Clearance rates 08 Mar.

Sydney 49.9%

Adelaide 55.6%

Brisbane 43.7%

Might be time to find a new favored Indicator ?


----------



## explod (9 March 2008)

tech/a said:


> Well 67% properties at auction had punters agree with prices asked.
> 
> All clearance rates prove is just that.
> 
> ...




A good way of putting it.   The clearance rates down a bit in Melbourne but some commentators now pointing out that there is increased stock and vendors are lowering prices, both of which increase the clearance rates.

So yes the old clearance rate, which you keep quoting Robot, is a meaningless figure.

The other factor that is not being accounted for on this thread is the value of money.  Price rises across the board mean that money is losing value.  The inflation rate is a bodgey figure also because some important items are not included for its calculation.   So $500,000 put up 12 months ago would probably require 50,000  more today.  If the mean average of houses have increased that much, as some say, then they have not gone up at all.


----------



## robots (9 March 2008)

hello,

never have been any property bulls here STC, just realists

oh yeah everything collapsed,

thankyou

robots


----------



## pepperoni (9 March 2008)

Kimosabi said:


>




Denial ... comes right after the new paradigm.

Happy to say I havent seen an auction for over a year.  Havent got the foggiest idea what clearance rates are either but I know they are meaningless.

I also know prices are falling pretty hard in the most valuable parts of australias most valuable market and plummeting in other parts of the same market.

Word is the "margin loan" belt is looking like it will do far worse than the mortgage belt very soon.

Nero fiddled while rome burnt ... robots arent nearly so educated ... but they still have their bacon lol.


----------



## krisbarry (9 March 2008)

robots said:


> hello,
> 
> never have been any property bulls here STC, just realists
> 
> ...




A realist, how can a real estate agent be a realist? get real!

No offence to real estate agents it is a profession, but lacks credibility! 

Gee even a signpost or a traffic light can place a bid on a house.

My sister got the secret envelope trick, she was screwed out of an extra 
$25,ooo, silly girl, but filthy dirty trick by the real estate agent.

So Again being real is one thing but being realistic about a market is better.

A real estate agent is a step up from a car person


----------



## krisbarry (9 March 2008)

By the way, a close mate of mine is a real estate agent, and his gums flap non stop, he can sell the leg off a chair, but of late his gums stopped flapping and he has become a property bear too.

Says a lot about the profession and the current market climate, its bleak in anyones language.

Keep it real-estate agents!


----------



## tech/a (10 March 2008)

Pepperoni,Numbers,Kris.

I'll call you the cynics.

Did you ever stop to think that those like Bots,Myself and a few others here,bought fully geared back when prices were $90k for a 4 bedder
They are now $350K.Rents were $150/ week then and now $330/week.

Passive income--cant beat it.

Do you really think we give a rats if prices fall 50%?


----------



## numbercruncher (10 March 2008)

Tech and others,


Our argument/debate here isnt about your guys personal circumstances.

We are probably all indifferent to the fact of you guys being Millionaires, Billionaires or debtors or whatever. Its nice to hear youve done so well, but dont make out that your all some kind of genius RE moguls for buying property at the bottom of the cycle !

We are presenting the facts that support that House prices certainly arnt going to keep rising for years. There is very little evidence to the contrary since the beginning of this thread.

Cheers 


Oh and I do think you would give a rats if prices fell 50pc, actually I think you and others would be devastated.


----------



## tech/a (10 March 2008)

> We are presenting the facts that support that House prices certainly arnt going to keep rising for years. There is very little evidence to the contrary since the beginning of this thread.




Yes only History I guess.
But hey this time IS different isnt it.

In 1977 I heard exactly the same thing.

Houses were a REDICULOUS $32,000 on average in Adelaide.
To think that in 30 yrs time the exact same house would be $350,000 was fancifull.
As was the idea that the wages would go from an average of $6k a year to now around $60k
As was the thought of a New car going from $2500 to $35000 
As was the thought of Petrol at 14c going to $1.50 a litre.

$350,000 to 3.5 million
$60,000 to $600,000 wages

Totally rediculous!!


----------



## wayneL (10 March 2008)

Holy Dooley!

We're arguing a 5 year time horizon with a 30 year time horizon?

Futile.

Let's at least agree on the time frame we're talking about.


----------



## xoa (10 March 2008)

The typical house in 1977 was twice as affordable.

I read a few days ago that the typical mortgage owner is putting 49.8% of his disposable income into repayments. For recent entrants, it's even worse. Before long, those at the top of the pyramid scheme will be trying to get blood from a stone.

"Investors" are temporarily distorting prices because they've suddenly become 45% of the market. At most auctions, the end-users of real estate are outnumbered by "investors". It's never been like this before. Take out the speculative element of demand, and prices will become a falling knife.


----------



## numbercruncher (10 March 2008)

A graph says it all, In my humble opinion the correction is beginning just like every other Western country.

View attachment 18873




> NEIGHBOURS, spectators and onlookers gather for a Saturday auction in St Kilda West. Valued at more than $1 million by its owners, the house is in a trendy part of town that is typically keenly sought. But while well served by the sunshine, the assembled crowd in Park Street is missing one key ingredient: a buyer.
> 
> Not a single bid is made and the property passes in with a vendor's bid.




Vendors bids add to the so called " clearance rate " dont they ?



> More than ever, real estate agents are telling their clients to lower their price expectations and that with the heat coming out of the property market the massive profits reaped last year are unattainable today.




Wow, realistic RE salespeople, bearish even, but oh well they slice off 2.5pc no matter the price 

http://www.theage.com.au/news/in-depth/going-going-gone/2008/03/09/1204998282272.html


----------



## explod (10 March 2008)

numbercruncher said:


> A graph says it all, In my humble opinion the correction is beginning just like every other Western country.
> 
> View attachment 18873
> 
> ...




The latter a very important point, time and again I have had family and friends who signed up at a price over the last few years when things were good.  Prices suggested by the RE Guru's to get the business over competing ageants and within weeks were suggesting that a price drop was needed to move the property.    Get you then screw you.

As you say 2.5%, which varies little from $500,000 to $450,000

In fact with the internet now figuring in more than 50% of properties being spotted I suggest it is time to sell property on ebay without agents.  Conveyancing DYO with the backing of your solicitor is ABC.

And car salesmen, angels compared to Real Estate Agents because thier evolutionary brain period/size is more exposed in the car yard.  And as a matter of fact they are more regulated because of past vehicle theft problems.


----------



## Kimosabi (10 March 2008)

tech/a said:


> Pepperoni,Numbers,Kris.
> 
> I'll call you the cynics.
> 
> ...



The real question, was this luck or did you do your research and analysis before jumping in?

Did you understand credit and money creation cycles before jumping in?

All of us RE Bears have done the analysis and research and have concluded that the real value of your $350K 4 Bedder is probably about $150K - $200K adjusted for insanity and Real Estate/Credit Bubbles.

Needless to say, when Real Estate becomes a dirty word for the General Public, those of us that are currently Real Estate Bears will soon become Real Estate Bulls.

Research and Analysis = Smart Money

I bide my time for my entry into Real Estate and observe the dynamics of the Booms and Busts with great interest.


----------



## tech/a (10 March 2008)

wayneL said:


> Holy Dooley!
> 
> We're arguing a 5 year time horizon with a 30 year time horizon?
> 
> ...




Who nominated 5 Yrs?



> Vendors bids add to the so called " clearance rate " dont they ?




No only a sale.If its not sold its still inventory.



> Wow, realistic RE salespeople, bearish even, but oh well they slice off 2.5pc no matter the price




They have to get sales----price is *one* of the best draw cards. 



> In fact with the internet now figuring in more than 50% of properties being spotted I suggest it is time to sell property on ebay without agents. Conveyancing DYO with the backing of your solicitor is ABC.




There are many creative ways to sell your property.And you can sell it yourself.Its very simple with a conveyancer.
There was that story of the guy in Surfers I think it was that* reverse* Auctioned his house and got Double the price!
Agents have an agenda for both buyers and sellers.
Read Jenmans"Dont Sign Anything".



> The real question, was this luck or did you do your research and analysis before jumping in?




My story is somewhere on this thread.



> Did you understand credit and money creation cycles before jumping in?




Did *you* before missing the biggest property boom in decades?



> All of us RE Bears have done the analysis and research and have concluded that the real value of your $350K 4 Bedder is probably about $150K - $200K adjusted for insanity and Real Estate/Credit Bubbles.




Well the real value on the last one I sold turned out similar to $350 from initial $120K in my case.



> Needless to say, when Real Estate becomes a dirty word for the General Public, those of us that are currently Real Estate Bears will soon become Real Estate Bulls.




Really?
Where were you in 1997,98,99,2000,01.02,03,last year?



> Research and Analysis = Smart Money




Can be as smart a money as you wish but unless its invested in something its pretty DUMB.



> I bide my time for my entry into Real Estate and *observe* the dynamics of the *Booms* and Busts with great interest.




I'm sure you will.You'll *OBSERVE* them possibly all your life.Paralysed by fear of failure.


----------



## wayneL (10 March 2008)

tech/a said:


> Who nominated 5 Yrs?




(exasperated sigh)

Nobody. But I suggest that the participants of this thread do so.

Of ####ing course property will rise in nominal terms over a 30 year time frame.

The next 5 years may see something different. I also may not, but seeing as folks are arguing across time frames I suggest we all nominate what time horizon our view extends to. It would also be a good idea to state whether the view is in real or nominal terms. 

Otherwise it is another one of those stupid futile point scoring fiascoes that don't achieve anything but acrimony. A silly byatch fight. (Both sides guilty here)

FWIW It's how investors survive the next 5 years that will matter. No point having a 30 year view if you go down in flames before then. 

Now is definitely a time for caution. You can play baby games and call it fear, but was Buffet a scaredy cat for not buying equities when he perceived them too expensive?

Utterly ridiculous.


----------



## tech/a (10 March 2008)

> Now is definitely a time for caution.




Who mentioned that its not?
In my case of postings I have suggested and STILL suggest that there are opportunities still out there which Joe Average can take advantage of.

New Homes by Pioneer for $260 a week.
Elizabeth and surrounding areas here in Adelaide for Continued growth for a number of reasons including the new Northern Expressway.

"Investors" will survive well as they will be geared to weather whatever is thrown at them.
Its speculators who will have to show caution.

No one said its easy and no one said people wont get burnt.

There will be some cases where R/E will rise over the next 5 yrs and as Ive stated at 20% down and as close as positively geared as you can get---and its STILL possible---a 3% a year rise is 15% return on your money---now compound that 5 yrs.Let alone add increased rentals over that time at say Inflation and you'll have capital appreciation and passive income.

Ill bet 95% of those in the Stock market wont come close.


----------



## explod (10 March 2008)

tech/a said:


> Who mentioned that its not?
> In my case of postings I have suggested and STILL suggest that there are opportunities still out there which Joe Average can take advantage of.
> 
> New Homes by Pioneer for $260 a week.
> ...



To suggest that ANY realestate transaction is stupidity at its heighest---in todays market IS Utterly rediculous.
No one said its easy and no one said people wont get burnt.

You do not know much about the stock market.  Just the dividends alone from BHP (20% down and the rest borrowed) would do better than you outline here by 300%.  And that is not counting the equity growth.

Head your horses into another direction, both of you of you are talking nonsense just to score.   Pity we cant turn this into a physical **** fight, would be sold out in an instant.


----------



## wayneL (10 March 2008)

tech/a said:


> Who mentioned that its not?
> In my case of postings I have suggested and STILL suggest that there are opportunities still out there which Joe Average can take advantage of.
> 
> New Homes by Pioneer for $260 a week.
> ...



All that is contingent upon the economy staying out of recession. There are a stack of assumptions in your argument.

If you hold that view, fine, go invest in those. 

But you have to have a macro view. If that view is different, or if a different opportunity is perceived as better, those Adelaide investments might not seem such  good idea. Only with the benefit of hindsight can that be judged with total accuracy.

But I'll repeat the point that I was trying to get at. When arguing points, let's declare the playing field, so we don't get these silly discussions where apple are compared against oranges.

As for "who mentioned it's not"? Now you're really taking the piss. Read some of the bulls comments on this thread. Sheesh!


----------



## tech/a (10 March 2008)

> Just the dividends alone from BHP (20% down and the rest borrowed) would do better than you outline here by 300%. And that is not counting the equity growth.




Good idea.
Thought we are talking Property?


----------



## chops_a_must (10 March 2008)

wayneL said:


> But you have to have a macro view. If that view is different, or if a different opportunity is perceived as better, those Adelaide investments might not seem such  good idea. Only with the benefit of hindsight can that be judged with total accuracy.




I've asked this a few times... and have never got an adequate response. I do genuinely want one.

What has Adelaide and South Australia got going for it, in terms of property?

From an outsider's perspective, long term it is a dud and stuffed. Reducing manufacturing base, reducing jobs, fleeing youth, fleeing education base, rapidly deteriorating environment and water supplies. All points to a lowering of average incomes, vis a vis lower house prices and lower rents available.

The only thing I can see in its future is it aiming for the Florida approach. But, even then, there are heaps of better places in Oz for that, so relatively that's not smart either.

Discuss.


----------



## explod (10 March 2008)

tech/a said:


> Good idea.
> Thought we are talking Property?





We were but there does not seem to be enough in it.  We need to pull all sorts of irrelevant arguments in to try and ramp the thread.

Maybe as some one suggested here last week we need a name change.


----------



## wayneL (10 March 2008)

chops_a_must said:


> I've asked this a few times... and have never got an adequate response. I do genuinely want one.
> 
> What has Adelaide and South Australia got going for it, in terms of property?
> 
> ...



Indeed.

I can pick up 3 bed terraces just over the border around the outskirts of Cardiff with 8 -10% yields. Not a helluva lot going for it either, but at least you get yield... and the tenant pays the rates as well.


----------



## xoa (10 March 2008)

tech/a said:


> There will be some cases where R/E will rise over the next 5 yrs and as Ive stated at 20% down and as close as positively geared as you can get---and its STILL possible---a 3% a year rise is 15% return on your money---now compound that 5 yrs.




???

That's some interesting mathematics. You must have gone to the Enron school of property investment.

If a 3% rise equals a 15% return on investment, then by the same logic your annual loss to interest is 45%. Compound that for 5 yrs. 

Margin loans (mortgages) amplify both gains and losses.


----------



## Kimosabi (10 March 2008)

Oops, more facts, I really need to stop doing this...


----------



## Kimosabi (10 March 2008)

Only allowed six images a post...






It's a real pity these graphs don't include property's on the market...


----------



## pepperoni (10 March 2008)

Phone call today from a mosman real estate agent begging me to buy the bluest of blue chip properties for a 1990s price.  In his words "if there was ever a time to buy a property its now".

The other house I said started in the 1.8s is many weeks later still on the market at 1.7m and offers (1.6s are looking best case scenario).  Any market that still sees prices going up is a backwater that is yet to hear about the moon landing 

Why would I buy a depreciating low return property when I can buy shares in a bank with a 7% FRANKED dividend yeild and the prospect of almost 100% capital gains back to the 52 week high in the medium term? And then rent a nice fully maintained house for about 3% tops?

And re egents are not a step up from car sales people ... I expect they have about the same education but care salesmen dont pretend the car you are buying will go up in price each year.


----------



## pepperoni (10 March 2008)

tech/a said:


> Pepperoni,Numbers,Kris.
> 
> Do you really think we give a rats if prices fall 50%?




Probably not ... good luck following the market back down 

Personally Ive been in the market forever (for nice shelter not get rich quick schemes) and out for 2 years on a common sense basis earning 7% on average.


----------



## Kimosabi (10 March 2008)

pepperoni said:


> Phone call today from a mosman real estate agent begging me to buy the bluest of blue chip properties for a 1990s price. In his words "if there was ever a time to buy a property its now".




Another thing I thought about a while ago, is that when the full time real estate agents really start suffering because of lack of sales, they will start advising clients to lower prices just so they can put food on their Louis Vuitton Plates and Fuel in their BMW's...


----------



## wayneL (11 March 2008)

Kimosabi said:


> Another thing I thought about a while ago, is that when the full time real estate agents really start suffering because of lack of sales, they will start advising clients to lower prices just so they can put food on their Louis Vuitton Plates and Fuel in their BMW's...




That's what's happening here.


----------



## tech/a (11 March 2008)

xoa said:


> ???
> 
> That's some interesting mathematics. You must have gone to the Enron school of property investment.
> 
> ...




Rent covers interest. Not to mention that its tax deductable.

$100,000 with 20% down = $20000

3% gain = $3000.

3000/20000 = 15%

Any other areas youd like a hand in?



> Probably not ... good luck following the market back down




With remaining properties Freehold or geared max 36% passive income is the achieved goal.With rents rising any down turn is like holding your BHP long term and recieving dividend.


----------



## KIWIKARLOS (11 March 2008)

Average days on market is 12-14 in sydney and asking to sale price average -5% geez im doin it tough. Who doesn't inflate their expected value at least 5% for the price they will sell. 

If you can't find a property in sydney which isn't making a capital gain albiet a smaller one than the last ten years you haven't done your research and shouldn't be buying. : Round my area about 5 kms east of parramatta we have had some record prices in the last two months. 

Median house price means NOTHING its not indicative of anything. I would argue that you can't do a broad brush assumption of a deteriorating market untill you understand the demographics and future development plans of an area. Sure some areas are going down and thats because they were going to high to start with and really had nothing to offer. Areas with good services with the right demographics will continue to rise.


----------



## xoa (11 March 2008)

tech/a said:


> Rent covers interest.




Maybe before the bubble. Not any more. The average gross rental yield (before costs) is half of the interest rate. Net rental yields (after costs) is less than a third of the interest rate. You're still looking at a ~25% pa loss using your own mathematics. You'll need an imaginative lawyer.


----------



## moses (11 March 2008)

Real Estate Institute of Victoria chief executive Enzo Raimondo says the string of interest rate rises since last last year and other pressures on household budgets have taken their toll on consumer confidence when it comes to purchasing a home.

"Bidders are very cautious about committing themselves at this point in time. It's a totally different marketplace to this time last year - or any time last year. Buyers are spooked a bit.

"I think this year will be a much more subdued market," Raimondo adds. "Properties that went to market last year exceeded vendor expectations, but this year it will be different. You will find fewer bidders and fewer people committing themselves, and that means prices won't go up as much as people thought."

But that doesn't mean buyers can start looking forward to a fire sale any time soon. "It certainly doesn't mean prices will go backwards, certainly not in the sought-after areas, as the real driver of inner-city suburbs is scarcity of land and that won't change.People will pay a premium for those sorts of properties. It just means prices won't go up every couple of weeks like last year."

Peter Simmons agrees that Melbourne's more prestigious suburbs should be able to weather the oncoming storm so long as the economy remains robust. "Unemployment in these areas is minimal and until middle management starts to be affected in large companies you will find that people are in pretty good situations there."

Elsewhere, prices will reduce but not collapse.

"Everybody wants to buy a bargain, but it's not going to happen," Simmons says.

CommSec chief equities economist Craig James says the strong dynamics of the Australian economy, coupled with demand-and-supply forces, will put a floor under property prices.

"Demand by owner-occupiers is still strong and that's because the job market is still strong, wages are rising, and the population is growing strongly, particularly from skilled migration," he says. "Supply (of housing) is not keeping up, and a key reason is that investors are staying away from the market."

His prognosis? "*It's unlikely we will see too much easing of the tight conditions (and that) will keep upward pressure on prices, and upward pressure on rents as well*."


----------



## moses (11 March 2008)

The bottom line for housing prices seems to be:-

a) sentiment has changed, creating downward pressure

b) fundamentals have not changed, maintaining upward pressure

So what happens next? Who wins?


----------



## numbercruncher (11 March 2008)

Availability and affordability of credit becomes the trump card


----------



## numbercruncher (11 March 2008)

On that often forgotten subject of credit being the ultimate fundamental, this pops up in todays news ....




> THE Commonwealth Bank yesterday suspended its $400 million share buyback to preserve capital and avoid the need to ration lending to customers in the face of the worsening global credit crunch.
> 
> With its rival ANZ having warned that the liquidity crisis meant that rationing credit - either through pricing or by amounts lent - was now a real possibility, the Commonwealth called a halt to its buyback to keep the lines of credit open.




http://business.smh.com.au/cba-forced-to-dump-buyback/20080310-1yhs.html


----------



## KIWIKARLOS (11 March 2008)

http://news.ninemsn.com.au/article.aspx?id=59380

Demand for home loans grew in January


----------



## numbercruncher (11 March 2008)

Thats because the Money Renters are refinancing in record droves, 1/3rd of all mortgages sold are currently refinances.


----------



## Pommiegranite (11 March 2008)

My home is currently up for sale (Melbourne Western suburbs). It has been for about 5 weeks. No offers (no problem).

My RE agent is now suggesting that I should attend other 'open for inspections', to get an idea of comparable homes/values.

He also told me, when I signed up, how the area is booming i.e new town centre etc etc. Isn't it funny how agents always have this microeconomic view?

My dilema is that, I could advertise at a reduced price, but that doesn't mean that the home that I will end up buying (in Sydney) would be reduced in price proportionaly. I think the market is now in the 'cat and mouse' stage i.e viewers not buying, sellers not reducing prices.

Fortunately, I have no homeloan, and can comfortably sit and wait. However, I really do feel for those who will be forced to sell cheaply, only to find themselves never being able to get on the property ladder again.


----------



## KIWIKARLOS (11 March 2008)

numbercruncher said:


> Thats because the Money Renters are refinancing in record droves, 1/3rd of all mortgages sold are currently refinances.




Refinancing isn't a cheap affair the fee's most people have to pay make it only worthwhile to do so to tap equity or get a fixed rate. No one in their right mind would pay $1-2 K in fee's to save 25 basis points would they ?

IMO its way to late to move to a fixed rate loan if things keep going how they are chances are we could see rates starting to come down by year end.
The reduction of carry trades between Jap - OZ has greatly increased the banks cost of capital effectivly doubling the effects of the RBA rises. If carry trades dry up more we could see significant increases from the banks and im willing to be the RBA will decrease if they go to high. I feel we have hit a good rate at the moment enough to dampen spending (cause some hardtimes for those at the lower end) but not enough to significantly slow our economy. Any significant increases beyond say .5% - 1% could really have some bad effects on our economy and would undoubtedly be taking the tightening to far.


----------



## pepperoni (11 March 2008)

tech/a said:


> Rent covers interest. Not to mention that its tax deductable.
> 
> $100,000 with 20% down = $20000
> 
> ...




Way to break even on that 20k! 

If you hold it just about forever that is .... otherwise way to fill govt stamp duty and land tax coffers!


----------



## pepperoni (11 March 2008)

Pommiegranite said:


> My home is currently up for sale (Melbourne Western suburbs). It has been for about 5 weeks. No offers (no problem).
> 
> My RE agent is now suggesting that I should attend other 'open for inspections', to get an idea of comparable homes/values.
> 
> ...




Your agent is conditioning you for a low price to make the clearance rate look good for the robots ;-)

I wouldnt sell now .... rent it, or even borrow against it and negative gear.

The transaction costs will just suck mega bucks out of the whole sell and buy thing.


----------



## pepperoni (11 March 2008)

KIWIKARLOS said:


> Refinancing isn't a cheap affair the fee's most people have to pay make it only worthwhile to do so to tap equity or get a fixed rate. No one in their right mind would pay $1-2 K in fee's to save 25 basis points would they ?
> 
> IMO its way to late to move to a fixed rate loan if things keep going how they are chances are we could see rates starting to come down by year end.
> The reduction of carry trades between Jap - OZ has greatly increased the banks cost of capital effectivly doubling the effects of the RBA rises. If carry trades dry up more we could see significant increases from the banks and im willing to be the RBA will decrease if they go to high. I feel we have hit a good rate at the moment enough to dampen spending (cause some hardtimes for those at the lower end) but not enough to significantly slow our economy. Any significant increases beyond say .5% - 1% could really have some bad effects on our economy and would undoubtedly be taking the tightening to far.




Agree rates are high enough barring any further inflation increases.  Any more rate rises will overcook it.


----------



## pepperoni (11 March 2008)

numbercruncher said:


> Thats because the Money Renters are refinancing in record droves, 1/3rd of all mortgages sold are currently refinances.




Refinancing or ixing now vs having fixed in the first place = another 1-2k in bank fees and potentially mortgage stamp duty.  The joys of home ownership.

In other news, if stock markets didnt have indicies re agents and robots would be telling you they are up 20% this year .


----------



## ROE (11 March 2008)

Pommiegranite said:


> Fortunately, I have no homeloan, and can comfortably sit and wait. However, I really do feel for those who will be forced to sell cheaply, only to find themselves never being able to get on the property ladder again.




If there is a will there is a way....What about people who are born now? cant they afford a house when they grow up? what about your kids? what about migrants that came here with empty handed now and in the future they cant get a house? hmm seem a little far fetch to me 

Property is no different from any other assets, there will be cycles and time when things are expensive and cheap...no one can predict the future but what you can be absolutely sure is there are always people who can afford their first home in any time and well into the future.


----------



## zt3000 (12 March 2008)

Problem i see is people that people are lazy to work on a saturday, and have two jobs, night and day to EARN money to pay for mortgage.

$50 a week more ... pffft 

go work couple extra hours and you wont have that problem

but nooooooooooo people want their fancy plasma screens in every room, want their 4 holidays a year, want to live in best suburb

face the music people ... only with hard work will you achieve anything

nothing is free and no one will give you a free ride,

our parents made it, and their parents ect ect. They had it much harder i assure you

The other thing, you cant afford something ... why did u purchase in the first place??? simple

On another note ... latest housing figures www.abs.gov.au

VALUE OF DWELLING COMMITMENTS

January 2008 COMPARED WITH December 2007:


In trend terms, total value of dwelling finance commitments excluding alterations and additions increased by 0.9%. Investment housing commitments rose 1.2% and owner occupied housing commitments increased by 0.8%. 
In seasonally adjusted terms, total value of dwelling finance commitments excluding alterations and additions increased 3.7%. Investment housing commitments increased 8.3% and owner occupied housing commitments increased 1.7%.


NUMBER OF DWELLING COMMITMENTS

January 2008 COMPARED WITH December 2007:

In trend terms, the number of commitments for refinancing of established dwellings rose 3.3% and the seasonally adjusted series increased 6.0%. 
In trend terms, the number of commitments for owner occupied housing finance increased by 1.2% while the number of commitments for owner occupied housing finance excluding refinancing rose by 0.2%. 
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments decreased from 18.4% in December 2007 to 18.0% in January 2008. 
In original terms, the number of fixed rate loan commitments as a percentage of total owner occupied housing finance commitments decreased from 23.4% in December 2007 to 22.3% in January 2008

IMO - housing has long long way to go before we have a downturn ... if any ...

resource supercyle to continue for Decades to come .. long live the bull

(For entertainment purposes only)


----------



## explod (12 March 2008)

zt3000 said:


> Problem i see is people that people are lazy to work on a saturday, and have two jobs, night and day to EARN money to pay for mortgage.
> 
> $50 a week more ... pffft
> 
> ...




Yep, our parents made it with only one wage earner.  Mum stayed home and rared the childen.  The children were well behaved and in thier turn contributed meaningfully.  Of course I am now a Grand Parent so can see that we perhaps spoilt you.

Parents today both work and some have 2 jobs on top of that and still struggle to make ends meet.

Your broad rationalisation and analogy is typical of someone not exposed to the real situation out there.   A lot of variations that cannot be steriotyped.


----------



## tech/a (12 March 2008)

> Your broad rationalisation and analogy is typical of someone not exposed to the real situation out there.




Everyone is exposed to everything.
We all have the choice of "How Exposed" we wish to be.
Unless you are handicapped in some way.


----------



## chops_a_must (13 March 2008)

wayneL said:


> Indeed.
> 
> I can pick up 3 bed terraces just over the border around the outskirts of Cardiff with 8 -10% yields. Not a helluva lot going for it either, but at least you get yield... and the tenant pays the rates as well.




Disappointing that you were the only one who cared to comment on South Australian property.

I'd say there is quite a bit going for Cardiff actually. Has a kick **** music scene. Steve Albini does quite a bit of work there for instance - a couple of Perth bands have gone there specificially to record. It is world leading in that regard. But unlike say, Adelaide, young people want to be there. Which from a development perspective, is very healthy.

So yeah, I guess people in Adelaide, seeing as though they don't want to counter what I said, agree that it is a hole, has no future and is a place where young people don't want to be, and where educated persons do not want to stay.

Apart from that annual day of mourning, on proclamation day on or about the 28th December, what else does it have?


----------



## theasxgorilla (13 March 2008)

chops_a_must said:


> Disappointing that you were the only one who cared to comment on South Australian property.




Or Cardiff in Wales even?


----------



## chops_a_must (13 March 2008)

theasxgorilla said:


> Or Cardiff in Wales even?




You know what I mean, he was comparing the two. :

P.S. - Swedish property would do very well if/ when energy becomes a real crisis. Lucky buggers with your mass transit systems...


----------



## gfresh (14 March 2008)

Latest Residex update out. Houses prices fell in Brisbane, Melbourne, Sydney, Hobart, Darwin in February.

http://www.residex.com.au/newsletter/source2008_03aMC.html

Unit prices up in most areas..

Rent up 4% across the board in Feburary... sustainable?

Worth noting "% of suburbs declining in Feb 2008" figures. 

Bottom has some valuable advice for buyers.


----------



## numbercruncher (15 March 2008)

Interesting no RE permabulls have comment on falling prices ? Might be a data error or seasonal anomaly ?

I see the cost of Money might get a bit more expensive yet .....



> CASH-strapped home owners should prepare for more interest rate pain.
> 
> Just as the banks slapped a second round of independent rate rises on borrowers, Reserve Bank Governor Glenn Stevens has indicated rates could *rise again in May *– the third time this year.
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,23376897-952,00.html

This W/ends auction results will be interesting im sure


----------



## robots (15 March 2008)

hello,

yes auction rate will be very ordinary today, I would say around 60%

the interesting one is the recomendation not to buy a prop with lease arrangment in place and to keep lease agreements short therefore allowing for increases to easily occur, doh

rents up up and up, about time as they are extremely low 

thankyou

robots


----------



## numbercruncher (15 March 2008)

robots said:


> the interesting one is the recomendation not to buy a prop with lease arrangment in place and to keep lease agreements short therefore allowing for increases to easily occur, doh





I heard that they are also recommending that Investors pray 3 times a day to the Mother of God that they dont end up with a vacant property with a 500k mortgage @ 10pc.


----------



## robots (15 March 2008)

hello,

what a tent city is starting up in all capital cities,

although wouldnt surprise me if the government helps out all the struggling renters while the people out their doing something get stung with 10% IR's,

thankyou

robots


----------



## numbercruncher (15 March 2008)

Never mind the tents, renters being targeted by greedy " Investors " could be better off hooking up the caravan doing a 12 month gold fossicking trip around Australia while the caranage unfolds. Least their savings will be getting 8pc whilst on the roadtrip and the money renters will be forking out 10pc.

The unfolding of the Greatest pyramid scheme in Modern history is going to get nasty, oh I mean it already is .... 





> The Real Estate Institute of Victoria is preparing for a big weekend of auctions but despite the record number of properties going under the hammer the REIV isn't expecting the properties to sell.
> 
> A record 1400 homes and units are expected to be put to auction.
> 
> The previous record was just over 1200 auctions during the property boom of 2003.




http://www.abc.net.au/news/stories/2008/03/14/2189245.htm?section=business

Lot of competition to " sell " out there !


----------



## dodgers (15 March 2008)

I heard from Rod Cornish (head of real estate resarch at macquarie bank) the other day at a presentation, his view is flat to moderate growth this year on the back of high interest rates but then another bull run commencing 2009/10 which could last for 5 yrs.

He said that it was typical following any house price correction for prices to increase strongly for a year (which is what we saw last year) but for them then to pull-back or consolidate for a period before advancing on a more sustained trend.


----------



## theasxgorilla (15 March 2008)

dodgers said:


> I heard from Rod Cornish (head of real estate resarch at macquarie bank) the other day at a presentation, his view is flat to moderate growth this year on the back of high interest rates but then another bull run commencing 2009/10 which could last for 5 yrs.
> 
> He said that it was typical following any house price correction for prices to increase strongly for a year (which is what we saw last year) but for them then to pull-back or consolidate for a period before advancing on a more sustained trend.




One of the more sensible things I've heard on the topic.

By 'bull run commencing 2009/10', did he/you mean in shares?

ASX.G


----------



## chops_a_must (15 March 2008)

I'd like to know what will happen to Australian house prices if the PMI group goes broke, like its on the verge of doing.

All of a sudden the majority of home buyers will need to pony up 20% straight up. About 80k or something? Can't see that happening...

And then of course banks will get nervous as home "owners" with less than 20% equity can't be insured against default. What then, if say CBA or some others need to take that risk back on their books? Or even if they have to call in loans early?

Yep, great time to buy to prepare for that impending bull run.


----------



## theasxgorilla (15 March 2008)

chops_a_must said:


> You know what I mean, he was comparing the two. :
> 
> P.S. - Swedish property would do very well if/ when energy becomes a real crisis. Lucky buggers with your mass transit systems...




Yes, it would seem that this country has thoughtfully planned away from over-dependence on oil and gas.
If the rest of the world catches on and Sweden exports this know-how then I expect it will have GDP positive effects and hence, r/e will rise.  I look forward to being the new Robo-Paddy of Europe   Only we'll be Robo-Sven & Ingas.

ASX.G


----------



## xoa (15 March 2008)

The American bulls were also calling it a "consolidation" when their bubble started to burst 18 months ago. It's been "consolidating" ever since.


----------



## theasxgorilla (16 March 2008)

xoa said:


> The American bulls were also calling it a "consolidation" when their bubble started to burst 18 months ago. It's been "consolidating" ever since.




You/they can call it what you like.  When prices in my area go up and I sell my house for more and I put that money in the bank, I call it equity.


----------



## numbercruncher (16 March 2008)

Clearance rates for 15th March.


Brisbane - *23.7* p/c

Adelaide - 50 p/c

Sydney - 48.3 p/c

Melb - 67 p/c


Massive spike in listings ....... early days


----------



## xoa (16 March 2008)

23.7% clearance? Is that a typo? If not, then last month's 2% price decline is just the beginning.

Brisvegas may become the next Las Vegas as far as negative equity is concerned.


----------



## dodgers (16 March 2008)

theasxgorilla said:


> One of the more sensible things I've heard on the topic.
> 
> By 'bull run commencing 2009/10', did he/you mean in shares?
> 
> ASX.G




No he was only referring to houseprices.


----------



## numbercruncher (16 March 2008)

Looks like more rate rises independant of the RBA ....



> AUSTRALIAN homeowners and investors are facing more interest rate misery after the near collapse of American banking giant Bear Stearns yesterday.
> 
> The US investment bank had to be given an emergency loan by rival JP Morgan, backed by the Federal Reserve, after it effectively ran out of cash because of a massive fall in the value of its investments.
> 
> ...




http://www.news.com.au/business/story/0,23636,23380935-462,00.html


----------



## Gordon Gekko (16 March 2008)

Can Anyone help with a question on Buying property in N.Z?

I am just wondering if you can negative gear property in N.Z. I.E. Can I off set that against my Australian income?

Thanks
GG


----------



## Mofra (16 March 2008)

numbercruncher said:


> Clearance rates for 15th March.
> 
> Melb - 67 p/c



Despite your grin NC, that is a massive result for Melbourne on the biggest auction day on record. 60-70% is the clearance rate during a stable, normal market and to reach that given the current circumstances is quite extraordinary.


----------



## Mofra (16 March 2008)

chops_a_must said:


> I'd like to know what will happen to Australian house prices if the PMI group goes broke, like its on the verge of doing.
> 
> All of a sudden the majority of home buyers will need to pony up 20% straight up. About 80k or something? Can't see that happening...



PMI could sell the Australian policies fairly easily, as our credit standards are infinately higher than in the US. Some lenders self-insure & GE could take quite a number of PMI policies as many areas of policy overlap. 

They would be better off selling some arms of the business anyway, given they are basically at junk bond status in the US so capital is a problem, and their share price is 80%+ off their highs.


----------



## numbercruncher (16 March 2008)

Mofra said:


> our credit standards are infinately higher than in the US.




LOL


----------



## chops_a_must (16 March 2008)

Mofra said:


> *PMI could sell the Australian policies fairly easily*, as our credit standards are infinately higher than in the US. Some lenders self-insure & GE could take quite a number of PMI policies as many areas of policy overlap.
> 
> They would be better off selling some arms of the business anyway, given they are basically at junk bond status in the US so capital is a problem, and their share price is 80%+ off their highs.




I doubt they could if the person buying has absolutely zero trust in who is the other party. Especially if they have been bundled... right?

And that's the real problem, if counter party risk is a real problem like it is, you wont touch anything of theirs with a barge pole. So what do the other parties do?


----------



## Mofra (16 March 2008)

chops_a_must said:


> I doubt they could if the person buying has absolutely zero trust in who is the other party. Especially if they have been bundled... right?
> 
> And that's the real problem, if counter party risk is a real problem like it is, you wont touch anything of theirs with a barge pole. So what do the other parties do?



PMI are getting slaughtered in the US however their default rates within Aust. are well within even normal guidelines, over their entire range of normal products (Adv, LD & Gold). 

I'm sure any prospecive buyer will have enough sense to ignore rhetoric & conduct sufficent DD to determine a fair price and enough nous to cancel the clawback on premiums for refinances to save themselve back-end dollars.


----------



## Mofra (16 March 2008)

numbercruncher said:


> LOL



You obviously disagree - care to provide _any_ factual information or will we just have selectively edited bearish quotes to avoid any sence of balance in your position?


----------



## numbercruncher (16 March 2008)

Mofra said:


> You obviously disagree - care to provide _any_ factual information or will we just have selectively edited bearish quotes to avoid any sence of balance in your position?




XYZ (or is it still ABC? ) , CeNtRo , any muppet with an abn and small deposit can stack up on debt, banks jumping over each other to lend to people their maximum capactity when rates were 6pc with NO allowance for rising rates etc etc etc and so forth.

Now back at yah - Where is your evidence that " our credit standards are *infinately* higher than the US "


----------



## robots (16 March 2008)

hello,

good typo NC, can you give every post like that please

thankyou

robots


----------



## robots (16 March 2008)

hello,

huge result for melb yesterday, superb

location, location, location is what it is all about, fantastic weekend

a couple of auctions just had no bids, quite amazing not one and bang passed in

would like to take time to thank all those involved, and good luck in the future

thankyou

rObOts


----------



## Rogue Trading (16 March 2008)

Is PMI listed on the ASX?
What is there ASX code?
Thanks.
Rogue Trading


----------



## YChromozome (16 March 2008)

Rogue Trading said:


> Is PMI listed on the ASX?
> What is there ASX code?
> Thanks.
> Rogue Trading




My Understanding the Australian Operations are a subsidiary of The PMI Group, inc.

NYSEMI

52 Wk High : 50.50
52 Wk Low : 5.43
Last : 5.69


----------



## Mofra (16 March 2008)

numbercruncher said:


> XYZ (or is it still ABC? ) , CeNtRo"



Which has nothing to do at all with residential property credit



numbercruncher said:


> any muppet with an abn and small deposit can stack up on debt



No Doc (1 day ABN product) requires a 30% deposit. Small deposit? No, wrong.
For a 20% deposit, a full A&L, ABN with GST reg for 2 years, again very different to the US.



numbercruncher said:


> banks jumping over each other to lend to people their maximum capactity when rates were 6pc with NO allowance for rising rates etc etc etc and so forth.



Wrong _again_ NC - assessment rates are taken as 2% above the _highest_ rate with every lender I've worked for (securitised & non-securitised).



numbercruncher said:


> Now back at yah - Where is your evidence that " our credit standards are *infinately* higher than the US "



No NINJA loans, subprime % is tiny compared to the US, no defaults acceptable on non-gen savings loans above 85% LVR, etc etc.

If you really believe that Australian & US lenders have similar credit standards, you really need to do a little more homework


----------



## numbercruncher (16 March 2008)

Just look at the Banks share price, I need say no more.

If you believe our banks lending practices are so superior, stack up at bargain prices 

Cheers.


----------



## theasxgorilla (16 March 2008)

Mofra said:


> Despite your grin NC, that is a massive result for Melbourne on the biggest auction day on record. 60-70% is the clearance rate during a stable, normal market and to reach that given the current circumstances is quite extraordinary.




Isn't it.  Robots has been right all along.  Melb is an extremely robust market   Sorry, NC, keep up the bad news...stopped clock is right twice a day, as you know.


----------



## numbercruncher (17 March 2008)

Heres one Just for you then ASG ..... RE doesnt plummet over night, its a gradual affair, I believe unfolding right now before our very eyes 



> Property auction clearance rates plummet
> 
> AUSTRALIA'S property market has taken a nosedive, with falling auction clearance rates in most capital cities at the weekend.
> 
> ...






> Australian Property Monitors general manager Michael McNamara said present circumstances made it "hard not to be pessimistic about the property market".
> 
> He said Melbourne's clearance rates, which had gone up to 90 per cent last year, were now hovering in the 60s. In Adelaide, clearance rates were at 50 per cent, a drop from 62 per cent only last week. Brisbane's abysmal clearance rate of 23.7 per cent was less than half the same time last year.
> 
> "I think the auction clearance rates will get worse than this by the end of the year," he said. "*The party is over*."




http://www.news.com.au/story/0,23599,23387623-2,00.html


Its all no problem if you didnt buy at the peak, but if you bought last year I bet your losing $$ already, especially if your a money renter


----------



## Mofra (17 March 2008)

numbercruncher said:


> Just look at the Banks share price, I need say no more.
> 
> If you believe our banks lending practices are so superior, stack up at bargain prices
> 
> Cheers.



We are talking domestic residential lending practices, not the entire activities of global banks.

C'mon, is that all you've got? You have raised some good points in the past however this line of reasoning isn't one of your finer moments.


----------



## stock_man (17 March 2008)

gfresh said:


> Latest Residex update out. Houses prices fell in Brisbane, Melbourne, Sydney, Hobart, Darwin in February.
> 
> http://www.residex.com.au/newsletter/source2008_03aMC.html
> 
> ...




Saw this article and thought that name sounds familiar. Digging through my email archives found this email dated 25/10/2004. These guys are obviously creditable, so *its all ok people. I have the proof*.

Extract from email on the 25/10/2004



> Like to know our predictions for this state?
> 
> Lists postcodes we predict to show the best capital growth over the next 5 years. Choose from:
> 
> ...




5 years on from this email would be 25/10/2009.
Silly me sold this property in 2007 for $465,000. Its going to climb 165% in 19 months!!!!!


----------



## numbercruncher (17 March 2008)

stock_man said:


> 5 years on from this email would be 25/10/2009.
> Silly me sold this property in 2007 for $465,000. Its going to climb 165% in 19 months!!!!!




LOL

Thats like the myth about house prices going up 10pc p/a. Would mean Sydney house prices need to be something like 190mil. now! (compared to 100ish years ago)


----------



## numbercruncher (17 March 2008)

Well the price falls are officially showing in the numbers, defeat for this thread now? Let it die? 



> Thousands of Perth families face owing more on their mortgages than their homes are worth, with fresh figures revealing prices in more than half of Perth’s suburbs have fallen this year.
> 
> As the double whammy of multiple interest rate rises and falling house prices hits hard, property analysts have warned that the number of borrowers with negative equity will increase, raising the prospect of forced sales and bankruptcies.
> 
> A market analysis by national property monitor Residex *found all major cities *except Adelaide recorded a fall in median house values in February from January, with values in Perth retreating 0.9 per cent. While the falls were relatively small, the data showed interest rate uncertainty was spooking the market.




http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=63124


----------



## robots (17 March 2008)

hello,

any chance of getting a trumpet lesson NC?

thankyou

robots


----------



## numbercruncher (17 March 2008)

I can do the ....


----------



## explod (17 March 2008)

numbercruncher said:


> I can do the ....
> 
> View attachment 19086




Maybe we could create our own song and the words could start "House Prices to Keep Falling for Years" and we could then start a thread on it.

Putapump putapump puta da DA.


----------



## numbercruncher (17 March 2008)

Oh My Golly Gosh ! Even the REIQ is saying that people are asking too much for their houses ! what is the world coming too ? Guess they get that 2.5pc either way realestate punters 




> Brisbane house prices too high: REIQ
> 
> The Real Estate Institute of Queensland (REIQ) says Brisbane has recorded one of the worst weekends for house sales because owners are asking too much.




http://www.abc.net.au/news/stories/2008/03/17/2191489.htm?section=justin


I cant help but notice alot of the RE permabulls have vanished ! Robi is the only one at the helm now ! Where is TysonBoss, he has all his cash in Brissy RE, wonder what he makes of the REIQs call ?


----------



## robots (17 March 2008)

hello,

love the picture NC,

thats right, only the hardcore left (me, ASX and technotronic)

its an interesting procedure the asking price and what you ultimatley get, thats why I like auction

my brother trying to sell on mornington peninsula, whacked a heap on, and it has rightfully dropped down

no harm in trying though

thankyou

robots


----------



## ROE (17 March 2008)

I'm not sure if an average person who leverage 90% of their property understand the simple economic... I keep thing very simple and as long as simple economic doesnt compute I'm staying out.

I take this assumption ..price always go up then I question it and if it doesn't come out with a sensible answer I stay out let everyone make the money
with the risk, and good luck to them to take on the risk...it is not for me.. 

1. so for that assumption to be true....say I start to pay for a property 300K
because the assumption is always true the property will be 330K next year
and the year after that more than 360K etc.

2. For this to happen someone always going to be borrowing a lot more than me to get the same property, that is their capacity to borrow increase 10% a year....

so 7 years down the track this person has to borrow double what I borrow to get the same place... and 14 years down the track 4 times more to buy the same place.

but hang on a second, salary doesn't grown 10% a year so how can anyone capacity to borrow grow, unless you go into the doggy lending practice which end up in sub prime mess, then everyone pays  and pay hard are the leverage up person.

even in extreme boom you don't get that salary growth that fast and even if they do it, very rare few occupation that can only command that sort of increase.

and negative gear is even more scary you basically fore go your lost in hope of capital gain which may and may not deliver in the future...in small doze it's worth the risk like 1%-2% but larger doze you start to get into gambling mode or speculation mode.

so for you to lose 5% this year and 5% the next, you got to make up 10% in the future to break even.

does my simple economic model make sense or I am just rambling and to keep thing simple I take out all the stamp duties and other tax associated with the property and even then it doesn't seem to compute too well


----------



## pepperoni (17 March 2008)

Another intersting article here:

RE price falls closing in: Robots' brother to lose a bundle


----------



## Tysonboss1 (17 March 2008)

numbercruncher said:


> Just look at the Banks share price, I need say no more.
> 
> If you believe our banks lending practices are so superior, stack up at bargain prices
> 
> Cheers.




The current situation is hitting just about every sector,..

the ASX has beening bleeding to death for weeks now, It's not just the banks,


----------



## Tysonboss1 (17 March 2008)

numbercruncher said:


> I cant help but notice alot of the RE permabulls have vanished ! Robi is the only one at the helm now ! Where is TysonBoss, he has all his cash in Brissy RE, wonder what he makes of the REIQs call ?




I have been to busy to chat here latly cause it's the busiest time of year in my business and I am under staffed,.... I still have faith in my sectors of the brisbane market, as I have said I invest for the longterm and have built a portfoilio with really good and growing cashflow so the short term ups and downs don't bother me.

I don't have all my money in brisbane real estate,... I hold alot of equity in shares and my businesses in sydney, And I can tell you that my property portfolio is holding up better than my share portfolio at the moment,...lol but again even the current stock crash isn't really bothering me I am increasing some holdings in some of my favourite companies at a discount.


----------



## irondragon (17 March 2008)

numbercruncher said:


> Oh My Golly Gosh ! Even the REIQ is saying that people are asking too much for their houses ! what is the world coming too ? Guess they get that 2.5pc either way realestate punters
> 
> 
> 
> ...




One must factor in that Brisbane did have a city council election on the weekend. Did the REIQ conveniently omit that fact ?


----------



## numbercruncher (17 March 2008)

irondragon said:


> One must factor in that Brisbane did have a city council election on the weekend. Did the REIQ conveniently omit that fact ?




Oh I see what you mean, you think the clearance rates were low because people went to vote ? Why do you think the REIQ intentionally omitted that ? You think perhaps they are in on the property crash conspiracy or something ?


----------



## numbercruncher (17 March 2008)

Tysonboss1 said:


> I don't have all my money in brisbane real estate,... I hold alot of equity in shares and my businesses in sydney, And I can tell you that my property portfolio is holding up better than my share portfolio at the moment,...lol but again even the current stock crash isn't really bothering me I am increasing some holdings in some of my favourite companies at a discount.




Nice work Tyson, as long as your not overgeared you should do very nicely throughout the ongoing correction ?

If prices pull back enough in Sydney think youll go owner occupier or continue to rent ?


----------



## irondragon (17 March 2008)

numbercruncher said:


> Oh I see what you mean, you think the clearance rates were low because people went to vote ? Why do you think the REIQ intentionally omitted that ? You think perhaps they are in on the property crash conspiracy or something ?




Conspiracy theroy .. ? Nah, I'll leave that to the Area 51 devotees and 911 CIA plot theorists. 

I am suggesting that the REIQ statement didn't consider the external factors that could have contributed to a lower auction clearance rate. One factor may have been the council election. The proof in the pudding will be the next auction clearance figure.


----------



## Tysonboss1 (18 March 2008)

numbercruncher said:


> If prices pull back enough in Sydney think youll go owner occupier or continue to rent ?




If I was going to buy an owner occupier it wouldn't be a unit, and the houses in my area start from $2M, so I won't be buying here soon.

If I was to by an owner occupier I think I would buy up on the central coast on the train line about an hour from Sydney. That way I would have a larger and nicer home with a better weekend life than the sydney at race can provide.

But at the moment I am just watching things planning my next move.


----------



## numbercruncher (18 March 2008)

An Idea on how unsustainable the property bubble has got and how far it could potentially fall is demonstrated in this article just released.



> Australian housing prices soared 400 per cent between 1986 and 2007 while income rose just 120 per cent, new research has shown.
> 
> The AMP-NATSEM (The National Centre for Social and Economic Modelling) report reveals the dream of home ownership is fading for many people.
> 
> ...




http://news.ninemsn.com.au/article.aspx?id=59380

1 in 20 Gen-Ys own a home, thats massive, thats huge, and it should tell you all something looking forward.


----------



## xoa (18 March 2008)

Listening to ABC radio this morning, and one of the interviewees dropped the "bubble" word. There was about a 3 second silence afterward. The elephant in the room that nobody wants to talk about.


----------



## prawn_86 (18 March 2008)

Im Gen Y, and I know that at current prices I am not going to be able to afford a home by myself, unless I get a job on 100k plus. Even then it would have to be out suburbia.

So at this stage I'm just happily sitting back and will either wait for prices to come down, or simply not buy and be happy renting.

I dont follow property too closely, but imo the rental yield should at least cover interst payments on the loan. Anything over that (which is virtually everything now) suggests to me its overpriced.


----------



## stock_man (18 March 2008)

Tysonboss1 said:


> If I was to by an owner occupier I think I would buy up on the central coast on the train line about an hour from sydney. that way I would have a larger and nicer home with a better weekend life than the sydney at race can provide.




Keep dreaming. With the public transport system in Sydney you only get to Hornsby 1 hr from the city.


----------



## treefrog (18 March 2008)

radio aunty a couple of weeks back on a sat morn I think had a expert on Oz housing on (a prof or research specialist affiliated with a WA uni from memory)
interview probably on elsewhere as aunty tends to repeat these things several times
any way crux was that Oz culture is the main problem with far too many wanting a house and many people who did not need a house hanging on to them and tieing up land that units could be built on to make housing more affordable - yeah well don't disagree, but the solutions - virtually only one - 
large land taxes to owner/occupiers and investors.........:iagree:


----------



## Uncle Festivus (18 March 2008)

treefrog said:


> large land taxes to owner/occupiers and investors.........:iagree:




Investors maybe, but for people who own/buy their own home it's not equitable. Try telling the couple who have lived in their house for 30 years that because of 'speculation'? in the property around them that they now have to pay exorbitant land tax, even though they have not contributed to the bubble in house prices, and probably have lived within their means all this time. Let the investors/speculators start paying for what the rest of the community subsidises (through tax breaks).


----------



## Tysonboss1 (18 March 2008)

prawn_86 said:


> I dont follow property too closely, but imo the rental yield should at least cover interst payments on the loan. Anything over that (which is virtually everything now) suggests to me its overpriced.




Do you use the same theory when investing in the stockmarket?


----------



## prawn_86 (18 March 2008)

Tysonboss1 said:


> Do you use the same theory when investing in the stockmarket,




I dont invest on margin, so no.

Also, one could argue that stock gains are made more from capital gains than yield. And the % move of stocks is quicker than that of property, due to liquidity


----------



## Tysonboss1 (18 March 2008)

stock_man said:


> Keep dreaming. With the public transport system in Sydney you only get to Hornsby 1 hr from the city.




personally I don't catch the train, I drive and it takes me about 50mins -1.10mins depending on traffic to get from central coast to chatswood where I work and Because I own the company I also have the luxary off turning up late so I can miss the traffic.

The only reason I commented on buying on a train ine is because the suburbs on the central coast close to the trainline will out perform the rest of the coast.

Any way at the moment I am living about 2 mins walk from work, but it comes at the cost of being stuck in syney most week ends,... which I am over.


----------



## stock_man (18 March 2008)

ROE said:


> does my simple economic model make sense or I am just rambling and to keep thing simple I take out all the stamp duties and other tax associated with the property and even then it doesn't seem to compute too well




I pose a different look at IPs (to stir the pot!). One from a perspective of not knowing or caring what yeild really is. A look at IPs as a forced savings account.


Example:
Purchase Price: $300k
Mortgage: $285k  (5% down....)
Repayments: $510/week  (8.60%)
Rent: $320/week
Costs of renting: $40 (rates, insurance etc)

Balance / week: $230
Balance / year: $12k
Balance / 30 years: $360K

Inflation rate @ 2% / year on average over 30 years
Final rent = $580
Final house value = $540k  (adjusted for inflation only)
Crossing Point = 15 years (rent crosses minimum repayments)


The owner could theoretically restart the mortgage at the crossing point (15 years) to a 30 year loan, meaning that the IP from then costs them no weekly commitment. By adding in the extra rent from CPI increases, would bring the end result of ownership back to the approximate total of 40 years or so, costing only 15 years of balance repayments - $180K.
Therefor, the owner could actually handle a price drop in the end?

Conclusion:
To break even, the house must move 20% in 30 years.
(Thats also under the assumption that rent does not increase anymore from day 1, and mortgage interest rates remain at 8.60%)
 or
Taking into account inflation, have a tidy profit of at least $180k...


----------



## treefrog (18 March 2008)

Uncle Festivus said:


> Investors maybe, but for people who own/buy their own home it's not equitable. Try telling the couple who have lived in their house for 30 years that because of 'speculation'? in the property around them that they now have to pay exorbitant land tax, *even though they have not contributed to the bubble in house prices*, and probably have lived within their means all this time. Let the investors/speculators start paying for what the rest of the community subsidises (through tax breaks).




the gist of the interview/expert research was the land tax solution was the only really workable way of getting access to more city land
and of course that couple have contributed to the problem - they are occupying but seldom using the land - kids have grown and don't play there anymore - chooks are a nuisance to feed and water all the time so just buy at the s'market, and we don't need the woodpile and chopping block any more as we have a RCAC and the outdoor nightpan loo - well we got this inside one that uses water now.........


----------



## Tysonboss1 (18 March 2008)

treefrog said:


> any way crux was that Oz culture is the main problem with far too many wanting a house and many people who did not need a house hanging on to them and tieing up land that units could be built on to make housing more affordable - yeah well don't disagree, but the solutions - virtually only one -
> large land taxes to owner/occupiers and investors.........:iagree:




That pointis correct,... except for the land tax part.

In chatswood there is heaps of homes on large blocks worth millions that only house 1 elderly person or an elderly couple as these people slowly die off the houses disapper and 4 storey apartments are built back.

same goes for the crowd saying that they can't afford a house,... it's true in a city as populated as sydney the average person won't beable to afford a large home on a large block especially in the inner suburbs and shouldn't expect to live in a 4 bed house.

it only stand to reason that the "Average" person can only afford and "Average" home which in the inner city suburbs is a small apartment.


----------



## Tysonboss1 (18 March 2008)

treefrog said:


> the gist of the interview/expert research was the land tax solution was the only really workable way of getting access to more city land
> and of course that couple have contributed to the problem - they are occupying but seldom using the land - kids have grown and don't play there anymore - chooks are a nuisance to feed and water all the time so just buy at the s'market, and we don't need the woodpile and chopping block any more as we have a RCAC and the outdoor nightpan loo - well we got this inside one that uses water now.........





I think land tax is a bad idea, 

cut red tape for developers, rezone more areas for higher density and give tax breaks to developers creating low cost housing and you will get more apartments built, 

People keep talking about releasing more land,... I think we should talk about releasing more airspace above existing suburbs, after all releasing 1/4 of land might give you 1 maybe 2 houses, releasing 10 stories above that land gives you 20 dwellings,..


----------



## ROE (18 March 2008)

stock_man said:


> I pose a different look at IPs (to stir the pot!). One from a perspective of not knowing or caring what yeild really is. A look at IPs as a forced savings account.
> 
> 
> Example:
> ...




You are assuming the money you put away for all those years not earning a single cents on interest or capital growth.

outlay 15K
extra saving every year 12K
average save rate 5% compound a year
time: 30 years
money in hand in 30 years with little risk: $901,958.61


----------



## Tysonboss1 (18 March 2008)

prawn_86 said:


> I dont invest on margin, so no.
> 
> Also, one could argue that stock gains are made more from capital gains than yield. And the % move of stocks is quicker than that of property, due to liquidity




weather you invest on margin or not has little to do with an investments merit,...

as for investing on margin it is simply that when an investments yeild + capital growth is higher than your interest rate then it does make sense to invest on margin, especially because your earnings will be compounded year by year.

As for shares increasing faster than property, it's true they do, but they also decrease alot faster than property,.... 

you need both shares and property to accellerate your growth,... there is alot of people who would be on the brink of collaplse at the moment who have leveraged stock portfoilios with no property to back it up.

and on the other hand if you are leveaged completely into property then you have the risk of slower growth than with shares,....

but when you put both asset classes together you you get a high growth portfolio with alot of stability to get you though tough times,...

If you go down the road you say you are taking with no leverage at all,... you really limit your growth,


----------



## prawn_86 (18 March 2008)

Tysonboss1 said:


> you need both shares and property to accellerate your growth,...




Im not denying that, and im certainly not saying I know much about property.

By your posts you obviously work in property, or have a deep interest in it, much more so than me.

Looking at rent vs. prices in my suburb (which is an upmarket one admittedly, so im not sure what it would be for outer suburbs), rental yield doesnt go anywhere near covering interest payments.

IE - 600k home @ 8.5%pa = $51k interest per year.
Rental yeild = between $24k and $30k depending.

So just to break even you need approx 8.5% capital gains per year, and thats not even paying off any principal.

I should note this is ignoring tax implications, as I dont know enough about them.


But an example like that suggest to me prices are too high, as 5 years ago the rental yield covered the interest payments. Although IR were lower...


----------



## Tysonboss1 (18 March 2008)

ROE said:


> outlay 15K
> extra saving every year 12K
> average save rate 5% compound a year
> time: 30 years
> money in hand in 30 years with little risk: $901,958.61




except inflation will take about 90% of the interest your earning,.. where as property will increase atleast with inflation,...

and you will be paying tax on your interest,... where as you'll get a tax deduction for the interest you pay,...


----------



## Tysonboss1 (18 March 2008)

prawn_86 said:


> Looking at rent vs. prices in my suburb (which is an upmarket one admittedly, so im not sure what it would be for outer suburbs), rental yield doesnt go anywhere near covering interest payments.
> 
> ..




Sometimes simply comparing rent of the property to the price is very misleading,...

Rent yield is basically what you can rent the current dwelling for,... but the price is based on what you can do with the property in the future.

Picture a house on a large 5 acre block,... you may only be able to rent the house for $350 a week, But that doesn't mean the land is not worth $2M,

Some people would look at it and say it's over priced because the rent doesn't cover the interest on the loan, But a developer would look at it and say it's a bargain,........

The same thing can be said for a house that's only getting $500 a week rent but is worth $2.4M,..... the fact that it might be zoned high density and you can build 5 stories on it might mean that $2.4M is a fantastic price.


----------



## prawn_86 (18 March 2008)

Development isnt generally in the mind of the average property owner though.

And the ones I was looking at in my suburb are fairly small block or townhouses, and in this suburb you are not allowed to build over 3 stories.

I do see your point however


----------



## stock_man (18 March 2008)

ROE said:


> You are assuming the money you put away for all those years not earning a single cents on interest or capital growth.
> 
> outlay 15K
> extra saving every year 12K
> ...




Tysonboss1 is right.
De-inflate $900k by 2$/year gives $490K
Take an average amount of $300k in the bank (conservative in this example), and the tax is $4.5k (30% of $15K interest).
$4.5K x 30 years = $135K
$490K - $135K = $355K (for an outlay of $360k.... )

So property wins due to delaying the tax!
(this is the same principle as shares - delayed and cheaper tax)


----------



## ROE (19 March 2008)

stock_man said:


> Tysonboss1 is right.
> De-inflate $900k by 2$/year gives $490K
> Take an average amount of $300k in the bank (conservative in this example), and the tax is $4.5k (30% of $15K interest).
> $4.5K x 30 years = $135K
> ...




Well this is what you do for 30 years investment...you put it in super
you salary sacrificed your 12K component after tax that give you ~15K

initial 15K before tax say 20K
so start off 20K = 15K post tax
each year increase 15K = 12K post tax
return 5%
time 30 years = 1,132,850.70
super tax at 15%, when you retire tax free.. so that give you around 900K mark still ..
outside super you get tax on your investment after you retire

and your bank saving rate always run above inflation... RBA based rate on inflation as you can see lately you don't see bank rate below inflation figure


----------



## Freeballinginawetsuit (19 March 2008)

ROE said:


> You are assuming the money you put away for all those years not earning a single cents on interest or capital growth.
> 
> outlay 15K
> extra saving every year 12K
> ...




No doubt there are probably plebs that do the aforementioned .


----------



## Tysonboss1 (19 March 2008)

ROE said:


> You are assuming the money you put away for all those years not earning a single cents on interest or capital growth.




Since when does property not have a rental return or capital growth, when you put this money away year by year,... 

Inflation eats away at the debt you owe year by year,...

Inflaton increases the weekly rent year by year, to the piont where it will eventually cover the repayments.

and you should experiance capital growth by a minimum of inflation + higher demand as increasing density pushs up the value of your property or inreasing density in surrounding suburbs pushs up demand for your lower density suburb from people who refuse to live in higher density.


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## gfresh (19 March 2008)

Well this was ABC's Lateline last night...

http://www.abc.net.au/reslib/200803/r233769_937407.asx

Bit extreme.. but anyhow, don't shoot the messenger!


----------



## tech/a (19 March 2008)

ROE said:


> Well this is what you do for 30 years investment...you put it in super
> you salary sacrificed your 12K component after tax that give you ~15K
> 
> initial 15K before tax say 20K
> ...




Wheres your adjustment for inflation?
Whats the REAL buying power of the $s in 30 yrs.
Bugger all.

There is a product out there readily available through Adelaide Bank and Commonwealth Bank which *puts to rest *the Affordability issue.

I know why its not been widely used in the last 5 yrs but the time is very close when this product will come into its own.


----------



## professor_frink (19 March 2008)

stock_man said:


> Keep dreaming. With the public transport system in Sydney you only get to Hornsby 1 hr from the city.




rubbish. I'm nearly an hour north of Gosford by train, and it's 2 hours for me to get to Central.


----------



## numbercruncher (19 March 2008)

Got to love how many RE agents are now jumping on the talk down wagon!



> Property prices tipped to plummet
> 12:00a.m. 19 March 2008
> | By Kathy Sundstrom
> 
> ...




http://www.thedaily.com.au/news/2008/mar/19/property-prices-tipped-plummet/


----------



## tech/a (19 March 2008)

Stock market crash!!---when was that?


----------



## theasxgorilla (19 March 2008)

gfresh said:


> Well this was ABC's Lateline last night...
> 
> http://www.abc.net.au/reslib/200803/r233769_937407.asx
> 
> *Bit extreme..* but anyhow, don't shoot the messenger!




Hahaha, yeah, but bring it on I say...prices halving on the Mornington Peninsula...thanks very much, I look forward to that.


----------



## YChromozome (19 March 2008)

numbercruncher said:


> Got to love how many RE agents are now jumping on the talk down wagon!




It makes sense, most only make a commission when they sell a house. Hopefully they can get a 50% crash done and dusted this year, so the next boom can start next year. Much better than house prices saying dormant for the next 50 years as inflation rises to catch up to house prices.


----------



## nizar (19 March 2008)

theasxgorilla said:


> Hahaha, yeah, but bring it on I say...prices halving on the Mornington Peninsula...thanks very much, I look forward to that.




Yeh same.
There's some sweet properties down that side. Black Rock, etc.


----------



## explod (19 March 2008)

theasxgorilla said:


> Hahaha, yeah, but bring it on I say...prices halving on the Mornington Peninsula...thanks very much, I look forward to that.




Near where I live on the east side of the Napean Hwy, Mornington things are looking grim and agents are knocking back stock.   Along the beach no probs but in the bigger picture that's a small percentage.

And the Martha Cove Development (City Pacific)  is looking like a ghost town in the Sudan.


----------



## Mofra (19 March 2008)

numbercruncher said:


> Got to love how many RE agents are now jumping on the talk down wagon!



Of course they will be lowering the expectation of sellers - the lower the reserve price, the more likely a sale (and therefore commission) is. The reputation of real estate agents hasn't been earned by accident


----------



## robots (21 March 2008)

hello,

anyone know whats going on with property prices?

a unit in our block sold last weekend for the highest figure in recorded history for the complex,

truly amazing

thankyou

robots


----------



## numbercruncher (21 March 2008)

A fool and his/her Money are easily parted ?


----------



## tech/a (21 March 2008)

numbercruncher said:


> A fool and his/her Money are easily parted ?




Whats a fool doing with money in the first place?


----------



## numbercruncher (21 March 2008)

tech/a said:


> Whats a fool doing with money in the first place?




Renting it from a bigger fool ?


----------



## tech/a (21 March 2008)

numbercruncher said:


> Renting it from a bigger fool ?




Any fool can criticize, condemn, and complain - and most fools do!


----------



## robots (25 March 2008)

hello,

awesome result on the weekend for melb. 82% clearance,

well done to all those involved

thankyou

robots


----------



## explod (25 March 2008)

robots said:


> hello,
> 
> awesome result on the weekend for melb. 82% clearance,
> 
> ...




Said it before and I will say it again Robots, CLEARANCE RATES IS NOT AN INDICATOR OF MARKET STRENGTH, VALUE OR OTHER.  There are indications that vendors or starting to rush the gate with reduced prices.

It will be a great time for me to gat back into investment properties in a year or two.

Oh, and by the way Robots;  thought I would get a little apology from you regarding your comment towards me last week.


----------



## robots (25 March 2008)

hello,

the RBA loves the clearance rates,

the tanti estate is an infamous part of mornington where plenty of people live, so not sure how I over stepped the line, was just asking if you were down?

have a great day

thankyou

robots


----------



## pepperoni (25 March 2008)

robots said:


> a unit in our block




The property spruiker that lives in a unit.  The end.

In other news nab independently increased its mortgage rates by .9%.


----------



## robots (25 March 2008)

hello,

thats right peeperoni, 

its a great place too, 53sqM of fabulous living right here in Melbourne, where all the Sydney people are migrating to

how we looking peep, property still 8x your salary?

this is what I mean, why the anger towards property?

thankyou

robots


----------



## xoa (25 March 2008)

robots said:


> hello,
> 
> thats right peeperoni,
> 
> ...




99% of Australians will never need to  live in a 53sqm bedsit. We're not Japan.

If you're counting on that, well...


----------



## robots (25 March 2008)

hello,

 do you think I should sell xao?

like with record prices everywhere

thankyou

robots


----------



## xoa (25 March 2008)

robots said:


> hello,
> 
> do you think I should sell xao?
> 
> ...




I'm not a financial adviser, so I'm not going to give you advice.

There's just no way I'd buy even a 53sqm bedsit at current prices. These hovels are being sold in Brisbane for $300k and up, mostly to "investors" who end up renting to international students.  Sure, the average person may be able to afford one (on a large mortgage), but so what? 

I'd rather rent a proper property, than pay $440 per week in interest for a bedsit.


----------



## robots (25 March 2008)

hello,

oh, still a bubble going on, you sure

thankyou

robots


----------



## Mofra (25 March 2008)

tech/a said:


> Whats a fool doing with money in the first place?




We, as the voting public, elected them


----------



## numbercruncher (26 March 2008)

Bit more pain for the Money Renters, other banks will surely follow suit ? House prices to keep rising for years ?




> THERE'S more pain in store for home buyers, with National Australia Bank raising interest rates out of the blue this afternoon.
> 
> NAB hiked the interest rates on its standard variable home loans by another nine basis points to 9.36 per cent - even though there has been no movement in the Reserve Bank's official interest rate.




http://www.news.com.au/adelaidenow/story/0,22606,23430232-5006301,00.html


----------



## metric (26 March 2008)

house prices will rise forever. its a no brainer. fiat money devalues, so as time goes by one needs more of it to buy the same thing.

however, if i gave you gold for land, it is possible in 50 years they will be of simmilar value to eachother as they were at the time of purchace.

please dont blow bubble theorys at me...my home doubled in value the day i bought it. not because of fiat money etc, but because i bought correctly, researched, and got a bit lucky.

but house prices will always rise, even if some 'buyers selections' fall in price a little occaisionally..


----------



## pepperoni (26 March 2008)

Living in a 53 sqm unit in the bleak city ... oh god Id rather be waterboarded on a daily basis.  

I didnt think banks even rented money to people who are thick enough to buy anything under 60sqm????????!


----------



## pepperoni (26 March 2008)

metric said:


> house prices will rise forever. its a no brainer. fiat money devalues, so as time goes by one needs more of it to buy the same thing.
> 
> however, if i gave you gold for land, it is possible in 50 years they will be of simmilar value to eachother as they were at the time of purchace.
> 
> ...






I guess the majority of the world that is experiencing falls or flat prices for decades dont have fiat money. 

And if anyone was interest in fiat money effect on prices they might have well would have started a thread "brocolli prices to keep rising for years" 

100% in a day ... unless you sold the same day (.....bwahahaha...) Im sure you will find that when you go to sell there is no great rush to buy at more than you paid.

Its great that there are such enthusiastic dreamers out there like you and robots out there but financially its also better to have some realism and invest on strong fundamentals for high returns (ie not on a fiat money basis and not in property).


----------



## metric (26 March 2008)

pepperoni said:


> I guess the majority of the world that is experiencing falls or flat prices for decades dont have fiat money.
> 
> And if anyone was interest in fiat money effect on prices they might have well would have started a thread "brocolli prices to keep rising for years"
> 
> ...




if you only knew.


----------



## metric (26 March 2008)

pepperoni said:


> I guess the majority of the world that is experiencing falls or flat prices for decades dont have fiat money.




lets look at this statement..

i guess the majority of the world, that is experiencing falls or flat prices, for decades, dont have fiat money..


i ask, where in "the majority of the world", has real estate been "experiencing falls or flat prices for decades" ?


----------



## Tysonboss1 (26 March 2008)

pepperoni said:


> Living in a 53 sqm unit in the bleak city ... oh god Id rather be waterboarded on a daily basis.
> 
> I didnt think banks even rented money to people who are thick enough to buy anything under 60sqm????????!




I live in an apartment thats not much larger than that size,... lots of people do.

Just because it's not to your taste doesn't mean it no good.

It's only natural that as more ad more people try and cram into the same area that living spaces decrease,


----------



## wayneL (27 March 2008)

http://latimesblogs.latimes.com/laland/2008/03/california-free.html

WOW!!!



> *California freefall: Home prices fell 26% in February*
> 
> Signs of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.
> 
> ...


----------



## xoa (27 March 2008)

Some analysts suspect the initial housing bust could be just the beginning. There might be a second collapse in prices, as baby boomers start to retire/kick-the-bucket in their millions.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/08/REDHVBQ2L.DTL


----------



## Kauri (27 March 2008)

http://www.theage.com.au/news/national/record-numbers-default-on-homes/2008/03/26/1206207208847.html 

Cheers
.........Kauri


----------



## dalek (27 March 2008)

xoa said:


> Some analysts suspect the initial housing bust could be just the beginning. There might be a second collapse in prices, as baby boomers start to retire/kick-the-bucket in their millions.




Just a couple of points about this article.
The proposition that when us Boomers die off that our property will just return to the market must assume that we have no families to inherit and live in them.
Remember that group that are currently renting because they can't afford a home ? 

Economists Myers & Ryu's predictions weren't "the worst in history" they were just "ahead of their time."
Just too funny !!!! 
And one of primary soothsayers, Gregory Mankiw went on to become chairman of President Bush's Council of Economic Advisers from 2003 to 2005 
ROFL !!!

Quote
*After all, not all seniors retire or sell their homes and move to smaller places. Many prefer to age in place and live out their lives in the houses where they've built a lifetime of memories. But eventually, as they die off, most of their homes will come on the market.

Myers' and Ryu's foreboding prophecies bring to mind a 1989 study by a pair of Harvard economists, who predicted a 47 percent decline in housing prices during the 1990s because Boomers would stop buying as they aged. Housing-industry economists lambasted that forecast as pure poppycock, and it eventually blew up in smoke.

Indeed, one economist recently called their projection "one of the worst forecasts in the history of mankind."

But Myers and Ryu maintain that Gregory Mankiw, who eventually became chairman of President Bush's Council of Economic Advisers from 2003 to 2005, and David Weil, now working in the economics department at Brown University, were simply two decades ahead of their time.

Mankiw and Weil "may have miscalculated the timing of the decline, predicting its beginning 20 years or more prematurely," the new study says. "But the Baby Boomers will finally start retiring from the housing market."*


----------



## professor_frink (27 March 2008)

pepperoni said:


> I guess the majority of the world that is experiencing falls or flat prices for decades dont have fiat money.




Did you mean for this to read the way it does pepperoni? Care to name a couple of countries that have had a flat or falling market for decades? I didn't know such places existed


----------



## gfresh (27 March 2008)

Surely people have at least $20k savings to buffer them through a couple of years? That's approx $200wk x 104 to cover any recent rate rises. That's about the depreciation + interest paid on a new car over a few years, which everbody has been loading up on. Who should they be blaming? The RBA here?  

If things do get worse, I think it will be good for the long-term strength of the country when people learn that economies do change, and there are cycles, and savings for these sorts of times are required. House prices have been rising for 10 years,  and interest rates have been historically low for that time. Easy for some to forget the past before 1998. 

As share traders, one of the ley lessons we learn is "never chase prices - prices usually come back to you". Maybe that will soon be learned by those who were chasing whatever house prices asked, without standing back and really thinking hard about it.


----------



## juiceman (27 March 2008)

gfresh said:


> Surely people have at least $20k savings to buffer them through a couple of years? That's approx $200wk x 104 to cover any recent rate rises. That's about the depreciation + interest paid on a new car over a few years, which everbody has been loading up on. Who should they be blaming? The RBA here?
> 
> If things do get worse, I think it will be good for the long-term strength of the country when people learn that economies do change, and there are cycles, and savings for these sorts of times are required. House prices have been rising for 10 years,  and interest rates have been historically low for that time. Easy for some to forget the past before 1998.
> 
> As share traders, one of the ley lessons we learn is "never chase prices - prices usually come back to you". Maybe that will soon be learned by those who were chasing whatever house prices asked, without standing back and really thinking hard about it.



As a share trader, don't forget that you can't live in a share certificate


----------



## gfresh (27 March 2008)

> Just a couple of points about this article.
> The proposition that when us Boomers die off that our property will just return to the market must assume that we have no families to inherit and live in them.
> Remember that group that are currently renting because they can't afford a home ?




What is the net population growth in the US right now? It's possible if it's falling rapidly then it could be a factor soonish, as you've got more leaving than replacing them.. but otherwise, it doesn't seem to be backed up by the important figures, and therefore questionable. 





> Myers and Ryu project that the ratio of those 65 and over to people 25 to 64 will *surge 30 percent* in the decade between 2010 to 2020 and 29 percent more in the 2020s, altering the delicate balance between buyers to sellers for the foreseeable future.




30% increase? But what is the total % of population that make up the property market a baby boomer?! say 30% increase of 20% = 26% .. not enough to crash property prices. 

I also don't know how relevent that article is to Australia (if at all)...net population increase is still strong here. Last year I believe we had the largest population increases in recent record (large part migration, but still).. ABS doesn't believe this sort of thing will hit us until about 2051 - lot could change in that time! http://www.abs.gov.au/ausstats/abs@...5A9C0859C5F50C30CA25718C0015182F?OpenDocument


----------



## Gundini (27 March 2008)

juiceman said:


> As a share trader, don't forget that you can't live in a share certificate




Very true! 

But as Share Investors you can live in the proceeds from the Share Certificate... (Dividends + Capitol Growth = Mortgage or Rent Repayments)


----------



## ROE (27 March 2008)

professor_frink said:


> Did you mean for this to read the way it does pepperoni? Care to name a couple of countries that have had a flat or falling market for decades? I didn't know such places existed




Have a look at Japan during the 80's boom and subsequent bust that last
15 in negative years and still struggling till today.

But I think house price still way way under value in Australia.. We should encourage everyone to get into it and buy one before it's too late.

We never have a crash in Australia and we never will, we are different people from Japan,US and UK and the rest of the planet.

Get your foot in the market quick...the longer you wait the dearer it becomes  ... BUY BUY BUY


----------



## robots (27 March 2008)

hello,

in europe we always here people rent for 15, 20 + years and they dont have this fixation with home ownership, (sure some exceptions)

this is entirely because many cannot afford it, my partner from germany and family still there they just could never afford the RE, 

the great divide is occuring in aus and our ownership rates of 70% will gradually decline, 

although it wont be the greedy landlord to blame (oh hangon I know who will be to blame) 

thankyou

robots


----------



## professor_frink (27 March 2008)

ROE said:


> Have a look at Japan during the 80's boom and subsequent bust that last
> 15 in negative years and still struggling till today.




And Japan is the majority of the world now?? Thanks for the example- I'll just wait for clarification on what pepperoni was trying to say earlier.



ROE said:


> But I think house price still way way under value in Australia.. We should encourage everyone to get into it and buy one before it's too late.
> 
> We never have a crash in Australia and we never will, we are different people from Japan,US and UK and the rest of the planet.
> 
> Get your foot in the market quick...the longer you wait the dearer it becomes  ... BUY BUY BUY


----------



## Tysonboss1 (27 March 2008)

Gundini said:


> Very true!
> 
> But as Share Investors you can live in the proceeds from the Share Certificate... (Dividends + Capitol Growth = Mortgage or Rent Repayments)





what capital growth,... the share market has been hit harder than property latly,

and Dividends are just subject to economic down turns just like property.


----------



## robots (27 March 2008)

hello,

xao are you going to re-summit post

baby boomers (born 1946-1961),

it doesnt surprise that many will gladly inherit the proceeds from their parents hard work, whether it be cash or RE

and yet continue to cry "affordability issue" when many here have repeatedly shown no such thing exists

thankyou

robots


----------



## xoa (27 March 2008)

dalek said:


> Just a couple of points about this article.
> The proposition that when us Boomers die off that our property will just return to the market must assume that we have no families to inherit and live in them.
> Remember that group that are currently renting because they can't afford a home ?
> 
> ...




Nobody could have predicted that the baby boomers would use their twilight years to go on a debt fuelled "investment property" spending spree.

The fact remains, that eventually the boomers will sell. The are no real estate agencies or Xinc mortgage brokers in heaven.


----------



## xoa (27 March 2008)

robots said:


> hello,
> 
> in europe we always here people rent for 15, 20 + years and they dont have this fixation with home ownership, (sure some exceptions)




If you don't think we should be so fixated on property ownership, why are you a property permabull?

Australia's demographics are wildly different to that of Hong Kong, Luxumbeurg, Monaco, or Germany. Your dream of every Australian renting a 53sqm apartment is a few centuries off.


----------



## robots (27 March 2008)

hello,

as I look out my window XAO things are as good as gold,

wouldnt have a clue what is going to happen in the future,

just sick of the whingers who claim housing is unafforable when it clearly isnt

any chance of re-submitting the post about the inheritance

thankyou

robots


----------



## xoa (27 March 2008)

robots said:


> just sick of the whingers who claim housing is unafforable when it clearly isnt




Same.. I'm also tired of hearing people whine about mortgage repayments. If they're not happy with things as they are, they should leave the market and wait for the correction.

But you're deluded if you think property here is affordable. We have the most unaffordable property in the developed world. OECD and other statistics bear this out. And you expect property to get even more unaffordable. It's hard for me to understand your reasoning.


----------



## robots (27 March 2008)

hello,

frankston, 44km to melb, 200k - 250k,

gladstone park, 24km to melb, 250k-300k

melton, 40km to melb, 200k-250k

units and apartments galore, 

friends purchased apartment in paris (marais area) 21sqM 365k aus, in aus you would get double size

thankyou

robots


----------



## xoa (27 March 2008)

robots said:


> friends purchased apartment in paris (marais area) 21sqM 365k aus, in aus you would get double size
> 
> robots




Really, that's interesting. You'd struggle to craft a single bedroom out of 21sqm. Forget about a toilet, kitchen, or dining area. I'm dubious about the existance of that 21sqm apartment, but I'll assume you're telling the truth. In any case, let's compare apples to apples. It doesn't make sense to compare a riverside Parisian arrondissement to Melton.. though I'm sure some patriotic bogans may disagree.


----------



## robots (27 March 2008)

xoa said:


> Same.. I'm also tired of hearing people whine about mortgage repayments. If they're not happy with things as they are, they should leave the market and wait for the correction.
> 
> But you're deluded if you think property here is affordable. We have the most unaffordable property in the developed world. OECD and other statistics bear this out.
> 
> ...




hello,

many people would be surprised to know the dimensions of a bedroom, alot of places in paris have pull down beds,

a development coming on line in melb of around 270 apartments, with the 1-bedders having pull down beds, 90% sold in a month

melton, frankston and gladstone park are examples of very affordable property

thankyou

robots


----------



## robots (27 March 2008)

xoa said:


> If you don't think we should be so fixated on property ownership, why are you a property permabull?
> 
> Australia's demographics are wildly different to that of Hong Kong, Luxumbeurg, Monaco, or Germany. Your dream of every Australian renting a 53sqm *apartment is a few centuries off*.




hello,

maybe so, but is on the way and probably a little earlier

thankyou

robots


----------



## gfresh (27 March 2008)

I'm surprised by how affordable melbourne is to be honest.. 

Bayswater, Boronia, Ferntree Gully out east you can find 2br units for under $250k -- a few years old, and all within 35km of the city. All close to public transport (train), and all about 50mins via PT to the city. None of those areas are that bad with plenty of infrastructure there, and very established areas. 

Up here (QLD) that amount wouldn't buy you squat really, or you'd have to be much further out where PT is pretty bad.. and wages here are a lot lower here unless you're involved with a few key areas. Yet prices have jumped a lot up here. 

While for a few reasons I'm over Melbourne, but really, it seems that those that whinge about 'unaffordability' in Melbourne want either a large house, or want to live within 10km of the city for all it's "lifestyle" stuff - which has been the realm of the wealthy for a long time. Can't always have your cake and eat it too..


----------



## xoa (27 March 2008)

robots said:


> hello,
> 
> many people would be surprised to know the dimensions of a bedroom, alot of places in paris have pull down beds,
> 
> ...




Affordable for who? A Melbourne-based speculator with too much credit on his hands, or an actual resident of these towns? 

Some regions have more "affordable" housing, because they are economically depressed or a terrible place to live. Even a modestly priced house is unaffordable, if you're reliant upon centrelink or a low paying job. The bottom line is that $470k is the median. If something costs less than this, there's a good reason why. You'd be a brave man to bet upon further capital gains, unless wages increase proportionally.

You don't seem to understand my point about the futility of comparing the most expensive suburb of Paris to regional Australian towns. Prime real estate in Paris, New York, Hong Kong, or Shanghai will always command a premium, and for good reason.


----------



## theasxgorilla (27 March 2008)

xoa said:


> Really, that's interesting. You'd struggle to craft a single bedroom out of 21sqm. Forget about a toilet, kitchen, or dining area. I'm dubious about the existance of that 21sqm apartment, but I'll assume you're telling the truth. In any case, let's compare apples to apples. It doesn't make sense to compare a riverside Parisian arrondissement to Melton.. though I'm sure some patriotic bogans may disagree.




These shoe-box appartments are very common in Stockholm.  Frankly, I don't know how people can live like that, but they do it for affordability reasons, because they want to live in the centre of the city.


----------



## robots (27 March 2008)

hello,

here we go, equality for all

buying a house on centrelink payments, are u serious?

oh yeah got a dollar mate? out the front of coles,

so I climb ladders and bust my backside for 8hrs and just give it to the freeloader out the front of coles (who probably on centrelink) who wants to sleep into 11am every day and get a slab and pack of smokes

its like medicare, on the dole you walk right up and get you're skin cancer cut out or a finger fixed, you employed sir? yes oh a clinic is down the road just hand over a k,

workmate who rented in melton just recently bought in Melton (6mths ago), 200k, 

21sqM in melb cbd would cost half that of paris cbd, howzat

thankyou

robots


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> in europe we always here people rent for 15, 20 + years and they dont have this fixation with home ownership, (sure some exceptions)
> 
> ...




Unmitigated rubbish. RE is waaaaaaaaaaaaaaaaaayyyyyyy cheaper than in Anglo countries (Well with the possible exception of USA now)

I have a friend in Munich who ownes a chain of Taverns and is pretty wealthy... prefers to rent.

1/ House price inflation is not out of control, it is not seen as a speculative punt.

2/ Tenancy laws are very pro tenant. You have as much security of tenure as a tenant, as you do as a mortgagor.

3/ It is more about attitude than money.

The only thing pushing prices up a little is the bloody Pommie property mad punters. The locals ain't playin'.


----------



## xoa (27 March 2008)

robots said:


> hello,
> 
> here we go, equality for all
> 
> buying a house on centrelink payments, are u serious?




I never said they should.

I said it's not surprising to see lower house prices in communities where many people are on unemployment or low income jobs. People's capacity to consume any good is finite and determined by their incomes; a concept which evades many permabulls.


----------



## shogun (27 March 2008)

moses said:


> e) increasing cost of capital (interest rates)




How does an increasing cost of capital RAISE house prices?  That is an interesting one!  

My thoughts are the opposite - the demand side has been fueled (with extreme heat!) by debt.  Higher cost of capital will have a dramatic impact on the prices people can offer.


----------



## robots (27 March 2008)

hello,

rubbish,

like us here, many in europe want to own a home and strive for that,

yes tenure is sound because that is life,

21sqM for 365k aus, find me that in melb or syd, you could not and will not

thankyou

robots


----------



## wayneL (27 March 2008)

Hello,

Take a look \/

Thankyou


----------



## robots (27 March 2008)

robots said:


> hello,
> 
> 
> 21sqM for 365k aus, find me that in melb or syd, you could not and will not




hello,

my example was that in paris 21sqM cost 365K, find me that in melb or syd, so people get an idea aus is no way at the top of the list

thankyou

robots


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> my example was that in paris 21sqM cost 365K, find me that in melb or syd, so people get an idea aus is no way at the top of the list
> 
> ...



ROTFLMAO
Paris ain't Melbourne or Sydney.

If you want a pad overlooking the Champs Elysee, or Hyde Park, yer gonna have to cough up. 

But you can find Apartments in Paris environs for comparable prices to Oz. Get out into the sticks a bit and it's cheaper than Australia.

That said, It's the poms who've pushed prices up in France.


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> my example was that in paris 21sqM cost 365K, find me that in melb or syd, so people get an idea aus is no way at the top of the list
> 
> ...



You might want to have a look at this; minutes from Paris according to the ad:


----------



## robots (27 March 2008)

hello,

no example was for re in good area of paris, nothing fantastic,

the sticks of aus are going for huge prices too,

things are going well in aus still Wayne, like most great places in the world,

just the good ol' US of A being exposed for the fraud it is

thankyou

robots


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> no example was for re in good area of paris, nothing fantastic,
> 
> ...



Show me a link that verifies your assertion. Because until then, it's tosh.

Central Paris is expensive, but deserves to be so, just like central London. But let's compare like with like. Exactly where is this studio and find me a similarly priced unit to look at.


----------



## robots (27 March 2008)

hello,

hahahahaha.......

croisette minutes to paris, yeah like about 200 min, you need to move on from the dodgy uk real estate web sites

thankyou

robots


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> hahahahaha.......
> 
> ...



Get your facts straight before making a buffoon of yourself. It ain't that Croisette. Read the ad dude, it's near the golf course of Saint Germain en Laye at Carrieres sous Poissy. 

30 minutes by car to Champs Elysees
ThankYou


----------



## wayneL (27 March 2008)

robots said:


> hello,
> 
> hahahahaha.......
> 
> ...




Maybe if you went on foot and stopped off at a few cafes on the way.

\/ With thanks to the person with Google Earth... you know who you are.


----------



## chops_a_must (27 March 2008)

xoa said:


> If you don't think we should be so fixated on property ownership, why are you a property permabull?
> 
> Australia's demographics are wildly different to that of Hong Kong, Luxumbeurg, Monaco, or Germany. Your dream of every Australian renting a 53sqm apartment is a few centuries off.




I disagree.

I don't think every Australian will live in Apartments, but it has to be a growing trend, there is no other way we can sustain our sprawl.

And you can see it already.

Premiums are paid for property where costs of living are reduced because of location. This is a different trend from Australia 10-20 years ago where isolation was rewarded.

In WA, you only have to look at areas that have had the best price appreciation. Thornlie, West Perth, Subi Centro, East Perth and I dare say Wellard. All are very cheap to live in when rent is taken out, so you pay a premium for that.

Any apartment living with access to great facilities will be the way to go in the future. Increased energy costs are a given, whether from peak oil, or carbon trading. And those positioning themselves for such will be rewarded.

Although I mainly disagree with Robots, and am a property bear, these things are glaringly obvious.

For mine, the place to be for price and costs of living would be inner city Melbourne, without a doubt. You're paying a half to a third of what you are paying for the equivalent in Perth. And it's in Melbourne! And you don't need a car to be a functioning citizen. So it's a no brainer.

I've said before here, I'll be looking at Murdoch and inner city Perth when the time is right. Because the cost of living and energy trends make that the obvious choice, and I think people would be foolish not to consider that when looking at property investing from here in.

Cheers.


----------



## xoa (27 March 2008)

chops_a_must said:


> I disagree.
> 
> I don't think every Australian will live in Apartments, but it has to be a growing trend, there is no other way we can sustain our sprawl.
> 
> ...




I also believe that higher density living is desirable, at the right price. Not $6000 per square metre. I take issue with those greedy individuals who infer that living in a shoebox on a 30-year-mortgage is a solution for those priced out by the bubble.


----------



## chops_a_must (27 March 2008)

xoa said:


> I also believe that higher density living is desirable, at the right price. Not $7000 per square metre. I take issue with those greedy individuals who infer that living in a shoebox on a 30-year-mortgage is a solution for those priced out by the bubble.




I wouldn't know enough to talk about money per metre, but I'd say Melbourne Inner City is quite affordable. To me at least, and quite reasonable for that lifestyle. For me anyway.

Compare that to West Perth... and it's a whole different story. I've ranted about Adelaide before. I think that's the worst market. Not in a million years would I consider investing or buying there.

In short, to live - inner city Melbourne is the only place I'd buy right now. To invest, I wouldn't buy anywhere at the moment. I'd wait for the credit crunch to get everyone out in the next year or so... at least then you know you are probably going to get the bottom, or close enough to it to make it worthwhile in the long run.


----------



## kermitos (28 March 2008)

I'm a noobie to investments, tho I thought I'd share my  worth of first hand experience.

I assume there are quite a few ASF'ers here who've been looking around the property market lately (or the past 6mths or so like myself) - making phone calls to agents and attending open inspections.  I've been busy driving around Melb's SE suburbs each weekend.

But I'm not sure how many of yous have received phone calls from agents in the last mth or so, coz I've received quite a few, they never use to call, but now I get one every 2 or 3 days.  It seems to me that there might be a lack of buyers out there, tho it does not mean prices will drop - tho I'd like to wait and see how it turns out, only time will tell.............


----------



## Kauri (28 March 2008)

not too flash in Sydney??  From the SMH.. full article link below

http://www.smh.com.au/news/national/when-pain-persists-they-arrive/2008/03/27/1206207300876.html 

Cheers
..........Kauri


----------



## robots (28 March 2008)

wayneL said:


> You might want to have a look at this; minutes from Paris according to the ad:




hello,

you might want to send the re website a note asking them which area the actual property is, cant be both, the heading boldly says "Croisette"

no body is priced out of RE in aus, plenty around to choose from its just that certain people cant afford what the dream is so the end has to happen,

in summary, its been 2 and half years since the other thread was going, 11 IR rises and  prices are still solid across the country and for that matter across the globe (excluding the good ol' US of A because we know what goes on there)

thats all robots has said, 

thankyou

robots


----------



## chops_a_must (28 March 2008)

robots said:


> in summary, its been 2 and half years since the other thread was going, 11 IR rises and  prices are still solid across the country *and for that matter across the globe* (excluding the good ol' US of A because we know what goes on there)
> 
> thats all robots has said,
> 
> ...




Obviously you haven't heard of a place called spain and the goring happening there, have you?


----------



## wayneL (28 March 2008)

chops_a_must said:


> Obviously you haven't heard of a place called spain and the goring happening there, have you?



Or the Uk, Ireland etc atc


----------



## robots (28 March 2008)

hello,

got any example's of decreases in london? not some average, 

asked for it before and didnt get so,

thankyou

robots


----------



## wayneL (28 March 2008)

robots said:


> hello,
> 
> got any example's of decreases in london? not some average,
> 
> ...




It's not my patch, and if you want a specific example, I will have to find it through contacts... not easy

But rest assured as soon as I hear of one, you'll be the first to know.


----------



## Kathmandu (28 March 2008)

*



Shortages set to fuel housing crisis

 

Nassim Khadem
March 28, 2008






HOUSE prices across the nation will rise by 30% to 40% over the next five years because of built-up shortages of housing, according to a leading economics forecaster.
		
Click to expand...


*



http://www.theage.com.au/news/natio...-housing-crisis/2008/03/27/1206207302370.html



Dave


----------



## Tysonboss1 (28 March 2008)

xoa said:


> I also believe that higher density living is desirable, at the right price. Not $6000 per square metre. I take issue with those greedy individuals who infer that living in a shoebox on a 30-year-mortgage is a solution for those priced out by the bubble.




As with anthing it is supply and demand,... not "greedy Individuals" that determine the price,

If you increase the supply you will lower the price,..

What has made sydney apartment market worse was that after a boom you should generally have an upswing in new development which increases supply an levels of the market,

however in NSW the development upswing was cut off at the knees by the land tax that was brought in to try and profit from the boom, which made the developers bail out of the sydney market and plunged sydney into the rental crisis we are in at the moment,...

It's all well and good to say things are over priced but if people are lining up to pay that price then it's not over priced,...

At the end of the day somthing that is over priced won't sell,... so if it is selling regularly then i is not over priced,...


----------



## stock_man (28 March 2008)

robots said:


> hello,
> 
> got any example's of decreases in london? not some average,
> 
> ...




http://www.propertysnake.co.uk/

Not too sure if this reflects decreases in average sale prices, but shows that vendors are dropping expectations.

(assuming the site is accurate....)


----------



## xoa (28 March 2008)

Tysonboss1 said:


> As with anthing it is supply and demand,... not "greedy Individuals" that determine the price,




You first premise is correct. But during more rational times, the actual consumers of housing drove the vast majority of demand. That ensured that the prevailing price approximated its intrinsic value. The speculative element was sidelined. Not any more. With "investors" taking out almost half of new home loans, it's not surprising that we've had price spikes of up to 20% pa. 

Look at America, where some in the real estate industry pressured ordinary families to buy massively overpriced homes, lest they never become home owners. The prevailing consensus among "experts" was that prices would soar for a decade, that the "old rules" had changed and that a "new paradigm" had emerged. We're seeing similar scaremongering here. A simplistic view of supply and demand cannot tell the whole story.


----------



## chops_a_must (28 March 2008)

Tysonboss1 said:


> As with anthing it is supply and demand,...



This is the sort of bollocks that gets economics a bad name, and the reason it is fundamentally flawed.

Demand for owning ones own home will almost always be 100%. Therefore, economics logic dictates that housing prices should go vertical to match demand.

But what is never charted, never graphed, never modelled, is the ability to pay.

When you get reductio ad absurdum ad nauseam like you do in economics, incredibly important things are left out.

And you get lemmings, and people without any semblance of critical thinking, that bring out these over simplified truisms at any opportunity, who only prove themselves to be sheep.


----------



## explod (28 March 2008)

chops_a_must said:


> This is the sort of bollocks that gets economics a bad name, and the reason it is fundamentally flawed.
> 
> Demand for owning ones own home will almost always be 100%. Therefore, economics logic dictates that housing prices should go vertical to match demand.
> 
> ...





Chops, I love it, Amen

The hard calculation to make wise trades needs to devorced of all emotion.  One of the great mistakes of traders is that they fall in love with a particular stock.  You would be aware that at the moment I am a gold bull but the moment I can see the fundamental change I hope and work on the task to have myself ready to get out.

Aussie Stock Forums is number one about investing.  Emotionless facts are the way.   

The whakkers that measure Real Estate by clearance rate percentages really breaks me up.


----------



## shogun (29 March 2008)

chops_a_must said:


> This is the sort of bollocks that gets economics a bad name, and the reason it is fundamentally flawed.
> 
> Demand for owning ones own home will almost always be 100%. Therefore, economics logic dictates that housing prices should go vertical to match demand.
> 
> ...




The ability to pay is an inherent part of the demand curve.  It is clearly part of economics so your criticism of the field is unfair!  Microeconomics builds demand curves from indifference curves which represent how much of something else you have to give up to buy what you want to buy (i.e. the ability to pay).  The part time "know it all" journalist economists don't do it and those that like to comfort themselves about their poor speculative position in the realestate market don't do it either but who would listen to them!

Further to that economic logic would not dictate that house prices rise verticle - it depends on the supply curve.  The high prices SHOULD incent further development and then supply grows to match demand and prices come back to normal again.  Not happening in this market - I suspect it has something to do with government interference (call it bad behaviour) on the supply side.

Anyway - all in all I agree with you - we have hit a ceiling on ability to pay.  As credit is withdrawn prices will drop very quickly.


----------



## shogun (29 March 2008)

dalek said:


> Just a couple of points about this article.
> The proposition that when us Boomers die off that our property will just return to the market must assume that we have no families to inherit and live in them.
> Remember that group that are currently renting because they can't afford a home ?




But then wouldn't the home they were renting be empty?  There are so many physical dwellings and so many people to live in them - whether they are rented or bought is irrelevant.


----------



## chops_a_must (29 March 2008)

shogun said:


> The ability to pay is an inherent part of the demand curve.  It is clearly part of economics so your criticism of the field is unfair!  Microeconomics builds demand curves from indifference curves which represent how much of something else you have to give up to buy what you want to buy (i.e. the ability to pay).



But see, even this criticism which I knew someone would bring up, is evidence of a giant reduction.

Demand is demand is demand is demand.

It's not REDUCIBLE to quantity. And that's the problem. Demand is a psychological function or response, not a number representing quantity at price.


----------



## numbercruncher (29 March 2008)

I dont see a shortage ?



> There are 33,600 residential properties for sale in Queensland, up from 17,500 this time last year.




http://www.news.com.au/couriermail/story/0,23739,23446579-5011140,00.html


P.S Welcome back Davo, sell your IP up north yet ?


----------



## Kathmandu (29 March 2008)

I did, thanks.

Went fairly fast and possibly could have got a smidge more then, not sure now though.

Dave


----------



## refined silver (29 March 2008)

chops_a_must said:


> It's not REDUCIBLE to quantity. And that's the problem. Demand is a psychological function or response, not a number representing quantity at price.




Sorry, demand as an economics term, means how much will I buy at a certain price. If apartments were $90k and yielding 8%, I'd buy a couple instantly, if they are $350k and yielding 2-3%, I don't want any.



> Demand is demand is demand is demand.




A simple desire for something is not demand. I have many competing desires, but since only limited finances, I have to chose between competing desires.

As you've already noted, with limited finances available, demand for housing will drop.


----------



## chops_a_must (29 March 2008)

I disagree. I speak in English though, not in econolect. :

Obviously why I am not an economist.

**** you Comte!


----------



## refined silver (29 March 2008)

chops_a_must said:


> I disagree. I speak in English though, not in econolect. :
> 
> Obviously why I am not an economist.
> 
> **** you Comte!




if an economist, an accountant and a geography professor talk about "capital", all will have different meanings for the word, yet all will be correct when using it in their specific field with their specific definition.


----------



## refined silver (29 March 2008)

chops_a_must said:


> **** you Comte!




?????????????


----------



## ithatheekret (29 March 2008)

Well ...... , what we've recently bought semi-rural , has risen and we had premium built in on the original buying ranges .

Noted a lot of young families competing with us on some though.

The lowest property we bought ($120K ) , is now $155K . ( let @ $175/wk ) , spent $12K on it to get it upto proper standard .

Just waiting for the council rates to start drifting up again .............


----------



## refined silver (29 March 2008)

robots said:


> hello,
> 
> got any example's of decreases in london? not some average,
> 
> ...




Looks like it only just turned 6 months ago. UK top was later than tops in US, Spain, Ireland etc.


----------



## pepperoni (30 March 2008)

Well mosman seems to have kicked again ... Clearly this means 20% plus compounding forever.

Nevermind that household wealth is  going nowhere, rates are, and credit is contracting, housing is finite and therfore the entry level will be in the trillions within weeks.


----------



## pepperoni (30 March 2008)

refined silver said:


> Sorry, demand as an economics term, means how much will I buy at a certain price. If apartments were $90k and yielding 8%, I'd buy a couple instantly, if they are $350k and yielding 2-3%, I don't want any.
> 
> 
> 
> ...




If 8% yield is good enough for you who cares if they are 90k or 350?.  Personally 8% yield with 9% rates and questionable growth prospects doesnt make either prospect too good for me ... ill take cash or fully franked bank shares thanks ...  and I think the wealth creation minded are boring of the fantasy of getting rich off simply buying properties ... *again* 

I wonder how the all imporant clearance rates are going ... because I could almost sell at a gain after transaction costs by 2020.


----------



## refined silver (30 March 2008)

pepperoni said:


> If 8% yield is good enough for you who cares if they are 90k or 350?.




Relativity, thats why.

5 years ago on the Sunshine Coast (Qld) you could buy 2bdrm apartments with sea views 200m from the beach for $90k. A house - 3 bedroom in the same position was $300k. Now the unit is $300k and the house $400k. Its not only about yield.


----------



## juddy (30 March 2008)

Perth is starting to look quite ugly now. Overall, in excess of 16,000 properties on the market and some suburbs with over 10% of housing up for sale. Should see a nice big correction in the next couple of years. Not that I'd consider buying more property atm, but if I did, Adelaide would probably be the city of choice. Mainly because of the positive media surrounding it's future prospects.


----------



## SM Junkie (30 March 2008)

Although Perth may have 16,000 properties on the market, it was reported in the West Australian yesterday that prices are still expected to increase upto 40% over the next 5 years.

Key points of the article were:
- shortfall in the construction of 3000 dwellings per annum
- when interest rates stabilise, those pent-up demand pressures would be released and could result in a price explosion
-  then the period of underbuilding may have some consequences
-  oversupply of houses on the market to remain throughout 2008
-  price growth similar to that of recent years is less likely.
- if housing stock does not increase over the next 3-5 years then there will be a dramatic increase in house prices.

Sounds like when the interest rates stabilise, then Perth could have another run.  Still a very positive market if you are willing to wait through the current cycle IMO.


----------



## juddy (30 March 2008)

SM Junkie said:


> Although Perth may have 16,000 properties on the market, it was reported in the West Australian yesterday that prices are still expected to increase upto 40% over the next 5 years.
> 
> Key points of the article were:
> - shortfall in the construction of 3000 dwellings per annum
> ...





Hi SM, I think you'll find that prediction was an 'average' prediction Australia-wide. Every news-site across the country carried that story. I think Perth will have another run around 2015, when Delhi get the 2020 Olympics.


----------



## SM Junkie (30 March 2008)

Ok, bit of a sucker I was. I can see how they have manipulated the information, thrown in a couple of REIWA quotes and eye catching headline. Not to worry, still optimistic about the market.  I was on the horse during the last run, so I'm happy for it to catch its breath for a few years before its next run.


----------



## Tysonboss1 (30 March 2008)

chops_a_must said:


> This is the sort of bollocks that gets economics a bad name, and the reason it is fundamentally flawed.
> 
> 
> 
> ...




people can only pay what they have or what they can borrow so as the price rises this will naturally decrease demand.

Banks just don't lend willy nilly,... there is plenty of serviceabilty checks done when you go for a loan, The only people getting into trouble at the moment are the people that didn't protect them selves by fixing interest rates.


----------



## Tysonboss1 (30 March 2008)

chops_a_must said:


> But see, even this criticism which I knew someone would bring up, is evidence of a giant reduction.
> 
> Demand is demand is demand is demand.
> 
> It's not REDUCIBLE to quantity. And that's the problem. Demand is a psychological function or response, not a number representing quantity at price.




the sydney apartment market has seen many cycles of development out stripping demand, so it is exactly that,.... quantity at a price.


----------



## Tysonboss1 (30 March 2008)

juddy said:


> Perth is starting to look quite ugly now. Overall, in excess of 16,000 properties on the market and some suburbs with over 10% of housing up for sale. Should see a nice big correction in the next couple of years. Not that I'd consider buying more property atm, but if I did, Adelaide would probably be the city of choice. Mainly because of the positive media surrounding it's future prospects.




I have never really been into the perth property market, I have been a perth property bear for a long time.


----------



## Kathmandu (30 March 2008)

Tysonboss1 said:


> The only people getting into trouble at the moment are the people that didn't protect them selves by fixing interest rates.




Or those that purchased houses they could ill afford using Div's as part of the servicability equation.

Share market takes a hammering, sevicability say bye bye's

Dave


----------



## wayneL (31 March 2008)

The UK house price crash is cancelled! We're seeing rises in asking prices!

Ahahahahahahaha!


----------



## pepperoni (31 March 2008)

Hmm I wonder if there are any PRICE statistics over all these weeks of reported high "auction clearance rates" in melbourne.

I have learnt from this thread that with a limited supply of prperty, prices should just keep rising and rising and definitely without regard to interest rates, wages, personal wealth.  Definitely into the billions in the short term.

I know most people spend much more than their net worth on properties and credit supply is pretty much contracting buuuuuuuuut ...... 

*googles it*


----------



## gfresh (31 March 2008)

Clearance rates are down to 63% Melbourne.. Funny how these things get bumped off the front page so quickly.. yet, it's the most viewed story.. 

http://www.theage.com.au/articles/2008/03/30/1206850707213.html


----------



## Tysonboss1 (31 March 2008)

pepperoni said:


> I have learnt from this thread that with a limited supply of prperty, prices should just keep rising and rising and definitely without regard to interest rates, wages, personal wealth.  Definitely into the billions in the short term.
> 
> *googles it*




wages and personal wealth will only impact on the median house price,

It is possible for long term property prices to increase faster than inflation without the median house price increasing faster than wages and inflation.


----------



## pepperoni (31 March 2008)

Tysonboss1 said:


> wages and personal wealth will only impact on the median house price,
> 
> It is possible for long term property prices to increase faster than inflation without the median house price increasing faster than wages and inflation.




Im sure its possible if the stock market is on fire forever or something .. but generally the people buy houses with a mix of savings, debt that needs to be serviced from wages/salaries/rents, and the proceeds of their last house (and investment properties) so houses in mosman for example and definitely affected by chages in median house prices.


----------



## pepperoni (31 March 2008)

"Wary buyers shave $11,000 off house prices" http://www.theage.com.au/news/natio...ff-house-prices/2008/03/29/1206207499082.html




Wow fundamentals do effect house prices.   And Ive been following robots auction clearance report as gospel of property market returns 

More than a 2 percent loss .. going backwards at the same rate that hassle free cash is going forward.


----------



## Tysonboss1 (31 March 2008)

pepperoni said:


> "Wary buyers shave $11,000 off house prices" http://www.theage.com.au/news/natio...ff-house-prices/2008/03/29/1206207499082.html
> 
> 
> 
> ...




only 2%,.... seems to have faired better than the sharemarket,


----------



## Tysonboss1 (31 March 2008)

pepperoni said:


> Im sure its possible if the stock market is on fire forever or something .. but generally the people buy houses with a mix of savings, debt that needs to be serviced from wages/salaries/rents, and the proceeds of their last house (and investment properties) so houses in mosman for example and definitely affected by chages in median house prices.




The median House price will always be within the limits of wages,... How ever the True Median Home (average House), is not the same size and siting on the same amount of land as it was 20 years ago,.... and twenty years into the future the median house will be smaller and siting on less land than it is today.

If you bought 4 bed home on a 1/4 acre block within 10k's of sydney it probally was considered a median home,... but that same house today would probally be worth  3x the median sydney home value today, because what is classed as the average home today will be larger and more valuable than the average home in the future,


----------



## refined silver (1 April 2008)

> chops_a_must said:
> 
> 
> > I disagree. I speak in English though, not in econolect. :
> ...


----------



## chops_a_must (1 April 2008)

refined silver said:


> > For someone who recently started a thread on defining a word, "demand" and its distinction from "desire" is not that difficult to master.
> >
> >
> >
> ...


----------



## chops_a_must (1 April 2008)

Tysonboss1 said:


> Banks just don't lend willy nilly,... there is plenty of serviceabilty checks done when you go for a loan



Ah yeah...



> Commonwealth Bank 'exploited refugees'
> 
> The Commonwealth Bank has been accused of exploiting refugees in its allocation of loans.
> 
> ...




Lol!


----------



## refined silver (1 April 2008)

chops_a_must said:


> refined silver said:
> 
> 
> > And from dictionary.com in relation to demand:
> ...


----------



## Tysonboss1 (1 April 2008)

chops_a_must said:


> Ah yeah...
> 
> 
> 
> Lol!




I bank with the cba and hav always had to jump through hoops to get loans,... especially when it came to loans under my company name.

If you get into trouble with your loans it either because you have fudged some figures some where, you haven't protected your self from possible rate rises or you have been unlucky and lost your job,...

I have heared alot of people on this forum bag out fixed loans,... But if you are just starting out and a few rate rises could push you over the edge, its nota bad idea.


----------



## Tysonboss1 (1 April 2008)

chops_a_must said:


> refined silver said:
> 
> 
> > That comment in no way was directed at you. A little wikipeding could have saved you some anguish.
> ...


----------



## IFocus (1 April 2008)

Tysonboss1 said:


> I bank with the cba and hav always had to jump through hoops to get loans,... especially when it came to loans under my company name.
> 
> *If you get into trouble with your loans it either because you have fudged some figures some where, you haven't protected your self from possible rate rises or you have been unlucky and lost your job,...*
> 
> I have heared alot of people on this forum bag out fixed loans,... But if you are just starting out and a few rate rises could push you over the edge, its nota bad idea.




In the easy credit market unfortunately this is what happens and when the bad loans start blowing up it rolls onto affecting the main market.

Watched four corners last night pretty sobering but not unexpected........


----------



## gfresh (1 April 2008)

Was sobering watching.. for those that missed it.. 

http://abc.net.au/4corners/content/2008/20080331_debt/interviews.htm

The one family was overplayed a little, but no doubt there are very many in the same situation. When unemployment rises (which it will), there is going to many more put into stress.


----------



## Tysonboss1 (1 April 2008)

gfresh said:


> Was sobering watching.. for those that missed it..
> 
> http://abc.net.au/4corners/content/2008/20080331_debt/interviews.htm
> 
> The one family was overplayed a little, but no doubt there are very many in the same situation. When unemployment rises (which it will), there is going to many more put into stress.




I watched the link today, I can't believe these people put so much blame on the lenders.

Just because a credit company tries to upsell you more credit doesn't mean you have to take it ( every business will try and upsell, at the end of the day it's up to you to judge if you can afford it and if you need it ). The family concerned made three big mistakes

1, bought a house that was to expensive for them,

2, Failed to protect them selves from rising interest rates,

3, continued to take more and more consumer debt instead of facing the facts that they can't afford the home and sell out earlier.


----------



## IFocus (1 April 2008)

Tysonboss1 said:


> I watched the link today, I can't believe these people put so much blame on the lenders.




Unfortunately there are many people who don't think to far ahead or past the "I want it now". They get blasted 24hrs a day by the media advertising that its all OK and thats how it is with BS like "equity mate".

The lenders clearly have a huge responsibility because they are the ones with the knowledge, they have the numbers as to when people blow up and the conditions when this happens. I was realy shocked at how slack the big 4 have gotten never mind GE's 28% entry credit card.

The observation about charging 28% allows more defaults on payment but still be a profitable business sends alarm bells ringing as maybe the major banks now use the same formula.

Also the bank analysis comments on the effects the credit card debt may have flowing back to mortgage defaults is also very alarming.

Not only a financial issue but likely to become a very nasty issue for the community in general.

House prices here in the West have clearly slowed and this is with a F1 economy at full tilt, warp speed 10 I think prices around Oz are going to take a hit......IMHO


----------



## gfresh (1 April 2008)

I agree, people do definitely have to take responsibility for their own actions, so there is no denying that if you ask me. 

With your 3 points, this is true, however the question is, how many of them are there out there?  I know several who would be in this position - all it will take is the loss of one job in the family, and their house is up for sale in a matter of weeks. None of them are "poor", all are well educated, and all are on roughly the average income, with what I would classify as nothing extravegent in terms of the home they've purchased. Well, unit to be specific, "houses" are beyond the reach of most GenY's these days. 

If everybody knows even one or two couples who are, or could be in this situation so easily, it's a scary thought the total numbers.

Unfortunately for many, they just see the price going up and up, and think "well if I don't buy now, I will never be able to buy". Then we hear the constant likes of "rent money is dead money". And they lose some logic along the way. Or they buy the house, and then everything else goes on credit (new car, tv, furniture from Harvey Norman, etc). In turn this sort of attitude can push house prices in some areas way beyond any reasonable valuation. The longer the boom goes on, the more the attitude is hard to shake.


----------



## Tysonboss1 (1 April 2008)

IFocus said:


> The lenders clearly have a huge responsibility because they are the ones with the knowledge, they have the numbers as to when people blow up and the conditions when this happens. I was realy shocked at how slack the big 4 have gotten never mind GE's 28% entry credit card.




a lender can only make judgements based on the infomation they are given, People need to take into consideration that if they are signingup for a 30year loan they need to monitor the situation of the economy and make allowences for things to change, If they knew they were only just getting by,.. why not fix their rate,.... why not buy a smaller house in the first place,.... why go to havey norman and stock up on new furniture to fil your house with

Personally I don't like GE money,... But in defence of their 28% interest rate, It is 28% interest because the first 12 months are interest free, I use one of these cards myself,.... I bought a computer on it for $2000, I have the $2000 sitiing in an account earning interest as soon as the 12 month iterest free period is up I will pay off the card,.... It's all about using the right tool for the job.

People's


----------



## IFocus (1 April 2008)

Tysonboss1 said:


> a lender can only make judgements based on the infomation they are given, People need to take into consideration that if they are signingup for a 30year loan they need to monitor the situation of the economy and make allowences for things to change, If they knew they were only just getting by,.. why not fix their rate,.... why not buy a smaller house in the first place,.... why go to havey norman and stock up on new furniture to fil your house with





I share your sentiment but I think / know most don't make allowances we seem become more and more like the US in every way.

If you take the four corners program at face value clearly the lenders are fudging the numbers knowingly.

The loans to Sudanese refugees was a shocking example


----------



## Tysonboss1 (1 April 2008)

gfresh said:


> I know several who would be in this position - all it will take is the loss of one job in the family, and their house is up for sale in a matter of weeks. None of them are "poor", all are well educated, and all are on roughly the average income, with what I would classify as nothing extravegent in terms of the home they've purchased. Well, unit to be specific, "houses" are beyond the reach of most GenY's these days.
> 
> .




I don't think this is any different to my parents when I was growing up.

If dad had lost his job we probally would have lost the family home too,...

It's made worse though by people over commiting them selves,... It's true the average family should not be attempting to by a house like what was in the four corners footage within 20K's of sydney, unless they are well off.

these defaults are caused by people wanting to much to soon,... so many people try to start where their parents have finished, forgeting that it has taken a life time for their parents to accumulate what they have.


----------



## gfresh (4 April 2008)

Property correction risk in Australia 'high'

April 4, 2008 - 6:30AM

The risk of a correction in Australian house prices is high by international standards, the International Monetary Fund (IMF) says.

*The IMF, which says Australian property is among the most overvalued in the developed world*, has warned that about 25 per cent of the increase in house prices between 1997 and 2007 cannot be explained by fundamental economic factors such as population growth and income, The Australian Financial Review reports today.

The fund ranks Australian residential property fourth among developed nations, behind Ireland, the Netherlands and Britain in terms of vulnerability to a drop in value.

The warning comes as pressure mounts on the federal government to spark competition in the home-loan market and assist non-bank lenders affected by the global credit crunch to secure funding.

Concerns about the financial pressures on households and a deterioration in competition in the mortgage market are likely to be raised when the Reserve Bank of Australia Governor Glenn Stevens appears before a parliamentary committee in Sydney today.

AAP


----------



## cuttlefish (4 April 2008)

The house 3 doors down from me sold on the weekend for just shy of $1.8 million.  If you include the $85k stamp duty thats close to $1.9 million down. 
(the house is a well renovated 3 bedroom brick bungalow on approx 400 sqm block). 

Rents in the area have risen as far as I know and a reasonable rent would be around the $900-$1000k/week mark, possibly up to $1200/wk but that would have to be about the upper end.  

So if looking at it from an investment perspective thats a yield under 3.5% at a time when loan rates are over 8% and cash rates are 5% plus.  

Its true that rentals have risen quite considerably and I guess continued rental growth could contribute to improved yields - though even at the wages being paid today $1200/week seems like a fair bit to pay to rent a house. Free standing houses in tightly held area's are also a land investment which could possibly justify a lower yield than say for an investment property in an area where land isn't scarce, or in a strata unit. 

But if sentiment towards property changed we'd be looking at a very different price scenario I suspect.   In a flat market with a lot of negativity, lack of confidence and fear its not unusual for investment yields to get close to parity with bank interest rates even in tightly held 'blue chip' suburbs.


----------



## Tysonboss1 (4 April 2008)

cuttlefish said:


> The house 3 doors down from me sold on the weekend for just shy of $1.8 million.  If you include the $85k stamp duty thats close to $1.9 million down.
> (the house is a well renovated 3 bedroom brick bungalow on approx 400 sqm block).
> 
> Rents in the area have risen as far as I know and a reasonable rent would be around the $900-$1000k/week mark, possibly up to $1200/wk but that would have to be about the upper end.
> ...




High end properties always have lower yeilds, but generally as surronding areas have infill developments and increase density then these areas that remain low density become very sot after for life style reasons so can be traded on very high P/e ratio's.

Investing in property is like investing in shares,... you have to decide wheather you are chasing growth or cashflow. 

If you want to chase income then you are best to stick to lower end properties,.... the average home is probally  combination of the two, and a high end property is mostly a growth asset.


I know that most people say that property yeilds are to low because they can ge better in cash, bt this is really flawed thinking.

say you put $200,000 a high interest account, you may get 8% but you are fully taxed on that 8% every year and your capital is eaten by inflation

If you put $200,000 into a lower end property  after outgoing you may get 4.5% rental income ( which has a good chance of increaseing year by year,.. atleast with inflation),.... your capital will most likely be protected because the value of the home should increase by atleast inflation,.... and you have a good chance of getting some capital growth in he demand for that style of property or land content increases.

So in the first year or two, a cash investment may do better than property, but every year you hold your property the benefits are compounded.

Investing in property is alot like shares,... you can't just buy any property in any suburb and expect in to met your needs.

you have to match the style of property and investment stratergy with your needs.


----------



## Mofra (4 April 2008)

IFocus said:


> In the easy credit market unfortunately this is what happens and when the bad loans start blowing up it rolls onto affecting the main market.
> 
> Watched four corners last night pretty sobering but not unexpected........



It isn't household debt in isolation which is the problem - despite what the (uneducated) majority believe, there is at least 2% fat in the assessment rate above the highest standard rate offered by banks & lenders, and we do have some of the highest _secured_ credit standards in the world.

The problem is that _unsecured credit_ is so easy to obtain - I haven't seen a default yet in which the mortgagor hasn't had multiple cards, car loan, personal loans etc. Many of the people defaulting on mortgages pay far more in unsecured credit every month than they do in mortgage repayments.


----------



## Tysonboss1 (4 April 2008)

Mofra said:


> It isn't household debt in isolation which is the problem - despite what the (uneducated) majority believe, there is at least 2% fat in the assessment rate above the highest standard rate offered by banks & lenders, and we do have some of the highest _secured_ credit standards in the world.
> 
> The problem is that _unsecured credit_ is so easy to obtain - I haven't seen a default yet in which the mortgagor hasn't had multiple cards, car loan, personal loans etc. Many of the people defaulting on mortgages pay far more in unsecured credit every month than they do in mortgage repayments.




Toatally aggree,

I think that there needs to be more education at High school level on cashflow and debt management and maintaining family budget.

I can't believe that a school subject called "Home *economics*" puts the focus on teaching people how to bake a cake, but there is no subject that teaches people about the basic principles of investing or the pros and cons common debt structures.

I putfull blame of peoples but finiancel situation on them selves,.... but I guess atthe end of the day, more education would help people.


----------



## gfresh (4 April 2008)

Education would definitely help. Even some government sponsored ads I reckon would help the country a lot. They have them for gambling, smoking, drink driving, domestic violence, etc.

I think credit card (or any other) form of household debt needs to be addressed in a similar fashion, as it can be equally devastating. It can lead to severe depression, alcoholism, drugs, even suicide for some where their life is ruined by debt. 

While often the end effects are addressed, credit debt can be a root cause (or at least in part) for many of them! It's definitely in the public interest that this is addressed, as we've seen in the US, it can actually almost destroy a whole economy if it gets out of control. 

They've had expensive campaigns on other public issues which I would say are of lesser importance, I remember the non-stop advertising by the previous government pushing "workchoices" non-stop for 2 months. How useful that was... !

Maybe there is too many toes to stand on, that being the banks, which contribute hundreds of millions, if not more to Government coffers each year in taxes and charges. If that is the case, it's a sad state of affairs..


----------



## IFocus (4 April 2008)

Mofra said:


> It isn't household debt in isolation which is the problem - despite what the (uneducated) majority believe, there is at least 2% fat in the assessment rate above the highest standard rate offered by banks & lenders, and we do have some of the highest _secured_ credit standards in the world.
> 
> The problem is that _unsecured credit_ is so easy to obtain - I haven't seen a default yet in which the mortgagor hasn't had multiple cards, car loan, personal loans etc. Many of the people defaulting on mortgages pay far more in unsecured credit every month than they do in mortgage repayments.




Agree Mofra you have hit the nail on the head which was one area that the 4 corners program looked at, the concern was how the dept accumulated via credit cards and other would roll back into affecting house mortgages etc.


----------



## Tysonboss1 (4 April 2008)

IFocus said:


> Agree Mofra you have hit the nail on the head which was one area that the 4 corners program looked at, the concern was how the dept accumulated via credit cards and other would roll back into affecting house mortgages etc.




One problem s alot of the time these credit cards, Lease hire aggreements and consumer loans don't exist when the person first applies for the home loan, 

People do really bring it on them selves,...


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## xoa (4 April 2008)

Credit card debt is a molehill compared with the mountain of mortgage debt.


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## kyme (4 April 2008)

On news, that CBA just increased its Home loan rates again. Isn't that the third in roughly a month?. Home loan owners must think its a bad joke, ignore last weeks letter  and one before that, this is your new repayment !


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## gfresh (4 April 2008)

Banks can do what they like.. Raise it to 50% if they wanted to ... I doubt the Government could do much. Remember it is the bank that owns your home until you pay it off. 

At the moment I'll admit it is a little hard for credit card companies to see the real story when it comes to an applicant. In most cases they can only see that you have either taken out, paid off, or defaulted on a payment from another co - they cannot see how much credit you actually have taken out. Some moves to change this could help stop financials lending people beyond their means, although most will scream over privacy concerns.


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## Mofra (5 April 2008)

xoa said:


> Credit card debt is a molehill compared with the mountain of mortgage debt.



In total debt level yes, but in effect on society no: Joe Average can't walk in off the street and obtain a secured loan/mortgage without proof of income, adequate security, confirmation of stability of employment etc. etc.

For a credit card all you need is a pulse and the ability to sign your name, regardless of how many credit cards you already have. I haven't seen a _single_ default case of someone who has no unsecured/consumer credit.


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## wayneL (8 April 2008)

Uh Oh! 

The fear in the housing market here is now palpable. Instead of the topic around dinner tables being how much their stinking pile of bricks is now worth, that topic is now _verboten_! 

Discussion now centers around employment, recession and whether their money is safe in the banks.

The Austrians were right again. 

http://business.timesonline.co.uk/tol/business/economics/article3704088.ece


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## Kauri (8 April 2008)

and the BOE is on the balls...

BoE is* expected* to announce at 10:00GMT that it will provide _at least_ GBP 10bln in its three-month repurchase operation next week. The BoE could _also _use GBP 5bln in additional reserves for longer term funding, _possibly _against a wider range of collateral... a la BB??

no link.... yet  
Cheers
............Kauri


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## Tom Ronalds (8 April 2008)

wayneL said:


> Uh Oh!
> 
> The fear in the housing market here is now palpable. Instead of the topic around dinner tables being how much their stinking pile of bricks is now worth, that topic is now _verboten_!
> 
> ...




And that's not the end of it. Spain's bubble is now well and truly burst, too:

http://tinyurl.com/4j9umc

But of course it can never happen in Australia, because prices only ever go up in this country.

Meanwhile, outside of cuckoo land, business confidence has gone off the cliff and so has consumer spending. Even the dreaded "R" word is now being whispered around the professional financial circles.

Those with high level of debt, which can't be quickly offloaded - i.e. many property investors - are likely to be taught a pretty harsh lesson over the next 12-18 months.

Tom R.


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## theasxgorilla (8 April 2008)

Tom Ronalds said:


> And that's not the end of it. Spain's bubble is now well and truly burst, too:
> 
> http://tinyurl.com/4j9umc
> 
> But of course it can never happen in Australia, because prices only ever go up in this country.




It's nice to see that the Spanish gov is going to go all Keynesian and up spending on infrastructure (among other things) to help "cushion the downturn".


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## theasxgorilla (8 April 2008)

It should be pointed out that a lot of the time when we see these extreme numbers published, its in reference to debt that is connected to properties that are, for want of a better word, 'sub-prime'.  The big question that should be asked is, WTF are people doing buying sub-prime property in the first place?

If the debt wasn't packaged in such a way as to obscure the physical property that it was collateralised against, would a sensible investor invest in some of the properties that people have bought in some parts of Spain (the world!) at silly prices?

I think premium property is safe as, hmmm, well, houses.  It needs to be a sad state of affairs before premium property takes the kind of tumble that many people seem to wish it would.



My six cents worth.


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## wayneL (8 April 2008)

theasxgorilla said:


> It should be pointed out that a lot of the time when we see these extreme numbers published, its in reference to debt that is connected to properties that are, for want of a better word, 'sub-prime'.  The big question that should be asked is, WTF are people doing buying sub-prime property in the first place?
> 
> If the debt wasn't packaged in such a way as to obscure the physical property that it was collateralised against, would a sensible investor invest in some of the properties that people have bought in some parts of Spain at silly prices?
> 
> ...




I'll raise you two.  

It's not so much that the property is sub-prime, not in this country at least (although that may be a debatable point in some cases ). It's the quality of the debt that is sub-prime.

I.e. that the loan is not able to be serviced going forward (with apologies to those who hate that phrase) and that the security for said loan is evaporating.

It's not just dire terraces in sink estates that are tanking here, it's anything that is overvalued... and that's everything.


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## Mofra (8 April 2008)

theasxgorilla said:


> It should be pointed out that a lot of the time when we see these extreme numbers published, its in reference to debt that is connected to properties that are, for want of a better word, 'sub-prime'.  The big question that should be asked is, WTF are people doing buying sub-prime property in the first place?



Sub-prime doesn't refer to the security, it refers to the lending agreement between the mortgagor & mortgagee (ie Low Doc loans to clients with imparied credit ratings). The problem is the securitisation process in the US involved packaging US sub-prime (arguably a far lower standard than even sub-prime in most other nations) with prime debt, and selling it all off under a single CDO each time with a different credit rating depending on the risk of default (ie AAA were the last to lose in the event of default, AA second last etc.)

In short - the US sneezed, and we know what that means


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## theasxgorilla (9 April 2008)

Mofra said:


> Sub-prime doesn't refer to the security, it refers to the lending agreement between the mortgagor & mortgagee (ie Low Doc loans to clients with imparied credit ratings). The problem is the securitisation process in the US involved packaging US sub-prime (arguably a far lower standard than even sub-prime in most other nations) with prime debt, and selling it all off under a single CDO each time with a different credit rating depending on the risk of default (ie AAA were the last to lose in the event of default, AA second last etc.)
> 
> In short - the US sneezed, and we know what that means




Yeah, I get it...but when things go wrong I think it pays to strip away the layers of 'professional' fluff that have been put in place here.

If you were an average Aussie looking for an investment property, would you buy the property that the sub-prime mortgagee has, and rent it to him/her/them?  If the answer is, "no, because they're not a good tenant because...<insert essentially the same reasons why you wouldnt give them a home loan>, and because <insert reasons why it doesn't make sense on a macro-level to invest in said property in said neighbourhood of said suburb of said city>", then why does layering in all this complexity and professionalism suddenly make it okay to invest that way??? Clearly after all the write-downs it wasn't/isn't.

Where did common sense go?


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## noirua (9 April 2008)

The U.K. has reported a fall of 2.5% in property prices during March. The reason is due to lenders liquidity problems. The Bank of England is pushing a further A$35 billion into the market this week. U.S. property prices have fallen 10.7% in the last 12 months, with some areas down 25%.


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## gfresh (9 April 2008)

http://www.guardian.co.uk/business/2008/apr/07/economics.banking

Apparently in the UK, the banks have cut back on 100% mortgage loans almost completely, making it more difficult for many to get into the market.. Even though the BOE has lowering rates three times since December, banks aren't passing them on (we would no doubt see the same here if the RBA at all decided to lower rates). They've also been tightening lending standards significantly, which seems to be driving many out of the market. Any institutions offering any special deals have been so swamped by applications they've had to cease the offer. So none of this can be helping. 

Always interesting to take a look on realtor.com to get a bit of an idea of the "depressed" US housing market. Even adding 20% back onto the price of the average property "pre-pop", it's still a heck of a lot cheaper than here. Even a reasonably sized NYC apartment is cheaper than the some of the new apartment blocks going up on the Goldcoast.

A few houses in some smaller towns in the US you could buy a basic house (as in 3 bedrooms), for the price of a new car sold here.


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## KIWIKARLOS (9 April 2008)

I think the main advantage we have in OZ is our huge budget surplus which is likely to further expand into the coming years. Our exports next year alone could jump another 45 Billion that could very well leave us with surpluses in excess of 3% !

The best way for us to weather this storm would be to concentrate on trying to maintain current house prices and limit the decreases to as little as possible then massively increase productivity and reduce inflation through federal expenditure on projects which will make a difference. I relise that gov spending can increase inflation but targeted projects may cause short term inflation pressure but medium to lond term would be of great benefit. Lets get more productive, start saving money instead of blowing our wages years into the future and turn the country around. I believe that tightening credit is starting to do this for us and i hope it goes further. These no deposit no interest for 36 month deals are BS, credit card limits are outragous but who's to blame the banks or the person who doesn't even take a minute a day to look at their finances to relise they are living beyond there means 
Imagine how much we could gain from a large scale information and teaching program designed to help people learn how to manage their finances ? What would it take a few ads, a call centre and a few trained councilers, hell even centrelink should have free financial advisors.

The projects I would like to see happen are:
1. Murray Darling river. More efficient farming through expenditure in irrigation technology. They are already planning to plant massive amounts of forest alone its banks which will be tradable with a carbon trading scheme and which will also benefit the environment.
2. Spending on Ports and assoicated infrastructure: Sydney , WA and melbourne are already in the first stages. They are upsizing, converting to all electrical and building rail transport systems to remove trucks of the road to strategic cargo Nodes.
3. Stop spending money on pointless road projects and spend big on Public transport, we should be encouraging people to ditch large cars and multiple cars per household and IMO actually be charging people for excessive personal transport use. realistically apart from sport etc nobody really needs a highly inefficient large car.


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## Judd (9 April 2008)

KIWIKARLOS said:


> realistically apart from sport etc nobody really needs a highly inefficient large car.




Get real!  How else am I supposed to impress other parents as I drop off my children at very expensive private schools.  Sheese!!!!


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## KIWIKARLOS (9 April 2008)

Of coarse how silly of me and what about the massive gains in safety. I mean what if I'm driving through a school zone at 70 kmph on the way to my weekly botox party and a small child jumps out in front of me. Thanks god my child will be positioned safely 2 metres above the bull bar impact zone!


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## xoa (9 April 2008)

I'd wager that the UK property crash has more to do with inflated prices, as was the case with the dot com crash, rather than liquidity problems. Trying to correct the situation by injecting more debt into the system is like trying to put out a bonfire with kerosene. Debt is the problem, not the solution.

Hordes of "investors" are fleeing the market, often taking significant losses. They've suddenly realised that property can go down. It's reassuring that not even reckless interest rate cuts are having an effect. Even with government distortion, the free market is working.


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## stock_man (9 April 2008)

gfresh said:


> A few houses in some smaller towns in the US you could buy a basic house (as in 3 bedrooms), for the price of a new car sold here.




As you can here: http://www.realestate.com.au/cgi-bi...fmt=&header=&c=56024012&snf=rbs&tm=1207715302

(Assuming we are talking about a new bmw  and living who knows where?)


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## nioka (9 April 2008)

KIWIKARLOS said:


> hell even centrelink should have free financial advisors




They do.


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## gfresh (9 April 2008)

stockman said:
			
		

> (Assuming we are talking about a new bmw  and living who knows where?)




True, guess it's not much different.. 

http://www.realtor.com/search/listi...&pg=3&lid=1096704242&lsn=24&srcnt=1535#Detail

http://www.realtor.com/search/listi...8d1a864&lid=1096344306&lsn=3&srcnt=226#Detail

http://www.realtor.com/search/listi...&pg=3&lid=1094676023&lsn=27&srcnt=1535#Detail

http://www.realtor.com/search/listi...&pg=3&lid=1094676023&lsn=27&srcnt=1535#Detail

I'm there!! (maybe not)


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## xoa (9 April 2008)

gfresh said:


> True, guess it's not much different..
> 
> http://www.realtor.com/search/listi...&pg=3&lid=1096704242&lsn=24&srcnt=1535#Detail
> 
> ...




I'd say it's enormously different. The first American house you linked to doesn't look like much, but it seems to be in good condition on a large block in a rapidly growing city of 650,000 people. Not bad for less than $30k. 

The "cheap" Australian houses were all in dying outback towns, most of them with populations of less than 1000, and advertised as being in need of repair. It might be hard to find a plumber or carpenter in a town of a few hundred people.


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## rocket67 (9 April 2008)

xoa said:


> I'd say it's enormously different. The first American house you linked to doesn't look like much, but it seems to be in good condition on a large block in a rapidly growing city of 650,000 people. Not bad for less than $30k.
> 
> The "cheap" Australian houses were all in dying outback towns, most of them with populations of less than 1000, and advertised as being in need of repair. It might be hard to find a plumber or carpenter in a town of a few hundred people.




 Not necessarilly correct.

I have just purchased a home on a 1,050 square metre block at Millicent, SA
for $80,000. Sure, the house is only a 2 bedroom timber frame - fibro clad, and needs some work to bring it up to scratch. we will do the work on it and then rent it out for a few years, or use it as a holiday home.

Millicent is 50klm`s from Mt Gambier and has a high annual rainfall. Residents in these areas actually have green lawns and can use sprinklers!

Hardly what you would call a " dying outback town ".

Rocket.


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## theasxgorilla (9 April 2008)

Economies are complex.  These apples to oranges comparisons are amusing but unless you're planning to move to or invest in the US it isn't going to help you much.


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## xoa (9 April 2008)

rocket67 said:


> Not necessarilly correct.
> 
> I have just purchased a home on a 1,050 square metre block at Millicent, SA
> for $80,000. Sure, the house is only a 2 bedroom timber frame - fibro clad, and needs some work to bring it up to scratch. we will do the work on it and then rent it out for a few years, or use it as a holiday home.
> ...




At every price point, Australian property looks seriously overpriced by international standards. I cruised Millicent listings, and it seems that the median is about $200k. So yes, it's not a dying outback down, but this fact is adequately reflected in its prices. At $80k, you were probably buying the property at land value.


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## rocket67 (9 April 2008)

xoa, I totally agree that housing in capital cities in Australia is way overpriced.
My wife wants us to buy some investment properties in Adelaide - but i absolutely refuse to. The possibility of prices coming off the boil here is very high in my opinion.

 There are also water considerations. Adelaide can no longer pump water from the Murray river to top up our reservoirs. It does not rain in Adelaide very often and as the city expands - where is the water going to come from?
There is a de-salination plant on the drawing board. Perhaps it will help?

 So my plan is to buy property in the South East of the state where there are no water supply issues. Houses can be bought all around the South East for around $100,000. Lots of land is also available from about $55,000 with all services connected.

In the years ahead i believe that there will be a population explosion to these areas - mainly due to the availability of abundant water.

Rocket.


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## wayneL (9 April 2008)

As I reported a few posts up, UK house prices have just had a 2.5% MoM fall, and was just discussing the reaction on the news and the morning shows with another misanthropic malcontent.

There are all these phases people go through, shock, denial, anger, panic, acceptance etc (Can't remember the exact order). The shock was seeing queues outside Northern cRock of Sh!te. Since then there has been steadfast denial. Denial that prices are in a bubble, denial that the credit crunch will affect UK, denial that house prices are coming off, denial that it will affect them personally etc.

Now that the positively skewed official figures are now showing hefty drops, anger has definitely set in. The morning show bobbleheads (who all have BTL portfolios) are seething with rage. Blaming America, blaming the financial press for talking us into a recession, blaming GenXer FTBs for buying iPhones instead of hocking themselves up to the eyeballs and buying an overpriced pile of bricks.

Everything except the real reason - the credit/asset/house price bubble/overvaluaton.

Now the gu'mint is panicking and setting up committees on how to hock up FTBs on a house.

What is now obvious (and the Austrians knew it all along) is that the entire UK economy is predicated on ever growing house prices. And Oz is exactly the same, it is just fortunate for 'Strayans that dirt is expensive and they can flog it off.

Chuck in POO and a few other things going on atm and I think it's fairly obvious that the US and UK (and Euro) economies are in for a very tough time. 

The $64,000,000 question for buyers is, with all that in mind, do house prices look reasonable and sustainable?

Certainly not here.


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## explod (9 April 2008)

rocket67 said:


> xoa, I totally agree that housing in capital cities in Australia is way overpriced.
> My wife wants us to buy some investment properties in Adelaide - but i absolutely refuse to. The possibility of prices coming off the boil here is very high in my opinion.
> 
> There are also water considerations. Adelaide can no longer pump water from the Murray river to top up our reservoirs. It does not rain in Adelaide very often and as the city expands - where is the water going to come from?
> ...





A good post, same in Victoria,  Melbourne is in grid locked, they are deepening the bay when in fact the best deep sea port is in Portland.  The combined Portland Warrnambool area has the resources, climate and space to replicate Melbourne.   As is the case with your south east SA, and just over the border too.


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## Bill M (9 April 2008)

Tonight on TV a Morgan Stanely guy said that Sydney house prices will probably fall about 25 to 30% this year. Then on another program they showed two guys from Melbourne who were buying up RE in Brisbane and in 14 Months they accumulated something like 2 dozen properties. The two guys said their properties were well up in value and that they were planing to buy more. Interesting perspectives but who do you believe?


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## rocket67 (9 April 2008)

We all know that the USA is screwed, and according to Wayne - so is the UK
and Europe. Are we next?

Bill, things are starting to look grim. Surely we are not going to be spared from the global financial crisis, so my money is on the Morgan Stanley bloke being correct. However a drop in Sydney prices of 25 - 30% sounds a bit extreme ( we all hope ).

Explod, I think you are onto something. Maybe we need some visionary politicians to plan a couple of " satellite cities " in the area between Warnambool and Mt Gambier. Plenty of water, The port at Portland, lots of coastline and lush green land.

Perhaps if we did that it would give our young people an opportunity to buy into " the great Australian dream " at affordable prices. 
Something has to give with the current prices, and surely we have an obligation to give our young children the opportunity to be able to buy decent homes to raise their children instead of renting those " dogbox " inner city apartments.

Food for thought.

Rocket.


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## Mofra (9 April 2008)

theasxgorilla said:


> Yeah, I get it...but when things go wrong I think it pays to strip away the layers of 'professional' fluff that have been put in place here.
> 
> If you were an average Aussie looking for an investment property, would you buy the property that the sub-prime mortgagee has, and rent it to him/her/them?  If the answer is, "no, because they're not a good tenant because...<insert essentially the same reasons why you wouldnt give them a home loan>, and because <insert reasons why it doesn't make sense on a macro-level to invest in said property in said neighbourhood of said suburb of said city>", then why does layering in all this complexity and professionalism suddenly make it okay to invest that way??? Clearly after all the write-downs it wasn't/isn't.
> 
> Where did common sense go?



A "sub-prime" mortgagee would own the property so wouldn't rent it, and in the US contruction activity was at ridiculous levels as opposed to our stifled rental market so it is hard to compare. It is a moot point regardless as the sub-prime market is Australia is miniscule compared to the market in the US which is where most funding originates (thanks to Societe Generale, we used to fund quite a bit out of Europe but alas no more).

Unfortunately _secured_ credit standards here make little difference to the funding source (cost of funds) which is what is hurting lenders (and by second degree borrowers) at the moment.


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## wayneL (9 April 2008)

For anyone interested, Alistair Daaaaaahhhhhling (UK Chancellor of the Exchequer {Treasurer}) gets a grilling on the BBC. Interviewer could have skewered him a bit more IMO, but not bad for the government's property ramping  division (BBC).

http://www.bbc.co.uk/radio4/today/listenagain/ram/today4_darling_20080409.ram


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## Tom Ronalds (9 April 2008)

As I wrote earlier on this thread, the writing is now well and truly on the wall here in Australia. An example - here's some data regarding property for sale listings over the last 12 or so months across Australia:

State....Feb 07.....Feb 08.....Latest
QLD.....17,165.....29,754.....34,041
NSW....15,888.....31,160.....43,957
VIC......18,190.....23,312.....28,926
WA......10,643.....19,119.....22,620
SA.........5,192.......7,168.......8,677
NT............575..........806..........928
ACT..........556.......1,024......1,166
Aus.....68,208....112,342..140,315 

(Source: RPData Information Services)

Notice anything about that table? 

Listings have gone through the roof. Correspondingly, other data available at the same site shows that the levels of unsold stock sitting on the market are closely following.

When plotted on a chart, the picture looks suspiciously like the US housing market some time ago - shortly before it all fell over over there.

Clearly all these properties are coming on the market for a reason. The most likely explanation being that the costs of owning are becoming unsustainable for many people. Others possibly just want to cash in whatever profit they think they have and get out. Many will probably be disappointed with the offers - if any - they will get on their properties.

Either way, this is creating an oversupply and ultimately it will lead to prices going down. Here goes the fallacy of "supply shortages".

Next item concerns employment. The Australian reported today that job vacancies have declined for 5 straight months in a row. The newspaper concluded that "some softening in employment appears inevitable". Business confidence has already tanked to levels not seen for many years. Retailers are reporting sales have "fallen off a cliff".

The above factors of course will trigger the next stage of the downward spiral - people losing their jobs and having to liquidate; or having their banks do it for them. Either way, it will lead to more drops in property prices.

Banks are already tightening up credit; not quite like in the UK yet, but they will soon. One just needs to take note of the rate at which the majors have been increasing provisions for bad debts. They claim so far it's mainly targeted at corporate debt, but residential and unsecured loans (credit cards etc) will not be far behind.

Someone here has already mentioned the predictions of certain economists about Sydney house prices possibly dropping by up to 30% - like for example in this article: 

http://tinyurl.com/5hwztr

My opinion is that it won't be confined to just Sydney and that, depending on the severity of the recession the developed - and possibly also the developing - world, Australia included, will be going through over the next 12-18 months (and maybe longer, if the absolutely shocking data coming out of the US is any indication), the overall declines may be even larger.

For many Australians, particularly the younger ones or those with short memory, this will be a novel and rather painful experience. It will once again demonstrate that contrary to popular wisdom, it is possible to go broke owning property because it does not always go up.

For those pundits who think we are somehow "different" here in Australia and therefore immune, I would suggest to do a search for relevant newspaper articles from 2 or so years ago from the US and about 12 months ago from the UK. You will get a very strong sense of deja vu reading those...

Regards,

Tom R


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## theasxgorilla (9 April 2008)

Mofra said:


> *A "sub-prime" mortgagee would own the property so wouldn't rent it*, and in the US contruction activity was at ridiculous levels as opposed to our stifled rental market so it is hard to compare. It is a moot point regardless as the sub-prime market is Australia is miniscule compared to the market in the US which is where most funding originates (thanks to Societe Generale, we used to fund quite a bit out of Europe but alas no more).
> 
> Unfortunately _secured_ credit standards here make little difference to the funding source (cost of funds) which is what is hurting lenders (and by second degree borrowers) at the moment.




Thanks for pointing that out! :

Yeah, I get it.  The point I'm trying to make is that you're looking at the details of the situation.  Strip away the layers of fluff here and you basically have people in houses who couldn't afford them.

I'm suggesting that the average Aussie (or American) landlord would apply more stringent scrutinisation to the same people as tenants.  Yet the banks didn't.  Put the formality of the arrangements aside for a second and think a bit laterally.  You know they call interest _rÃ¤nta_ in Sweden (pronounced, renta).  You know what that implies?  Who becomes your landlord when you have a mortgage?  IMO, this terminology cuts through it.  And the implied landlords in this case were negligent.  Not only that, they attempted to dilute their negligence into the so-called CDOs.


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## professor_frink (10 April 2008)

morning Tom, just wanted to comment on one part of your post-



Tom Ronalds said:


> For many Australians, particularly the younger ones or those with short memory, this will be a novel and rather painful experience. It will once again demonstrate that contrary to popular wisdom, it is possible to go broke owning property because it does not always go up.




maybe my data on this is a bit dodgy, but I can't seem to find much in the way of house price declines since WWII. It would appear that the only people that can recall housing falling by 30% are those of us born before the great depression! Now I kinow that median house prices are a rather poor reflection on what is actually happening in the housing market, but it seems to be the main method used by both the bulls and bears to try and make a case, so I'll stick with that until something better is found.

One of the charts posted by the bears on this forum plots the median price of housing on an inflation adjusted basis, and it clearly shows the booms and busts. What is also apparent when lookng at the inflation adjusted chart with the standard chart next to it is that pretty well every property bust we've experienced since WWII is a period of stagnating prices, instead of a crash- prices don't really go anywhere whislt inflation and wages play catch up for a few years.

Considering we are currently in a period of increasing inflation after the past property boom, why should this time be the exception to the rule?? What is to stop house prices stagnating for a few years whilst inflation and wages catch up, making housing affordable once again? Or are you expecting that the recession that seems to be on it's way is going to turn into a deflationary depression style situation?

Cheers


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## gfresh (10 April 2008)

> Perhaps if we did that it would give our young people an opportunity to buy into " the great Australian dream " at affordable prices.
> Something has to give with the current prices, and surely we have an obligation to give our young children the opportunity to be able to buy decent homes to raise their children instead of renting those " dogbox " inner city apartments.




Within 100km south-west of the goldcoast there is as much green ground as you can poke a stick at - plenty of rainfall and the like. Most of that seems to be taken up by a few cows spread out over a heck of a lot of area doing not much (ok, this is a generalisation, but I can't see much productive use of 100% of that land). The land values in these areas however are still quite expensive, and to be honest, I'm not even sure what a lot of the people who own this land are doing with it.. 

In the few small spread out estates that have been established in these areas, they are all a bit 'wanky' to use the phrase "country living", "lifestyle properties", etc, however they are still your usual $350-450k properties which try to be fancy. You may as well purchase back in the "city" (goldcoast) for close to the same cost. To me, it's just developers trying to make a buck, not provide any form of housing that is affordable or accessible to most families. It's in a less accessible area, which you would think would be cheaper, but in most cases it's quite similar. 

Surely, there is a market, and the means to create something different? Maybe there needs to be a Government sponsored building authority, that builds for cost and affordable housing, rather than strictly for profit?? "Affordable housing" subsidies are planned in some parts of Aus, but really, I think that's just shifting money into the pocket of developers, so there is always commercial interests going on. 

Not everybody wants to, or can afford to spend $350-450k on property.. Surely there are ways to construct lower cost housing that is down under the $300k mark in these sorts of areas using different materials and methods. I'm the sort of person who really doesn't give a s* what sort of house I live in.. as long as it's not too tiny, fairly ameniable, and not falling apart, walls and a roof - I don't need big kitchens, large living spaces, all that guff. I'm sure there are plenty of individuals and families out there that would feel the same. Yet most new housing estates seem to be trying to offer a package for those that "want everything", and looks pretty in a brochure - and pay accordingly for it. 

These outer areas would be prime for some lower density, lower cost property.. Even taking into account 1 hour drive, and petrol costs, I'd much rather do that and have a bit more space, than pay $350k (minimum) for a newly built small inner city place, or a bit less for an older place that is starting to get a bit ratty.


----------



## Tom Ronalds (10 April 2008)

professor_frink said:


> morning Tom, just wanted to comment on one part of your post-
> 
> maybe my data on this is a bit dodgy, but I can't seem to find much in the way of house price declines since WWII. It would appear that the only people that can recall housing falling by 30% are those of us born before the great depression!




I don't believe that I was claiming that housing has in the past *uniformly* dropped by 30% or more.

However plenty of people experienced substantial drops in the values of their houses in the early 90s, during Paul Keating's infamous recession "we had to have". Many were forced to sell at a loss because they could not afford the mortgage payments.

Incidentally the "accepted" (by most economists at least) indicators of mortgage servicing costs show that these days the *average* household needs almost 3 times as much of its income to service the mortgage as it did leading up to the last recession. Interest rates were much higher then but the level of debt was much, much lower.

And herein lies the current problem. A severe recession combined with the current levels of debts will see many people destitute.



> Now I know that median house prices are a rather poor reflection on what is actually happening in the housing market, but it seems to be the main method used by both the bulls and bears to try and make a case, so I'll stick with that until something better is found.




Unless one is in a position to comment specifically on particular suburbs/areas/income groups, then the "median" is the most useful and meaningful proxy.



> One of the charts posted by the bears on this forum plots the median price of housing on an inflation adjusted basis, and it clearly shows the booms and busts. What is also apparent when lookng at the inflation adjusted chart with the standard chart next to it is that pretty well every property bust we've experienced since WWII is a period of stagnating prices, instead of a crash- prices don't really go anywhere whislt inflation and wages play catch up for a few years.




True, but this is where the "median" tends to mask wide disparities in various areas/amongst different income groups. 

What makes the current situation different is the fact that the average Australian is loaded up to the eyeballs in debt (really no different to the average American) and that the median house price has shot way, way out of its 100-year trendline (which tracks the relationship between incomes and house prices).

This has been made possible, just like in the USA and some European countries, by such easy access to cheap credit that in relative historical terms it's almost unprecedented. 

When that credit is withdrawn, as is happening now, the bubble must deflate. When the ability of borrowers to service this debt is impaired by high rates of unemployment, then it's well and truly all over.



> Considering we are currently in a period of increasing inflation after the past property boom, why should this time be the exception to the rule?? What is to stop house prices stagnating for a few years whilst inflation and wages catch up, making housing affordable once again? Or are you expecting that the recession that seems to be on it's way is going to turn into a deflationary depression style situation?




You answered your own question. One only needs to look at the US - contrary to many local posters' opinions, the USA is a pretty good "leading indicator" for Australia in many aspects.

As I have said in my earlier post, the news coming out of the States is not just atrocious, it is well and truly frightening. One trillion dollars in losses arising from the credit markets meltdown is now an accepted figure, with some commentators (and I don't mean sensationalist media by this) putting the figure at up to $1.7 trillion. 

On top of this, the "next stage" of the blow-out is shaping up to be the credit derivatives. There is over $140 trillion worth of these instruments out there. If/when the corporate credit default swaps (CDS) system suffers a systemic collapse, then the Fed will be powerless to do much about it - it also only has limited resources, even if those are very large. It is also debatable how much of the intervention can only serve to postpone the inevitable, rather than "solve" the problem.

Those figures are mind-boggling. The word "deflation" is already doing the rounds over there, as anything approximating losses of such magnitudes cannot lead to any other outcome.

With a US recession as deep and protracted as the one that would follow the above scenario, the rest of the world, Australia included, will not be immune. As I already mentioned, we have many of the same imbalances here that have brought the Americans unstuck. Furthermore, Australia is in comparison to the States a small and rather undiversified economy. To somehow believe we will not be affected, because of China or because the Federal government is not running a budget deficit (not yet, anyway - but just give them a little time!) is beyond naive.

We are well and truly in an uncharted territory now. This is why my opinion is that going forward, it is going to be a pretty bad time to have a big debt tied to a large, illiquid asset like direct property. I would not want to bet on inflation saving these investors' skins.

Cheers,

Tom R


----------



## professor_frink (10 April 2008)

Tom Ronalds said:


> I don't believe that I was claiming that housing has in the past *uniformly* dropped by 30% or more.
> 
> However plenty of people experienced substantial drops in the values of their houses in the early 90s, during Paul Keating's infamous recession "we had to have". Many were forced to sell at a loss because they could not afford the mortgage payments.
> 
> ...




sorry Tom, I wasn't trying to say that you were claiming a 30% decline in the past - I was merely making the point that based on median house price data there has barely been a decline at all since WWII.

So deflation it is then. Thanks for clarifying that for me

On a personal level I wouldn't be betting against a 50 year trend in housing ending coming to a sudden halt and reversing, but hey, every trend has to bend at some stage doesn't it! But then again, I've gone to great lengths to try and "recession proof" the Frink household, so maybe I do agree with you on a subconscious level- and having the security of owning our own home compared with renting was a no brainer for us - even if it means that we've paid more to get our house than we would have if we had waited for another year or 2. 

As with everything else in this area, it'll be interesting to see how it all pans out.

cheers


----------



## nioka (10 April 2008)

The situation with housing prices is displayed by agents differently than in actual fact. When sales are slow agents need to get them on the move and what better way than to get home owners to have discount sales, remember for agents it is no sale no income at all. They still get most of, if not all of their commission even at discounted sale prices. The "falling home prices" is a beat up by real estate agents to get people to sell and they pressure clients in that direction. 

Sure there are some home owners who are not able to meet their mortgage payments but they will mainly be those who have only recently purchased and do not have much equity, if any equity  in their property. The majority will have enough equity to have their loan extended to prevent having to pay extra per week. Investment property owners can obtain higher rents with the shortage of rental properties.

I had experience yesterday with an agent desperate for a sale trying to get me to sell a property at $200,000 less than value because her "customer" only had $1m. She admitted my price is right but said "the market is back". If I sell at her price the market will be back but if I don't the market will not be back.

So you see it is up to the individual to make the market for themselves. The law of supply and demand will keep the market rising for years. Until Australia's population stops rising and while the population wants to live in the best areas, it will always be "Location, Location, Location."


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## Adam A (10 April 2008)

Nokia if your price is right why isnt sold? (i know i know not going to give it away)


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## nioka (10 April 2008)

Adam A said:


> Nokia if your price is right why isnt sold? (i know i know not going to give it away)



 I admit that I have not found a willing buyer.... YET... but I will in the next 12 months if I choose to sell. In the meantime it is a good proposition to hold. I don't have to sell. The agent approached me yesterday because she hasn't been able to find something her client would buy. I did not ask her to sell it. She is so desperate she even offered to halve her commission.( will accept $18000 for a days work.)


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## Adam A (10 April 2008)

Fair enough, there bloody cheeky those agents, wondering about there next dollar,tough times ahead for them me thinks (those bmws arnt cheap)


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## gfresh (10 April 2008)

What is the percentage of fixed vs variable loans in Australia? Does anybody know? 

The problem I see is that the longer rates stay at present levels.. the worse the pressure on many out there. If rates for instance have to stay at, or close to current rates for 2 years, the more painful things could get for many. From various economists, not many are tipping a significant lowering anytime soon... 

As a result, into 2008/09 you're going to be hitting people that were on "fixed for 5 years" or "fixed for 3 years". Even "fixed for 10 years" were on much lower rates..  

Let's see (I've added 2% ontop of the RBA cash rate target for bank mortgages)..

2004/05 (3/4 year reset): 7.5% 
2003 (5 year): 7%
2002 (6 year): 6.5%
2001: 6.5%
2000: 7.25%
1998/1999 (10 year): 6.75%

So assuming a 9.5% rate currently (highest since 1992), if forced to go back onto a variable (or fix another loan), you're looking at 2-3% jump. 

Depending on the size of the loan, that can be an instant $100/wk increase in the household budget. For those poor at budgeting, or high in other debt, that's surely enough to cause a few to be in stress. Not many were able to look forward to 2008, and see interest rates would be 2-3% up (who really would!). A woman here at work is fretting because she is in exactly the same situation -- a very large jump in weekly payments, as her 3 year fixed rate expires later this year. 

I can see some similarities to the US "ARM" style reset loans, where after an initital honeymoon rate, the loans reset and caused a lot of the worst of subprime. Yes, it's quite a different product, but possibly similar effects. 

Here it may be a couple of years longer than that process, but surely there could be a similar effect.. whether you're either an investor or owner/occupier it effects equally.


----------



## gfresh (10 April 2008)

ok, assuming avg 2.5% increase (7->9.5%), on some average mortgages (30 year terms)

$100k remaining: $153wk -> $193.94/wk
$200k remaining: $306.87/wk -> $387.88/wk
$300k remaining: $460.29/wk-> $581.82/wk
$400k remaining: $613.72/wk -> $775.76/wk

Maybe many can cope, but towards the upper level of that scale, anybody with even modest debts such as credit card, car, or personal loan is getting hit with large % increases as well.. Then considering inflation which has been running high the last few years on weekly expenses such as electricity, food, and of course petrol.. 

Many who were comfortable 2 years ago, and even conservative with what they thought they could borrow, may not be in the same situation right now.


----------



## nioka (10 April 2008)

gfresh said:


> Maybe many can cope, but towards the upper level of that scale, anybody with even modest debts such as credit card, car, or personal loan is getting hit with large % increases as well..



Anyone with a mortgage can not afford the "things" they bought with personal loans and credit cards.They should not have bought them in the first place.
 Nor should they be paying off through hire purchase, an expensive 4wd vehicle, like some I know. Maybe they will have to accept that a 4yr old Ford or Holden will get them where they need to be. Maybe they will have to forgo designer labels and shop at the local op shop.
 They won't be the first generation that went without some of the oversold and unnecessary products available to manage a mortgage. 
 I have just collected mail and in it was the latest BigW catalogue. What a lot of consumer rubbish available for those who spend on unnecessary items.


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## Happy (10 April 2008)

nioka said:


> Anyone with a mortgage can not afford the "things" they bought with personal loans and credit cards.They should not have bought them in the first place.
> Nor should they be paying off through hire purchase, an expensive 4wd vehicle, like some I know. Maybe they will have to accept that a 4yr old Ford or Holden will get them where they need to be. Maybe they will have to forgo designer labels and shop at the local op shop.
> They won't be the first generation that went without some of the oversold and unnecessary products available to manage a mortgage.
> I have just collected mail and in it was the latest BigW catalogue. What a lot of consumer rubbish available for those who spend on unnecessary items.




I know few young people who cook home, take home prepared lunch to work, have basic plan mobile phones, have modest car and dress, have second hand computer but don’t have big LCD or plasma TV.

They are proud homeowners and pay off mortgage in leaps and bounds.

Imagine, if you pay towards home loan all spare money, you save interest you would have to pay if you didn’t and it is tax free !!!

Try to do that legally, receiving interest from saved money in a bank account.

Of course you don’t have to worry about tax bit if you save nothing.


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## Uncle Festivus (14 April 2008)

Starting to get nasty....blame it on Howard?



> THE Howard Government's First Home Buyers grant was a huge of waste of taxpayers' money that actually made housing less affordable and is depressing the market, an industry expert says.
> The comments came as interest rate rises culled house buyer interest  with auctioneers struggling to sell properties over the weekend.
> "We are seeing auction clearance rates much lower than at the same time last year," said Michael McNamara, head of Australian Property Monitors.
> "With mortgage rates rising so rapidly in the last few months, buyer sentiment in the property market has taken a battering.
> ...



http://www.news.com.au/business/money/story/0,25479,23533823-5013951,00.html


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## KIWIKARLOS (14 April 2008)

I was driving around my local area on the weekend and was surprised at how many places have come on the market recently. There is usually a handfull but I reakon the numbers have increased at least 3 fold since about 2 months ago. They also seem to be staying on market for longer too?

Could this be a sign that interest rates are starting to effect more area's ?
The area i live in isn't a "rich" area but it is by no means  a "poor" area either.


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## numbercruncher (14 April 2008)

Distinct lack of permabull comments in this thread lately


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## professor_frink (14 April 2008)

Uncle Festivus said:


> Starting to get nasty....blame it on Howard?
> 
> http://www.news.com.au/business/money/story/0,25479,23533823-5013951,00.html




yeah I think it was a big waste of money. No way in hell I was going to give back a $7K freebie from the govt though.


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## Kimosabi (14 April 2008)

Has anyone else noticed that Robots has gone MIA....


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## Mofra (14 April 2008)

numbercruncher said:


> Distinct lack of permabull comments in this thread lately




NC, you may finally be right.... after 2 and a half years


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## numbercruncher (14 April 2008)

Mofra said:


> NC, you may finally be right.... after 2 and a half years





Cut me some slack, I havnt even been a member here that long and I used to be a property bull until the unsustainability of it all became glaringly obvious.


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## Temjin (14 April 2008)

numbercruncher said:


> Cut me some slack, I havnt even been a member here that long and I used to be a property bull until the unsustainability of it all became glaringly obvious.




Not unusual given this is a stock forum, not a property forum. 

Try our bearish view on any of the investment properties forum and I'm sure we will be flamed to death.  

We are still in the "in denial" stage though, but with a bit of anger in it.


----------



## Tysonboss1 (14 April 2008)

Temjin said:


> Not unusual given this is a stock forum, not a property forum.
> 
> Try our bearish view on any of the investment properties forum and I'm sure we will be flamed to death.
> 
> We are still in the "in denial" stage though, but with a bit of anger in it.




Has anyone noticed the share market bleeding to death,

The property market is holding up better than the share market,


----------



## explod (14 April 2008)

Tysonboss1 said:


> Has anyone noticed the share market bleeding to death,
> 
> The property market is holding up better than the share market,




Of course, the stock market has been shakey for 12 months or more and it would appear has a way to go also.

Just as obvious but more recent the property market has begun to look a bit shakey also.   But if we take in the object or theme of the thread, the part about "...keep rising for years" seems to be bleeding also.

Some of us who lost faith in all of it a few years ago have taken counter measures such as buying up physical gold.  Up 30% a year for the last three years.


----------



## Tysonboss1 (14 April 2008)

explod said:


> Of course, the stock market has been shakey for 12 months or more and it would appear has a way to go also.
> 
> Just as obvious but more recent the property market has begun to look a bit shakey also.   But if we take in the object or theme of the thread, the part about "...keep rising for years" seems to be bleeding also.
> 
> Some of us who lost faith in all of it a few years ago have taken counter measures such as buying up physical gold.  Up 30% a year for the last three years.




the tide of money flowing into gold will reverse at some stage,


----------



## YChromozome (14 April 2008)

Kimosabi said:


> Has anyone else noticed that Robots has gone MIA....




I noticed that yesterday. I hope he is o.k. - I'm concerned about his well being.


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## Temjin (15 April 2008)

Tysonboss1 said:


> the tide of money flowing into gold will reverse at some stage,




As in more money will flow into it because there isn't enough right now. Hardly anybody are investing in gold right now, and sentiment is still very low from a historic sense. Go and ask around, who has gold as investment?



			
				YChromozome said:
			
		

> I noticed that yesterday. I hope he is o.k. - I'm concerned about his well being.




Kinda missed him too, it makes reading this thread a whole lot more "interesting".


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## pepperoni (15 April 2008)

Temjin said:


> Kinda missed him too, it makes reading this thread a whole lot more "interesting".




Still waiting for robots' next property boom report ......


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## explod (15 April 2008)

pepperoni said:


> Still waiting for robots' next property boom report ......




Dont' you worry about Robots, property will be back with a vengence in a year or two.   And after I have sold my gold for a good profit there will be some juicy property for the next cycle.   And as it does a new wave, inflation will  help those who have held onto tangible stuff to continue on.  It will be 1970 over again.


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## Kimosabi (15 April 2008)

YChromozome said:


> I noticed that yesterday. I hope he is o.k. - I'm concerned about his well being.



I found him!!!!



He's lookin a bit down and out.

Oh well, we did try and tell him that house prices won't keep going up forever...


----------



## noirua (15 April 2008)

Don't put a cent in property, not advice, just a "WARNING", as a cold icy wind blows, and a storm is on its way!


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## Aargh! (15 April 2008)

Kimosabi said:


> I found him!!!!
> 
> 
> 
> ...





ROFL. Bloody funny stuff


----------



## numbercruncher (15 April 2008)

YChromozome said:


> I noticed that yesterday. I hope he is o.k. - I'm concerned about his well being.




I wonder if hes out there dumping his IPs into the market and when he returns he will be a RE mega bear ? You know sorta like those people who give up smoking and then all of a sudden become the strongest anti-smoking advocates in society ?


----------



## stock_man (15 April 2008)

explod said:


> It will be 1970 over again.



Can you explain what happened in 1970?


----------



## explod (15 April 2008)

stock_man said:


> Can you explain what happened in 1970?




In 1974 I brought my first house for $20,000, in 1979 I sold it for $90,000.  It was a no brainer and everyone hit the jackpot with that particular part of the cycle.    In 78 brought some blocks of land which doubled in 12 months.  

Unfortunately it was the main seabed for the current complacency and a sense that property is an invicible investment.

I meant the "1970's "


----------



## stock_man (15 April 2008)

explod said:


> In 1974 I brought my first house for $20,000, in 1979 I sold it for $90,000.  It was a no brainer and everyone hit the jackpot with that particular part of the cycle.    In 78 brought some blocks of land which doubled in 12 months.
> 
> Unfortunately it was the main seabed for the current complacency and a sense that property is an invicible investment.




Interesting that your property went up 4x the original amount in just 5 years. Makes the current property boom seem small (most people talking about 2-3x).

Ran the figure of your house purchase of $20K in 74 in the rba inflation calculator (http://www.rba.gov.au/calculator/calc.go). Adjusted to inflation it would now be worth $127K!

This says to me that over a 38 year period, property is defying and increasing well behond inflation over and over again. Assuming it is now worth 300k, the average annual increase is 8.5%, while inflation was 5.8%.

I can see how this leads to the "current complacency" regarding property.

But still, what rules does property follow? I am confused!!


----------



## explod (15 April 2008)

stock_man said:


> Interesting that your property went up 4x the original amount in just 5 years. Makes the current property boom seem small (most people talking about 2-3x).
> 
> Ran the figure of your house purchase of $20K in 74 in the rba inflation calculator (http://www.rba.gov.au/calculator/calc.go). Adjusted to inflation it would now be worth $127K!
> 
> ...




You need to get into economics and follow currencies, supply and demand, and focus on trends.   Then  maximise the cycles.   

Have you ever looked at the financial clock for example, a good place to start the thinking.  Google it ans see what you find.

The rules are, do not fall in love with a particular means of making money and growing wealth.  Try to find the best at the moment and go for it.  The hard part is to pick when it has stopped.   I was 2 years too early with property but I have made up for it by going onto areas that have been as good. George Sorros is a good one to read uip on also, he's a mate of Warren Buffet


----------



## Kimosabi (15 April 2008)

stock_man said:


> Interesting that your property went up 4x the original amount in just 5 years. Makes the current property boom seem small (most people talking about 2-3x).
> 
> Ran the figure of your house purchase of $20K in 74 in the rba inflation calculator (http://www.rba.gov.au/calculator/calc.go). Adjusted to inflation it would now be worth $127K!
> 
> ...



The RBA calculator doesn't use the "REAL" inflation figures.

If you want to calculate "REAL" inflation figure, your probably better off using the RBA's M3 figures which is currently increasing at 16%, not their 3 - 4% bullsh!t...




*M1*: currency + bank current deposits of the private non-bank sector 
*M3*: M1 + all other bank deposits of the private non-bank sector 
*Broad Money*: M3 + borrowings from the private sector by NBFIs, less the latter's holdings of currency and bank deposits 
*Money Base*: holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank of Australia (RBA) and other RBA liabilities to the private non-bank sector 

http://en.wikipedia.org/wiki/Money_supply


----------



## pepperoni (15 April 2008)

explod said:


> You need to get into economics and follow currencies, supply and demand, and focus on trends.   Then  maximise the cycles.
> 
> Have you ever looked at the financial clock for example, a good place to start the thinking.  Google it ans see what you find.
> 
> The rules are, do not fall in love with a particular means of making money and growing wealth.  Try to find the best at the moment and go for it.  The hard part is to pick when it has stopped.   I was 2 years too early with property but I have made up for it by going onto areas that have been as good. George Sorros is a good one to read uip on also, he's a mate of Warren Buffet




Is that you robots?

Houses anywhere worthwhile in sydney are about $2m.  Tens of thousands of them ... they wont be getting to $9m 1970s style anytime soon.

Years ago property was VERY often bought outright with cash ... european migrants often bought in leichardt with cash after 12 months saving!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!    Suffice to say the market was once undergeared .... hence the potential for the increases we have seen.

How long does it take to save for that $1m inner west property now? A lifetime or two? All I can say is Bwa-ha-ha-ha.

Increased prices are just the result of a few changes in the fundamentals of the property market (ie huge leverage and millions of dual income households).

The market is so overgeared now its not funny ... you may in your extensive readings have heard about the sub prime crisis?  Recent increases are fueled by the robots selling their souls (and much much more) for 30 years and beyond.  Once all the fools have had their souls sucked up there is literally nowhere for property to go.  

So until the money to service the ever increasing gearing grows on trees property is not sustainably going up much.  With oil, food, internet, phones, tolls, energy (ie every fundamental costs of living) increasing, property could be flat for decades ... even with 3% interest rates.

And suffice to say medium to long term falls are definitely possible.


----------



## explod (15 April 2008)

Kimosabi, that house is now worth about $200,000 against you measure to $300,000    That was one of my points, they do not rise on a steady scale, it is the old saw tooth.  I believe if you put some time in it is possible to be in and out at roughly the right times.   

Of course to make that on my first house was the pure luck of the beginner, wish that could have remained my story.    But looking back helps learn the game.


----------



## pepperoni (15 April 2008)

Oh yeah and as "mortgage stress" is killing sydneys property bears, this bear  has the 1.8m proceeds of liquidating properties earning 8.1% with the CBA compounding monthly.

It earns me over $2,500 a week, from which I rent a $4.5m - $5m property on balmoral slopes for $825 a week. 4 bedrooms, 27m frontage, 300m to cafe and beach. No rates, no maintenance, not even lawnmowing.  Not to mention a far cry from the 60sqm unit of the property bull.

In fact all the property bulls should feel free to calculate my landlords rate of return!

Ok its a rare bargain, but they exist in the supposed dire rental market (unlike the buying market).

But its more a lifestyle thing for me, and whilst my returns wont be stellar, Im happy keeping things simple.


----------



## Pommiegranite (15 April 2008)

pepperoni said:


> Oh yeah and as "mortgage stress" is killing sydneys property bears, this bear has the 1.8m proceeds of liquidating properties earning 8.1% with the CBA compounding monthly.
> 
> It earns me over $2,500 a week, from which I rent a $4.5m - $5m property on balmoral slopes for $825 a week. 4 bedrooms, 27m frontage, 300m to cafe and beach. No rates, no maintenance, not even lawnmowing. Not to mention a far cry from the 60sqm unit of the property bull.
> 
> ...





Hey Pep...which CBA account gives 8.1%?
Thanks


----------



## numbercruncher (15 April 2008)

Nice work Pepperoni !

Loads of similar examples around, Here on the GC i see a 5 to 10m (perceived worth) property they have been trying to rent out for months at 100k p/a.

Lets assume its "worth" 5m, that 5m in someones savings acc. would get 400k p/a+, hahahahaha, sorry couldnt help but laugh


----------



## robots (15 April 2008)

hello,

have been having a "holiday" as many put it,

would like to thank joe

but all is well, the reading has been awesome

witnessed some debacles on saturday, just no bids, passed in

they tend to then move in about a week or two thru private sale, 

thankyou

robots


----------



## Pommiegranite (15 April 2008)

I live in Melbourne's West and have just sold. The suburb I built in boomed last year.

It is now noticeable, the number of properties appearing on the market on a daily basis. I have also seen a few 'private sale boards/banners' appearing. 

I have also heard that people trying to sell blocks of land pending certificate of title.

Also, developers seem to be upping the rate of release of land and homes seem to be getting built quicker. I sense the construction industry is in a hurry.

Agents aren't selling nearly as many property as are appearing. As a side show, I now expect agents to up their commisions.


----------



## robots (15 April 2008)

hello,

pomme, what do you plan to do after settlement?

renting, moving interstate, bought already

thankyou

robots


----------



## YChromozome (15 April 2008)

You're back Robots!. We all really missed you.


----------



## robots (15 April 2008)

YChromozome said:


> You're back Robots!. We all really missed you.




hello,

thanks ychromo, look forward to giving those weekly clearance rates that many members enjoy hearing about,

this sat in melb will be a BIG test, many many props going up, could be bleak

on a side note, its still the tale of two markets and for those who think "small" apartment living is questionable, 

a development in inner-south melbourne has just sold 265 of 272 1-bed and 2-bed apartments, awesome stuff

thankyou

robots


----------



## Pommiegranite (15 April 2008)

robots said:


> hello,
> 
> pomme, what do you plan to do after settlement?
> 
> ...




Throw my cash into a term deposit (8.4% with Suncorp for 12month is the best I can find at the moment).

Move to NSW and rent, watch and wait.


----------



## Temjin (15 April 2008)

Kimosabi said:


> I found him!!!!
> 
> 
> 
> ...





ROFL!!!

That is just soooo cruel! Sorry, nothing personal here, just can't stop laughing.


----------



## WaySolid (15 April 2008)

I'm watching the Brisbane market closely at the moment.

After 20+% last year a slow down was not a brave prediction, though it's possible we are having a decent one at the moment, nothing concrete yet but a few anecdotal observations about stock on the market in my areas and how long it's taking to move, though I'm not sure what prices are being achieved. Still that's just a hunch and there is nothing obvious at the moment.

My guess at the moment is once again the property market will follow the stock market and we could be in for a 90's scenario of slow nominal growth and even slower real growth allowing rents a chance to catch up.


----------



## stock_man (16 April 2008)

For me personally, after recently selling our house, have decided to stay in the market. Am currently building a new house with expectations of completion around end of year.

My reasoning for this decision is simply:

Mortgage Cost : $200/week greater than rent ($10K/year)
Invested @ 8%: $800-$1000
After Tax: $700
End Result: $10700 (year 1)

New House Value (approx): $470K
Break Even (against savings): $480.7K
Increase needed to break even: 2.27% (year 1) - less than inflation

Obviously the house needs to increase more every year to stay with the savings, but as rents increase this should tend to even out in the mid term.
Plus I have made a % gain on construction, which should assist me to ride out the current times.


----------



## numbercruncher (16 April 2008)

Just another day dealing with reality ?



> House prices in some Perth suburbs could fall 20 per cent before Christmas, exposing thousands of people to the disastrous prospect of owing more than their homes are worth and increasing the risk of bankruptcy if they are forced to sell, a leading property forecaster warns.
> 
> Australian Property Monitors made the alarming prediction just days after the Real Estate Institute of WA said homeowners had been hit with a 2.7 per cent slide in house prices in the three months to March.




http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=67894


Funnily enough Perth is the only place I have any exposure to RE


----------



## pepperoni (16 April 2008)

Pommiegranite said:


> Hey Pep...which CBA account gives 8.1%?
> Thanks




Advertised term deposit pays that for 6 months ... For the sum they have given me monthly compounding.

Citi has an at call account paying 8%.


----------



## pepperoni (16 April 2008)

robots said:


> hello,
> 
> thanks ychromo, look forward to giving those weekly clearance rates that many members enjoy hearing about,
> 
> robots




Its about as enjoyable as checking my share prices every 2 mins.

Id rather invest on good fundamentals and forget the market for 5-10 years.


----------



## xoa (16 April 2008)

CBA is offering 8.4% for 6 month term deposits here in Queensland.


----------



## robots (16 April 2008)

pepperoni said:


> Its about as enjoyable as checking my share prices every 2 mins.
> 
> Id rather invest on good fundamentals and forget the market for 5-10 years.




hello,

good luck to you,

thankyou

robots


----------



## Julia (16 April 2008)

xoa said:


> CBA is offering 8.4% for 6 month term deposits here in Queensland.




Can you be specific about where you were able to access this?

I placed some funds with them a couple of weeks ago and the best rate was 8.1%.
Here are their rates as of today from their website:


----------



## Tysonboss1 (16 April 2008)

xoa said:


> CBA is offering 8.4% for 6 month term deposits here in Queensland.




But your Capital is eaten away by inflation and you are fully taxed on your earnings every year....

you can't compare property will a cash investment,... it's like comparing apples and orange flavoured soft drink.


----------



## Tysonboss1 (16 April 2008)

stock_man said:


> For me personally, after recently selling our house, have decided to stay in the market. Am currently building a new house with expectations of completion around end of year.
> 
> My reasoning for this decision is simply:
> 
> ...




your right,...

and your capital gain portion of the equation is tax free if its your own home,...

and 50% discounted if it is invested + tax delayed until you sell,...


----------



## xoa (17 April 2008)

Julia said:


> Can you be specific about where you were able to access this?
> 
> I placed some funds with them a couple of weeks ago and the best rate was 8.1%.
> Here are their rates as of today from their website:




There are posters in front of Brisbane CBA branches which advertise 8.4% for 6 month deposits of $10k+.


----------



## xoa (17 April 2008)

Tysonboss1 said:


> But your Capital is eaten away by inflation and you are fully taxed on your earnings every year....
> 
> you can't compare property will a cash investment,... it's like comparing apples and orange flavoured soft drink.




All investment strategies can be compared. The advantage of fixed interest, is that you're investing your own money, not renting somebody else's. You don't need to worry about it until it matures. And there's no repair bills, stamp duty, council rates, legal fees or agent commissions. I pay little tax on the interest I earn.


----------



## robots (17 April 2008)

hello,

i pay zip tax on my home, 

and even with the interest rate rises, rates, bc fee's my outgoings are below what the property would rent for, awesome stuff

it has taken 7 yrs to get to that position with the gap getting closer each year

and with rents heading up and up the equation is looking even better

thankyou

robots


----------



## Judd (17 April 2008)

Hmmmm, bot.  Trouble is your home does not generate any income and you incur costs to hold.  Therefore it is technically a liability as opposed to an asset.

And don't try and start arguing from the "imputation of rent" proposition as that is a load of crock and only one obscure country somewhere in Europe attempted to raise tax on that basis, ie the UK.

If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.


----------



## robots (17 April 2008)

hello,

thanks for the opinion piece will keep it in mind

thankyou

robots


----------



## theasxgorilla (17 April 2008)

Judd said:


> If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.




Can't one buy a house, see it appreciate, sell it for a tax-free cap gain and move to another house, repeat process...thereby achieving home ownership and the benefit of canny investment?  This "house costs money therefore it's a liability" thinking is nice and all, but I prefer to see it as burying you living costs.  We all have to pay to put a roof over our heads...if you can 'make of thy dwelling a profitable investment...', well then.

And if you didn't/couldn't sell it, wouldn't it be important to know if you could rent out said property for an amount sufficient to cover the outgoings?

I thought robots was commenting on how long it took him to get to a position where his property could be rented without it costing him money?

Can an investment strategy exist where one buys a property and lives in it until it reaches a cashflow goal?  eg. becomes at least cashflow neutral.  And then perhaps you do the same again,  and again, and again? I would say yes.  IMHO you can mix and match ideas and get creative as necessary.  All that really matters is how it contributes to the plan.

I would have thought that a better approach would be to say, "that's interesting robots, what's your plan?"


----------



## wayneL (17 April 2008)

IIRC, somebody wanted evidence of price falls in Londinium.

_Voila!_

Straight from the VI's mouth.

http://www.londonstockexchange.com/...e=basic&WBCMODE=presentati?ArticleID=18553683



> SNIP:
> 
> Mark Anderson of Hamptons said that he perceives that prices in the capital have already slumped by 15 per cent, having hit "unsustainable levels" at its peak during last summer.


----------



## Tysonboss1 (17 April 2008)

Judd said:


> Hmmmm, bot.  Trouble is your home does not generate any income and you incur costs to hold.  Therefore it is technically a liability as opposed to an asset.
> 
> And don't try and start arguing from the "imputation of rent" proposition as that is a load of crock and only one obscure country somewhere in Europe attempted to raise tax on that basis, ie the UK.
> 
> If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.




The cost of home ownership may be a liability,.... But so is the rent you would have to pay,...

owning your own home offsets rent especially as the years go by and the cost of ownship decreases and the costs of renting increases.


----------



## Tysonboss1 (17 April 2008)

xoa said:


> All investment strategies can be compared. The advantage of fixed interest, is that you're investing your own money, not renting somebody else's. You don't need to worry about it until it matures. And there's no repair bills, stamp duty, council rates, legal fees or agent commissions. I pay little tax on the interest I earn.




Property in vesting is a longterm stratergy,.... No one should invest in property for the short term.

If you are looking for a 1-2 year investment then cash wins, But if you are looking for a 10 year investment then property wins.

If thre were 2 people each with $250,000 to invest and one went for cash and one went for property then the peron investingin property woudbe better of after 10 years,

The person who invested in cash would only get 8% interest, which they have to pay income tax on every year and their capital will be eroded by inflation,... 

The person who invested in property may only get a 4% (after maintenance and rates) but this income should rise year by year with inflation,... and their capital (being the value of the property) has a great chance of rising with inflation too therefore protecting the value of the capital, they also get a 50% discount on this capital gain meaning half the gain is tax free,.... secondly they don't have to pay the tax on the gain till they sell which means there gain is compounded year by year before it is finally taxed,...

Secondly, apart from the inflation related growth of return and capital,... if you have invested in an area of a city that has a good chance growing over the years, demand or your property will increase and you should see your property return and capital growth grow faster than inflation which will generate wealth for you.


----------



## gfresh (17 April 2008)

Interest rates in cash/term deposits won't be 8% forever either.. 

Cash is only compelling during periods of uncertainty. That time is probably now, but it won't be too long before that passes, and cash will be flooding back into sharemarkets and property alike as the rates drop. If anything it will be nirvana for those that thought "well I survived a couple of years at 9.5%, 6.5% yehaw.. load me up".. and we'll get a bigger credit crisis next time. 

Even if property prices did decrease for a couple of years, any losses would more than likely be reversed in the upswing after that. I don't know why people are so worried to be honest if they are really in it for a long term investment. 

The amount of "forsale signs" in my beachside area suggests they're only in it for the quick flick. Looking at what the houses are going for, and their value even 2 years ago, big profits have already been made. People are just taking their profit off the table. Even if prices did drop 25% in my area, these people are still going to be laughing.


----------



## robots (17 April 2008)

hello,

in melbourne we can contact the State Revenue Office or other private companies to find past sale prices of houses/units,

it is very hard to find an example of a single home/unit within a 12mth period, you may get one as you get closer to three or five years ownership,

thankyou

robots


----------



## theasxgorilla (17 April 2008)

Tysonboss1 said:


> Property in vesting is a longterm stratergy,.... No one should invest in property for the short term.
> 
> *If you are looking for a 1-2 year investment then cash wins, But if you are looking for a 10 year investment then property wins.*




I beg to differ.  Sounds like I know something, or know how to do something that you don't.


----------



## Tysonboss1 (17 April 2008)

theasxgorilla said:


> I beg to differ.  Sounds like I know something, or know how to do something that you don't.




what do you mean,...


----------



## wayneL (17 April 2008)

theasxgorilla said:


> I beg to differ.  Sounds like I know something, or know how to do something that you don't.




I know what you mean... and it can work like a bloody beauty. Just gotta stay smart and watch the cycles. I've seen some crash and burn by getting cocky at the wrong time, after making squillions.

FWIW


----------



## theasxgorilla (17 April 2008)

Tysonboss1 said:


> what do you mean,...




Have you been living under a rock for the last decade? 

Surely you've known of occasions where people have bought property and sold it a couple of years later for a profit that can't compare with cash.


----------



## gfresh (17 April 2008)

Here is an example for the bulls.. 

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=83290999&s=qld&tm=1208421423

Initially this property near me was on the market for $1.6M .. I thought they must be suffering hard to drop it back to $1.275M. I think I mentioned that on here.. Little did I know.. 

Jump across to http://www.onthehouse.com.au/sold_info/ (useful btw for free NSW & QLD reports)

14 LORD ST	$748,000	19-09-2005	491	DWELLING

Suffering? hardly! $500k profit in 2.5years for the owner.. even if they get a "measly" $1m they're well in the bank..


----------



## wayneL (17 April 2008)

gfresh said:


> Here is an example for the bulls..
> 
> http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=83290999&s=qld&tm=1208421423
> 
> ...



On the face of it that looks good, and they could be quids in. But there are sometimes a number of non-transparent factors.

* transaction and holding costs above rental value.
* renovations and repairs
* MEW on bling and other nonsense

etc.

Even so, 60 odd % gross profit is not too shabby... if they get it.


----------



## theasxgorilla (17 April 2008)

gfresh said:


> Initially this property near me was on the market for $1.6M .. I thought they must be suffering hard to drop it back to $1.275M. I think I mentioned that on here.. Little did I know..




An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo".  The Swedes have a good term for it, _skadaglad_...meaning, "wound happy"...people who find glee in other peoples injury.

Little do they know...house price went down, but bank account still went up...how is it so???


----------



## Tysonboss1 (17 April 2008)

theasxgorilla said:


> Surely you've known of occasions where people have bought property and sold it a couple of years later for a profit that can't compare with cash.




Yes, but my example was based  a bare minimum of capital growth based on inflation,

I was stating that even if property only increased by inflation then it would still beat cash overe time, ofcourse during a boom any fool can make money buying and selling but these ae the peope often caught with there pants down.

Yes it is possible to make money flipping properties,... But the average mum and dad investor that aren't really skilled in property buying a trophey property in flat or slow market will have to hold onto the property for the long term to gain the benefit, because of the high entry and exit cost.

I wouldn't recomend any novice enter the property market with the idea of buying a property and holding it for a few months and hoping to sell it at a profit, yes it can happn but it's not the way to do it unless you really know what you are doing.


----------



## wayneL (17 April 2008)

theasxgorilla said:


> An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo".  The Swedes have a good term for it, _skadaglad_...meaning, "wound happy"...people who find glee in other peoples injury.
> 
> Little do they know...house price went down, but bank account still went up...how is it so???




"Schadenfreude" is the English word for it..... ummmm, well the one we borrowed anyway.


----------



## theasxgorilla (17 April 2008)

wayneL said:


> "Schadenfreude" is the English word for it..... ummmm, well the one we borrowed anyway.




Present company discluded, I have found the word sadly appropriate these last couple of years, in many countries.  Property has been able to create such extreme changes in wealth levels between people who were previously comparible in wealth and potential.


----------



## wayneL (17 April 2008)

theasxgorilla said:


> An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo".  The Swedes have a good term for it, _skadaglad_...meaning, "wound happy"...people who find glee in other peoples injury.
> 
> Little do they know...house price went down, but bank account still went up...how is it so???




I don't know that it's skadaglad or schadenfreude all the time. Certainly not in a blanket categorization of "property bears". 

There are cases i hear about every day here where folks have made heaps on property in gross dollars, but the property slump still gets them (read some of them)

e.g. There was the case of a couple in Birmingham recently on TV; they bought their ex council terrace for £30,000 odd. Peak valuation was £170,000 last year.

But guess what? They MEWed to the point where their debt was ~£150,000... renos, new kitchen, bathroom etc, cars.

Husband loses his job and fell into arrears. No worries, we'll sell and get the equity remaining and start again once employment situation sorted....

Valuation is now £140,000 and they can't even sell it at that.... got repossessed and lost everything.

Now you may think they were incredibly stupid, and they were, but there are lots of people who've done this with full encouragement from the banks/ mortgage providers. Even "smart" people.

There are a few malcontented misanthropes who enjoy seeing this, but most bears have been cautioning about this sort of situation for a while, while suffering derision from certain property bulls.

The cognitively biased breed we are, view derision from bulls as OK but view anecdotes from bears as doom-mongering, schadenfreude, heretical etc.


----------



## Kimosabi (17 April 2008)

theasxgorilla said:


> An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo". The Swedes have a good term for it, _skadaglad_...meaning, "wound happy"...people who find glee in other peoples injury.
> 
> Little do they know...house price went down, but bank account still went up...how is it so???



For a long time the irresponsible and stupid have been rubbing the noses of the responsible in it.  Now it's time to return the favour.


----------



## theasxgorilla (17 April 2008)

wayneL said:


> On the face of it that looks good, and they could be quids in. But there are sometimes a number of non-transparent factors.
> 
> * transaction and holding costs above rental value.
> * renovations and repairs
> ...




Yes these things.  And the cashflow consequence of hold two properties with bridging finance.  This can sometimes force the asset rich/cash poor to drastically drop their asking price.  I know of at least one person who during a robust point in the cycle, picked up a fundamentally sound property in a fundamentally sound suburb (read, not depressed) for what equated to just less than a 20% discount of the vendors asking price.

I guess that happens less in the UK with the whole buy-sell chaining situation, right?


----------



## wayneL (17 April 2008)

theasxgorilla said:


> Yes these things.  And the cashflow consequence of hold two properties with bridging finance.  This can sometimes force the asset rich/cash poor to drastically drop their asking price.  I know of at least one person who during a robust point in the cycle, picked up a fundamentally sound property in a fundamentally sound suburb (read, not depressed) for what equated to just less than a 20% discount of the vendors asking price.
> 
> I guess that happens less in the UK with the whole buy-sell chaining situation, right?



It's starting to happen A LOT over here now. The buzz acronym is no longer "BTL", it's "BMV" (below market value), where folks are digging up distress sales and doing lease-backs etc (which many BMVers renege on and toss the vendor out on the street ). Mostly there is no infernal chain involved. (WTF? This chain business and the process of contract exchange is BS over here. The Oz system is much better/cleaner)

But even some of the BMVers are getting caught with declining valuations... and there is a potential glitch.

If the vendor subsequently goes bankrupt, and it can be proven that the property was sold prior to the bankruptcy for BMV, the receivers can go after the purchaser for the supposed shortfall. A couple of recent cases of this has the BMVers a tad concerned. 

Also the expectation now is at least 10% off asking in normal sales.


----------



## wayneL (18 April 2008)

The British media has now comprehensively turned on the housing bubble. There is scarcely a bullish argument to be heard anywhere. It's all a tad late mind you. For years the media has been ramping property as the proverbial golden goose

Check out this one:



			
				The UK Times said:
			
		

> *Scandal of luring first-time buyers*
> Gordon Brown is acting immorally by asking for rate cuts that could lead to negative equity
> Alice Miles
> 
> ...


----------



## Mofra (19 April 2008)

wayneL said:


> Valuation is now £140,000 and they can't even sell it at that.... got repossessed and lost everything.
> 
> Now you may think they were incredibly stupid, and they were, but there are lots of people who've done this _with full encouragement from the banks/ mortgage providers_. Even "smart" people.



ie. Full encouragement from those with clearly defined vested interests. As harsh as this sounds, this isn't a property problem, it's a _gearing_ problem, one which would have occurred independant of asset class or method of borrowing, given the husband was gearing for personal assets. 

Money management is money management, even a margin loan taken at the start of Nov 07 would have this couple in a similar predicament, albeit one far more transparent.



wayneL said:


> There are a few malcontented misanthropes who enjoy seeing this, but most bears have been cautioning about this sort of situation for a while, while suffering derision from certain property bulls



I would suggest independant of any bull/bear bias, gearing up to borrow for personal effects would be cautioned by anyone who has even a small amount of financial sense. Perhaps this is where most of debate lies - some of the bulls here aren't highly geared so see smaller risks in their positions, whilst the bears are (justifiably) concerned about the level of risk adopted by many of the rank & file property buyers due to the credit explosion.



wayneL said:


> The cognitively biased breed we are, view derision from bulls as OK but view anecdotes from bears as doom-mongering, schadenfreude, heretical etc.



Now that depends on which side of the fence you're leaning


----------



## Happy (19 April 2008)

Mofra said:


> Money management is money management





People should concentrate more on how to service their loan and forget building into the equation property appreciation.


----------



## wayneL (19 April 2008)

Mofra said:


> ie. Full encouragement from those with clearly defined vested interests. As harsh as this sounds, this isn't a property problem, it's a _gearing_ problem, one which would have occurred independant of asset class or method of borrowing, given the husband was gearing for personal assets.



Yes, it is a gearing problem. The chappy mentioned geared up on frivolities mostly, but recent entrants to the housing market are geared up to the eyeballs, just on the house. So these people have a housing problem, and a gearing problem at the same time.

Many more have MEWed on their PPR to gear themselves into BTL.

The problem I see is that encouragement to gear is portrayed as coming from experts, rather than VIs. The few remaining attempts to ramp property from "experts", with a little digging, are coming from those with most to lose from a housing slump. That includes Crash Gordon and his cabal of Champagne Socialists. The current agenda is to "get first time buyers on the ladder".... at the top of the market.

For many years the property VIs have had a free hand in the media; social proof then strongly comes into play, that cognitive bias that creates the "bandwagon effect". The early ones are doing rather well if they kept their portfolios cash positive and LVRs sensible. The late comers and those who continued to highly gear are in deep doo-doo; and that is a substantial slice of the Anglo market.

Fortunately for the FTBs in this country, there are significant voices advising caution at current (falling) valuations.

The catch phrase has changed from "better buy now before it's too late" to "better not buy now, better to wait till value returns". This ins itself creates an opposing bandwagon as people are now scrambling to get out of the market.

In conclusion, the gearing problem and the housing problem, because of the asset bubble have become intrinsically linked. It will be interesting from now on to see what happens.


----------



## Adam A (19 April 2008)

Gday Wayne L 

can you please explain mewed and vi 

Thanks allways enjoy an os (overseas ) view


----------



## wayneL (19 April 2008)

Adam A said:


> Gday Wayne L
> 
> can you please explain mewed and vi
> 
> Thanks allways enjoy an os (overseas ) view




*M*ortgage *E*quity *W*ithdrawal

*V*ested *I*nterest


----------



## robots (20 April 2008)

hello,

sorry for the delay fellow asf members,

melb recorded 64% clearance for the weekend (saturday),

great result considering the no. of auctions with great prices also,

3 i went to were mixed, with only one selling, alls going well for in demand "correctly" priced stuff,

thankyou

robots


----------



## motion (20 April 2008)

This is a very interesting question, We are lucky as we bought our home before the boom, but my sister is now looking for a place in Sydney after coming back from overseas with her husband. They are on a good wage and want to buy there family home but to break into the market, they are looking around 800k to get a nice family home.

I must say this is nothing special it's just a nice family home, but in today’s market it seems normal. 

I gave them some advice to hold off and see what happens but it seems they are going to buy because of all the press on how home prices are rising and going to rise up to 30% over the coming 5 years.  I must say I think it will drop about  5% - 10% but you never know.  

What are peoples thoughts on buying now in Sydney ?


----------



## robots (21 April 2008)

hello,

some more great reading:

http://www.news.com.au/business/money/story/0,25479,23560127-5013951,00.html

amazing to see the countries that are way ahead of the aus capitals,

awesome stuff

thankyou

robots


----------



## xoa (21 April 2008)

robots said:


> hello,
> 
> some more great reading:
> 
> ...




Yes, other nations do have far better rental yields, I agree. And not just for executive 3-bedroom apartments. That's why renting is a wise choice at the moment.


----------



## alanding (21 April 2008)

give me such simple numbers mean nothing. 
We need more, at least the proportion of income for rent.
Maybe in Hongkong  Rental is 1xxx, but income is 10xxx.


----------



## wayneL (21 April 2008)

More evidence of the sentiment change in the Old Dart:

http://commentisfree.guardian.co.uk/carole_cadwalladr/2008/04/albion_come_to_great_confusion.html



> Albion come to great confusion
> 
> The property market is nothing but a pyramid-selling scam, with the last in losing out. If house prices are falling, so much the better
> Carole Cadwalladr
> ...


----------



## numbercruncher (22 April 2008)

Wouldnt want to be a seller if this report is on the money hey ?

*
One in five will lose homes: report*



> Up to one in five households under mortgage stress will lose their homes, according to new figures.
> 
> The findings in the monthly Anatomy of Australian Mortgage Stress to be released on Thursday show that about 20 per cent of people who go "into the slippery slide" of borrowing never get out.
> 
> ...




http://au.news.yahoo.com/080421/2/16kcj.html

Sooo .. that report implies _another_ 150 thousand established properties to flood onto the market ?


----------



## professor_frink (22 April 2008)

numbercruncher said:


> Wouldnt want to be a seller if this report is on the money hey ?
> 
> *
> One in five will lose homes: report*
> ...




I wonder how many of those people blaming rate hikes have a lot of consumer debt to go with the mortgage?? Quite a few I would think


----------



## wayneL (22 April 2008)

professor_frink said:


> I wonder how many of those people blaming rate hikes have a lot of consumer debt to go with the mortgage?? Quite a few I would think




That's the predominant feature of folks who are in the schtook over here, massive MEW on frivolities... or very recent (last 1 - 3 years) buyers with humungous LVR/wage-mortgage ratios.


----------



## robots (22 April 2008)

hello,

and where will they all go once all sold?

no tent city in melbourne, no public housing, maybe end up in the rental market?

sensational

thankyou

robots


----------



## professor_frink (22 April 2008)

http://www.news.com.au/dailytelegraph/story/0,22049,23567042-5013110,00.html



> PROSPECTIVE homebuyers *should buy now* before Sydney prices start to climb again with signs of a recovery in the housing market looming, property insiders claim.
> 
> New figures released this week by property analysts Residex reveal Sydney property values have risen by more than six per cent in the past year despite talk of a continuing slump due to rising interest rates and low levels of affordability.
> 
> ...




Had read this shameless spruiking on Sunday, and thought I'd throw it out there to counter the downramping from the bears

Wonder if the author of this article has a house for sale and is looking to get a bit more interest! 

Love the parts in bold


----------



## professor_frink (22 April 2008)

wayneL said:


> That's the predominant feature of folks who are in the schtook over here, massive MEW on frivolities... or very recent (last 1 - 3 years) buyers with humungous LVR/wage-mortgage ratios.




I'd say it will be a common attribute with most people that get into trouble with debt(boom or no boom). It's not their fault though, it's high interest rates

IT'S NEVER MY FAULT!


----------



## wayneL (22 April 2008)

professor_frink said:


> I'd say it will be a common attribute with most people that get into trouble with debt(boom or no boom). It's not their fault though, it's high interest rates
> 
> IT'S NEVER MY FAULT!



It's those evil banks wot made me do it.


----------



## numbercruncher (22 April 2008)

Another sign of carnage in waiting  our version of ARM 




> FOR the past three years, they have breezed through each interest rate rise, their beatific serenity at odds with other mortgage holders who have been bludgeoned without ceremony closer to Struggle Street with each hike.
> 
> They are the estimated *30 per cent *of Australia's mortgage holders who chose to fix their rates after the Reserve Bank lifted its cash rate to 5.5 per cent in March, 2005.






> They will find that their interest repayments will rise by a whopping 50 per cent.




http://www.news.com.au/business/money/story/0,25479,23573946-5016199,00.html


----------



## Happy (22 April 2008)

> From Nine MSN, 22 Apr. 08
> 
> ONE IN FIVE WILL LOSE HOMES: REPORT
> 
> ...





One day we will know if this is true or fabricated scare mongering attempt to make people sell at lower price.

By then prices will probably start to rise again, after every bust there is almost always reversal.


----------



## gfresh (22 April 2008)

Maybe there should be warnings on all home loan applications "WARNING: Interest rates may vary up to 5% higher than when you originally take out this loan". Seems this slips many people's minds when taking out large loans. 

With the CBA right now, non home-credit is becoming pretty out there. Their variable personal loan is now from about 14.75-16%, and their "visa classic" card is now up over 20%. This is enough to get many in trouble, into much greater trouble quite soon.

There is so many conflicting stories out there, one of which is "house prices will keep going up and up, if you don't buy now you never will". So people jump in right at the fringes of what they can afford, almost in fear of "missing out". Fear is definitely not the best reason to go into the largest financial purchase that most families will do. People only have themselves to blame by following the rheotoric and paying exorbidant prices paid in certain areas. 

I don't think there is anything like a bust yet where I am. Lots of forsale signs on the goldcoast, but checking the purchase price data (where available), none of these vendors will be taking a large loss, quite the opposite.


----------



## Temjin (22 April 2008)

Happy said:


> One day we will know if this is true or fabricated scare mongering attempt to make people sell at lower price.
> 
> By then prices will probably start to rise again, after every bust there is almost always reversal.




Sorry, the boom in property will not happen again for a very very long term. The recent global property boom was all fueled by cheap credit and relaxed lending criterias, both of which were unprecendent and an unique event in modern history. 

When everything do go bust, and you can almost guarantee that it will sooner or later, it will take a VERY LONG TIME for people to have confident in borrowing money again to speculate. The bear market in credit will be quite prolonged, because the bull market in credit is a secular event, not a cyclic. Remember the word SECULAR, a once off event. 

But humans never really learn from history, so be prepared for the next boom


----------



## robots (22 April 2008)

hello,

great news,

http://au.news.yahoo.com/080422/2/16kjj.html

it just goes on and on globalisation,

thankyou

robots


----------



## numbercruncher (22 April 2008)

robots said:


> hello,
> 
> great news,
> 
> ...





Odd comment for the article you link ....

Hardly a very broad study though eh ?



> A global survey of urban lifestyle trends in 14 cities interviewed 8,500 people, 630 who live in Sydney.


----------



## tech/a (22 April 2008)

> The bear market in credit will be quite prolonged,




Yeh well thats exactly what was being touted in the 80s.
Then Keating had "The recession we had to have" 

Short memories.12 or so years in fact.

Humans do learn from history.
In the 80s I was one of those who crashed and burned to tumultuous applause from the knockers.
This time like many others we have capitalised the majority of our gains.



> both of which were unprecendent and an unique event in modern history.




You jest---you also must have been in diapers. 
Low interest rates (6.8%)
Low purchase prices which could be positively geared from day 1
Established housing far cheaper than building.
All seen before---and those that have seen it now should take advantage of it in years to come when they see it again!!
I'll be well into my 60s but having a ball!


----------



## wayneL (22 April 2008)

Wanna cheap flat?

I was just watching an auction (via live link) and saw this one go through.\/

Just need to brush up on the German. 

Another large semi in a semi rural area just went for £9,000 too.

LOL


----------



## Temjin (22 April 2008)

robots said:


> hello,
> 
> great news,
> 
> ...




I certainly don't mind the food in Sydney.  Must go back for more in the future. 



			
				tech/A said:
			
		

> Yeh well thats exactly what was being touted in the 80s.
> Then Keating had "The recession we had to have"
> 
> Short memories.12 or so years in fact.
> ...




Of course, some individuals do learn from history and able to benefit from it. 

I am saying that CROWD BEHAVIOUR never change. HUMANS (with emphasis on the "s") will always be humans, collective greed and fear will always exist. Greed and fear exist, and will always do. That is why technical analysis do work despite of what the fundamentalists or "in-love-with-their-efficient-theory" economists say. 

And good on you for being able to capitalise on the recent boom. I wish I had the capacity and financial foundation to capitalise on it just a little over few years ago. I will definitely be ready for the next one. 



			
				tech/a said:
			
		

> You jest---you also must have been in diapers.
> Low interest rates (6.8%)
> Low purchase prices which could be positively geared from day 1
> Established housing far cheaper than building.
> ...




Have you seen 105% loan being available to low income earners back in the "old days"? I was not born back then but my limited knowledge of history tell me no such thing exist back then. Tell me otherwise if I am wrong. 

The mentality for "credit / free money" for us younger generations are so much different from what you may have in back 20-30 years ago. 

Yes, I may not be old or "wise" enough to back up what I am claiming. However, at the very least, I can learn from history that good times do not last forever. Unlike my fellow Generation Ys who believe the boom in property will last forever, especially one who commit half a million dollar on an old queenslander house and expect that it will increase in value by 7-10% every year for eternity. Not to mention he is a recent graduate, first job, and with a wife who works as a real estate agent for the last 2-3 years. (so I guess it's rather hard to convince him otherwise...)


----------



## tech/a (23 April 2008)

> Have you seen 105% loan being available to low income earners back in the "old days"? I was not born back then but my limited knowledge of history tell me no such thing exist back then. Tell me otherwise if I am wrong.




I remember loans at 5% down. I had a few. Dont know about 100% down plus costs,cant remember that far back---urr what was the topic?---.

I do remember vividly banks virtually throwing money at me.
I also remember that after the first approval there was very little regard to servicability,thats what got them unstuck back then. (The Banks and their clients).
Very similar to today in that very little attention was directed in how the debt was to be serviced particularly with a string of interest rate rises.

Proper use of leverage is fine,you usually learn this after a period of *Improper* use!
Which in my case back in the 80s very nearly cost me the lot!


----------



## numbercruncher (23 April 2008)

Let there be no doubt, cheap easy credit fueled this boom, borrowing has never been so easy, except for perhaps before the great depression ?

Anyone with an ABN and prepared to lie could borrow hundreds of thousands - thats changing rapidly im sure 


I remember as a debt free working teenager in the early 90s getting rejected for a 5k car loan! Seems we went from one extremity to another, from far to tight to far to loose.


----------



## gfresh (23 April 2008)

I think the biggest change is non-mortgage credit. Surely this has changed?

Accessible credit and creating new types for consumers is how the banks have swelled their profits so much in recent years.. And because they're all competing against each other, it's not like any one of them will stand up and go "hang on, we're going to be selective here". That philosophy just hasn't been good for business, or shareholders who won't stand for an underperformer. 

It's interesting to think our very first credit card was only offered in 1974 here in Australia.. That's only one generation that has grown up with the concept of "unlimited" cash in a card, or credit on demand. Now it seems that even people on minimum income are able to obtain multiple cards with several thousand dollar limits. Even a $3k limit seemed large when I first got a card in the early 90's, but I think that is almost the minimum they will accept these days(?)

Even retailers such as the likes of Harvey Norman have fed fat on offering their "xxxx months" interest free systems, store branded credit cards, etc. By the time you add them all up, lots of temptations for people. 

Contracts are also becoming more common as well which leads many into a trap that never used to exist. $50/m doesn't seem like much for a mobile say, but by the time you add up internet contracts, foxtel, etc it's easy to rack up a couple of hundred dollars a month minimum costs in your budget. And they're all now 24 month contracts, 12 months used to be common.. If you want to get out because times get tough, bad luck, you signed a contract - debt collectors for you.


----------



## professor_frink (23 April 2008)

gfresh said:


> I think the biggest change is non-mortgage credit. Surely this has changed?
> 
> Accessible credit and creating new types for consumers is how the banks have swelled their profits so much in recent years.. And because they're all competing against each other, it's not like any one of them will stand up and go "hang on, we're going to be selective here". That philosophy just hasn't been good for business, or shareholders who won't stand for an underperformer.
> 
> ...




Na, my only CC has a whopping $1000 limit on it.


----------



## xoa (23 April 2008)

http://www.abc.net.au/news/stories/2008/04/23/2225130.htm?section=australia

Inflation is running at 4.2% pa. Few employment contracts are indexed at this level. Millions of Australians have experienced a fall in real incomes over the past year. Responsible wage earners are suffering because of debt junkies - it's time for higher interest rates.


----------



## numbercruncher (23 April 2008)

xoa said:


> http://www.abc.net.au/news/stories/2008/04/23/2225130.htm?section=australia
> 
> Inflation is running at 4.2% pa. Few employment contracts are indexed at this level. Inflation is causing millions of Australians to experience a fall in real incomes. It's time for higher interest rates.





Exactly !


It isnt the RBAs mandate to protect over extended money renters its to fight Inflation, aka protect the purchasing power of my savings


----------



## robots (23 April 2008)

hello,

and you can still easily get 105% loans, no docs, low docs etc

sure the rate is high maybe 10%>, it will also get easier than it was yesterday to get credit,

gotta love the social commentary this thread generates, i hope people can stick to the discussion

thankyou

robots


----------



## CAFA1234 (24 April 2008)

robots; said:
			
		

> hello, and you can still easily get 105% loans, no docs, low docs etc
> sure the rate is high maybe 10%>, it will also get easier than it was yesterday to get credit, gotta love the social commentary this thread generates, i hope people can stick to the discussion
> thankyou
> robots




Not for long my friend. Look at the number of mortgages available at this level compared to 6 months ago. Have a look at what is going on in the USA & UK, as leading indicators of how the credit crunch is impacting loan availability. In the UK some of the largest lenders have withdrawn most mortgages unless there is a good deposit and the best rates are now based on a 25% deposit. 

The people who lend you 105% at +10% have a problem - they can't sell the mortgage on, as there is no secondary market for this security. So they have to raise money from unorthodox channels e.g. interesting 3rd tier lenders. And when you cant make one or two payments they will have no problem about sending you bankrupt in no time.

The restriction in lending and the move back to deposits WILL impact the housing market. Much of the Sydney market has gone nowhere over the past 4/5 years. Is that a problem - no, not for the majority of people. long may it continue.


----------



## robots (24 April 2008)

hello,

still looks pretty easy:

https://www.eloan.com/s/show/refina...&sid=WxLkB2zQcaHSBqoCPkvBPBs_als&user=&mcode=

thankyou

robots


----------



## CAFA1234 (24 April 2008)

robots; said:
			
		

> hello,
> still looks pretty easy:
> https://www.eloan.com/s/show/refina...&sid=WxLkB2zQcaHSBqoCPkvBPBs_als&user=&mcode=
> thankyou
> robots




Robots - please, please don't get suckered by headline 'come on' smiles  -particularly in the USA. They are always finding a sucker - one born every minute, so they say.

Go into their site and punch some numbers and see what happens to those fantastic headline rates they were going to offer you.

This result a few minutes ago for a $520k loan - not big for California, and a perfect credit score (most people do not have a credit score above 700). Sorry they refused $520k, but offered $495k on a $540k price - hm, now where are those 105% loans?

I also asked for undocumented - again not on offer.
-------------------------------------------
Today's Best Purchase Rates

Lowest Cost – Guaranteed!

30 day lock period with impounds 	   Change Lock Period
Rates for Excellent Credit (740 credit score)
Your customized quote is for a loan amount of $495,000 on a property with an estimated value of $540,000.
Updated Wednesday, April 23, 2008 at 4:19 PM PDT 	Modify Search

There are no stated income loans available for the loan amount you entered of $520,000.00. However, we do have income documentation loans available for a loan amount of $495,000.00. Below are all the loan types we have for this loan amount.

------------------------------------
Now the 1 year interest rates are about 10.5/12.8%  - after 1 year you go onto their adjustable rate. If thats not a good deal click on the 'Closing Costs' View link and get ready for a shock. The closing costs for this mortgage e.g. what you have to find to move in are.....

Estimated Non-recurring Closing Costs:   $22,118 - if you want the cheap rate of 10.5%.

You can reduce this closing cost down to about $3k if you select the 12.8% rate.

Don't forget that this 13% mortgage rate is in a country where bank rate is well under 5%.

Sorry to disappoint, but serious research is a must before we espouse the virtues of the USA.
-----------------------------------------------------

1 Year ARM (30 year loan, fixed for 1 year)
  	SORT
Interest Rate 	SORT
Points or Credit* 	SORT
Monthly
Payment 	SORT

APR 	

Margin 	Prepay Penalty 	Closing Costs 	Loan Details 	Compare These Loans

Apply
	10.500% 	3.882% 	$4,528 	6.970% 	2.250% 	No 	View 	View 	

Apply
	11.625% 	1.980% 	$4,949 	6.886% 	2.250% 	No 	View 	View 	

Apply
	12.250% 	0.971% 	$5,187 	6.844% 	2.250% 	No 	View 	View 	

Apply
	12.875% 	No Points $59 Credit 	$5,427 	6.805% 	2.250% 	No 	View 	View


----------



## CAFA1234 (24 April 2008)

From today's FT in London. This is not lack of buyers it is lack of available funds for those without deposits / documentation. I assure you that with a 25% deposit there is no problem getting a mortgage in the UK, nor the USA.
__________________________________________________________
FT - Tuesday April 23 2008 22:24  
Mortgage approvals by UK banks slumped to the lowest level in a decade last month, the British Bankers’ Association reported on Wednesday, illustrating the extent to which tighter lending practices are curbing activity in the housing market.

The BBA said its members approved 35,417 mortgages for house purchase in March, the lowest since the series began in 1997. The level of approvals had dropped 18 per cent since February and was 46 per cent lower than a year earlier.


----------



## numbercruncher (24 April 2008)

Melbourne, seems to be the only area that isnt getting whacked yet ? But with properties coming to market at this phenomenal rate I wonder if we will begin to see demand destruction ?



> The number of residential auctions scheduled this weekend will be the *highest number ever *held in an April weekend.
> 
> Although the Anzac Day long weekend may be a contributing factor, the high number of auctions confirms the strong level of activity in certain metropolitan areas.
> 
> There are 1,150 residential auctions scheduled this weekend, which is almost *twice the number usually held this time of the year*. What makes this number more extraordinary is the very different economic conditions and the higher interest rates compared to the same period last year.




http://www.reiv.com.au/news/details.asp?NewsID=646


----------



## kyme (24 April 2008)

ANZ putting up Home loan rates from Monday, other Banks expected to follow.
Pain isn't over for those overcommitted yet by a long way.  Those with savings should be happy though on getting a better return.
I reckon just after Christmas 2008 might be some bargain buying in real estate market, as some struggling home owners bite the bullett and cut their losses.


----------



## robots (24 April 2008)

hello,

look at this one bro:

http://www.abcmortgages.com.au/No_Deposit_Home_Loans.aspx

awesome stuff, credit crunch no where to be seen,

rents up, house prices up this is fantastic, what a pyramid scheme

thankyou

robots


----------



## numbercruncher (24 April 2008)

robots said:


> house prices up this is fantastic, what a pyramid scheme





You recognise it for what it is all of a sudden ? 

Are you implying house prices are up this year ? or is that a loose comment that spans a few years ?  If they are up this year I cant find any solid evidence ....


----------



## robots (24 April 2008)

hello,

how long has this pyramid scheme been going on for? 10yrs, 50yrs, 100yrs?

house prices must of risen if inflation is 4.2%, as you told me it moves as per inflation

thankyou

robots


----------



## wayneL (24 April 2008)

robots said:


> hello,
> 
> how long has this pyramid scheme been going on for? 10yrs, 50yrs, 100yrs?
> 
> ...




It always has been a pyramid scheme of sorts, 2nd home buyers relying on 1st home buyers to buy their gaff and so on. Under normal circumstances, in other words, when all psychological and value vectors are normal, there is nothing wrong with that.

When these get out of whack, it becomes toxic. The reason for this has been discussed already and either people accept that or they don't: But I think it's pretty apparent now, that on a worldwide scale, this toxicity is beginning to tell.

My newly married next door neighbors are classic. They bought last year because they believed the VI line to buy now or never. They could have bought identical houses (it's a new development still being constructed) for at least £20,000 less this year.

They are in negative equity and struggling with payments.... and could have rented the same place for about 60% per month of what it's costing them.

Sometimes rent is not dead money.


----------



## robots (24 April 2008)

wayneL said:


> Sometimes rent is not dead money.




hello,

spot on wayneL, over in euorpe people rent their entire life

its part of "living" as they are never able to buy a place of their own

thankyou

robots


----------



## robots (24 April 2008)

hello,

what about this one:

http://www.news.com.au/heraldsun/story/0,21985,23591683-2862,00.html

could be 75,000 lining up based on all the stories about people getting kicked out of the home due to mortgage stress

at roughly 415k a pop for bedsit, grollo will be lining up for another benz

thankyou

robots


----------



## wayneL (24 April 2008)

robots said:


> hello,
> 
> spot on wayneL, over in euorpe people rent their entire life
> 
> ...




As discussed before, that's not quite true. Europeans just have a different attitude to property. There is also the factor of rent controls and superior security of tenure; many Europeans see no need to buy.

I have friends in Munich who are quite wealthy, can easily afford to buy, but rent and have no desire to buy at all.

In Europe, so long as you pay your rent, you have the same rights as an owner, you cannot be evicted.

By contrast, the UK has a similar psychology to property and property/tenancy laws to Oz, consequently home ownership is at similar levels @ ~70%.

Apples and Oranges


----------



## numbercruncher (24 April 2008)

robots said:


> hello,
> 
> what about this one:
> 
> ...




Thats just flamin ridiculous, does the Vic Gov have rocks in their heads ? Why dont they ship them out to Vic townships where they could house 4x as many for that money ?


----------



## numbercruncher (24 April 2008)

wayneL said:


> As discussed before, that's not quite true. Europeans just have a different attitude to property.





Precisely ....


Attitudes are quickly changing here too, Gen Y as shown in ownership figures couldnt give a rats about home ownership on average!

And " Investors " need renters , its a cosy little marriage of convienience and at this stage of the cycle no matter how the bulls like to dress it up renting is far far cheaper!


----------



## robots (24 April 2008)

hello,

yeah lets ship them all out, clear them out 

you finally coming around to my style of thinking NC, the light bulb has switched on for both of us tonite

thankyou

robots


----------



## nioka (24 April 2008)

Listening to the radio as I was driving I heard a story of a western NSW town where the council auctioned quite a few houses and the sale prices were from $2000 to $7000. Can't remember the town. They interviewed the buyer of the $2000 home and he sounded happy and was moving in.


----------



## Temjin (24 April 2008)

Here is something to ponder..



> So, as we asked before in Reserve Bank of Australia entering the landlord business, what might be the “possible repercussions if the RBA had not [got into the landord business]?” When money becomes scarce and banks (as well as non-banks) become more scared, lending seizes up and credit standards become tighter (see Rising price of money through the demise of ’shadow’ banking system). For economies that are drugged up by credit (e.g. Australia, UK and the US), this can cause the economic activity to seize up. The fact that the RBA is temporarily swapping risky assets (mortgage bonds) for thin air money at a bargain price is a very telling sign. And it is not only the RBA that is doing this- it looks that other central bankers are coordinating their efforts in pumping liquidity into the financial system. At least this is the official reason. Since the RBA did not reveal who they get their mortgage bonds from, other conspiracy theorists believe that the RBA are bailing out some financial institutions (which include banks and the non-bank lenders).
> 
> For bankers, there is such a thing as free lunch.




More at http://cij.inspiriting.com/?p=427

Things are really going from bad to worse. It's quite a move for the RBA to accept these "mortgage bonds". Are they hinting us that something really bad is going on behind the scene, but do not want to spread panic to the public. 

The property market is definitely a ponzi scheme. The only way for house prices to continue to go up is to have willing buyers to go into further debt.  It's not like wage income are growing fast enough anyway. And when banks are still absorbing a large amount of cost to maintain their existing mortgage loan, it's no wonder they will continue to rise mortgage rates regardless of the official rate. 

And when everything falls, the people who got in and capitalised the scheme will come out winning at the expense of those who got in late.


----------



## professor_frink (24 April 2008)

Temjin said:


> Here is something to ponder..
> 
> 
> 
> ...




Owning a home is a 'scheme' now??? LOL!


----------



## numbercruncher (24 April 2008)

professor_frink said:


> Owning a home is a 'scheme' now??? LOL!





Seems selling one is as well now looking at the sheer numbers flooding onto the market  (ie/ currently 80k proeperties forsale in NSW was 60k lastyear, and rising rapidly im sure!)


----------



## professor_frink (24 April 2008)

numbercruncher said:


> Seems selling one is as well now looking at the sheer numbers flooding onto the market




Not a scheme, just a bit of panic from the punters


----------



## CAFA1234 (25 April 2008)

robots; said:
			
		

> hello,
> look at this one bro:
> http://www.abcmortgages.com.au/No_Deposit_Home_Loans.aspx
> awesome stuff, credit crunch no where to be seen,
> ...




Robots - mate, you just don't get it do you?
All these web sites are just teasing you to get you to fill out the form so they can speak to you and send a commission only sales rep around to sign you up. Try actually applying for a loan, and then publish the results on this board.
If we look at the lenders panel for this mob, it includes some very fringe financial companies e.g. Liberty Financial. Go have a look at Liberty, they are a specialist in the loans the banks wont touch
. Do you think these guys are going to give you 105% undocumented mortgage at normal rates  - get real.

Brisbane Times - today.
Borrowers used to be fairly safe in the assumption that increases in their home loan rates would follow the changes made by the Reserve Bank. But the global credit crunch means that lenders are paying a lot more for wholesale funds and are passing that extra cost on to borrowers.

Liberty Finance increased the rate on its Star home loan from 7.54 per cent on August 1 last year to the present rate of 9.45 per cent. That is almost twice the level of the increase in official rates.
---------------------------------

This increase is twice what the RBA has done in this period. And of course the Star home loan is only available to some people at this rate.


Also watch out for many lenders small print e.g. Deferred establishment fee - that can add a full 1% extra. 

Don't get fooled by these web sites. the golden rule of any web site is to draw traffic and get you to click.


----------



## CAFA1234 (25 April 2008)

*http://www.bloomberg.com/apps/news?pid=&sid=aDyYp9o4DMGI&refer=home
*April 24 (Bloomberg) -- Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off.

Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. *The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades. *
------------------------------------------------------

This my friends is not some isolated backwater in the middle of Texas - this is the whole of the USA, including Manhattan etc. And this despite the vested interests of almost everybody in talking up house prices.


----------



## Kauri (25 April 2008)

CAFA1234 said:


> *http://www.bloomberg.com/apps/news?pid=&sid=aDyYp9o4DMGI&refer=home*
> April 24 (Bloomberg) -- Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off.
> 
> Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. *The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades. *
> ...




   Figures, I figure, can figuratively be figured to suit any figjam argument..  The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. * From two years 
ago, the median home price is down only 4.7%.  That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman.*   amongst others...

 Cheers
............Kaurifig


----------



## CAFA1234 (25 April 2008)

Kauri; said:
			
		

> Figures, I figure, can figuratively be figured to suit any figjam argument..  The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. * From two years
> ago, the median home price is down only 4.7%.  That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman.*   amongst others...
> 
> Cheers
> ............Kaurifig




Kaurifig - trust me, anyone who purchased a house with 100% mortgage, 1 year ago or even 2 years ago knows what a loss of 13% or even 5% is like.

The problem, in the USA, is that one can walk away from a property and the lender can't get their money back from you - all they can do is foreclose and auction the property. So, if you purchased a $500k home and it is now worth $65k less, then a lot of folks will think about walking away and renting. The numbers are not particularly large, but they can become the tipping point that puts further pressure on prices.

Now, if you really feel that the pundits are wrong with their calls of ANOTHER 10/15% reduction then my friend, you have the opportunity of a lifetime. Australia has a more restricted market, but in the USA (Chicago futures exchange), and the UK you can actually bet on the future prices of property. 

So, go boldly and make your fortune for the streets are paved with gold. 

Markets only exist because of differing views, so I'm grateful that we differ.


----------



## Kauri (25 April 2008)

CAFA1234 said:


> Kaurifig - trust me, anyone who purchased a house with 100% mortgage, 1 year ago or even 2 years ago knows what a loss of 13% or even 5% is like.
> 
> The problem, in the USA, is that one can walk away from a property and the lender can't get their money back from you - all they can do is foreclose and auction the property. So, if you purchased a $500k home and it is now worth $65k less, then a lot of folks will think about walking away and renting. The numbers are not particularly large, but they can become the tipping point that puts further pressure on prices.
> 
> ...




  Bean there... done that... the spread is murder though unless you really are confident of your own opinion..  maybe??..

Cheers
...........Kauri


----------



## CAFA1234 (25 April 2008)

Kauri; said:
			
		

> Bean there... done that... the spread is murder though unless you really are confident of your own opinion..  maybe??..
> 
> Cheers
> ...........Kauri




That looks as if it is a 2% spread - in a volatile market it looks reasonable.

Also remember, in the USA, that some areas are down over 20% in the last year - check out a little county called Riverside near Los Angeles. And this in Southern California, one of the great engines of world economy - I think CA has the 5th or 6th largest economy in the world (I could be wrong on this point).

I recently drove down that way (about 40 miles) and I was amazed at the 'super deals' that the builders are offering right now for anyone with a good credit rating and a good deposit - you can almost name your price. They just want to shift the stock.

In my local area there are significant blocks of units that are in various states of building and yet they don't appear to be in any hurry to finish them off - some have not had any work done on them in months. This implies that the developers feel the market is so bad that it's cheaper to leave them half finished than risk spending even more money for then to sit unsold and overhang the market.

Having said all of the above I remain a long term investor in many assets, but the heading of this thread suggests that houses will only ever keep going up, and that believe is in my mind, foolish and defies history. How many people got stuffed in 1989 in Aus with 18.5% mortgage rates?


----------



## Kauri (25 April 2008)

CAFA1234 said:


> Kaurifig - *trust me*,
> 
> Markets only exist because of differing views, so I'm grateful that we differ.




We don't differ... I happen to agree.. just tired of the way figures are interpreted by .... aahh.. them.. 



CAFA1234 said:


> This my friends is not some isolated backwater in the middle of Texas - this is the whole of the USA, including Manhattan etc. And this despite the vested interests of almost everybody in talking up house prices
> 
> Also remember, in the USA, that some areas are down over 20% in the last year - check out a little county called Riverside near Los Angeles. And this in Southern California, one of the great engines of world economy - I think CA has the 5th or 6th largest economy in the world (I could be wrong on this point).
> ?




Glad it isn't some isolated little backwater... so to speak..



> That looks as if it is a 2% spread - in a volatile market it looks reasonable




2% reasonable  hey the Euro is pretty volatile at the moment.. 
15645.0 bid 15647.0 offered ... the mind is a bittle fuddled on a Y day but I don't think that % approaches 2% by a country mile... 

Cheers
...............Karri


----------



## Whiskers (25 April 2008)

Kauri said:


> Figures, I figure, can figuratively be figured to suit any figjam argument..




HA ha, I like your style Kauri. 

I have not long expressed a similar point in the immenent market correction thread... but you take the points for articulation. :


----------



## CAFA1234 (25 April 2008)

Kauri; said:
			
		

> 2% reasonable  hey the Euro is pretty volatile at the moment..
> 15645.0 bid 15647.0 offered ... the mind is a bittle fuddled on a Y day but I don't think that % approaches 2% by a country mile...
> 
> Cheers
> ...............Karri




hey, Karri that is unfair. You know perfectly well that the depth of the currency markets, particularly the Euro, is so different to housing futures it unreal that you could compare the two.  A tad like comparing the BHP or TLS spread to an untraded over the counter 4th rate junior miner. If you get my drift?

The fact is, if one really believes (as opposed to ramping on BBs) that house will not drop another 10% or more then there is money on the table. I say to those people put your money where your mouth is and take the money. 

Now if they do  think that house prices will drop 10/15% in the USA, Ireland, Spain & the UK but still keep going up in Aus then they are either good at wishful thinking or they should articulate some bloody good rationales behind their thinking rather than ramping.


----------



## Kauri (25 April 2008)

CAFA1234 said:


> hey, Karri that is unfair. You know perfectly well that the depth of the currency markets, particularly the Euro, is so different to housing futures it unreal that you could compare the two. A tad like comparing the BHP or TLS spread to an untraded over the counter 4th rate junior miner. If you get my drift?
> 
> The fact is, if one really believes (as opposed to ramping on BBs) that house will not drop another 10% or more then there is money on the table. I say to those people put your money where your mouth is and take the money.
> 
> Now if they do think that house prices will drop 10/15% in the USA, Ireland, Spain & the UK but still keep going up in Aus then they are either good at wishful thinking or they should articulate some bloody good rationales behind their thinking rather than ramping.




  Ramping house prices... I wish.. when I sold out a year back,,,
  Try Nick Radges excellent book.. ( sorry kENNAS)... and try out the "_Bang for Buck_" filter... house prices are just a commode to be traded.. and should be treated as such.. 
  house prices in Aus will/have drop/dropped... butt...  aahh where was I... oh yes... maybe the Aussies didn't embrace the free ride as much as elsewhere... and the losses fueled by greed are not expected to be as severe as elsewhere... needless to say we will be affected by the ntoxic crup being... as always.. exported from the home of capitalism... but we will weather the storm... as we always have.. when they come sweeping in from a toch east of north east..     Y  Y Y  :drink:  Ynott..

 Cheers
............Kurlie


----------



## CAFA1234 (25 April 2008)

Kauri; said:
			
		

> Ramping house prices... I wish.. when I sold out a year back,,,
> Try Nick Radges excellent book.. ( sorry kENNAS)... and try out the "_Bang for Buck_" filter... house prices are just a commode to be traded.. and should be treated as such..
> house prices in Aus will/have drop/dropped... butt...  aahh where was I... oh yes... maybe the Aussies didn't embrace the free ride as much as elsewhere... and the losses fueled by greed are not expected to be as severe as elsewhere... needless to say we will be affected by the ntoxic crup being... as always.. exported from the home of capitalism... but we will weather the storm... as we always have.. when they come sweeping in from a toch east of north east..     Y  Y Y  :drink:  Ynott..
> 
> ...





Hey, Karri or is it Kurlie (you are confusing an old chap  ).

Firstly any comments I make are not directed on a personal level, so no need to defend the ramping comment - just a general comment for those rampers out there - you see them all the time, if it's not making a fortune on one thing it is another. 

I'm sure a lot of the time it's simply that they need the feel good factor of reading that other people agree with them - I don't mind losing money as long as everyone else is doing the same. They used to say that you didn't get fired for buying IBM. Funny that the hedge fund managers who made the real money last year were betting on house prices falls - one chap made $3.5B!!!

Secondly I'm not sure about Aussie house prices. I think if you look at the period 2000 - 2008 it suggests that Aussies have embraced the get rich quick mentality very much the same as the Yanks and Europeans (well the Brits, Irish and Spaniards). 

I was in Perth, WA in Jan, Feb & March, and I detected a rather different attitude to 8/12 months ago. A year ago 'everyone' in Perth was going to get an investment property and retire on the proceeds on the back of the mining boom. Well the mining boom is still there and house prices are sort of off the boil.

Thirdly, and I'm not sure how old you are and where you were in the late 80's, but some very good friends on mine got wiped out in Queensland in 1989 - 18.5% mortgage rate. They were in denial for about a year - just could not believe what had happened to them. 

People generally tend to forget bad experiences easier than they remember the good one - 'Those were the days my friend, I thought they'd never end......'

Anyway I've enjoyed our banter and I wish you every success in your investments - whatever they be.

BTW - the market 'owes' me about $200k over the past 10 months - maybe I should stick to housing


----------



## Kauri (25 April 2008)

CAFA1234 said:


> Hey, Karri or is it Kurlie (
> 
> BTW - the market 'owes' me about *$200k* over the past 10 months - maybe I should stick to housing





  Thanks...   

   ...Kurrie..


----------



## robots (25 April 2008)

hello,

yeah great stuff cafa, while around check out "property prices to stagnate for years",

its been going on for 2.5yrs and guess what those in have done very nicely on their INITIAL money down (ROI, although many dont like talking about ROI though)

thankyou

robots


----------



## CAFA1234 (25 April 2008)

robots; said:
			
		

> hello,
> 
> yeah great stuff cafa, while around check out "property prices to stagnate for years",
> 
> ...




Robots - I agree that in many areas the past 2.5 years have been a great time to invest in property, as in shares, commodities etc. 

Having said that, I own a property in Sydney, a share of a unit in Manly, and a share of a property in Brisbane. The Brisbane one has done well over the past 5 years - gone from $132k to about $290k. A very worthwhile return. However the properties in Sydney have just about kept up with inflation since about the peak in 2003, maybe tad under.

Please don't think that I'm downing property as an asset class, it's just that is what it is (ignoring the fact that one has to live somewhere). Because of the huge gearing that is available in property it is always going to be an interesting investment, but never believe that it will only ever go up in price. 

That is the message. 

I try to give a balance to the rampers that would fool less experienced investors. And I assume that it is investors that are reading this BB???


----------



## alwaysLearning (25 April 2008)

Those of you who are predicting a crash in house prices--would you agree that the only way this will happen is if Australia goes into a recession?

This is what the RBA said a day or so ago regarding the percentage of income used per month into paying back mortugages.

http://www.news.com.au/business/money/story/0,25479,23596478-5013952,00.html


----------



## CAFA1234 (25 April 2008)

alwaysLearning; said:
			
		

> Those of you who are predicting a crash in house prices--would you agree that the only way this will happen is if Australia goes into a recession?
> 
> This is what the RBA said a day or so ago regarding the percentage of income used per month into paying back mortugages.
> 
> http://www.news.com.au/business/money/story/0,25479,,00.html




It may not be a crash - it may just be like Sydney, a stagnant market for several years. Maybe 10/15 years. However I hear that in some suburbs of out west of Sydney that prices are already around 10/12% below their peak. And I'm sure some areas are still booming.

As with any investment don't get in over your head. If you can take the losses and not be forced to cash out then back your view.

Don't forget almost everyone has a vested interest, including the RBA, in talking up the house market. Read the RBA web site and see that they are relaxing their funding rules, and ask yourself why would they do this if they are so confident, and the economy is booming??? What people say and what they do are sometimes very different.

Can there be  a problem even if no recession? Maybe. The issue right now is lack of funds in the wholesale market, which means that banks that are still lending are having to take some of this onto their own books. If this continues for any length of time it WILL impact the market.

See comments in todays FT in London regarding lack of funds impacting the market there - no shortage of buyers, but an acute shortage of funds.
http://www.ft.com/cms/s/0/0e6833a8-1235-11dd-9b49-0000779fd2ac,s01=1.html


Sorry I could not help any more than simplistic views of the world, and I'm sure many will have others and opposing views 

To end on a bright note - the US market hit an intra-day high of almost 13,000. This is well within 10% of last years high. If, and a big IF, it continues on Friday then the Aussie market should open a good deal higher come Monday. Order another latte!


----------



## Mofra (25 April 2008)

wayneL said:


> Sometimes rent is not dead money.



Well, not any more than non-deductable bank interest which is generally higher than rent anyway, although only effects people silly enough to live in any property they own


----------



## KIWIKARLOS (25 April 2008)

i think that is you can afford to keep your house at the moment you will be in a good position for the future even if it did decrease in value in the short term i think medium term we could see house prices increases rapidly.

With the price of energy going up rapidly building materials will start to increase just as much. You will not be able to build a home cheaply in future. Land prices will decrease in the fringe suburbs where the cost of servicing the outer burbs will also dramatically increase. Electricity, water, food transport, public transport will all be up causing demand for land closer to the city and existing infrastructure to climb.

Its just not going to be affordable to live 50kms from work in huge houses with large heating cooling costs. 

The gov knows this and are currently converting ports in australia to all electric and with associated heavy rail lines which will move freight from the ports to suburban nodes. When oil hits $150 + a barrel in the next year or two we can kiss alot of road freight goodbye as we are oil poor in this country but electrical energy rich.

Plus think about the potential influx of environmental and economic refugees we will probably have knocking at our door very soon. We are still the lucky country we have huge amounts of natural resources and bith agricultural, metal and energy. Public debt is rediculous but that is correcting itself right now thanks to the non sustainable economies of the US, UK, Spain, etc. We have alot of common wealth to back up our public debt. I think australia is well positioned in the transfer to the new world


----------



## xoa (25 April 2008)

Kauri said:


> Figures, I figure, can figuratively be figured to suit any figjam argument..  The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. * From two years
> ago, the median home price is down only 4.7%.  That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman.*   amongst others...
> 
> Cheers
> ............Kaurifig




Two years ago, the median price peaked at $230,200. It's now $200,700. This is a nominal fall of 13%. In real terms, factoring inflation, the fall is almost exactly 20%. 

It's still falling - some people expect the market to fall by another 20% before it bottoms.


----------



## theasxgorilla (25 April 2008)

xoa said:


> Two years ago, the median price peaked at $230,200. It's now $200,700. This is a nominal fall of 13%. In real terms, factoring inflation, the fall is almost exactly 20%.
> 
> It's still falling - *some people expect the market to fall by another 20% before it bottoms*.




Would that be real or nominal?


----------



## numbercruncher (25 April 2008)

"Head em up punters", Melbourne hits reverse ! ( was always going to happen wasnt it ? )



> THE Reserve Bank's interest rate noose has tightened on Melbourne's housing market, cutting almost $40,000 from prices so far in 2008.




http://www.theaustralian.news.com.au/story/0,25197,23597617-20142,00.html


----------



## Spanning Tree (26 April 2008)

The IMF claims that Australian property prices are overvalued by 25 per cent and there is a very high risk of a correction.

Source: http://www.theage.com.au/articles/2008/04/04/1207249392771.html?from=top5



> The US house prices are failing so rapidly becasue they are such an unproductive country and simply consume more than they produce.
> The US became the most powerful country in the world on the back of resources such as oil, wheat etc but since the 70's when they became a debtor nation they have been on a downward spiral.



Are you saying Australia is not a debtor nation? 




> The US house prices are failing so rapidly becasue they are such an unproductive country



Actually the US is the most productive country in the world.

"DUBLIN, Sept. 3 (Reuters) ”” American workers are the world’s most productive, followed by the Irish, though productivity is rising fastest in China and much of the rest of Asia, according to the International Labor Organization.

"When productivity was measured by the hour rather than by the total number of hours worked, however, Norway, an oil nation, was the most productive, followed by the United States and France, the organization said in a report released over the weekend and published every two years. It mostly used 2006 data."

Source: http://www.nytimes.com/2007/09/04/business/worldbusiness/04output.html



> If Australians are this bad at saving now, Id dread to see what happens in a recession or an enviroment of rising Interest rates



The reality is that Australia and America are very similar. The savings rate of Australia today is virtually nothing or negative.


----------



## robots (26 April 2008)

hello,

wow, my suburb is down 1.2%, i cant believe it

bloody hell 1.2%

thankyou

robots


----------



## wayneL (26 April 2008)

robots said:


> hello,
> 
> wow, my suburb is down 1.2%, i cant believe it
> 
> ...




If that is the official figure, you'll find that the real figure is more in real terms.

This principle has been discussed before i.e. the role of gentrification in established and regenerating suburbs.

Baboom


----------



## robots (26 April 2008)

hello,

i have been trying to get thru to the help line after getting this news but there is a 3-mth wait, amazing

dropped 1.2% in 3mths

thankyou

robots


----------



## numbercruncher (26 April 2008)

robots said:


> hello,
> 
> i have been trying to get thru to the help line after getting this news but there is a 3-mth wait, amazing
> 
> ...





Is this thread title coming true yet ? 

Least your doing better than nearly every other suburb in Melbourne Robi


----------



## numbercruncher (26 April 2008)

Heres a good example of the Melbourne property crash in action ......

House asking price 500k

http://http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104688295&f=0&p=10&t=res&ty=&fmt=&header=&cc=&c=75236518&s=vic&snf=rbs&tm=1209193571

New advert, same house, asking 375k, 25pc drop 

http://http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104795387&f=0&p=10&t=res&ty=&fmt=&header=&cc=&c=75236518&s=vic&snf=rbs&tm=1209193571


Plenty of bargains out there property bulls, go rent some ca$h and come on in, the waters boiling


----------



## Aussiejeff (27 April 2008)

numbercruncher said:


> Is this thread title coming true yet ?
> 
> Least your doing better than nearly every other suburb in Melbourne Robi




*sigh*

Why is it that everyone thinks if they are in a suburb that has an AVERAGE drop of 1.2% that THEY have actually had a 1.2% drop in the value of their property. It's obvious to a blind freddy like me that these figures are, indeed, AVERAGES - which means at the extreme ends of the range, someone's property has in fact dropped MORE than the average (who knows, the worst in a particular suburb might be down 40%) while the most desirable property sold in the accounting period might have actually risen (who knows, the BEST property in a particular suburb might be up 40%!)

How the hell can anyone determine acurately BEFORE an actual sale that THEIR particular property has actually conformed exactly to the listed AVERAGE?

Robots - you better hope you are in the upper range of desirability - and that the next 3 months data doesn't turn into a 13% drop...! 

*sigh*

My $2 rants' worth.....  

AJ


----------



## numbercruncher (27 April 2008)

You dont even need prices to drop to be getting Walloped, stagnating prices at 9.5pc Interest is a walloping in my eyes


----------



## KIWIKARLOS (27 April 2008)

Spanning Tree said:


> The IMF claims that Australian property prices are overvalued by 25 per cent and there is a very high risk of a correction.
> 
> Source: http://www.theage.com.au/articles/2008/04/04/1207249392771.html?from=top5
> 
> ...




That is not true really australia isn't a debtor nation our people are up to their eyelids in debt but our contry produces big surpluses. Sure we can't keep increasing public debt but we are hardly in the situation of the US where they have trillions of public and government debt.

America may be a productive country in GDP per person etc but those figures are really BS and without looking at alot of other figures mean nothing at all. Even if teh US exported everything it made it would still be unable to balance its trade imbalance and would still be a net importer. Australia is not a net importer. In the US 70% of the economy is comsumer based so.

1. they have huge public debt
2. they have huge government debt
3. Their economy is built around consumption
4. They CAN NOT possibly turn around the balance of trade without manufacturing more or developing significanty more export industries.
5. Huge oversupply of homes and little demand

It's fairly similar situation for england, ireland and spain.

Australia

1. Huge public debt
2. Strong government balance sheet big surpluses
3. Massive export market that will get bigger and bigger. Coal prices up 100% and iron ore likely to be +70%. Not to mention we have cheap abundant energy resouces.
4. Large demand for housing and little supply.

Fact is the only thing making the oz markt downturn is the cost of credit.

the only reason credit is so expensive is because everyone ha just relised that the US is a very risky venture. Their economy is cactus and in all seriousness are they ever going to be able to pay of the government debt let alone the public paying of their housing debts? 

People will start looking for more secure investments for the huge amount of developing countriescash out there. We are secure becuse we have resources to back up our public borrowing and our economy is well diversified. 

I think that unless you couldn't pay your morgage you would be silly to sell your house now. Go to rental inspections 40 people turn up and many overbid the asking rent. I've even heard stories of people paying a year in advance. Families who can't afford a morgage ATM are looking to rent.

Inflation in oz is really only a big problem becuase of oil and less so food because of our long scale drought. But that looks to be over with a good winter crop on the way. 

I doubt oil will go down because there are plenty of countries waiting to pick up any drop in demand.

I personally think we may see a small scall pull back of prices in some areas for the short term but with energy inflation with rolls through the entire economy house prices can only increase with time. The cost of living is rising across the globe as everyone struggles to billions of people are wanting to increasse their standard of living. I believe the asset depreciations in the US are based on the fact that they can't support their way of life where as we are in a good position to actually increase ours. 

Seriously 25 million people with something like 30% of the world uranium, 20% of its coal, hgue deposits of iron ore, massive potential geothermal power, big aluminium deposits, probably some of the most prestine fisheries left in the world how are we in anyway near the same boat as the US, England, Ireland or spain ?


----------



## Kimosabi (27 April 2008)

robots said:


> hello,
> 
> wow, my suburb is down 1.2%, i cant believe it
> 
> ...



You haven't seen nothin yet.

I can see house prices halving or going down even more.

hhhhmmmm, what does history tell us.







Australia currently has the biggest housing bubble in our short history, which turns out is even bigger that the United States Bubble.

So watch out when unemployment start heading north.

We've already got massive increases in the prices of Food and Energy along with rising Interest Rates.

This is beginning to look like the perfect "Wipe out the Middle Class Storm" to me.

Now the other thing you people need to understand is how our fraudulent debt based Monetary and Banking Systems work.

I would recommend everyone does some research into Fractional Reserve Banking ==> http://en.wikipedia.org/wiki/Fractional-reserve_banking

Basically the banks can to turn a $1,000 deposit into $20,000 or even more.  The only thing is, if we start experiencing massive forclosures and writing off of debts, this will cause DEFLATION of the money supply which will have interesting effects on the rest of the economy.

Everything I'm seeing, is that the United States is going into a Inflationary Depression, watch our kiddies...


----------



## Aussiejeff (27 April 2008)

KIWIKARLOS said:


> .....
> *I think that unless you couldn't pay your morgage you would be silly to sell your house now*. Go to rental inspections 40 people turn up and many overbid the asking rent. I've even heard stories of people paying a year in advance. Families who can't afford a morgage ATM are looking to rent......




Many previous homeowners in the US would have been thinking exactly that way when their own housing bubble was starting to collapse some time ago. At that time, they would have been comfortably affording their repayments and thinking "we can ride out this downturn in house values". Unfortunately, a great many of those same people are now (a) without a job (b) have lost their home through repo or (c) both - and are struggling to keep their heads above the flood waters of bankruptcy. The worry in OZ is that interest rates may continue rising for months on the back of the banks bleating "ooer ... our costs are rising..." regardless of the Reserve Bank's actions. IMO the Reserve Bank has lost a lot of credibility of late and has effectively handballed the economy over to the private banking sector - "Have a fun game, guys!"      

Sure, Australia currently has enough employment to keep housing demand bubbling along for private purchases at a reasonable level, but as others have pointed out - woe betide us if China et all have a pull back in demand (through whatever circumstances causes that) for then our exports and consequently our comfortable levels of employment would surely have a marked fall. We would then end up with a BIG drop in demand for either new or existing houses on the market - since those unfortunate enough to find themselves in an unemployed situation (me having been one of those at some stages of my life) generally don't contemplate buying them when on a minimal income! There would be an even worse shortage (verging on a crisis) for rental properties.

Is Australia prepared for this (eg: large public housing projects)? Nope. Again, IMO as we have blindly followed the US lead in most things, I'm sure we can just as effectively fall into a collapsed housing bubble like they did. At least they had years to try and figure out what was happening (and failed). If China alone pulls up stumps (even just a wee little bit) the situation here could slump rather rapidly. 

All I can say is good luck and well done to those that currently own their home/flat/unit etc  outright!


AJ


----------



## juiceman (27 April 2008)

Kimosabi said:


> You haven't seen nothin yet.
> 
> I can see house prices halving or going down even more.
> 
> ...




What a sobering post
By combining the chart with information about fractional banking, it’s not hard to see why the US reserve bank is so intent on increasing money supply in their system.
They really had no choice!
Don’t worry about sub- prime, that’s just the tip of the iceberg.
Not many people understand fractional banking, so I would  urge our readers to have a look at the web site you suggested.
While your post was about real estate, I feel you should start another thread, give it an appropriate title and see what others think.
I can’t help but feel that the perfect financial storm is still brewing
Great post Kimosabi and can only hope that we are both wrong.
PS. The effects of the 29 crash where not really felt by the average family until 1930


----------



## robots (27 April 2008)

hello,

been going on for 2.5yrs kimo and presto -1.2%,

i think plenty need to wake up and go and do something different or more productive than reading all the documents on the internet 

like inflation it is all so irrelevant

it is great hearing all the predictions, keep it up

thankyou

robots


----------



## Kimosabi (27 April 2008)

robots said:


> hello,
> 
> been going on for 2.5yrs kimo and presto -1.2%,
> 
> ...



hahaha,

The Aussie Housing Crash officially started when the "Housing Prices to Stagnate for Years" thread was replaced by the "House Prices to keep rising for Years" thread.

When this thread gets replaced by a new thread on Housing Prices to never rise again we know the bottom is in and it's time to start investing in Property again...


----------



## numbercruncher (27 April 2008)

Kimosabi said:


> hahaha,
> 
> The Aussie Housing Crash officially started when the "Housing Prices to Stagnate for Years" thread was replaced by the "House Prices to keep rising for Years" thread.
> 
> When this thread gets replaced by a new thread on Housing Prices to never rise again we know the bottom is in and it's time to start investing in Property again...




lol thats exactly what I said when this thread started, this was the indicator that it was all about to turn to poo ...

Another scary thing I read, maybe I already mentioned it, is that about 30pc of Aussie mortgages are fixed and the majority reset this year to interest rates some 50pc higher, ouch ...


----------



## YChromozome (27 April 2008)

Kimosabi said:


> You haven't seen nothin yet.
> 
> I can see house prices halving or going down even more.
> 
> hhhhmmmm, what does history tell us.




And just look at Household Debt to fund those exuberant house prices.




It looks like Australian's have more debt than Americans, not to mention Australian household debt is accelerating much faster than our US counterparts. Have a look at that slope. Hope it's all sustainable.


----------



## robots (27 April 2008)

hello,

sorry for the delay homies in getting the auction results in for melbourne, i know many look forward to the news

great day yesterday, 68% clearance rate, very very good

next week will be another one to watch, will probably hang around 65+or- a little,

its a pity about "house prices to stagnate for years", although probably like a bad dream for many

thankyou

robots


----------



## numbercruncher (27 April 2008)

lol Robi, the Melbourne Median has dropped 10pc this last quarter yet you act like it was plus 10, what gives ?


----------



## Temjin (27 April 2008)

This thread just keep on going on and on and on and on. 

It's hard to talk to someone who have a vested interest in the investment they own. 

But I love this thread in the sense that a lot of valid and interest information are being put up on one side of the argument (which is obviously bearish) and the other side who have essential little viable evidences for counter-argue except to say that "it hasn't crashed yet! at least not me yet!".


----------



## robots (27 April 2008)

hello,

only reporting the results NC, 

yes another great weekend, hands up those who went to an auction or looked at property over the last week?

sorry, i remember now, like all the finance and monetary experts here at ASF (after they read some internet webpages) you have all read some property pages as well

its like Tech has previously mentioned if you have property you apparently should be committed

thankyou

robots


----------



## wayneL (28 April 2008)

There are trollish posts creeping back into this thread. Let's stick to proper debate.

Fair warning OK guys


----------



## pepperoni (28 April 2008)

Figures released today by the Real Estate Institute of Victoria (REIV) show the median price for a detached Melbourne home in the March quarter was $432,500, down 8.4 per cent from the December 2007 median of $472,250.

http://www.news.com.au/heraldsun/story/0,21985,23601336-31037,00.html


----------



## numbercruncher (28 April 2008)

Figures released by the REIV in Feb say that the Dec 2007 Median was actually 485k instead of the 472 claimed in that article, indicating a 10.8pc drop 

http://reiv.com.au/news/details.asp?NewsID=617


----------



## CAFA1234 (28 April 2008)

numbercruncher said:


> Figures released by the REIV in Feb say that the Dec 2007 Median was actually 485k instead of the 472 claimed in that article, indicating a 10.8pc drop
> 
> http://reiv.com.au/news/details.asp?NewsID=617




So, when is a government going to be brave enough and take on all the vested interests and legislate to ensure timely and accurate information 
e.g. force all closing transaction (when signed) prices to be published in real time (maybe allow 48 hours for those hard worked real estate people).

I can't think of any other market where one has to make a buy / sell decision based on 3 /5 month old data. Would you buy BHP shares today if you only had 3 month old data? Of course your stockbroker / real estate agent / broker / lender all have very recent data. 

The vested interests don't want to share their price knowledge as it allows them to continue to play games with the 90% of non-industry individuals.

It is shocking and they should be ashamed of themselves. 

Of course the real estate industry will put up one reason after another as to why this is not a good idea of the technology does not exist.

I say bull***t to that - we put a man on the moon and he came back 40 years ago - this is just a database. Regulate the industry NOW.


----------



## numbercruncher (28 April 2008)

With prices crashing Realtors have worked out ways of keeping the bottom line bumping along !



> GREEDY real estate agents have fleeced homeowners, tenants and landlords by increasing sneaky fees and charges by *16 per cent *over the past year.
> 
> Preying on the rental and property markets across the country, agents have subsidised their income from home sales and commissions with an increases in hidden costs.




http://www.news.com.au/business/money/story/0,25479,23579071-5013951,00.html

Not a bad deal that RE business, they win all the way up and all the way down


----------



## gfresh (28 April 2008)

Now agents have the job of convincing vendors their properties maybe aren't worth as much as they initially thought, simply to get a sale, and their commission in their pocket. Those BMW payments aren't cheap.. 

That works on the way down too


----------



## CAFA1234 (28 April 2008)

gfresh said:


> Now agents have the job of convincing vendors their properties maybe aren't worth as much as they initially thought, simply to get a sale, and their commission in their pocket. Those BMW payments aren't cheap..
> 
> That works on the way down too




With a tad of luck it will remove some of the 'Johnnie come lately' lads from the market - maybe the second car market is holding up, or they can give financial advice to little old grannies.


----------



## Macquack (28 April 2008)

numbercruncher said:


> With prices crashing Realtors have worked out ways of keeping the bottom line bumping along !
> 
> 
> 
> ...




I have developed a new view of business practices in Australia.

If your not robbing somebody, your out of business!


----------



## robots (28 April 2008)

hello,

gee wow look at that, for the last 4 yrs prices have dipped in the March quarter

many would love that on a stock (hint hint)

its tough when you cant do much about it though

thankyou

robots


----------



## numbercruncher (28 April 2008)

robots said:


> hello,
> 
> gee wow look at that, for the last 4 yrs prices have dipped in the March quarter
> 
> ...





So is a 10pc dip in the March quarter the usual ?


----------



## robots (28 April 2008)

hello,

look at the graph, every march quarter has dipped, 

goodluck

thankyou

robots


----------



## explod (28 April 2008)

robots said:


> hello,
> 
> look at the graph, every march quarter has dipped,
> 
> ...




A friend I have in the r/e business stated that the fall in the last quarter was caused by the last month of it.

So next quarter could be towards 20% drop, who knows ?

Looks like a good sector to stay away from for awhile


----------



## robots (28 April 2008)

explod said:


> A friend I have in the r/e business stated that the fall in the last quarter was caused by the last month of it.
> 
> So next quarter could be towards 20% drop, *who knows* ?
> 
> Looks like a good sector to stay away from for awhile




hello,

exactly explod,

you are well entitled to your investment decisions explod just like anybody else

thankyou

robots


----------



## theasxgorilla (28 April 2008)

robots said:


> look at the graph, every march quarter has dipped,




So you combine seasonal weakness with real weakness and you get substantial weakness...to state the obvious.  Hope all you bargain hunting bears are cashed up.  If history is anything to go by the bargains might not last that long in the scheme of things.


----------



## wayneL (28 April 2008)

I'm wondering if it's a bit of a statistical anomaly.

8.4% is an enourmous drop for one quarter, we would definitely have heard of that sort of dumpage in real time. 

Even though a bear, I don't believe it. If it was real, people would be slitting their wrists already.

<edit to add> We've had a MoM ~2.5% in the UK(can't remember the exact figure) and the doomage is palpable and comes only after months of negative sentiment, gnashing of teeth and extremely low turnover... in short, a Mexican stand-off between buyers and sellers.

It takes a while for sellers to eventually blink, in my experience... unless the whole market is going to hell in a handbasket. Which it isn't, yet.


----------



## explod (28 April 2008)

theasxgorilla said:


> So you combine seasonal weakness with real weakness and you get substantial weakness...to state the obvious.  Hope all you bargain hunting bears are cashed up.  If history is anything to go by the bargains might not last that long in the scheme of things.




From here in Victoria on average prices need to fall 30% to reach fair value.  Of course as allways happens in a sell off panic takes it below fair value before the recovery starts.    So at least 50% fall and then I will be ready.


----------



## numbercruncher (28 April 2008)

wayneL said:


> 8.4% is an enourmous drop for one quarter, we would definitely have heard of that sort of dumpage in real time.





We did hear about it in real-time, but the Bankers the realtors and the media are all in bed together and get to paint things over and shrug them off.

Weve had all the individual snippets of news but not one single media outlet connects all the dots.

Individual news reports on many things such as record amounts of properties to market, nose diving clearance rates, Worst affordability to income ratio on the planet, falling applications for and dollar figures on finance, good chance of more rates rises, and many more individual news items. But nearly each of these things gets dismissed by an expert, or some feeble but believable to the masses excuse released.

As I mentioned I beleive Melbournes median fall for last quarter was 10.8pc using figures from the REIV itself, but a double digit quarterly decline would be unacceptable for public release and could possibly trigger panic selling is why Im thinking its been fudged or errored 

The next quarter is what seals the deal.

Watch this space


----------



## numbercruncher (28 April 2008)

Heres an entertaining and oh so true read about how Australia got in such a bubbly bubble  Ill quote a little .....




> This yarn (Aussie for story or tale) about Australia’s housing bubble, arguably of even greater proportions than the US and UK bubbles is largely the story of one man, my old mate (Australian vernacular for buddy) John Symond.






> From here events take a predictable turn. With the financial stars aligned for mortgage brokers, mortgage originators, financial packagers and securitisers, valuers, conveyancers, lawyers and a horde of assorted hangers-on the US model to bubbledom was adopted. We got lo-doc and no-doc loans; no longer did you have to prove your income; you just “stated” it and paid a few points more in rate. Principal was deferred, wrapped or made into a “balloon” that was never paid as mortgages were refinanced before the new shrubs in the garden could grow more than a few feet. With almost unlimited access to funding, Aussies and Kiwis (natives of New Zealand) went on a buying binge unequalled in history. Houses had no established intrinsic worth anymore, all you had to know is that they were going up 20, 40, 60% a year so you just HAD to get into that market and buy that house right now. This indeed was the way to health, wealth and happiness.






> Those of us old enough to remember previous booms were continually proven wrong.....$360K for that piece of junk I said; they’re joking!! The opening bid was 600K!!




http://www.financialsense.com/fsu/editorials/danielcode/2008/0116.html


----------



## wayneL (28 April 2008)

numbercruncher said:


> We did hear about it in real-time, but the Bankers the realtors and the media are all in bed together and get to paint things over and shrug them off.
> 
> Weve had all the individual snippets of news but not one single media outlet connects all the dots.
> 
> Individual news reports on many things such as record amounts of properties to market, nose diving clearance rates, Worst affordability to income ratio on the planet, falling applications for and dollar figures on finance, good chance of more rates rises, and many more individual news items. But nearly each of these things gets dismissed by an expert, or some feeble but believable to the masses excuse released.




We heard about* value* concerns real time, all of which I agree with and have shoved down people throats as much as the next bear, but there were no anecdotes of being severely crunched on *price* in the last quarter... only really that properties were starting to stick.

I mean that is full blown crash figures for a quarter... are we really seeing that yet?


----------



## numbercruncher (28 April 2008)

Yes I think the full blown crash is starting, 10pc is huge ! Im guessing most is currently being shaved from the top so far, Medians are great for stirring bubble mania but they look equally bad on the way down too.

And check this out, what I was going on about the Median being changed or fudged or whatever, The medians are shown clear as a bell here in the age ,in the same article only paragraphs apart and it doesnt even look like the reporter noticed!



> MELBOURNE house prices have recorded their biggest quarterly fall in value since 1993 as interest rate rises and fears of a slowing economy dull buyers' appetites for homes.
> 
> The median price for a detached home in Melbourne in the March quarter was $432,500, a slide of 8.4% from the December quarter median of *$472,250*.
> 
> ...




http://www.theage.com.au/news/national/rates-hit-home-prices/2008/04/25/1208743253101.html

 lol gotta love the realestate game.


----------



## wayneL (28 April 2008)

numbercruncher said:


> Yes I think the full blown crash is starting, 10pc is huge ! Im guessing most is currently being shaved from the top so far, Medians are great for stirring bubble mania but they look equally bad on the way down too.
> 
> And check this out, what I was going on about the Median being changed or fudged or whatever, The medians are shown clear as a bell here in the age ,in the same article only paragraphs apart and it doesnt even look like the reporter noticed!
> 
> ...



Notwithstanding the figure fudging mentioned, I don't believe that we bears can dis' the indicies in the way up, and embrace them on the way down. That's duplicitous and damages bear credibility.


----------



## Mofra (28 April 2008)

Temjin said:


> This thread just keep on going on and on and on and on.
> 
> It's hard to talk to someone who have a vested interest in the investment they own.
> 
> But I love this thread in the sense that a lot of valid and interest information are being put up on one side of the argument (which is obviously bearish) and the other side who have essential little viable evidences for counter-argue except to say that "it hasn't crashed yet! at least not me yet!".




Glad you find it amusing, can't help but chuckle when you read a few days worth of posts in a row. Like a verbal game of tennis.



Temjin said:


> "it hasn't crashed yet! at least not me yet!".



Well, in some respects you could say property has out-performed equities this year, and one quarter of negative growth, in economic terms, doesn't fit the recession definition yet. Is creative analysis as misleading as creative accounting?


----------



## nioka (28 April 2008)

pepperoni said:


> Figures released today by the Real Estate Institute of Victoria (REIV) show the median price for a detached Melbourne home in the March quarter was $432,500, down 8.4 per cent from the December 2007 median of $472,250.
> 
> http://www.news.com.au/heraldsun/story/0,21985,23601336-31037,00.html



 All that may mean is that fewer of the better class of home and more of the lower class sold that quarter. You may be comparing apples with pears.


----------



## numbercruncher (28 April 2008)

wayneL said:


> Notwithstanding the figure fudging mentioned, I don't believe that we bears can dis' the indicies in the way up, and embrace them on the way down. That's duplicitous and damages bear credibility.





Good and valid point, I was feeling a little turncoat about that


----------



## CAFA1234 (29 April 2008)

wayneL; said:
			
		

> I'm wondering if it's a bit of a statistical anomaly.
> 
> 8.4% is an enourmous drop for one quarter, we would definitely have heard of that sort of dumpage in real time.
> 
> ...




Mr Bear - look at the stock market, down (upto) 25% in many places (China 50%) and yet there is no mass suicide. The numbers of brokers jumping off of Wall Street in the 30's was a handful, but it made great press, even 80 years later. 


What I can tell you, from yesterdays edition of the Los Angeles Times, is that the county of San Bernardino (East side of L.A.) is down 35%, with a number of zip (post) codes within the county being down 50%. These are not newsmen being dramatic, in fact no headlines anywhere. Just tucked away in the back of the real estate section where the official figures taken from the taxation records of sale.

People are still going about their everyday activities , large screen TVs are still being sold by the truckload etc, etc. However it combined with INFLATION , becoming a bigger problem every day for the lower income guys due to food and gas (petrol), this WILL create problems down the road.

So, Mr Bear, my assertion is that there is a considerable time gap between people getting wiped out and understanding the impact. Like the stages of grief, people are still in the first stage of disbelief. They just don't want to hear about it. Depression comes in much later.


----------



## wayneL (29 April 2008)

CAFA1234 said:


> Mr Bear - look at the stock market, down (upto) 25% in many places (China 50%) and yet there is no mass suicide. The numbers of brokers jumping off of Wall Street in the 30's was a handful, but it made great press, even 80 years later.
> 
> 
> What I can tell you, from yesterdays edition of the Los Angeles Times, is that the county of San Bernardino (East side of L.A.) is down 35%, with a number of zip (post) codes within the county being down 50%. These are not newsmen being dramatic, in fact no headlines anywhere. Just tucked away in the back of the real estate section where the official figures taken from the taxation records of sale.
> ...




Good God! Are Australians so much like Americans now that that all forms of literary license now disallowed? 

Whatever happened to colloquial speech, irony, allegory and metaphor? Must we convey the precise literal meaning of our words now? Is idiomatic speech dead... much worse, been executed by the thought police?

I think I'll go and drown my sorrows, kick the cat and give myself an uppercut, before slashing my own wrists.

Streuth!!


----------



## CAFA1234 (29 April 2008)

wayneL; said:
			
		

> Good God! Are Australians so much like Americans now that that all forms of literary license now disallowed?
> 
> Whatever happened to colloquial speech, irony, allegory and metaphor? Must we convey the precise literal meaning of our words now? Is idiomatic speech dead... much worse, been executed by the thought police?
> 
> ...




And I thought you were serious when you said you didn't believe the figures - how silly of me. next time I'll know.


----------



## wayneL (29 April 2008)

CAFA1234 said:


> And I thought you were serious when you said you didn't believe the figures - how silly of me. next time I'll know.



It's true, I'm having difficulty coming to term with *those* figures *at this time*.

If it was UK, I would believe it (just), going by the tales of doom, gnashing of teeth and what I am seeing with my own eyes here. But there has scarcely been an anecdote of price falls over there... particularly Melbourne.

As we go out over the next few months/years, I'm with you man. Those that have known me a while know this.


----------



## CAFA1234 (29 April 2008)

wayneL; said:
			
		

> It's true, I'm having difficulty coming to term with *those* figures *at this time*.
> 
> If it was UK, I would believe it (just), going by the tales of doom, gnashing of teeth and what I am seeing with my own eyes here. But there has scarcely been an anecdote of price falls over there... particularly Melbourne.
> 
> As we go out over the next few months/years, I'm with you man. Those that have known me a while know this.




April 24th - CNNMoney.com
WASHINGTON (AP) -- The percentage of vacant homes for sale in the United States set a new record high in the first quarter of this year, the government said Monday.

The Census Bureau report shows that shows that 2.9% of U.S. homes -- excluding rental properties -- were vacant and up for sale, compared with 2.8% in the fourth quarter of 2007. It was the highest quarterly number in records going back to 1956.

That works out to 2.28 million properties, up from 2.18 million in the same quarter last year, according to the report.

The West had the biggest gain in vacancy rates among homeowners, rising to 7% in the January-March period from 6.5% in the fourth quarter of 2007.
--------------------------------
So, in California (the West) one in 14 home is empty. These are government figures. Want to but some cheap property?


----------



## robots (29 April 2008)

hello,

just an article to read, dont read to much into the guy posting it,

http://www.theaustralian.news.com.au/story/0,25197,23609509-36418,00.html

have a great day 

thankyou

robots


----------



## CAFA1234 (29 April 2008)

robots said:


> hello,
> 
> just an article to read, dont read to much into the guy posting it,
> 
> ...




Another vested interest putting a brave face on a depressing situation. As far as I'm concerned if you want to know what is really going on, DO NOT listen to anyone who has a vested interest in bulling the market up, or putting forward arguments as to why it will not fall.

It's what the man is paid to do. Nothing personal.


----------



## theasxgorilla (29 April 2008)

CAFA1234 said:


> What I can tell you, from yesterdays edition of the Los Angeles Times, is that the county of San Bernardino (East side of L.A.) is down 35%, with a number of zip (post) codes within the county being down 50%. These are not newsmen being dramatic, in fact no headlines anywhere. Just tucked away in the back of the real estate section where the official figures taken from the taxation records of sale.




That makes for interesting news.  50% is a lot, eh?  I mean, a 50% loss means a 100% gain to make it back right?  Ugly.  And if we apply some common wisdom that's bantered around this part of the world (Australia, no I'm not there either but the forum is), house prices double in 7 years.  So does that take these places back to 2001 prices already?


----------



## theasxgorilla (29 April 2008)

nioka said:


> All that may mean is that fewer of the better class of home and more of the lower class sold that quarter. You may be comparing apples with pears.




Exactly.  In isolation the stat makes for good tabloid fodder but in reality it means sweet FA.  It has practically no bearing on a given house in a given street in a given neighbourhood in a given suburb etc.  "Housing" stats per se don't measure apples with apples.  It's neigh on impossible with the current systems of measurement.


----------



## CAFA1234 (29 April 2008)

theasxgorilla said:


> That makes for interesting news.  50% is a lot, eh?  I mean, a 50% loss means a 100% gain to make it back right?  Ugly.  And if we apply some common wisdom that's bantered around this part of the world (Australia, no I'm not there either but the forum is), house prices double in 7 years.  So does that take these places back to 2001 prices already?




Not sure of the numbers, but lots of the San Bernardino area with the big drops didn't exist in 2001. Huge new development over the past 3/5 years, and of course building in the middle of the desert is not a problem with cheap gas as people can drive. Even more of a problem with the price of gas going up - cheap in the US compared with Europe & Aus, but when it goes up 50% in 2/3 years and you are used to running a Ford F150/250/350 truck (big block little technology) you feel the pinch.

I suspect the same economics are playing out in the subs of the major Aussie cities. Who wants an hour, or 2 hour drive into Sydney from the North West subs that have seen huge development over the past few years?

In the Sydney area of Manly (nice world class surf) the price of a standard 2 bedroom 1000sf unit has not moved much since the peak in 2003. $500/600k is still the go. The boom in Melbourne / Perth / Adelaide / Brisbane appears to have bypassed Sydney.  I'm sure here are others who can explain this - maybe it was way overpriced in 2003?


----------



## noirua (29 April 2008)

House prices in the U.K. have just shown their first 12 month decline with a fall of 1.6%. Some predictions are for a fall of 6 - 9% in the next 12 months. 
The Royal Bank of Scotland is raising AUS$26 billion and the Halifax Bank of Scotland is expected to raise about AUS$9 billion.


----------



## CAFA1234 (29 April 2008)

noirua said:


> House prices in the U.K. have just shown their first 12 month decline with a fall of 1.6%. Some predictions are for a fall of 6 - 9% in the next 12 months.
> The Royal Bank of Scotland is raising AUS$26 billion and the Halifax Bank of Scotland is expected to raise about AUS$9 billion.




Yes, people have such short memories. I paid 100k (pounds) for a house in Hampshire / Sussex borders in 1986. In 1990 it was worth 160k and in 1993 I could have picked up the next door (same model on new estate) for 128K - that was a big drop in 2 years. Ended up not too bad by selling in 2003 for $320k. Just like Australia back in 1989/1990, houses DO go down in value. Timing is everything!


----------



## numbercruncher (29 April 2008)

Anyone read this report by Fujitsu Consulting and JP Morgan ? I think they have a little more credibility than your local RE agent or permabull  But even to a RE bear it sounds a bit scaryish ...


A few snippets of expected carnage ...



> Fujitsu Consulting and JP Morgan's latest data predict that almost 1 million households will experience mortgage stress by September, with 40 per cent of those under severe stress.






> Fujitsu predicts that every 25 basis points rise in the mortgage interest rate from now on will push 150,000 more households into mild stress, and half again into severe stress.






> Even more disturbing, on present trends a household in severe stress has only a 50 per cent chance of saving the house, North says.




http://www.theage.com.au/news/planning/weather-the-perfect-storm/2008/04/21/1208742855463.html?page=2

Scary Huh !


On " present Trends " thats 200,000 forced sales and 15,000 more for each 25pc raise.


----------



## YChromozome (29 April 2008)

CAFA1234 said:


> In the Sydney area of Manly (nice world class surf) the price of a standard 2 bedroom 1000sf unit has not moved much since the peak in 2003. $500/600k is still the go. The boom in Melbourne / Perth / Adelaide / Brisbane appears to have bypassed Sydney.  I'm sure here are others who can explain this - maybe it was way overpriced in 2003?




Despite what people tell you about house prices can continue to go up, there is an equilibrium point where house prices go too far that people can't afford them - they simply outstrip wages/household income. I suspect Sydney reached that equilibrium point in 2003, and the rest of Australia is just meeting it now.


----------



## KIWIKARLOS (29 April 2008)

Exactly and alot of people will be argueing the increased inflation point when it comes time for them to talk wage increases. I work for the state gov and i can promise you that no gov worker / union will be accepting anything under 4% min.

You have to relise as well there is plenty of work out there many people can work a few extra hours overtime or get a second job. Times aren't always easy but as long as you can survive the tough times you will be loving the good times. 

Does anyone relly doubt that the housing market etc will never recover ? I would suggest that it would probably recover strongly on the back of the east asian development. When japan was industrialising over 20-30 years the US its largest trading partner had some its best years as well. China is our largest trading partner and we will prosper from them for decades. 

I think that inflation rather than massive amounts of depreciation will  happen in oz. With energy prices going up all the building materials will rise accordingly. Most australian economic markets are holding up pretty well considering the scale of what is happening at the moment but the scales will balance sooner rather than later. 

Aus dollar strong, GDP growth most likely 4+% one of the highest in the OECD, unemployment at 4.2%, a tax break coming hardly comparable to the US


----------



## numbercruncher (29 April 2008)

Post from another forum, take it as a grain of salt if you wish 



> I started looking for homes in sydney about 1 month ago. Did a search for homes between 200.000 and 250.000. Nothing turned up : 0 results. I can remember the cheapest house was in the 300.000's. Today I did the exact same search , and I get 7 pages worth of homes ( about 50 homes, not counting doubles ) for sale for less than 250.000 AUD. Same search-engine, same search details.





Probably in Sydneys trasiest suburbs, but if true it shows the guts starting to fall out of the low end.


----------



## Gspot (29 April 2008)

It's worrying, with all the doom and gloom in the world, that seems very real.
Yet confusing for the ol folks living in Perth, who are still crying out for skilled immigrants on a large scale, as the state keeps booming along. 
Houses are coming on the market, and taking longer to sell, but try renting! Last week went down to Mandurah, and local real estate co, only had 1 property for rent, which was crap. People got to live somewhere.


----------



## gfresh (29 April 2008)

> Despite what people tell you about house prices can continue to go up, there is an equilibrium point where house prices go too far that people can't afford them - they simply outstrip wages/household income. I suspect Sydney reached that equilibrium point in 2003, and the rest of Australia is just meeting it now.




I think so.. and prices did get ahead of themselves, and since then the NSW economy has stagnated. With VIC it seems largely immigration based. QLD has benefited from people leaving VIC and NSW. Both of which seem be the key driver for a lot of the housing growth in these areas.. 

I think the trend is for people to be leaving Sydney, not moving there.. this is never good for housing values. In fact, expensive housing may be one of the key reasons why people have left Sydney. Why work your ass off to afford a property that takes you hours to get to work, and have to work incredibly long hours to pay for it? Some people have realised it's not like that in all the other states (yet).


----------



## stock_man (29 April 2008)

numbercruncher said:


> Post from another forum, take it as a grain of salt if you wish
> 
> 
> Probably in Sydneys trasiest suburbs, but if true it shows the guts starting to fall out of the low end.




Hardly worth a grain of salt. A quick check on realestate.com.au in Sydney and surrounds (ie the city) returns plenty of properties that have been for sale for a while, and I can think of suburbs that have always had units under 200K.



Gspot said:


> It's worrying, with all the doom and gloom in the world, that seems very real.
> Yet confusing for the ol folks living in Perth, who are still crying out for skilled immigrants on a large scale, as the state keeps booming along.
> Houses are coming on the market, and taking longer to sell, but try renting! Last week went down to Mandurah, and local real estate co, only had 1 property for rent, which was crap. People got to live somewhere.




That local re agent in Mandurah is about to close its doors. Another quick search on realestate.com.au returns 112 properties for rent...

But totally agree with you. In Sydney, any chosen suburb would be luck to have half those vacancies. Where I live there is 4, and each 1 has applications on it before they even show it to prospective tennants. I myself placed an application in for my place sight unseen - crazy times....


----------



## robots (29 April 2008)

CAFA1234 said:


> Another vested interest putting a brave face on a depressing situation. As far as I'm concerned if you want to know what is really going on, DO NOT listen to anyone who has a vested interest in bulling the market up, or putting forward arguments as to why it will not fall.
> 
> It's what the man is paid to do. Nothing personal.




hello,

yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others

get the facts from the state revenue office, thats where you find out the sales history of a particular house,

get out and about at auctions, ofi, very few here do that

thankyou

robots


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## CAFA1234 (30 April 2008)

robots said:


> hello,
> yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others
> get the facts from the state revenue office, thats where you find out the sales history of a particular house,
> get out and about at auctions, ofi, very few here do that
> ...




Agreed. The state revenue office is the main source, however it is months late. Legislate and regulate this industry NOW, and allow Joe Public a level (almost) playing field.


----------



## CAFA1234 (30 April 2008)

February marked another month of steep price declines for existing homes across the U.S., according to single-family home data released Tuesday by Standard & Poor's. And first-quarter foreclosure data from RealtyTrac only lends to the bleak picture of the national market.

The S&P/Case-Shiller Indices, which examines the housing market in 10-city and 20-city composites, shows prices declined more than 12.5% over last year. Looking at the 10-city composite, prices declined in February by 2.6% over January and by 13.6% over last February. The 20-city composite showed a 2.6% month-over-month decline and a 12.7% year-over-year decline.

The February data mark the sixth consecutive month of declines for each of the metropolitan areas covered. And there's little prospect of near-term improvement in the numbers. Every one of the 20 MSAs examined showed a decline in February from the previous month. And 19 of the 20 MSAs continued their year-over-year declines.

"There is no sign of a bottom in the numbers," says David Blitzer, chairman of the Index Committee at Standard & poor's. "Prices of single-family homes continue to drop across the nation. ... The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months. On top of that, the declines have remained steep with eight of the 20 MSAs and both composites reporting their single largest monthly decline in February."

Las Vegas and Miami, two markets that recorded some of the largest price growth in 2004 and 2005, have become the weakest markets, showing 12-month negative declines of 22.8% and 21.7%, respectively. The only market that showed a year-over-year improvement was Charlotte, which saw its prices improve 1.5% over last February. 
-------------------------------------------------------
I've highlighted the 2.6% month on month as those with quick brain cells or a calculator can extrapolate this to a 36% annual decline rate i.e. IF the market keeps falling at 2.6%, it will equate to a 36% fall. 

Whats even more worrying is that the velocity is increasing- try plotting it out for 12 months at the current velocity - I'm sure it gets scary. 

9/10 months ago, the Chicago Future Exchange was pricing a 15% fall for San Fran and 20% fall for Los Angeles, *over the next 3 years*. 

We are there already. San Fran down 17.2%, Los Angeles down 19.4%

BTW this report is the most respected house price indicator in the US and indeed the Chicago futures are based on this 20 city index.


----------



## numbercruncher (30 April 2008)

Looks like huge changes unfolding for UKs mortgage markets, will we see the same or similar here ?  If so the implications are massive ! after all Credit is the ultimate fundamental 



> Nationwide scraps all loans above £500,000 and demands 25% from customers with standard variable rate 'to limit its business'
> 
> The Nationwide yesterday announced some of the most dramatic changes to the mortgage market in 60 years.
> 
> ...




http://www.thisislondon.co.uk/news/article-23480826-details/Nationwide+scraps+all+loans+above+£500%2C000+and+demands+25%25+from+customers+with+standard+variable+rate+%27to+limit+its+business%27/article.do


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## Aussiejeff (30 April 2008)

robots said:


> hello,
> 
> yep, and the same can be said for every blog around from s.keen, financial sense crew, GHPC, mr imber and any others
> 
> ...




Hahaha! robots, yer killing me! Your total bias towards *BOOM TIME* is entertaining, to say the least. 

I note you come from one of THE most affluent suburbs in Melbourne (St Kilda). A most desirable suburb (if you are a professional who can afford the unit prices), *only* about 6km from the CBD. Obviously, transport costs would be minimal compared to someone living out further, say, at Sunbury (which is a mere 33km to the NW as the crow flies). Hmmm, lets see how the stats stack up, shall we?


----------



## Aussiejeff (30 April 2008)

Referring to my previously posted graphs and stats..

Firstly, the Median Property Trends for Houses and Units in the 12 Mths to April 2008 - 

*House Auction Clearance Rates* - St Kilda (83%), Sunbury (34%)
*Days on Market* - St Kilda (48), Sunbury (117)
*Suburb Graph Trend* - St Kilda (UP) v Sunbury (DOWN)

Secondly, the Demographics - 

*Age 20 to 39* - St Kilda (52%), Sunbury (29%)
*Never Married* - St Kilda (59%), Sunbury (29%)
*Professional Job* - St Kilda (18%), Sunbury (7%)
*Working (not school)* - St Kilda (82%), Sunbury (70%)
*Car drive to work* - St Kilda (24%), Sunbury (30%)
*Ferry/Tram to work* - St Kilda (9%), Sunbury (0%)
*Walk to work* - St Kilda (3%), Sunbury (0%)
*House dwelling* - St Kilda (10%), Sunbury (90%)
*Flat dwelling* - St Kilda (71%), Sunbury (5%)
*Renting* - St Kilda (57%), Sunbury (15%)
*Purchasing* - St Kilda (15%), Sunbury (47%)
*Owner/Occupy* - St Kilda (18%), Sunbury (34%)
*Loan Mth < $999* - St Kilda (37%), Sunbury (62%) 

Pretty stark contrast there, wouldn't you say robi? So, I don't think you can assert that what St Kilda is experiencing in the way of property sales and prices is even remotely representative of the general Melbourne region (just compare the Melbourne region stats to St Kilda's in the Demographics Lists above, if you don't believe me).

That's my $2 worth....


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## CAFA1234 (30 April 2008)

FT  -London & NY
Fall in US house prices accelerates

Interest rates have already fallen by 300bp since September, limiting some of the pain for borrowers with adjustable rate mortgages, but prospective home buyers have remained on the sidelines as prices have spiralled lower amid a glut of unsold properties.

Robert Shiller, economist and co-founder of the housing index, warned last week that the severity of the decline in residential property values threatened to exceed that of the Great Depression, when house prices dropped 30 per cent. Since its peak in June 2006, the 20-city house price index has already fallen 14.8 per cent.

The brutal blow to property values has left almost 9m US homeowners in negative equity, meaning they owe the lender more than their house is worth, according to an estimate by Moody’s Economy.com.

---------------
May you live in interesting times.


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## gfresh (30 April 2008)

Seems they have a large excess of supply over there.. 

How did this come about? Did they just start building estates with the blind hope that people would live in them? "Build and they will come". Was it investors thinking the path to riches was investment properties? 

Seems they have too many properties and we have too little. Or do we?


----------



## numbercruncher (30 April 2008)

The US was building 1m homes a year for a pop of 400m , So one house being built for each 400 ppl "triggered ?" a crash.

Now look at us building 150k homes a year for 22m population. So one house being built for each 147 ppl, and about double the Interest rates and double/treble median prices relative to incomes compared with US .....

Just thought Id point that out ....

Oh and currently we have 2.4ppl per house hold, so loads of room to up average folks per household.


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## nioka (30 April 2008)

numbercruncher said:


> The US was building 1m homes a year for a pop of 400m , So one house being built for each 400 ppl "triggered ?" a crash.
> 
> Now look at us building 150k homes a year for 22m population. So one house being built for each 147 ppl, and about double the Interest rates and double/treble median prices relative to incomes compared with US .....
> 
> ...



 You have to make an allowance for our migration and immigration program which is creating a big demand for new homes. Add that to the trend for more "single" families and our housing construction is not keeping up with demand. Try getting a quote from a builder for a quick home build and you will see how far behind we actually are.


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## numbercruncher (30 April 2008)

Last year we had circa 160k migrants and 130k Aussies snuffed it.

I can only Guess at how many people left Home to go " flatting " or whatever, maybe 200k ?

Yes I understand some areas have a long wait for builders, but the 150k builds p/a roughly seems to me to be keeping with demand, Just it seems too many people want to live in the same area, but high density projects should cure that over time ?


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## CAFA1234 (30 April 2008)

nioka said:


> You have to make an allowance for our migration and immigration program which is creating a big demand for new homes. Add that to the trend for more "single" families and our housing construction is not keeping up with demand. Try getting a quote from a builder for a quick home build and you will see how far behind we actually are.




Have you any idea how many migrants enter the US every year - legal and illegal? 

If single people can't afford a home then they will share, as they always have done.

It would help if you stated the numbers and some logical rationale for the assertion, otherwise it just gets lost along with other general comments.


----------



## numbercruncher (30 April 2008)

Heres something to ponder on the supply side, notice the amount of unoccupied dwellings has been rising over time, Id like to find the figure for last year, raises questions about demand exceeding supply (except as mentioned in specific areas, which I beleive is falsely used as the blanket debate )


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## nioka (30 April 2008)

numbercruncher said:


> Last year we had circa 160k migrants and 130k Aussies snuffed it.?




 You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
 If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.


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## numbercruncher (30 April 2008)

nioka said:


> You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
> If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.





Thats because Babies live at home until they are atleast 20 nowadays ( and our massive aging population is snuffing it in increasing numbers from now on, in 20 years when they are leaving home I bet more ppl die each year than are born)

But I did say that i guesstimated 200k people would leave home to go flatting each year which is all that matters for supply.

How many homeless are in Australia ?


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## CAFA1234 (30 April 2008)

nioka said:


> You didn't add the births ??? There are also a lot more overseas students and workers on temp visas.
> If you want to put the increasing number of homeless into the figures then that is a minus but hopefully Rudd will decrease that number so it will then be a plus.




Can, and do, many OS students and temp visa people impact the house market? I understand that it creates demand in the rental market which eventually impacts the capital values, but my view is that the impact on the direct house market is minimal.

And, unless they have changed the rules, those of 457 visas can't buy property anyway as it changes their status, and therefore removes the tax breaks, and their eligibility for the visa. 457 visa are the visa of choice for professionals as the tax benefits are substantial e.g. offset full cost of rental against highest tax rate for up to 4 years!

Temp workers also tend to come and go, depending on where else they can get work and at what rates. 

You really would not want to make a long term investment decision based on temp workers as their volatility is somewhat of a risk.


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## nioka (30 April 2008)

CAFA1234 said:


> Can, and do, many OS students and temp visa people impact the house market? I understand that it creates demand in the rental market which eventually impacts the capital values, but my view is that the impact on the direct house market is minimal.
> 
> And, unless they have changed the rules, those of 457 visas can't buy property anyway as it changes their status, and therefore removes the tax breaks, and their eligibility for the visa. 457 visa are the visa of choice for professionals as the tax benefits are substantial e.g. offset full cost of rental against highest tax rate for up to 4 years!
> 
> ...



 They all take up housing now and will continue to do so in the future.           Whether they rent or buy it makes little difference. Anyone taking up a housing space creates a demand and if there is a shotage the price goes up. There is always someone with the money to pay even if others miss out. Most sellers are instant buyers in the market. "Deceased" sales excluded but according to recent news even those residential spaces are becoming scarce.


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## numbercruncher (30 April 2008)

According to the news record amounts of properties are coming to market and prices have fall in over half of Australias capital cities. 

These students if not living on campus tend to be squeezed in like 5 to a house, way above the current 2.4 average.


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## gfresh (30 April 2008)

Population growth last year was 1.5%, longer term average is 1.3%. This is according to the ABS (on the website)

So whether it's people coming, dying, or leaving, whichever way you look at it, that's ~319k people coming onto the scene each year that need somewhere to live. If we take 2.4 people per household, that's 132k dwellings required. 

That seems pretty close to the 150k figure quoted above. No shortage?


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## gfresh (30 April 2008)

Found this as well, some interesting stats and figures on household trends. 

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/8DD7826E7F7235D8CA25732C0020820B?opendocument


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## nioka (30 April 2008)

gfresh said:


> If we take 2.4 people per household, that's 132k dwellings required.
> 
> That seems pretty close to the 150k figure quoted above. No shortage?



 I understand that the number per household is falling and that the next census will show a figure at less than 2.4. A small drop will make a big difference. Also making a  big difference is the number of old dwellings being demolished to make way for the new. Look at any inner city to see this is happening a lot. If there is no shortage why is it so hard to rent?


----------



## numbercruncher (30 April 2008)

gfresh said:


> Population growth last year was 1.5%, longer term average is 1.3%. This is according to the ABS (on the website)
> 
> So whether it's people coming, dying, or leaving, whichever way you look at it, that's ~319k people coming onto the scene each year that need somewhere to live. If we take 2.4 people per household, that's 132k dwellings required.
> 
> That seems pretty close to the 150k figure quoted above. No shortage?




The growth figure is actually a little bit misleading, because half+ that growth are new born babies living at home, we need to work out how many people are leaving home each year , and with people staying at home longer than ever Im suspecting its lower than the 319k figure, but Im just guestimating there, if we can find out how many Aussies are aged say 18 to 22, that would give us a good indication. Can probably find Aussie birth numbers from 18 or so years ago might help ?


Either way, we have an average of 2.4ppl per household, so 319k / 2.4 = 132k houses needing to be built p/a on that figure to maintain our current very low people per household, If large amounts of people start sharing amid rising cost of living I can see us slipping to over supply at quite a rapid rate.


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## numbercruncher (30 April 2008)

and over to Brisbane ....



> It's official: The boom is over
> 
> BRISBANE'S property boom has been stopped dead in its tracks by rapidly rising interest rates, according to new figures released today.




http://www.news.com.au/couriermail/story/0,23739,23621595-5011140,00.html


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## CAFA1234 (30 April 2008)

nioka said:


> I understand that the number per household is falling and that the next census will show a figure at less than 2.4. A small drop will make a big difference. Also making a  big difference is the number of old dwellings being demolished to make way for the new. Look at any inner city to see this is happening a lot. If there is no shortage why is it so hard to rent?




Nioka, my dear friend. When is the next census due to take place? And where are you getting the inside information from? 

It's a fair cop to say you think something, or even to report that XYZ thought something. One could even go with the flow of someone who guessed that they thought something. But you way you have suggested that somehow you have an inside view of what the next census will say is a tad naughty, and then use that to justify your position.

Be open minded and don't back a position too hard - sometimes you will be wrong. Maybe others are just trying to help you with some more detailed understanding that may not have been visible?

Many of the arguments you have put forward are just as valid in the US - hundreds of thousands of applications for visa every year, tens of thousands of illegal immigrants every month, marriage breakdown leading to small households, old houses being demolished, until recently a 30 year low in unemployment (in CA anyway), low federal bank rate (that's an extra one), intervention in the financial markets to encourage lending like increasing the amount that the federal backed Fannie & Freddie & FHL can lend (sorry another US only one)......and yet houses (not flats / units) are falling at a current rate of 30% PA  - see previous post of mine today.

You're right to say a small drop can make a big difference - 'the tipping point' of any market if often finely balanced. It works on the way up and the way down. If I can supply 10 into a market that wants 11, I have pricing power and can push the price up quickly. However as soon as there are only 9 wanted for my supply of 10, I have lost all pricing power and the price will tend to drop rapidly. This is very simplistic and nowhere like the real world with many variables adding to the mix.


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## Temjin (30 April 2008)

numbercruncher said:


> Heres something to ponder on the supply side, notice the amount of unoccupied dwellings has been rising over time, Id like to find the figure for last year, raises questions about demand exceeding supply (except as mentioned in specific areas, which I beleive is falsely used as the blanket debate )
> 
> View attachment 20584




numbercruncher, you just brought up an interesting table.

Read this as well if you haven't already, more details on it.

http://cij.inspiriting.com/?p=314

A short summary of the findings.



> In short, these are our findings:
> *There is no overall housing shortage.* The increase in the number of dwellings far exceeded the population growth and household formation. Furthermore, the increase in unoccupied dwellings is almost triple the increase in population growth.
> *Hoarding could be the reason for housing ’shortage’*
> *Overall, real rental costs are resistant to changes in real interest cost.*


----------



## robots (30 April 2008)

Aussiejeff said:


> Hahaha! robots, yer killing me! Your total bias towards *BOOM TIME* is entertaining, to say the least.
> 
> I note you come from one of THE most affluent suburbs in Melbourne (St Kilda). A most desirable suburb (if you are a professional who can afford the unit prices), *only* about 6km from the CBD. Obviously, transport costs would be minimal compared to someone living out further, say, at Sunbury (which is a mere 33km to the NW as the crow flies). Hmmm, lets see how the stats stack up, shall we?




hello,

thanks bro,  some great information you have put foward

today was awesome, rode the pushie into city a couple of times, witnessed all the taxi drivers taken' it easy

thankyou

robots


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## numbercruncher (30 April 2008)

robots said:


> hello,
> 
> thanks bro,  some great information you have put foward
> 
> ...




I saw them on the News, reminds me why Im not so keen on catching a taxi when in Melbourne, looked like Osamas Jihad brigade, was waiting for them to whip out the AK47's.

Big news story beamed into all Queensland living rooms tonight was .....

" House Prices Hit the Wall "

Now for the panic selling feedback loop, looking forward to next quarters fudgy figures !


----------



## wayneL (30 April 2008)

numbercruncher said:


> I saw them on the News, reminds me why Im not so keen on catching a taxi when in Melbourne, looked like Osamas Jihad brigade, was waiting for them to whip out the AK47's.
> 
> Big news story beamed into all Queensland living rooms tonight was .....
> 
> ...




It's not time for panic selling yet. The endowment effect is strong, look for a period of price standoff and lower turnover, with small drops because of stress sales at the margins. Something else will have to go wrong in the economy (and it probably will) before there is any panic selling.

It might just drift sideways/downish for a few years, there are still shoes to fall in this game.


----------



## nioka (30 April 2008)

CAFA1234 said:


> Nioka, my dear friend. When is the next census due to take place? And where are you getting the inside information from?
> 
> It's a fair cop to say you think something, or even to report that XYZ thought something. One could even go with the flow of someone who guessed that they thought something. But you way you have suggested that somehow you have an inside view of what the next census will say is a tad naughty, and then use that to justify your position.
> 
> ...



 I'd be the first one to admit that I'm often wrong. Aren't we all. However I have read some estimates in recent real eatate publications where they suggest a reduction in the number of occupants per dwelling and discussions with real estate agents seem to back this up.Aged people are living longer and staying at home longer, often on their own. Meals on wheels and aged care help is encouraging this. Time will tell.


----------



## CAFA1234 (30 April 2008)

nioka; said:
			
		

> I'd be the first one to admit that I'm often wrong. Aren't we all. However I have read some estimates in recent real eatate publications where they suggest a reduction in the number of occupants per dwelling and discussions with real estate agents seem to back this up.Aged people are living longer and staying at home longer, often on their own. Meals on wheels and aged care help is encouraging this. Time will tell.




I understand. But this is the point many of us have been trying to point out - the real estate industry has a vested interest in bulling the market. They will fund 'independent' reports to show how great their world is and how stupid you are if you don't but real estate.

Newspaper / real estate magazines get substantial revenue from real estate advertisers. It is better to look at official stats from taxation records or similar to understand exactly what is going on with house prices, or walk the streets, go to the auctions, analysis the real estate web sites on a regular basis, buy previous sales data for any are that you are interested in and do the hard yakka that any investment requires. But, do not put too much faith in real esate publications.

BYW I'm not dissing you - I'm a real state investor myself, but its not a get rich quick scheme that some elements of the industry try and sell on.


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## CAFA1234 (1 May 2008)

Standard & Poor's/Case-Shiller US house price report  - US house prices down 13% year on year.

Depressing as this may be there is some background detail to the above report.

It is made up from a rolling average over the 3 months to the end of Feb (published yesterday), so contains data from deals that closed last December. And of course last December's closed sales where negotiated in October / November / December. So what the numbers are telling you, are that prices at which houses were AGREED to be sold at showed a 13% decline from the period Oct2006 / Jan2007 to Oct 2007 / Jan 2008, with a bias towards  the mid point.

My assertion is that the market has fallen since Dec 2007, and so I suggest that next months figures will be worse.

PS the above index was started in 1988, and the previous low point was in the 1991 recession - a negative 6%. At the time there was a large billboard campaign "Spend a dollar today, end the recession tomorrow" on many prime sites across the US.


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## CAFA1234 (1 May 2008)

This is a really long post - however for those that are interested this is a brief chronological listing of various housing data from the end of 2005, when the Bond market called the problems in the US housing market. 12/06/05 Housing Bubble Bursts... (dates in US format)

Hindsight is such a wonderful attribute. However there were enough warning signs along the way for those that wanted to see them.
----------------------------------------------------------------------

4/29/08 According to the Standard & Poor's Case-Shiller home price index U.S. home prices fell 12.7% YoY.
4/15/08 U.S. housing starts fell 11.9% MoM and 36.5% YoY
3/25/08 Standard & Poor's/Case-Shiller index of U.S. home prices fell by 11.4% in January, the biggest monthly drop since the index began in 1987.
1/29/08 According to Standard & Poor's/Case-Shiller, U.S. home prices fell 8.4% YoY. 
1/28/08 U.S. New-home sales fell 4.7% MoM, and 26% YoY. The median price of a new home fell 10% YoY to $219,200.
1/24/08 U.S. existing home sales are down 2.2% MoM and down 22% YoY.
Prices of single family homes were down 1.8% in 2007 -- the first decline since records began four decades ago.
12/11/07 The National Association of Realtors said the pending U.S. home sales index was up 0.6% in October but down 18.4% YoY.
A trade group for real-estate agents said the battered housing market is on the verge of stabilizing and raised its outlook for 2007 and 2008 home sales.
11/27/07 U.S. Home prices fell 4.5% in the third quarter from a year earlier.
10/30/07 US real estate wealth is expected to fall anywhere from US$2 trillion to US$4 trillion when the total costs of the recent credit crunch are tallied, the New York Times reported.
10/25/07 U.S. New home sales fell 23% YoY.
10/24/07 U.S. Existing home sales fell 8.0% from August's pace -- the lowest since records began in 1999.
10/17/07 U.S. Housing starts were down 10.2% MoM and down 31% YoY.
9/28/07 New homes sales in the U.S. dropped 8.3 percent to an annual pace of 795,000 in August.
9/21/07 A big overhang of property will bring U.S. house prices down further, but it is too early to say if the economy will sink into recession, former Fed chief Alan Greenspan was quoted as saying.
8/26/07 The U.S. Census Bureau said new home sales were at an annual rate of 870,000 in July, up 2.8% from June's rate. So far in 2007, new home sales are down 21% YoY.
7/19/07 Losses in the fast-unraveling subprime lending market could top $100 billion, but the Federal Reserve is taking measures to protect borrowers, according to Fed Chairman Bernanke.
6/26/07 The U.S. Census Bureau said new home sales were down 1.6% from April's pace, and down 21% YoY. This is the fourth drop in the past five months, providing further evidence of a continued slump in housing.

5/07/ Bernanke Warned by Real Estate Analysts:Housing Collapse Is Much Worse Than You Say
5/25/07 The National Association of Realtors reports U.S. existing home sales down 2.6% from March's pace and the lowest level in over three years. Current inventories of homes for sale represent an 8.4 month supply, the most in 15 years.
5/1/07 The National Association of Realtors said pending U.S. home sales fell 4.9% in March, more than expected.
4/20/07 The National Association of Realtors said that U.S. existing home sales were at an annual rate of 6.12 million units in March, down 8.4% from the previous month and weaker than expected. YoY Median home prices were down 0.3% in March.

3/26/07 U.S. New home sales were weaker than expected down 3.9% from January's pace. This # is dimming hopes for a rebound in the housing market and increasing worries about the health of the economy
3/13/07 Question marks continue to hang over the US mortgage market. The Securities & Exchange Commission is investigating troubled subprime mortgage lender New Century, the firm has revealed.
2/28/07 New home sales fell by 16.6%, the Commerce Department said Wednesday. The monthly decline was the biggest, since a 23.8 percent drop-off in January 1994. The median sales price of a new U.S. home rose $400 to $239,800.
2/26/07 US mortgage crisis goes into meltdown Nouriel Roubini, economics professor at New York University, says the housing bust is slowly pulling America into recession. He cites a 14.4pc drop in housing starts last month; an expected loss of 600,000 real estate jobs in 2007; a sharp fall in home equity withdrawals - down from 6pc of GDP at the top of the boom; and a squeeze as $1,000bn of mortgages are adjusted upwards this year to higher interest rates.
2/12/07 The number of U.S. homes entering foreclosure rose to 130,511 in January, up 25% YoY.

12/19/06 U.S. Housing starts came in at an annual rate of 1.588 million units in November, up 6.7% from October's pace. So far in 2006 housing starts are down 12.5% YoY.
12/11/06 The National Association of Realtors expects U.S. existing home sales down 8.6% in 2006 and down 1.0% in 2007.
11/29/06 U.S. New home sales were at an annual rate of 1.004 million units in October, down 3.2% from September's pace and less than expected. YoY new home sales are down 18%.
11/28/06 The National Association of Realtors said U.S. existing home sales were at an annual rate of 6.24 million units in October, better than expected and up 0.5% from September's pace. The 3.85 million homes for sale in October represented a 7.4 month supply, the most in 13 years.
10/26/06 The Commerce Department reported the median price for a new home sold in September was $217,100, down 9.7 % from September 2005. This is the lowest median price for a new home since September 2004 and the largest year-over-year decline since December 1970.



9/27/06 U.S New home sales were up 4.1% MoM. New home inventory dropped from 7.0 to 6.6 months. YoY new home sales are down 16%.
9/25/06 The National Association of Realtors said that U.S. existing home sales were at an annual rate of 6.30 million units in August, more than expected. The median home price was down 1.7% from a year ago, the first annual drop in eleven years.
From Barron’s 8/21/06
32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
43% of first-time homebuyers in 2005 put no money down
15.2% of 2005 buyers owe at least 10% more than their home is worth
10% of all homeowners with mortgages have no equity in their homes$
2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007
8/24/06  New home sales fell 4.3% in July, the Commerce Department said Thursday. For 2006, new home sales were down 14% YoY.
8/2/06 The Mortgage Bankers Association said its index of mortgage applications is at the lowest level since May 2002.

6/28/06 U.S. Mortgage applications dropped from 567.6 to 529.6 last week, hurt by the recent rise in mortgage rates.
6/27/06 Buyers in more markets find housing out of reach
San Diego could be a poster child for the affordability crisis. Home prices here have risen 142% since the start of 2000. Only 9% of residents could afford the median home if they had to put down 20% of the purchase price. Even so, a dizzying array of high-risk adjustable-rate mortgages has sustained the market by helping more people qualify.
6/26/06 U.S. New home sales were up 4.6% from April's pace and more than expected. For 2006, new home sales are down 11% YoY.
6/20/06 The U.S. Census Bureau said housing starts were at an annual rate of 1.957 million units in May, up 5.0% from April's pace and more than expected. YoY housing starts are down 1.7%.
4/26/06 U.S. new home sales were at an annual rate of 1.213 million units in March, down 7% from March of 2005. So far in 2006, new home sales are down 8.2% from a year ago.
2/27/06 New home sales fell 5% in January to the lowest level in a year, the Commerce Department reported Monday. 
1/18/06 43% of first-time home buyers put no money down. The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found.
12/06/05 Housing Bubble Bursts in the Market for U.S. Mortgage Bonds
Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default.
11/28/05 Sales of previously owned U.S. homes fell 2.7 percent last month to a 7.09 million annual rate, the slowest since March, the National Association of Realtors said. The number of unsold homes was the highest since April 1986.
09/26/05 ..most homeowners are in a fairly good position to weather a shock if prices drop, Federal Reserve Chairman Alan Greenspan said Monday.


----------



## Temjin (1 May 2008)

Very nice CAFA1234! Must have spent alot of time putting all those stuff together!

Do we see a pattern too over in Australia too? 

Our "mainstream" news aren't as gloom and doom as over in the US right now, but we seem to be in the late 06 to early 07 range. Stuff like applications down, sales slowed down, median price start showing weaknesses. 

It's only a matter of time now. 

I'm more worried about the hundred trillion dollar CDS bomb than anything else right now, it's the next potential massive global black swan event. If it explodes, then every assets will collapse in prices. (and maybe include gold with it as well, though it should hold up the best)


----------



## numbercruncher (1 May 2008)

CAFA1234 said:


> Standard & Poor's/Case-Shiller US house price report  - US house prices down 13% year on year.
> 
> Depressing as this may be there is some background detail to the above report.
> 
> ...





Some are saying drops in the US could exceeed that of the great depression, they fell 30pc then, half way there now ...

Nice work on the data list Cafa btw (>:


----------



## CAFA1234 (1 May 2008)

Temjin said:


> Very nice CAFA1234! Must have spent alot of time putting all those stuff together!
> Do we see a pattern too over in Australia too?
> Our "mainstream" news aren't as gloom and doom as over in the US right now, but we seem to be in the late 06 to early 07 range. Stuff like applications down, sales slowed down, median price start showing weaknesses.
> 
> ...




Thanks - pulled the date from an investor web site, and highlighted a few items. Cut lots out as there is a 10000 character limit - just as well!

Whats interesting to me is the recent data. In December we had the Real Estate mob saying that he market has stabilized - we now know taht is was falling of a cliff. Will you EVER believe real estate publications again?
_ 12/11/07 ...trade group for real-estate agents said the battered housing market is on the verge of stabilizing and raised its outlook for 2007 and 2008 home sales._

The next worrying aspect is the velocity of the decline...
1/24/08 .. Prices of single family homes were down 1.8% in 2007 -- the first decline since records began four decades ago.

A week later it was..
1/29/08 According to Standard & Poor's/Case-Shiller, U.S. home prices fell 8.4% YoY.

By end or March..
3/25/08 Standard & Poor's/Case-Shiller index of U.S. home prices fell by 11.4% in January, the biggest monthly drop since the index began in 1987.

And this week ..
4/29/08 According to the Standard & Poor's Case-Shiller home price index U.S. home prices fell 12.7% YoY.

Looks as if the velocity is about 1.5% per month, between 1/29 and 4/29.

This is probably a silly view, but what the hell. If that velocity continued for another 6 months then we would be seeing a YoY decline of over 20%. I'll let you work out the number for a year out 

Will it repeat in Aus - I really don't have sufficient local data to make that call, but I'm sure others will be able to look at the US data and take a view as to whether there is a repeatable pattern developing. Maybe a view from the UK as well?

I share some concerns about CDS - maybe another thread??


----------



## CAFA1234 (1 May 2008)

#  The Guardian, UK
# Thursday May 1 2008

House prices fell 1% over the last year, says the Nationwide. It doesn't sound much but, as ever, the story is the trend. The rate of decline has accelerated in each of the past three months. Add up those declines - 0.5% in February, 0.7% in March and 1.1% in April - and you get an annualised fall of 9%. That sounds more serious.

Indeed, the useful picture is offered by looking at the decline from the peak, which was last October according to the Nationwide's figures. Viewed that way, house prices have fallen 4.2% in six months.

A few optimists, such as the Royal Institution of Chartered Surveyors, insist on describing the picture as a "softer tone," but those at the sharp end seem to be preparing for a harder fall.

Persimmon, the country's largest housebuilder, has postponed work on new sites. At HBOS, Britain's biggest mortgage lender, chief executive Andy Hornby is officially predicting a single-digit decline in prices this year. But he felt obliged, when asking shareholders for £4bn, to display a graph illustrating the effect on capital ratios of a 10% fall this year and next. One assumes he regards that as a real possibility.

So he should. It is now as clear as day that the era of 100% mortgages is over. We are about to discover what happens to house prices when the support of loose lending is removed.

In theory, prices ought once again to bear some relation to earnings. The long-term average is four times earnings, not the current ratio of six times. That's the basis on which David Blanchflower, a member of Bank of England's monetary policy committee, said a fall in prices of one-third is "not implausible".

That may turn out to be too dramatic, but the trend has clearly turned. When the old trend was a 15-year bull market, common sense says we are still in the very early stages of the correction.

----------------------
Enjoy the ride.


----------



## numbercruncher (1 May 2008)

The Investor market seems to be falling apart ....



> INVESTOR appetite for housing debt has plunged to its lowest on record, despite a stagnating sharemarket.
> 
> Amid rising interest rates, annual growth in borrowing for housing investments has fallen below 10 per cent for the first time since records began 17 years ago.




http://www.smh.com.au/news/national/investors-shy-away-from-house-market/2008/04/30/1209234957576.html


----------



## theasxgorilla (1 May 2008)

numbercruncher said:


> I saw them on the News, reminds me why Im not so keen on catching a taxi when in Melbourne, looked like Osamas Jihad brigade, was waiting for them to whip out the AK47's.




I think that's a bit bigoted Numpty.  Feel free to think what you like, but on the forum please be more discerning of what you share with the rest of us.


----------



## numbercruncher (1 May 2008)

theasxgorilla said:


> I think that's a bit bigoted Numpty.  Feel free to think what you like, but on the forum please be more discerning of what you share with the rest of us.





You didnt see the article they were half naked beating there chests and chanting in public like vile beasts. It was very UnAustralian.

But seen as your sensitive to such issues ill refrain as long as you refrain from childish name calling as ive requested before on more than one occasion. Some moderaters on forums i visit would view childish name calling as baiting.


----------



## wayneL (1 May 2008)

numbercruncher said:


> You didnt see the article they were half naked beating there chests and chanting in public like vile beasts. It was very UnAustralian.




What Article?

What has that (whatever or whoever you're referring to) got to do with taxi drivers?

How does a persons ethnic dress imply that they are terrorists?

Finally, you've never seen half naked Aussies behaving badly in public?


----------



## explod (1 May 2008)

numbercruncher said:


> You didnt see the article they were half naked beating there chests and chanting in public like vile beasts. It was very UnAustralian.
> 
> But seen as your sensitive to such issues ill refrain as long as you refrain from childish name calling as ive requested before on more than one occasion. Some moderaters on forums i visit would view childish name calling as baiting.




There was no immodesty in the behaviour.  A demonstration for a very serious situation for them.

At least they wernt' smashing and upturning cars as do some demonstrators.

The Taxi drivers have been trying very hard for years to have something done and a few hairy chests, if it has done some good, is not a problem..

A long way off topic, but............... I suppose one could live in a disused taxi if it got very bad


----------



## numbercruncher (1 May 2008)

wayneL said:


> What Article?
> 
> What has that (whatever or whoever you're referring to) got to do with taxi drivers?
> 
> ...




They were Taxi Drivers on strike or something.

It was on T.V and for the record they didnt have any ethnic dresses on and I never said they where Terrorists, I said they *looked* like Osamas Jihad brigade, because they did, long beards , no tops on in the middle of the street beating cheasts chanting something I couldnt understand.

But I see a casual jestful observation has been found offensive by some, and If so I apologise.

And Finally I assume these guys where Aussies or they wouldnt or shouldnt be driving taxis here, so yes Ive seen Aussies behaving many times, Including last night on the TV.


----------



## theasxgorilla (1 May 2008)

numbercruncher said:


> *But I see a casual jestful observation has been found offensive by some, and If so I apologise.
> *
> And Finally I assume these guys where Aussies or they wouldnt or shouldnt be driving taxis here, so yes Ive seen Aussies behaving many times, Including last night on the TV.




Aussie Stock Forums is an international community.  We don't promote nationalistic or racist discussions.

So you know, for the future, it's possible for a person to be a resident of Australia, to have an Australian drivers license, and to earn income driving a taxi.  One does not have to be an Australian national.


----------



## theasxgorilla (1 May 2008)

explod said:


> A long way off topic, but............... I suppose one could live in a disused taxi if it got very bad




Do you know what those taxi license plates cost?  Even without house prices severely corrected I still reckon you'll find somewhere to live that comes in under the cost of a taxi license.

Thanks for getting us back on topic BTW


----------



## Kimosabi (1 May 2008)

numbercruncher said:


> I saw them on the News, reminds me why Im not so keen on catching a taxi when in Melbourne, looked like Osamas Jihad brigade, was waiting for them to whip out the AK47's.



Good on them.

It was the best example of how to get your point across and not get f^cked around by the dipsh1t politicians I've ever seen.


----------



## numbercruncher (1 May 2008)

Yes good on them, they got the Requested security screens from the Victorian Government, would of thought it should be a employer supplied accessory rather than tax payer funded, but oh well. If I was driving taxis I would of installed my own on the first shift, sort of the same as providing your own steel caps when on building sites, safety is personal responibility.


----------



## Kimosabi (1 May 2008)

numbercruncher said:


> Yes good on them, they got the Requested security screens from the Victorian Government, would of thought it should be a employer supplied accessory rather than tax payer funded, but oh well. If I was driving taxis I would of installed my own on the first shift, sort of the same as providing your own steel caps when on building sites, safety is personal responibility.



These heard these new screens are being supplied by Bigot Proof Industries...


----------



## numbercruncher (1 May 2008)

Kimosabi said:


> These heard these new screens are being supplied by Bigot Proof Industries...





Thats nice Kimo, where are they made ?


----------



## CAFA1234 (2 May 2008)

Kimosabi; said:
			
		

> These heard these new screens are being supplied by Bigot Proof Industries...




Now, what was this tread all about? numbercruncher made an off the cuff comment, silly maybe. but I'm sure most people didn't take it seriously at all.

Lets get back to the topic, and for the others, go get a room.


----------



## wayneL (2 May 2008)

CAFA1234 said:


> Now, what was this tread all about? numbercruncher made an off the cuff comment, silly maybe. but I'm sure most people didn't take it seriously at all.



_Au contraire_. The mod team here takes the code of conduct very seriously.

Meanwhile, housing bears suddenly have a voice over here in Blighty.

http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=441054&in_page_id=3


> SNIP:
> 
> 68-year-old Ronson is incredibly negative about the housing market for new homes, particularly outside of London.
> 
> ...




He is speaking turnover here rather than prices, but give it time.


----------



## CAFA1234 (2 May 2008)

Whilst poking around on thisismoney.co.uk
http://www.thisismoney.co.uk/mortgages/buy-to-let/article.html?in_article_id=440950&in_page_id=56

This should be warning to anyone still thinking about all those 'I'll make you a millionaire in no time' property seminar

...Inside Track, the company that promised to turn a generation of Britons into 'property millionaires', has gone into administration....

Britain's biggest property investment company made its money encouraging people to purchase - at a supposed discount - strings of new-build flats to rent out: a business model that has faltered in the face of falling property values, below average rents and a mortgage freeze.

Inside Track epitomised the buy-to-let boom of recent years, with high-profile and ambitious advertising for its property seminars that it claimed would lead to riches. 
------------------------------------------------

Reminds me of a classic Sydney operation called Wealth Creators or similar. Anyone who is ever tempted to go to a seminar should read this report.

OK, so what has this to do with house prices. Well, this sort of scheme keeps prices up well beyond what they otherwise would be, and when the crunch comes it magnifies the downside.


----------



## wayneL (2 May 2008)

CAFA1234 said:


> Whilst poking around on thisismoney.co.uk
> http://www.thisismoney.co.uk/mortgages/buy-to-let/article.html?in_article_id=440950&in_page_id=56
> 
> This should be warning to anyone still thinking about all those 'I'll make you a millionaire in no time' property seminar
> ...




A lot of folks have been popping bottles of cheap Asti Spumante (They can't afford Moet & Chandon anymore after dealing with this mob). They've been losing clientÃ¨le and seminar attendances have been dropping for yonks after heaps of adverse publicity like this:

http://www.guardian.co.uk/money/2008/feb/16/property.houseprices2

And guess how the founder of Inside Track started his business life... a pyramid selling company marketing a Chanel knock-off pefume. 

I believe the smart bastid got his money out of I-T a while ago though.


----------



## Kauri (2 May 2008)

and the press here in Aus will be carrying stories calling for rate cuts as early as Sept... especially after the last building approvals...   

 Cheers
............Kauri


----------



## CAFA1234 (2 May 2008)

Kauri; said:
			
		

> and the press here in Aus will be carrying stories calling for rate cuts as early as Sept... especially after the last building approvals...
> 
> Cheers
> ............Kauri




And....? Sorry, but I'm missing the point. 

Is this in reference to another post, some specific information, or media report. Is 'building approvals' for single family dwelling or unit or both, in Wagga Wagga, or Timbuktu. Are they down on the Month or the Year, and how does that compare with historic numbers?

You'll have to forgive a Brit turned Aussie living in the US at times for being a tad dense.

Can you articulate a little more.


----------



## Kauri (2 May 2008)

CAFA1234 said:


> And....? Sorry, but I'm missing the point.
> 
> Is this in reference to another post, some specific information, or media report. Is 'building approvals' for single family dwelling or unit or both, in Wagga Wagga, or Timbuktu. Are they down on the Month or the Year, and how does that compare with historic numbers?
> 
> ...




   What point have you missed??


----------



## Kimosabi (2 May 2008)

Kauri said:


> and the press here in Aus will be carrying stories calling for rate cuts as early as Sept... especially after the last building approvals...
> 
> Cheers
> ............Kauri



I was listening to the radio today, I think it was the ABC(Australian Brainwashing Corporation) and they had some "Real Estate" expert on that was saying the main reason Building Approvals had dropped was because of the heavy rains in Northern Queensland.

I couldn't work What the F^ck heavy rains has to do with building approvals unless they don't have roofs on their offices in Northern Queensland.


----------



## CAFA1234 (2 May 2008)

Kauri; said:
			
		

> What point have you missed??




OK, I understand - there is no point.


----------



## Kauri (2 May 2008)

CAFA1234 said:


> And....? Sorry, but I'm missing the point.
> 
> Is this in reference to another post, some specific information, or media report. Is 'building approvals' for single family dwelling or unit or both, in Wagga Wagga, or Timbuktu. Are they down on the Month or the Year, and how does that compare with historic numbers?
> 
> ...




  As a person who has his hand in three properties in Aus, has bought and sold in the UK, and probably in the US.. , who quotes case schillers, et al,.. I wouldn't have thought that a simple thing like building approvals in Aus would get past you... or are you just looking for ... a discussion.... to fill in your day???

   Have a good one..
               Kauri


----------



## CAFA1234 (2 May 2008)

Kauri; said:
			
		

> As a person who has his hand in three properties in Aus, has bought and sold in the UK, and probably in the US.. , who quotes case schillers, et al,.. I wouldn't have thought that a simple thing like building approvals in Aus would get past you... or are you just looking for ... a discussion.... to fill in your day???
> 
> Have a good one..
> Kauri




Kauri,  As in my last post, there is no point in continuing this discussion as it is based on data that I'm not aware of. 

Please remember that not all posters are living in Aus and therefore some reference to a media report, with at least some basic detail would assist. 

I'm not sure what my property investing over a period of 25 years has to do with this - I've tried to add value to each post, by quoting reference material in the hope of expanding any discussion, or by expressly stating that something was my view or even a guess. I've made money, and I've lost money and been very open at all times, and where I have quoted my experince then that's just as it was - no bull, just fact.

Good day to you Sir.


----------



## Kauri (2 May 2008)

CAFA1234 said:


> Kauri, As in my last post, there is no point in continuing this discussion as it is based on data that I'm not aware of.
> 
> Please remember that not all posters are living in Aus and therefore some reference to a media report, with at least some basic detail would assist.
> 
> ...





   Sir,
       I would have loved to quote myself, but as my post was in reference to tomorrows financial story in the mass press, and that at the time of posting it wasn't even in the on line press, it would have been a tad difficult.. no??
       Tomorrows paper delivered today, now that was the point of my post... I leave intellectual discussion to the intellectuals... one of which I am not..

       and a good night to all..
      a smuggled Budgie..


----------



## wayneL (2 May 2008)

Kauri said:


> I leave intellectual discussion to the intellectuals...



There would be no discussion at all around here then.  :


----------



## CAFA1234 (2 May 2008)

Building Approvals for March - Australia 

Thomson Financial News - 1st May

Private-sector house building approvals dropped 5.8 percent to 8,611 in March from February, and was 1.0 percent lower than a year ago.

Other private-sector dwelling approvals inched up 0.3 percent to 3,753 for the month and were up 4.3 percent on year.

The trend estimate for total approved dwelling units fell 2.1 percent for the month but rose 1.8 percent compared to a year earlier, the ABS said.

-----------------------------------
Despite the headlines and expectations from the financial markets it looks as if the YoY figures are not too bad considering 2007 was still a building boom in many parts of Aus. It would be nice is someone could give up the numbers for a 5 year period to see the trend line. I not sure what the trend line in the article refers to.


----------



## Macquack (2 May 2008)

Kimosabi said:


> I was listening to the radio today, I think it was the ABC(Australian Brainwashing Corporation) and they had some "Real Estate" expert on that was saying the main reason Building Approvals had dropped was because of the heavy rains in Northern Queensland.
> 
> I couldn't work What the F^ck heavy rains has to do with building approvals unless they don't have roofs on their offices in Northern Queensland.




Kimy, I like your style.
By the way, keep bashing the banks (maintain the rage or outrage or whatever).


----------



## numbercruncher (2 May 2008)

Nice little chart here for you all showing the giant leap in property listings both YOY and from Jan to Feb this year.

From Jan to Feb weve seen nationally the amount of stock for sale leap some 50pc odd for houses , 132k in Jan to 195k in Feb and all indicators showing this is escalating?


----------



## robots (2 May 2008)

hello,

thats great news number, plenty of choice (ie. suburb, architectural style, near a train station or tram line etc)for the homeless if they decide to get with society

thankyou

robots


----------



## Pommiegranite (2 May 2008)

numbercruncher said:


> Nice little chart here for you all showing the giant leap in property listings both YOY and from Jan to Feb this year.
> 
> From Jan to Feb weve seen nationally the amount of stock for sale leap some 50pc odd for houses , 132k in Jan to 195k in Feb and all indicators showing this is escalating?
> 
> View attachment 20653





Great. Hopefully the extra listings will go someway to satisfying the unsatiable demand.

Reason they're not selling?

It's like buying house furnishings/electronics/white goods 2 weeks before XMAS i.e Most people wait until the post XMAS sales. 

It doesn't mean that the demand isn't there. In a true property market recession, the demand wouldn't be there even at reduced prices.


----------



## theasxgorilla (2 May 2008)

Pommiegranite said:


> It doesn't mean that the demand isn't there. In a true property market recession, the demand wouldn't be there even at reduced prices.




In a true market recession, crash, "the party is over", whatever, one would also expect to see the supply side actively seeking demand at lower prices.  Token examples notwithstanding, I don't get the impression we're seeing that yet in most capital cities.


----------



## wayneL (2 May 2008)

Jeff Randall of The Torygraph has been one of the very few journalists cautioning against the housing bubble over a period of years. He's been a bit muted before now about it, understandable really, anyone with dissenting views against the housing bubble was treated to mock and derision. Heretics or lunatics who should be boiled in oil... or at least committed to an institution for the criminally insane.

But Jeff is in full flight now, one of many excellent articles coming from him recently: The Death Of Common Sense



			
				Jeff Randall said:
			
		

> Snip:
> 
> Applying common sense as a first principle of intelligent behaviour is, of course, common sense. Few advise against it and those who do, insisted the 18th century Scottish thinker Thomas Reid, are usually "philosophers" or "insane". He said: "It is appropriate to ridicule the denial of common sense."
> 
> ...


----------



## wayneL (2 May 2008)

theasxgorilla said:


> In a true market recession, crash, "the party is over", whatever, one would also expect to see the supply side actively seeking demand at lower prices.  Token examples notwithstanding, I don't get the impression we're seeing that yet in most capital cities.




Yep, The Mexican Standoff on Price.

Was happening here for several months. Only when selling becomes urgent to enough people because of redundancy, reducing profits, cost of living/wage pressure etc, will the market see significant falls.

That horseman has yet to ride in Oz, but here in the UK, he is saddled up and mounted, and he's just about to spur his horse into motion. There is open talk of a financial Apocalypse.


----------



## numbercruncher (2 May 2008)

I wouldnt think many here had lived through a Realestate crash ? I havnt that I can remeber , I did see them stagnate for a decade in the 90's though.

I would assume prices dont Crash over night and Its pretty much a drawn out affair, 3pc this month, 1pc next , 5pc next etc .....

Its early days the listings are just beginning to surge massively and bubblevision is starting to run the stories such as the "House Market Hits the Wall " feature this week.

Once sentiment builds and momentum sets in who knows ?

Even saw an article on ninemsn today, some experts predicting rents and prices too increase 50, yes 50pc this year, delusional isnt it ?


----------



## theasxgorilla (2 May 2008)

wayneL said:


> Yep, The Mexican Standoff on Price.
> 
> Was happening here for several months. Only when selling becomes urgent to enough people because of redundancy, reducing profits, cost of living/wage pressure etc, will the market see significant falls.




It happened back in 2003/04 in some parts of Melbourne.  Vendors had their high-water-mark set by the eurphoria of 2002.  After enough bad news had been splattered around about what was happening in some sh1ttier parts of Melbourne and to greater effect in Sydney, many decided that they'd had a good run and they better takes profits, and get out before it really does crash.  Many couldn't sell, and many decided that it was better to keep the property, continue to rent it and take the negative gearing and depreciation kickbacks because that was a better financial outcome than discounting their property some tens of thousands of dollars and to just ride it.

Guess what happened?  Wages kept rising so the impact of making up the shortfall between rent and outgoings hurt less and less, and eventually 06/07 arrived and these people were able to sell into a new frenzy for prices that were invariably tens of thousands of dollars higher than 2002 peak prices.  

Smiles all round.


----------



## CAFA1234 (3 May 2008)

robots; said:
			
		

> hello,
> 
> thats great news number, plenty of choice (ie. suburb, architectural style, near a train station or tram line etc)for the homeless if they decide to get with society
> 
> ...




Robots, mate, what the hell are you on? Must be good stuff


----------



## wayneL (3 May 2008)

Holy snapping cadoodalies,

Even the VIs have turned bearish over here... stunning! 

http://business.timesonline.co.uk/t.../construction_and_property/article3859936.ece



> *Halifax signals start of two-year house price fall
> *
> James Rossiter, Property Correspondent
> 
> ...


----------



## CAFA1234 (3 May 2008)

numbercruncher; said:
			
		

> I wouldnt think many here had lived through a Realestate crash ? I havnt that I can remeber , I did see them stagnate for a decade in the 90's though.
> 
> I would assume prices dont Crash over night and Its pretty much a drawn out affair, 3pc this month, 1pc next , 5pc next etc .....




I suspect your assertion is correct - you are not going to wake up next week and see that property is down 30% from last week.

In major established areas you are likely, in my humble view, to see as you say a few % here and a few % there, and sometimes a % or two increase. It may even just stagnate for an extended period. 

However with inflation at over 4% prices should double every 16 years, so if you have an asset that does not move for 16 years, you have lost 50% !!! Now if your money could have been earning say 8% in the stock market (don't kill me guys, just an example!) then your asset would be worth 3.4 times what you paid for it.

So, if you pay $500k for an investment property today and we get the scenario above this is how it looks in 16 years time:

A) have investment property worth $500k

or

B) have share investment worth $1,713k

The real situation is that holding the property has in effect lost over 70% of it's value compared to a 'standard' long term investment.

Now, I'm not suggestion that property will stagnate for 16 years whilst the stock market is going up for 16 years! Just trying to show that even with stagnation it is a costly exercise in investments terms.

And or course there are in fact recent examples of a bubble that have taken this sort of period to sort out - Japanese stock market at 40,000 in 1989, and what is it today. Surely there are those who can remember this?


----------



## CAFA1234 (3 May 2008)

numbercruncher; said:
			
		

> Nice little chart here for you all showing the giant leap in property listings both YOY and from Jan to Feb this year.
> 
> From Jan to Feb weve seen nationally the amount of stock for sale leap some 50pc odd for houses , 132k in Jan to 195k in Feb and all indicators showing this is escalating?
> 
> View attachment 20653




This is good stuff. Does anyone have a chart showing this data over a rolling 12 months - would be nice to see the trend line and velocity.


----------



## CAFA1234 (3 May 2008)

wayneL; said:
			
		

> Holy snapping cadoodalies,
> Even the VIs have turned bearish over here... stunning!
> http://business.timesonline.co.uk/t...sectors/construction_and_property/article.ece




I can't remember where I read this, but I believe that HBOS at their institutional fund raising roadshow were showing an impact analysis of a 10% reduction for each of the next two year. 

Can anyone help with a reference for this?


----------



## numbercruncher (3 May 2008)

wayneL said:


> Holy snapping cadoodalies,
> 
> Even the VIs have turned bearish over here... stunning!
> 
> http://business.timesonline.co.uk/t.../construction_and_property/article3859936.ece





Yes amazing isnt it, I read a similar from Halifax ....



> Houses are losing almost £500 of their value a week according to a leading survey which has painted the bleakest picture yet for the property market.
> 
> Halifax, the country's largest mortgage lender, said that the average home price has fallen by £8,136 since the start of the year to hit £189,027. The decline in value equates to a fall of £479 a week.




http://www.telegraph.co.uk/news/1920108/Ha...500-a-week.html

Not exactly the most cost effective way to put a roof over your head is it, 500 a week capital loss and about 300 ? a week in mortgage payments, ouchers. Vrs im not sure what rent would be ? on the average 190k house 200 to 300 I guess ?


----------



## numbercruncher (3 May 2008)

Heres a great way to roughly keep tabs on how quickly properties are flooding onto the market, over at domain you can search and get a total number of listings, last night at 8pm I did the whole of QLD and there was 55 862 listings, this morning there is 55 907 - these agents must be keen to stay up late listing on a Friday hey ?

I will be interested in doing it daily during the week as listings seem to be just skyrocketing pretty much nationally ....

http://www.domain.com.au/Public/SearchResults.aspx?mode=buy&State=QLD&Areas=Brisbane+City%2cOuter+Northern+Suburbs%2cEastern+Suburbs%2cOuter+Southern+Suburbs%2cIpswich+%26+Region%2cSouthern+Suburbs%2cNorthern+Suburbs%2cWestern+Suburbs%2cCentral+Outback%2cSouth+Western%2cMt+Isa+%26+North+Western%2cBundaberg+%26+Wide+Bay+Region%2cRockhampton+%26+Region%2cMackay+%26+Whitsundays+Region%2cCairns+%26+Region%2cTownsville+%26+Region%2cFar+North%2cGold+Coast+%26+Hinterland%2cToowoomba+%26+South+Eastern%2cSunshine+Coast+%26+Region&agid=


----------



## robots (4 May 2008)

hello,

60% clearance rate for melbourne yesterday,

i went to two auctions, bids at both, but both passed in

one is an absolute best buy now at the reserve they have on it,

fantastic stuff, 

thankyou

robots


----------



## numbercruncher (4 May 2008)

robots said:


> hello,
> 
> 60% clearance rate for melbourne yesterday,
> 
> ...




Yes its also Interesting to see the breakdown, I love how they work it out, read it as you will 



> S *Sold at Auction: 360*
> SB Sold before Auction: 111
> SA Sold after Auction: 7
> 
> ...


----------



## robots (4 May 2008)

hello,

great site for those interested in melbourne architecture/property, those who walk the streets enjoying the wonderful city:

http://www.walkingmelbourne.com/forum/viewforum.php?f=4

thankyou

robots


----------



## Macquack (4 May 2008)

robots said:


> hello,
> 
> 60% clearance rate for melbourne yesterday,
> 
> ...




Hey robots, why did'nt you buy it, if it was such a steal?

You seem to go to a lot of auctions. Are you employed by a real estate agents as a "dumby bidder"?


----------



## robots (4 May 2008)

hello,

dont have the money to buy it, i am looking to upgrade over the next 5 yrs so checking out some buildings,

just doing research macquacker unlike the many armchair experts,

have dummy bidded before but no I am not employed by re agent

thankyou

robots


----------



## YChromozome (4 May 2008)

Sounds like a time consuming hobby you have there, Robots. Why don't you do what domain.com.au says and "Buy now and get your life back"


----------



## robots (4 May 2008)

hello,

quite enjoyable actually, get the pushie out, walkman and of you go

admire the buildings as I go

thankyou

robots


----------



## numbercruncher (4 May 2008)

robots said:


> have dummy bidded before but no I am not employed by re agent




Besides being unethical, is that Legal ?


----------



## robots (4 May 2008)

hello,

is illegal for a re agent to dummy bid,

no longer can tree's, rubbish bins or power poles place a bid

thankyou

robots


----------



## numbercruncher (4 May 2008)

Little Birdy tells me Brisbane clearance rate well under 30pc this w/end .... This must still be the denial phase ?

Maybe theyve packed up the Landrovers and headed back to you Robi ?


----------



## Macquack (4 May 2008)

robots said:


> hello,
> 
> is illegal for a re agent to dummy bid,
> 
> ...




Does that mean deforestation, recycling and underground power are having a negative effect on auction clearance rates!

Going, going, gone.


----------



## robots (5 May 2008)

hello,

gee number, i thought you would of banged this one up on the board today:

http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6416.0?OpenDocument

great effort, the ABS is as honest as the day

thankyou

robots


----------



## Mofra (5 May 2008)

numbercruncher said:


> Little Birdy tells me Brisbane clearance rate well under 30pc this w/end .... This must still be the denial phase ?
> 
> Maybe theyve packed up the Landrovers and headed back to you Robi ?




Maybe that'd explain the 4.1% gain in Melbourne for the quarter? 

(This should be fun...)


----------



## CAFA1234 (6 May 2008)

robots; said:
			
		

> hello,
> 
> dont have the money to buy it, i am looking to upgrade over the next 5 yrs so checking out some buildings,
> 
> ...




Robots, if you are 'thinking' of buying / upgrading over the next 5 years, then why would you be such a bull. It's in your interests if there is a really big crash so you can buy cheap?


----------



## CAFA1234 (6 May 2008)

Just to update you on the US side. Los Angeles times reports in detail on a county each week. Last week was San Fernando, as you will recall down 35%. This last week was Riverside and San Diego counties. 

All of these are from county records for transfer taxation, so are a matter of fact rather than the bull.

March taxation returns - e.g. sales in Jan / Feb in the main.
Riverside and San Diego - 
Median house price $290k down 30.1% from March 2007
Median condo price $309k down 7.8% from March 2007

N.B. there are few condos in this area with only 6 out of 30 zip codes showing sales at all. One Condo code was down 42.7%, and 2 codes were about same as last year, thus the 7.8% combined reduction.

For the houses 1 code showed a 2% increase, and the worst was -53%, High 20% and 30% was the norm. 

The number of sales in each code varied from 3 to 70. The % drop for the codes with the highest sales numbers were 70 sales  -30%, 46 -28%, 45 -27%, 37 -28%, 36 -27%, 35 -23%, 31 -39%, 31 -39%.

It would be good to see same breakdown by postcode for  the major Aussie cities, as I'm sure it would be equally varied. Does anyone know where this can be obtained?

----------------------------
More buyers are backing out of contracts for new houses. L.A.Times Sunday 4th May. "Nationwide builder, Toll brothers saw 28% of buyers cancel in the first quarter of this year. Dallas based Centex Homes cancellation rate was 33% in the third quarter of 2007 in a report to investors. NVR homes which builds NV homes and Ryan homes saw a 37% cancellation in the third quarter of 2007."

These means that thousands of people are walking away from a 10% deposit. Can't be good for house prices or the individual. 

It was reported that builders are including promissory notes in there contracts, often buried deep within the many pages of sale contract which put the purchaser on the hook for another 10% if they walk, in an attempt to stem the cancellation rate.


----------



## robots (6 May 2008)

CAFA1234 said:


> Robots, if you are 'thinking' of buying / upgrading over the next 5 years, then why would you be such a bull. It's in your interests if there is a really big crash so you can buy cheap?




hello,

i am not a bull, many have made that assumption, repeatedly I have commented i wouldnt have a clue what is going to happen

i am very much for saving hard and investing money into shares and property yourself with the PPOR being for most a substantial investment (wealth creation),

in 10, 20, 30 yrs it will still be a way of people to release capital (via downsizing, suburb change) to "prop up" retirement

thankyou

robots


----------



## Aussiejeff (6 May 2008)

robots said:


> hello,
> 
> i am not a bull, many have made that assumption, repeatedly I have commented i wouldnt have a clue what is going to happen
> 
> ...





robi - all your assumptions are based on the "dreamy" fact that in 10, 20, 30 years time, the price of services and goods THEN will be proportionately the same as they are TODAY (especially the price of fuel for transport) and that property will have remained "king" and values continued to rise inexorably.

However, what do you think would happen to the demand for outer metro housing in ALL Australian cities, if as a result of an "unforeseen" drop in world oil reserves or an "unforeseen" calamity that significantly reduces world oil production for months on end?

What if such a scenario rapidly lifted the price of petrol here to $2, $3, $4+ a litre? You seem to be betting 100:1 that this scenario cannot and will not happen. That there is no current or future risk?

Sorry, but I'd be hedging my bet, since IF such a scenario presents itself in the next few months or years (surely a possibility given the current flux of the world?) I would predict the value of outer suburban housing in OZ to plummet like a lead brick and the subsequent economic fallout for many desperate outer suburban familes would then be unthinkable.  

In a worst case scenario, inner city areas could become ghettos as outer suburban "economic refugees" flock to the streets of the city centres to try and survive. Oh, but of course - that could never happen. Only in other countries.  

Sorry to provide a flip side to the coin. I was an "old school" boy scout in the 60's. You know - be prepared for anything .. including the worst!

Cheers?

AJ


----------



## ROE (6 May 2008)

Aussiejeff said:


> robi - all your assumptions are based on the "dreamy" fact that in 10, 20, 30 years time, the price of services and goods THEN will be proportionately the same as they are TODAY (especially the price of fuel for transport) and that property will have remained "king" and values continued to rise inexorably.
> 
> However, what do you think would happen to the demand for outer metro housing in ALL Australian cities, if as a result of an "unforeseen" drop in world oil reserves or an "unforeseen" calamity that significantly reduces world oil production for months on end?
> 
> ...




Just my two cents, you are also assuming there is no alternative to oil  ..
there are plenty of other energy that can drive the car .. LNG and LPG
which Australia has enough to feed the world 

I'm no pro property but such scenario I don't think will happen.
as long as human ever exist on this planet we always manage to find a different source of energy to power us along.

Remember the British empire predict it the end of civilization when we run out of coal back in 1800?, then we discover Oil .. when oil dies we discover LNG/LPG and Cold fusion  

as for property remember the good old compound formula it can not keep growing there will be a period of price fall and long period of stagnation.

you can go back in time and see

you can see that as recent as 1975-1990 where price go no where but actually drop from 1975 to 1980 then flat for 10 years

before that it's 1930 to 1950 where price doesn't goes any where. Before that 1895-1920.

and I can see price drop or stagnant for the next 10 years from here on


----------



## CAFA1234 (6 May 2008)

Aussiejeff; said:
			
		

> However, what do you think would happen to the demand for outer metro housing in ALL Australian cities, if as a result of an "unforeseen" drop in world oil reserves or an "unforeseen" calamity that significantly reduces world oil production for months on end?
> What if such a scenario rapidly lifted the price of petrol here to $2, $3, $4+ a litre? You seem to be betting 100:1 that this scenario cannot and will not happen. That there is no current or future risk?
> AJ




Aussiejeff - a reasonable call ,if extreme 

Much of the pain in the US is in new build outlying areas where low income people decided they could drive the 30/50/80 miles into L.A. (as an example) to do minimum wage jobs. With Gas going up about 40/50% in the last 2 years it has started to become an issue. I'm not saying this is the only, or even the biggest cause, but it maybe a tipping point situation. If you can't afford to pump the gas then then you can't drive to work to earn your miserable wage to pay a mortgage on a depreciating asset. Answer - walk away. 

Not 10/20/30 years... it's happening now, albeit on a smaller scale

PS it doesn't help to be driving a truck


----------



## noirua (6 May 2008)

There are big questions being raised about the value of new houses that were sold much above their real value. 
In the States and UK this is proving to be a big factor.  This is particularly bad in the NEW apartment sector, often referred to as flats in the UK. These falsed sellers are finding prices down by 25% to 35%.

Interesting to see if this proves to be the case in Australia?


----------



## gfresh (6 May 2008)

Apartments are seem to be the only affordable housing for most people, so I cannot see any particular crash - as it's especially popular amongst renters, of which there is still a shortage of affordable accommodation (or so is said). If new apartments are being built which are too expensive for the average budget, then maybe the demand will drop off. 

I think some of the more exclusive rental apartments, that command say $500+/wk, could suffer in a downturn. People will be able to downscale there quite quickly if they need to cheaper rentals, which may in fact drive the rental for those up. Whos' going to be bidding the price *up* on the more expensive apartments in such a climate? 

Was down in Melb over weekend.. outer east lots on the market. More than I've ever seen. Equal to the goldcoast right now. Used to live there until a few years ago. Quite a few are selling, but if that stops, vendors will have to drop prices to ensure sales.  

With the whole oil thing, people will just need to adapt, or they'll suffer their own consequences. People's ego really gets in the way for many to adapt. 

Driving those large people movers really seems silly to me anyhow leading into the future, despite their popularity growing year on year here in Oz. I know I can save 50% of my fuel costs simply by buying a car that achieves 5/6L/100km... Do I want to? Not particularly, as I'd have to drive a small buzz box. If petrol was $3/L, would I have too much choice? no.. Would I be worse off than now? Not at all, I'd just have a smaller car. I guess for families it's more difficult, but surely they can go  smaller by changing the way they do things. 

$5/10/L would hurt however.. even if you did have a car that achieved 5 or 6L/100km.


----------



## numbercruncher (6 May 2008)

Yes amoungst skyrocketing fuel and living costs I suspect far lying suburbs and townships to be particularly hard hit in the coming correction.

Its not just the cost of fuel for these people but the time cost, 2 hours + commuting a day would be much more productive spent doing over time.

Well located units/houses etc _should_ fair much better.


The next penny to drop is the currently unfolding of tighter lending conditions , no one actually thought we were immune from the enevitable did they ?



> HOMEBUYERS face tougher questions and even knockbacks when applying for a mortgage as banks and non-bank lenders secretly tighten rules on who qualifies.
> 
> Leaked circulars show a series of banks and non-bank lenders have tweaked eligibility criteria on some home loans in the wake of rising repossessions, growing mortgage stress and a funds shortage.




http://www.news.com.au/business/money/story/0,25479,23650783-5013951,00.html

These changes will remove 10s (maybe 100s?) of thousands of potential buyers Im certain, Inventory is rising rapidly and this will only accelerate this rate.


----------



## Tysonboss1 (6 May 2008)

Just an update,...

 latest figures for one of my investment areas in Brisbane is 16.5%p/a growth for the last 12months, add to that the 5% rental return.


----------



## robots (6 May 2008)

Aussiejeff said:


> robi - all your assumptions are based on the "dreamy" fact that in 10, 20, 30 years time, the price of services and goods THEN will be proportionately the same as they are TODAY (especially the price of fuel for transport) and that property will have remained "king" and values continued to rise inexorably.
> 
> However, what do you think would happen to the demand for outer metro housing in ALL Australian cities, if as a result of an "unforeseen" drop in world oil reserves or an "unforeseen" calamity that significantly reduces world oil production for months on end?
> 
> ...




hello,

great reading AJ, all the best, i find it surprising you are quick to call things "dreamy" on my views yet the entire post is full of if's, but's, could's and maybe's

go tyson, great effort bro, get yourself a ruski tonite

thankyou

robots


----------



## numbercruncher (6 May 2008)

Tysonboss1 said:


> Just an update,...
> 
> latest figures for one of my investment areas in Brisbane is 16.5%p/a growth for the last 12months, add to that the 5% rental return.




And subtract holding costs ? Its also theoretic gains, I notice Brisbane clearance rates are under 30pc and Inventory is rising at an alarming speed.


How about growth over the last quarter ?


----------



## numbercruncher (6 May 2008)

robots said:


> hello,
> 
> i am not a bull, many have made that assumption, repeatedly I have commented i wouldnt have a clue what is going to happen
> 
> ...





I think people need to aquaint themselves with the Generous concessions offered to Superannuation, Salary sacrificing, Spouse contributions etc etc if they want to " prop up " retirement, Im tipping these concessions wont be as tasty in the years to come.

What happens in 10 years or so when everyone floods there houses to market for downsizing and capital release as you suggest ? yep oversupply in housing and overdemand for units etc.


----------



## robots (6 May 2008)

numbercruncher said:


> I think people need to aquaint themselves with the Generous concessions offered to Superannuation, Salary sacrificing, Spouse contributions etc etc if they want to " prop up " retirement, Im tipping these concessions wont be as tasty in the years to come.
> 
> What happens in 10 years or so when everyone floods there houses to market for downsizing and capital release as you suggest ? yep oversupply in housing and overdemand for units etc.




hello,

downsizing has been happening for years and years already, nothing new I am afraid number,

and in tyson's eg, how about the return on investment (money down), oops, we dont like to discuss that

so after costs may be 10% on ASSET price? thankyou very much, what must ROI be?

great news tyson, have another ruski

thankyou

robots


----------



## robots (6 May 2008)

hello,

i would also look at re-evaluating the rental for the property as well,

20% rise should be very very easy at the moment, a family friend moved out of place in stkilda 10mths ago was paying $190/wk is $250/wk now

great stuff, still a very small figure though, a couple on average wages could easily afford that,

thankyou

robots


----------



## numbercruncher (6 May 2008)

robots said:


> hello,
> 
> downsizing has been happening for years and years already, nothing new I am afraid number,
> 
> ...




Lets explore that as an owner occupier who bought 12 months ago ..... 300k property, fully financed , interest only ?


300,000 House
008,975 Duty
001,200 Mortgage duty
027,000 Interest at 9pc
000,500 Conveyancing
001,500 Rates
----------------------
339,175.00 total cost

300,000 + 16.5pc = 349,500 ( just enough equity to cover selling costs ?) 
10k equity.


Renter would have 39,175.00 less 15,000 (300pw rent) = 24,175.00

Alot of faith being placed in continued capital growth for the OO yes ?

Investor, depends on personal circumstances I guess ?


I Note however Brisbane house prices only rose 2.8pc in the last quarter, annualised that will probably not beat holding costs, we can judge this better in hindsight, maybe next quarter will be a good indication ?

Good luck Property Investors !

I hear 150 RE offices a week are closing in the UK ?


----------



## numbercruncher (6 May 2008)

robots said:


> hello,
> 
> i would also look at re-evaluating the rental for the property as well,
> 
> ...





How much is the property " Worth " ?


----------



## Tysonboss1 (6 May 2008)

numbercruncher said:


> And subtract holding costs ? Its also theoretic gains,
> 
> ?




Your not much of a number crunchr if you think those gains ar theoretic,...

the rent more than covers the holding costs of the properties I hold in that area, I only hold about 40% debt against them, 

and property holding Interest costs are less than sharemarket Interest holding costs, so you can't use the interest rate agrument against property.


----------



## wayneL (6 May 2008)

numbercruncher said:


> I hear 150 RE offices a week are closing in the UK ?




Yes

http://www.telegraph.co.uk/news/uknews/1930019/Estate-agencies-shut-150-branches-a-week.html

...and check out the reader's comments. The mood is very dark indeed.


----------



## robots (6 May 2008)

numbercruncher said:


> Good luck Property Investors !




hello,

thanks number good luck to you as well,

everybody has a choice and if they dont want to buy RE then so be it,

thankyou

robots


----------



## numbercruncher (6 May 2008)

Tysonboss1 said:


> Your not much of a number crunchr if you think those gains ar theoretic,...
> 
> the rent more than covers the holding costs of the properties I hold in that area, I only hold about 40% debt against them,
> 
> and property holding Interest costs are less than sharemarket Interest holding costs, so you can't use the interest rate agrument against property.





Yes I know you like using yourself as an example, your success is commendable. Especially being part of Gen-Y, you must be in the top 5pc of your age demographic financially.

My debate is with RE going forward, yes 2007 was a huge surprise to me personally, I cant for the life of me see anything similar for a very very long time outside serious intervention such as severe Inflation, especially wage inflation.

The numbers filtering through are painting a very gloomy picture. ie / Rising Interest rates, Tightening Lending standards, Rising inventories, Tumbling clearance rates, worldwide events etc etc


----------



## Tysonboss1 (6 May 2008)

numbercruncher said:


> I Note however Brisbane house prices only rose 2.8pc in the last quarter, annualised that will probably not beat holding costs, we can judge this better in hindsight, maybe next quarter will be a good indication ?
> 
> ?




I prefer not to look at overall figures for whole cities as it is not really accurate,

For exampe Brisbane some suburbs were -4% others were +20.... you really have to take it suburb by suburb.

And at the end of the day remember property is a long term asset quarterly and annual figures don't mean as much to me,.... I look at the 10year forecast, and I fully accept that if I have had a run of above average returns for a few years I may have a flat or down period,

one thing that has kept brisbane kicking for so long is that it had alot of ground to catch up to due to the prolonged flat period in the 90's... and it is till one of the cheaper capital cities.


----------



## numbercruncher (6 May 2008)

wayneL said:


> Yes
> 
> http://www.telegraph.co.uk/news/uknews/1930019/Estate-agencies-shut-150-branches-a-week.html
> 
> ...and check out the reader's comments. The mood is very dark indeed.





Great read ....

Wow the comments, wouldnt want to let people know your a RE or ex RE agent in the UK by the sounds of the feedback  Modern day withches it seems they are viewed as by those posters, theyll be whipping out the stakes soon!

Must be gut wrenching for those who bought at the height of the mania last year 

I was reading through a blog for Brits emigrating to Oz, was completely amazed by the number of Skilled visa holders waiting on their houses to sell to finance the move out here, comments like on the market 12 weeks and only 1 Viewer etc ....


----------



## wayneL (6 May 2008)

numbercruncher said:


> Great read ....
> 
> Wow the comments, wouldnt want to let people know your a RE or ex RE agent in the UK by the sounds of the feedback  Modern day withches it seems they are viewed as by those posters, theyll be whipping out the stakes soon!
> 
> ...



Estate Agents are even lower than NuLabour politicians here atm, and that's low. They are hated with a venom that is startling. That was even true during the boom. But people should look in the mirror first. It is the buyers who coughed up the ludicrous amounts for houses and created the situation where agent's made money for jam.

It is now the hysterical bandwagoners, both estate agencies and buyers who are now suffering. 

As a rule expats in waiting tend to be the most delusional with price. They want someone to finance their plans by overpaying for their sh!tty pile of bricks.

On paper it's costing me heaps (from peak valuation to current valuation) and will drop a lot more, but I'm not a seller so WGAF. In the long term it will be healthy... value to return. Then I'll be in the market again.


----------



## Macquack (6 May 2008)

Tysonboss1 said:


> I prefer not to look at overall figures for whole cities as it is not really accurate,
> For exampe Brisbane some suburbs were -4% others were +20.... you really have to take it suburb by suburb..




Would not the same principle be extended to individual property to property. No two properties are the same.



Tysonboss1 said:


> And at the end of the day remember property is a long term asset quarterly and annual figures don't mean as much to me,.... I look at the 10year forecast, and I fully accept that if I have had a run of above average returns for a few years I may have a flat or down period.




If your a long term investor, why are you always trying to beat-up the market. It does'nt matter what it is worth until you sell it.



Tysonboss1 said:


> one thing that has kept brisbane kicking for so long is that it had alot of ground to catch up to due to the prolonged flat period in the 90's... and it is till one of the cheaper capital cities.




A friend of mine moved from Sydney to Brisbane about 4 years ago. His simple reasoning  - " Incomes are lower, so real estate prices are lower ".


----------



## xoa (6 May 2008)

Macquack said:


> A friend of mine moved from Sydney to Brisbane about 4 years ago. His simple reasoning  - " Incomes are lower, so real estate prices are lower ".




That's a concept many southern investors are unable to grasp.

Plenty of rural towns have seen prices inflate to near Brisbane levels. Unaffordable housing is the kiss of death for towns which are already struggling with population declines.


----------



## Macquack (6 May 2008)

xoa said:


> That's a concept many southern investors are unable to grasp.
> 
> Plenty of rural towns have seen prices inflate to near Brisbane levels. Even towns which are unconnected to the resources boom and/or having population declines.




I can visualise this.
Small outpost, high-flyer flies into town, buys a few properties, prices escalate, locals lose their dream of owning their own home in the middle of butt****.


----------



## gfresh (6 May 2008)

tysonboss1 said:
			
		

> one thing that has kept brisbane kicking for so long is that it had alot of ground to catch up to due to the prolonged flat period in the 90's... and it is till one of the cheaper capital cities.




Well according to this article... Brisbane has moved up behind Sydney to become the 2nd most expensive city. Melbourne is now 4th. 

http://www.theage.com.au/news/natio...-among-cheapest/2008/05/04/1209839456803.html


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## wayneL (6 May 2008)

Slightly off topic-ish, but interesting point:

http://www.angryrenter.com/


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## Tysonboss1 (6 May 2008)

Macquack said:


> If your a long term investor, why are you always trying to beat-up the market. It does'nt matter what it is worth until you sell it.
> 
> 
> 
> .




I am not beating up the market,.... Just offering a different point of veiw and different ways to look at things in the face of an avalanche of negative veiws on this thead.

I am sorry if my opinion doesn't mold exactly with yours, I don't think it is fair to compare my coments with some sort of ramping.


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## Tysonboss1 (6 May 2008)

Macquack said:


> Would not the same principle be extended to individual property to property. No two properties are the same.




Yes,... absouloutly. as I mentioned in another thread there are markets within markets. there can be up to 10 different markets within one town all with there own cashflow vs capital gain pros and cons.

much like the share market you can't paint the whole market with one brush,..

there are good stocks and bad stocks,... same with property.


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## wayneL (7 May 2008)

Tysonboss1 said:


> I am not beating up the market,.... Just offering a different point of veiw and different ways to look at things in the face of an avalanche of negative veiws on this thead.
> 
> I am sorry if my opinion doesn't mold exactly with yours, I don't think it is fair to compare my coments with some sort of ramping.




I think both bulls and bears should be tolerant of the other sides views, so long as they are reasoned and backed by logic/figures and not just ramping/deramping/trolling.

It's annoying when the other side sticks doggedly to their views, but that's just tough cheddar.


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## CAFA1234 (7 May 2008)

Maybe it's time to think about some serious investments - when the news is this bad it is often the time of best returns!

*Fannie offers dismal housing outlook
Mortgage finance firm cuts quarterly dividend as it moves to shore-up capital in the face of losses.*
NEW YORK (CNNMoney.com) -- Mortgage financer Fannie Mae warned Tuesday that the tumbling home values and loan defaults that have crippled the U.S. economy are likely to worsen, after posting a far larger-than-expected first-quarter loss.

The firm said it now forecasts that home prices will sink 7% to 9% this year, 2 percentage points worse than its previous decline range forecast, a drop that could leave prices 19% off of peak levels. 

*Thestreet.com
U.S. Mortgages Drive UBS Losses*
UBS UBS, Switzerland's largest bank, on Tuesday reported a first-quarter net loss of 11.5 billion Swiss francs, driven by a $19.5 billion writedown tied to U.S. real estate and structured credit.

The first-quarter loss of 5.59 Swiss francs per share compares to a loss of 12.9 billion Swiss francs, or 6.45 Swiss francs per share, in the fourth quarter and a profit of 3.2 billion Swiss francs, or 1.5 billion Swiss francs, in the first quarter of 2007. 

*BOSTON (MarketWatch) -- D.R. Horton Inc., *one of the nation's largest home builders, on Tuesday reported a $1.3 billion quarterly loss as housing weakness and turmoil in mortgage markets continued to drain financial results.
The Ft. Worth, Texas-based company swung to a net loss of $1.31 billion, or $4.14 a share, compared with net income of $51.7 million, or 16 cents a share, in the year-earlier period.
D.R. Horton also halved its quarterly dividend.


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## Aussiejeff (7 May 2008)

CAFA1234 said:


> *BOSTON (MarketWatch) -- D.R. Horton Inc., *one of the nation's largest home builders, on Tuesday reported a $1.3 billion quarterly loss as housing weakness and turmoil in mortgage markets continued to drain financial results.
> The Ft. Worth, Texas-based company swung to a net loss of $1.31 billion, or $4.14 a share, compared with net income of $51.7 million, or 16 cents a share, in the year-earlier period. D.R. Horton also halved its quarterly dividend.




Wow. For one of the nations largest home builders, I'd say that's a pretty comprehensive turn-around right there, wouldn't you say? Hey, you might like to place an uber-contrarian bet on THAT one, CAFA1234... can only get better, wot?  


AJ


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## Temjin (7 May 2008)

Ok, I've made this excel sheet almost one year ago, but have recently refined the pricing model to make it as accurate as possible.

The excel sheet is a model that determine the estimated return of capital per year for any HOME investment, in particular first home buyers. Remember to note that this is not used for rental property investment. 

I've made a lot of assumptions in the model, but one can see that some of the assumptions are fairly "conservative". 

This will give someone an idea how much REAL RETURN they will get for every dollar they put in to their house and treating it as a pure investment. 

Feel free to distribute this. 

Oh yes, here is a disclaimer statement. 

Various assumptions have been made to generate the results from this model and no guarantees are made that these will remain valid over the length of the modelled period. This model was designed with no regards to individual's financial circumstances. The author will take no responsibilities for ANY liability or loss that may be resulted from anyone who have used this model as a basis for their decision making process. All copyright reserved.


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## gfresh (7 May 2008)

Thanks for putting it up there.. 

Have downloaded it to take a bit of a look.. however it gives me #NAME? in a few of the cells.. Think you may have a formula typo or something similar.

*edit:* looks like a particular formula doesn't work in Excel 2003. However, just opened in OpenOffice (free download - recommended) and works fine


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## Temjin (7 May 2008)

gfresh said:


> *edit:* looks like a particular formula doesn't work in Excel 2003. However, just opened in OpenOffice (free download - recommended) and works fine




Oops, yeah, I used the PMT, CUMIPMT and CUMPRINC functions which are in the financial category function list. I also used Excel 2003 to generate this model, maybe it's an added feature only or something. It also works for me at home on 2007. 

This is also why I have a seperate Loan Amortisation sheet. One can find the principle and interest paid on the table depending on the investment period. The cell which is highlighted in light blue contains the result for that particular investment period. Then you can transfer this value back to the original sheet. The financial formulas just made it easier without referring to this table. 

And thanks.  Let me know if you think there are any mistakes. Would love to continue to refine it further.

P.S: Oh yes, the rental profit from the profit calculation section is NOT USED in the final ROI calculations. You can easily add this final value to return of investment cell if you want. I used $250 per week as assumption, and adjusted by inflation over time. There are tax complications though as rental income will be regarded as taxable income, so it's hard to model at this time. The model sheet is not complete and the layout is still a little bit confusing, so sorry for that. 

Will try to make a rental property investment model when I have time.


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## gfresh (7 May 2008)

Few things to also take into account .. if it's a townhouse or apartment, I'd add a line for body corporate fees - would be significant over time. 

With insurance in apartment blocks, often building insurance is included in body corp above. Landlords would also commonly have rental insurance incase the tenants trash the place inside. Tenants also pay their own contents insurance. Maybe that could be broken down into those?

Tenants also pay their own electricity, so you'd have to zero that out as well for a rental situation (and probably also home owners grant).

Otherwise seems to work fairly well as a pretty good guide.


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## Tysonboss1 (7 May 2008)

Temjin said:


> This will give someone an idea how much REAL RETURN they will get for every dollar they put in to their house and treating it as a pure investment.
> 
> .




why have you included electricity and contents insurance,.... these are costs you would have to pay weather you are renting or own the property.

Also you should probally add in the rent you are saving if it is your own property,.... eg. if you are living in he property then te rent you would normally have to pay should be included as a saving some where.


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## Tysonboss1 (7 May 2008)

Temjin said:


> P.S: Oh yes, the rental profit from the profit calculation section is NOT USED in the final ROI calculations. You can easily add this final value to return of investment cell if you want.
> e.




Thats a pretty big point to leave out of the profit calculation,.... this is an example of over simplifying things,... the return becomes 9.71% when the rent is factored in.

Secondly you haven't allowed for the rent to be increased over the years.

for example you have calculated the rent saved as about 4.5 of the purchase price how ever this should be calculated at 4.5 % of the value of the property which in your model increases by 7% every year,... which again is another big point often missed

so with the increased rent the profit figure would return over 10%,..... plus the numerous other benefits holding a property can bring both personal benefits as well as investment benefits such as helping get cheaper finance for other investment and businesess ventures.


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## Temjin (7 May 2008)

gfresh said:


> Few things to also take into account .. if it's a townhouse or apartment, I'd add a line for body corporate fees - would be significant over time.
> 
> With insurance in apartment blocks, often building insurance is included in body corp above. Landlords would also commonly have rental insurance incase the tenants trash the place inside. Tenants also pay their own contents insurance. Maybe that could be broken down into those?
> 
> ...




Cool, will definitely update the sheet with those. But it is as simple as adding certain numbers to the final expense cell. 



			
				Tysonboss1 said:
			
		

> why have you included electricity and contents insurance,.... these are costs you would have to pay weather you are renting or own the property.
> 
> Also you should probally add in the rent you are saving if it is your own property,.... eg. if you are living in he property then te rent you would normally have to pay should be included as a saving some where.




Try treating your home as a business in this model. That is, the home is an asset that is appreciating in value (the land only), but is not generating any direct cash flow unless you are renting it out. You are also utilising this asset for a specific purpose (e.g. living in it), so there is a cost associated in both using it and maintaining it. This will include everything from interest from debt and obviously electricity and/or content insurance.

Only if you are using it for a purpose other than living it, like just hoarding the house, then you can simply put a $0 in those electricity or content insurance if you decide not to insure it. (or not required to) 

Play around with the numbers and one will find which variables are more sensitive to the final return than others. Obviously, expected growth rate and cost of debt is one. 

If you own an investment property, the whole model will be a lot more complex. But because you are utilising the asset to generate cash flow (i.e. renting), and that you can claim any expenses that were incurred to generate that cash flow (Aussie tax laws), then final return is obviously more attractive than just owning a home outright.

This is why when I find someone telling me they will be MUCH BETTER off buying a home (and not renting it out) and will make tons of money from the appreciation of their home over the long term, I will just show them this simple model to bring them back to reality. Investment properties is another different story.


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## Temjin (7 May 2008)

Tysonboss1 said:


> Thats a pretty big point to leave out of the profit calculation,.... this is an example of over simplifying things,... the return becomes 9.71% when the rent is factored in.
> 
> Secondly you haven't allowed for the rent to be increased over the years.
> 
> ...




Read my above post, this is NOT DESIGNED for INVESTMENT RENTAL PROPERTY. 

The rent will raise along with inflation at 3.5% EVERY YEAR (each year only) for whatever period you would like to specific. Remember the final values are all future values and have taken inflation into account. And obviously, you can tweak with the rental growth rate to whatever you believe it is to be. I can simply add a cell for that specific purpose. 

As for your last paragraph, that's a qualitative benefit and has no direct relations with this particular model. You would use a different evaluation criteria for that.


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## numbercruncher (7 May 2008)

Mortgage sales nose diving - Can probably expect it to get worse too as lenders have just very recently started tightening lending standards ....



> Mortgage sales across Australia fell every month for the first three months of the year, when compared to sales for the same three months of 2007 according to AFG, Australia’s largest mortgage broker with 9% of the national mortgage market (Source: ABS and AFG statistics).
> 
> This sales contraction is unprecedented in AFG’s experience: until this year, the company has never seen sales fall for more than a single month, when compared with data from a previous year.
> 
> ...


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## Tysonboss1 (7 May 2008)

Temjin said:


> Read my above post, this is NOT DESIGNED for INVESTMENT RENTAL PROPERTY.
> 
> The rent will raise along with inflation at 3.5% EVERY YEAR (each year only) for whatever period you would like to specific. Remember the final values are all future values and have taken inflation into account. And obviously, you can tweak with the rental growth rate to whatever you believe it is to be. I can simply add a cell for that specific purpose.
> 
> As for your last paragraph, that's a qualitative benefit and has no direct relations with this particular model. You would use a different evaluation criteria for that.




Firstly the rent will rise with the value of the property,..( although not at the same time there will be a lag),... so it has a good chance rising faster than inflation.

this is another big point people miss,... they think rent can only ever rise at the rate of inflation due to incomes,...how ever take a 3 bedroom home within 10Ks of the city,.... that 3 bed home may have been considered an average home 25years ago so it received and average rent,....

however 20years later the average home in the area is probally a 3 bed unit,... so that same large 3 bed house on a large block is no longer an average home so it would receive and above average rent,.... so over the years the rent on the 3 bed home has been rising faster than inflation.


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## Tysonboss1 (7 May 2008)

Temjin said:


> Cool, will definitely update the sheet with those. But it is as simple as adding certain numbers to the final expense cell.
> 
> 
> 
> ...





It is flawed to include the cost of electricity, personal belongings insurance and to leave out the rent saving if your goal is to compare the cost of home ownership to renting,....

because the person will have to pay for the insurance and rent wheather they are renting or not,.... and as I said the rent should be included because they no longer have to pay rent if they own there own home.

It does not make sense what you are trying to say about treating your home as a business,.... I aggree you should run a profit and loss statement on your properties( which is pretty much what your speadsheet is). but when it comes to calculating in electricity and other personal costs it is of no use if your aim is to compare renting vs ownership.


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## Temjin (7 May 2008)

Tysonboss1 said:


> It is flawed to include the cost of electricity, personal belongings insurance and to leave out the rent saving if your goal is to compare the cost of home ownership to renting,....




....I'm not, where have I said that the goal of this model was to COMPARE the return of home ownership verse renting + investment? 

You don't seem to understand the whole point of this model. Yes, I may be bearish on the whole real estate market at this time, but the model was designed to view the whole thing from an unbiased, quantative perspective. 



> because the person will have to pay for the insurance and rent wheather they are renting or not,.... and as I said the rent should be included because they no longer have to pay rent if they own there own home.




As above again, not designed for direct comparsion! 

Just treat the model as, how much money invested, how much money in return! As simple as that. 



> It does not make sense what you are trying to say about treating your home as a business,.... I aggree you should run a profit and loss statement on your properties( which is pretty much what your speadsheet is). but when it comes to calculating in electricity and other personal costs it is of no use if your aim is to compare renting vs ownership.




Maybe it's the biases in you that is preventing you from making a sense out of this model. And like I said, the aim of this model is *NOT *renting vs ownership!!!!! 



> Firstly the rent will rise with the value of the property,..( although not at the same time there will be a lag),... so it has a good chance rising faster than inflation.
> 
> this is another big point people miss,... they think rent can only ever rise at the rate of inflation due to incomes,...how ever take a 3 bedroom home within 10Ks of the city,.... that 3 bed home may have been considered an average home 25years ago so it received and average rent,....
> 
> however 20years later the average home in the area is probally a 3 bed unit,... so that same large 3 bed house on a large block is no longer an average home so it would receive and above average rent,.... so over the years the rent on the 3 bed home has been rising faster than inflation.




This discussion is almost worth another different thread. I am not going to bother talking about how much growth renting will increase along with whatever over the long term. 3.5% inflation was a guessmate, if you think rent will increase 10% over the next 30 years, that is 6% above wage growth (assumption on 4% growth), then so be it, add it into the model.

But do you really think this is sustainable in the real term? 

Remember that the model is never an accurate representation of the real world. Just look at the intellectual nerds in rating firms designing Einstein's style computer model to price/predict mortgage backed bonds. The subprime event was something they called a 7 standard deviation event, or something that should not happen in their model every billion year or so. 

This model I have cannot account for black swan events such as the subprime event. Imagine what will happen to your "return" if interest rate suddenly goes up to 15% in less than one year. It happened before, why it shouldn't happen again?


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## Tysonboss1 (7 May 2008)

Temjin said:


> ....I'm not, where have I said that the goal of this model was to COMPARE the return of home ownership verse renting + investment?
> 
> You don't seem to understand the whole point of this model. Yes, I may be bearish on the whole real estate market at this time, but the model was designed to view the whole thing from an unbiased, quantative perspective.
> 
> ...




1,  you your self said that you have shown this model to people to point out that they will not benefit much from owning their own home,... using this model for that purpose would not give a fair result,..... It says that they are only ahead by about 1% when the true figure is closer to 10% If that is not the point of the model then give me an example of a situtation where this model could be used, I can't see a reason for such a model that includes living costs such as insurance and rent.

2,   what is the point of the model then,...  

3,   yes rent on a certain size and style of property can sustainablly increase faser tha wages,... look back at the example I gave, it's simple what is considered an average home today is likly to be considered above average in the future,....

meaning a average home getting average rent today,.... will be larger than the average homes being built in the future,.... there fore even if the average rent only increases with inflation, because this home is know bigger and on more land than the 2 bed aparments being built which are the new average then the house which once was average will be collecting a rent alot higher than the new average.


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## wayneL (7 May 2008)

Tysonboss1 said:


> I am not beating up the market,.... Just offering a different point of veiw and different ways to look at things in the face of an avalanche of negative veiws on this thead.
> 
> I am sorry if my opinion doesn't mold exactly with yours, I don't think it is fair to compare my coments with some sort of ramping.






Tysonboss1 said:


> 1,  you your self said that you have shown this model to people to point out that they will not benefit much from owning their own home,... using this model for that purpose would not give a fair result,..... It says that they are only ahead by about 1% when the true figure is closer to 10% If that is not the point of the model then give me an example of a situtation where this model could be used, I can't see a reason for such a model that includes living costs such as insurance and rent.
> 
> 2,   what is the point of the model then,...
> 
> ...



That depends on a whole host of things. There are a too many jokers in the pack to state that definitively.


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## wayneL (7 May 2008)

The latest VI pronouncement from Londinium:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/07/bcnsavills10.xml

I was said that London would never fall, then it was said prime properties would never fall.

However I recall in the early nineties, it was prime that suffered most of all, in both Oz and The UK.


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## CAFA1234 (8 May 2008)

Tysonboss1; said:
			
		

> 1,  you your self said that you have shown this model to people to point out that they will not benefit much from owning their own home,... using this model for that purpose would not give a fair result,..... It says that they are only ahead by about 1% when the true figure is closer to 10% If that is not the point of the model then give me an example of a situtation where this model could be used, I can't see a reason for such a model that includes living costs such as insurance and rent.
> 
> 2,   what is the point of the model then,...
> 
> ...




I think the spreadsheet is a great first attempt. However if the cost of home ownership is the point then assuming one has to live in a rental if not in an owned house, then the rental 'saved' MUST be taken into account. Likewise the electricity and contents insurance would be paid anyway even in a rental, along with water in many cases. 

Therefore to get a 'true' comparison the electric, water, and contents insurance should be ignored, and the nominal rental factored in. Add in a variable to allow a user to select 'first time buyer', and if not then to ignore the grant but add in stamp duty etc and I think you have a reasonable model.

Allow the user to select Inflation rate, rental growth rate, and interest rate, and you have a good basic model that would give a reasonable outcome. 

As a comparison it would be useful to show the combined return of the ASX200 over a similar period. e.g. if 10 years were selected, then show the total return (including dividends) over an average 10 year period. Because the stock market is more volatile this would have to be some form of weighted average to give a fair comparison. Anyone got any ideas how to pull all of this together?

As I said this is a great start and having done a few myself I am cognitive of the effort that was put in. Lets do the shareware thing and all help to make this a great little tool!


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## CAFA1234 (8 May 2008)

WASHINGTON (MarketWatch) -- In a sign that the U.S. housing market may have further to weaken, an index of sales contracts on previously owned homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday.
*The NAR's index, considered a leading indicator of existing home sales, was 20.1% below the March 2007 level.*
The availability of affordable mortgages is uneven around the country, and the extent of a recovery depends on better access to affordable loans, said Lawrence Yun, the trade group's chief economist. 

---------------------------------
For those of you that follow US data, Mr Yun must be the world biggest bull of real estate. It's comical at times and he takes a fair amount of stick in the press for being out of this world, but he does manage to put a brave face on bad figures. It's his job, I guess.


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## professor_frink (8 May 2008)

Temjin said:


> Let me know if you think there are any mistakes. Would love to continue to refine it further.




nice work on the spreadsheet Temjin

My on what you've done - 

Electricity, contents insurance and getting a telephone connected probably shouldn't be included in this type of calculation, unless you can find a way to live without paying for them elsewhere(not very likely).

I'd probably add in some kind of maintenance cost(2% of the building's value per year maybe). Let's face it, things can and will break at some stage and needs to be factored in.

If you want to look at the true cost of buying a house, I'd be inclined to deduct the rent saved from the expense calculations before doing the calculation too. If you aren't going to add in the rent that you save by buying a house, then it's not really worth doing - half the point of buying a house to live in is so you don't have to rent anymore!


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## CAFA1234 (8 May 2008)

A new tit-bit.
http://www.ft.com/cms/s/0/8be8bcb2-1c71-11dd-8bfc-000077b07658.html
*US city council files for bankruptcy*
The city council of Vallejo in California late on Tuesday voted unanimously to file for bankruptcy, sparking a downgrade on Wednesday in some of its municipal bonds and prompting fears that other cash-strapped local governments might emulate it.

Vallejo, near San Francisco with a population of 117,000, faces an estimated $16m budget deficit for the fiscal year that starts on July 1. *This comes amid a decline in tax revenues related to falling house prices coupled with rising salary and pension costs.*

The last city in California to file for bankruptcy was *Desert Hot Springs in 2001* while *Orange County sought protection from creditors in 1994* after making poor investments with interest rate derivatives
--------------------------------
A small and rare event - lets hope it's not a sign of worse to come. 

What's this got to do with Aussie real estate - well if you have to ask then it should be a separate thread.


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## nioka (8 May 2008)

CAFA1234 said:


> A new tit-bit.
> http://www.ft.com/cms/s/0/8be8bcb2-1c71-11dd-8bfc-000077b07658.html
> *US city council files for bankruptcy*
> The city council of Vallejo in California late on Tuesday voted unanimously to file for bankruptcy, sparking a downgrade on Wednesday in some of its municipal bonds and prompting fears that other cash-strapped local governments might emulate it.
> ...



 At least that wont happen in NSW where the councils just keep increasing the rates and send the property owners to the wall instead. Or in the case of our council, which was in credit just amalgamate it with another so they can balance the books.


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## CAFA1234 (8 May 2008)

nioka; said:
			
		

> At least that wont happen in NSW where the councils just keep increasing the rates and send the property owners to the wall instead. Or in the case of our council, which was in credit just amalgamate it with another so they can balance the books.




Yes, it's peculiar to the US and in particular California under Proposition 13.

http://en.wikipedia.org/wiki/California_Proposition_13_(1978)

Basically it prevents a council from increasing property taxes. They have to use the value of the house when you purchased it, which means the newest purchaser pay proportionately the highest levels of property tax. They (CA) are an interesting bunch


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## gfresh (8 May 2008)

Makes an interesting point if property values drop in some areas of Australia though. What happens if council rates have to actually *decrease* to the area where property values dropping 5-10%? say Western Sydney?  That could squeeze some already very tight council budgets. Wonder how they'll get their way around that one? 

I forget the exact councils, but a couple here have also been exposed to the whole US subprime via buying mortgage securities themselves  and got themselves into strife.


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## nioka (8 May 2008)

gfresh said:


> Makes an interesting point if property values drop in some areas of Australia though. What happens if council rates have to actually *decrease* to the area where property values dropping 5-10%? say Western Sydney?  That could squeeze some already very tight council budgets. Wonder how they'll get their way around that one?
> 
> I forget the exact councils, but a couple here have also been exposed to the whole US subprime via buying mortgage securities themselves  and got themselves into strife.



 Councils in NSW are given a figure percentage wise that they are allowed to increase the total rates collected for the year. They then allocate that over the ratepayers. The increase is usually in line with inflation. Individual councils can apply to the minister for permission to make additional increases. Councils also get around this by levying special charges apart from rates. Our council has introduced an inspection charge of $85 yearly on our septic system although they don't make annual inspections.


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## stock_man (8 May 2008)

Great work Temjin, loved the spreadsheet!

I had something similar myself, but not to that depth of inclusions. You should be stoked with your efforts!

I adjusted the figures slightly (reduced insurance as only house cover is needed - contents is negated as people have stated, LMI etc), and reduced from it the current rental amount I would pay indexed to inflation (as you have done with the other expenses).

Result - (5 year comparison)
  Without rent: *-21%*
  With rent: *15.22%*

* Note this is based upon the default figures of inflation at 3% and growth rate at 7%

Seems I need to get 2.5% growth rate on my house to break even - pretty much what I had imagined 

Thanks again!


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## CAFA1234 (8 May 2008)

stock_man; said:
			
		

> Great work Temjin, loved the spreadsheet!
> 
> I had something similar myself, but not to that depth of inclusions. You should be stoked with your efforts!
> 
> ...




Another item to note. Most people 'improve' a property over time e.g. new kitchen / bathroom / garden etc etc. Just doing routine maintenance like having the gutters cleaned out. 

I don't know the answer but I guess some reasonable amount should be factored in. I know that when I rent, I spend zero. I don't even buy a plunger for the sink! When I own (which I still do in Aus) I know that there is expenditure. 

I don't want to put a figure on it, but the easiest way of factoring in, is to use the ATO guidelines for depreciation about 2.5% PA (this may be a tad out of date). So if you keep a property for 10 years it is reasonable to assume you will spend, on average, 25% of the initial cost.

To ignore this 'hidden' cost is folly as I'm sure most home owners know, over the years a few $ here and a few there all adds up, and things DO wear out. Do you know what it costs to outside paint a weather board house these days - $5-7K in NSW.


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## CAFA1234 (8 May 2008)

The 2.5% in the last post should exclude land value. - Sorry.


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## professor_frink (8 May 2008)

stock_man said:


> Great work Temjin, loved the spreadsheet!
> 
> I had something similar myself, but not to that depth of inclusions. You should be stoked with your efforts!
> 
> ...




The good thing about running these sorts of calcs when you are looking at buying a house is that you can find out what needs to be done for you to come out ahead compared with if you rent. Mrs Frink and I did something similar to Temjin's spreadsheet before we bought our house - we found our own financial sweet spot where we could buy a house without impacting our current lifestyle too much, whilst also putting ourselves in the position where we would pay less in interest/costs to own the place over the life of the loan compared with what we would pay to rent, without having to rely on the home appreciating to come out in front. The sweet spot for us was making payments that would have the mortgage gone in 9-10 years. And then if we manage to make some improvements to the house on top of that, then all the better



> Do you know what it costs to outside paint a weather board house these days - $5-7K in NSW.




Really? Have never painted the outside of a house before but that sounds pretty extreme! Is that paying painters to do it for you or to do it yourself?


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## CAFA1234 (8 May 2008)

professor_frink; said:
			
		

> Really? Have never painted the outside of a house before but that sounds pretty extreme! Is that paying painters to do it for you or to do it yourself?




Paying a painter! I've never spent $7 just on paint - my house is not that big 

Yes, I do many jobs myself including gutting and installing kitchens, but the point is would I rather be out doing a cross Simpson trip or whatever your hobby is? Just because you DIY does not change the maths, all you are doing is supplying your labour at zero cost. Not a good basis for a mathematical model ?


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## professor_frink (8 May 2008)

CAFA1234 said:


> Paying a painter! I've never spent $7 just on paint - my house is not that big
> 
> Yes, I do many jobs myself including gutting and installing kitchens, but the point is would I rather be out doing a cross Simpson trip or whatever your hobby is? Just because you DIY does not change the maths, all you are doing is supplying your labour at zero cost. Not a good basis for a mathematical model ?




ok that sounds better!

From a stictly mathematical point of view, yes you are 100% right. 

Though many fortunes are built on cheap, dodgy labour, just look at China and India these days. Why would I want to be any different

If I can save a few thousand doing a job that I have the spare time to do, then I'll do it. Only if I don't have the time, or skills to do something will I run off and pay top dollar for it.


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## gfresh (8 May 2008)

> Councils in NSW are given a figure percentage wise that they are allowed to increase the total rates collected for the year. They then allocate that over the ratepayers. The increase is usually in line with inflation. Individual councils can apply to the minister for permission to make additional increases. Councils also get around this by levying special charges apart from rates. Our council has introduced an inspection charge of $85 yearly on our septic system although they don't make annual inspections.




I see.. that's a bit different to QLD (e.g. http://www.goldcoast.qld.gov.au/t_standard.aspx?pid=10). QLD uses the unimproved property value in the area, and then charge you accordingly. In VIC (http://www.localgovernment.vic.gov....BDBF1B0C3885BC0FCA25718E0021E63E?OpenDocument) they slug you for the capital improved value, what they think the home is worth. 

So if the property values are going up, so do the council rates. 

I guess in those two states they could quite conveniently change the rules to NSW style rules if values turned against them.


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## nioka (8 May 2008)

gfresh said:


> I see.. that's a bit different to QLD (e.g. http://www.goldcoast.qld.gov.au/t_standard.aspx?pid=10). QLD uses the unimproved property value in the area, and then charge you accordingly. In VIC (http://www.localgovernment.vic.gov....BDBF1B0C3885BC0FCA25718E0021E63E?OpenDocument) they slug you for the capital improved value, what they think the home is worth.
> 
> So if the property values are going up, so do the council rates.
> 
> I guess in those two states they could quite conveniently change the rules to NSW style rules if values turned against them.




NSW is basically the same as Qld except here where it used to be unimproved value they now include in the value improvements to the actual land. There is also double whammy charges such as improvements that you have to "rent" from the lands department but they are then valued again with your property rating. I have a pontoon in the river for which I pay rent to the lands dept but the valuer says it adds $50,000 to my property valuation. The rent used to be $40 a year this year it has been increased to over $400. 
 The problem with rates is the unfairness of the system. We pay about $2,400 for less services (being rural) than some in town that will pay $450. Then because of the bigger land area we use more water. The water gets dearer per kl the more you use. (and we aren't short of water here)


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## Temjin (8 May 2008)

Thanks for the compliment guys. 

Actually, please ignore that model for now. : I had a deep thought about it last night (yes, while sleeping!!) and I believed I've made some mistakes in terms of how the return of capital should be calculated from. So treat any values generated by this model with a grain of salt for now.  I will come up with a new version and post it again in the future.

Meanwhile, keep it up with the thread, contain a massive amount of useful info.


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## pepperoni (8 May 2008)

Temjin said:


> Thanks for the compliment guys.
> 
> Actually, please ignore that model for now. : I had a deep thought about it last night (yes, while sleeping!!) and I believed I've made some mistakes in terms of how the return of capital should be calculated from. So treat any values generated by this model with a grain of salt for now.  I will come up with a new version and post it again in the future.
> 
> Meanwhile, keep it up with the thread, contain a massive amount of useful info.




As mentioned previously, I have sold my house, invested the $1.8m equity with CBA at 8% ($2770 a week before tax) and am renting a $5m house on Balmoral Slopes in Mosman for $700-800 per week.

In addition to any views on the financial aspects of this, this is my dream home. I would buy it in a heartbeat if i could but definitely could not buy now and would almost certainly die, rot and be long forgotten before getting within cooee of ever living my dream.

Irrespective of what any spreadsheet says, I think the idea of small profits compromising my life/living arrangement for any part of my very finite life in the hope of a small profit is pretty sad.


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## professor_frink (8 May 2008)

pepperoni said:


> Irrespective of what any spreadsheet says, I think the idea of small profits compromising my life/living arrangement for any part of my very finite life in the hope of a small profit is pretty sad.




well said pepperoni


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## nioka (8 May 2008)

pepperoni said:


> As mentioned previously, I have sold my house, invested the $1.8m equity with CBA at 8% ($2770 a week before tax) and am renting a $5m house on Balmoral Slopes in Mosman for $700-800 per week.
> 
> In addition to any views on the financial aspects of this, this is my dream home. I would buy it in a heartbeat if i could but definitely could not buy now and would almost certainly die, rot and be long forgotten before getting within cooee of ever living my dream.
> 
> Irrespective of what any spreadsheet says, I think the idea of small profits compromising my life/living arrangement for any part of my very finite life in the hope of a small profit is pretty sad.




 In 5 years time you money is worth less, your rent will have gone up. The property probably will have been sold and you will probably have been told to go.( nobody will continue to rent a $5m house for $700 week) The place you sold will be worth more than you sold it for and you may not be able to afford to buy back in.

That is the history of a lot of my friends that have done that sort of thing thinking it was a smart move at the time.


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## robots (8 May 2008)

hello,

http://www.theaustralian.news.com.au/story/0,25197,23666031-12377,00.html

awesome stuff, 20% rise

i imagine property owners would be looking foward to bumping things up and up

thankyou

robots


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## YChromozome (8 May 2008)

robots said:


> awesome stuff, 20% rise




With rents having a weighting of 5.22% in CPI, no wonder inflation is out of control. Coupled with Petrol & food, we should brace for more interest rates.


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## robots (8 May 2008)

YChromozome said:


> With rents having a weighting of 5.22% in CPI, no wonder inflation is out of control. Coupled with Petrol & food, we should brace for more interest rates.




hello.

yes just have to "plod" along i guess, 

has the labor gov started any new public housing or still relying on the private investor?

thankyou

robots


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## trendsta (8 May 2008)

ahh yes Robots.. rents will just have to keep rising 20% yoy .. 

only a matter of time until wages catch up... and they also have a lot of catching up to do with rising costs.. maybe they will match the rent rises.. and everyone will be happy.. just "plod" along.


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## Macquack (8 May 2008)

pepperoni said:


> As mentioned previously, I have sold my house, invested the $1.8m equity with CBA at 8% ($2770 a week before tax) and am renting a $5m house on Balmoral Slopes in Mosman for $700-800 per week.




Better watch out pepperoni, the owner may be thinking of doing the same as you. $5m @ 8% ($7692 a week before tax). Does sound a lot better than $700-800 per week (0.832% gross return!).


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## Pommiegranite (8 May 2008)

nioka said:


> In 5 years time you money is worth less, your rent will have gone up. The property probably will have been sold and you will probably have been told to go.( nobody will continue to rent a $5m house for $700 week) The place you sold will be worth more than you sold it for and you may not be able to afford to buy back in.
> 
> *That is the history of a lot of my friends that have done that sort of thing thinking it was a smart move at the time.*




Unless you have a crystal ball, I wouldn't overlook the well known investment maxim "Past performance is no guarantee...blah..blah.blah"


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## bvbfan (9 May 2008)

wayneL said:


> I was just watching an auction (via live link) and saw this one go through.\/
> 
> Just need to brush up on the German.
> 
> ...




Which site did you see that? I wouldn't mind a cheap flat in Germany


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## CAFA1234 (9 May 2008)

pepperoni; said:
			
		

> As mentioned previously, I have sold my house, invested the $1.8m equity with CBA at 8% ($2770 a week before tax) and am renting a $5m house on Balmoral Slopes in Mosman for $700-800 per week.




I can understand your view about being in a nice place renting as opposed to the struggle to purchase. However there are a couple of things that are worrying me in your 'story'.

You are either paying $700 or you are paying $800. Whenever I've rented, as I do currently, I actually know how much my rent is. Or is it that you hope to be able to rent this house for around $7/800 a week?

Secondly, I know the area you are referring too, as I suspect many others do and as you will know, if you are genuinely renting a $5m property for even $2000 a week then you have the bargain of a life time, or you know the people concerned and there is some extra element  to this story.

The market pricing of rentals in Mosman on the slopes of Balmoral do not suggest that your numbers are right. Do you want to check them out just in case there is a slip up.

The danger is, if the bargains are that good we will get all the mobs from WA and VC flooding into the area - not good my friend!


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## wayneL (9 May 2008)

bvbfan said:


> Which site did you see that? I wouldn't mind a cheap flat in Germany




http://www.eigroup.co.uk/public/future_property_auctions.asp

...but it is a bit of an anomaly for German property to be sold in Blighty. Still a good guide as to what is available in certain parts of Germany. Some areas are jolly expensive though... Hamburg especially.

Cheers


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## robots (9 May 2008)

hello,

interesting one:

http://business.theage.com.au/mortgage-hardship-no-worse-than-usual/20080508-2ccv.html

seems a seasonal issue all those issues in the paper that number highlights,

no issue by the looks of it

thankyou

robots


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## YChromozome (9 May 2008)

robots said:


> hello,
> 
> no issue by the looks of it
> 
> ...




Glenworth is listed on the US Stock Market, so you are highly unlikely to say defaults are up, the housing market is likely to crash 50% and the company will fail. Rather, this will be in the administrator's report when the company is wound up.


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## professor_frink (9 May 2008)

YChromozome said:


> With rents having a weighting of 5.22% in CPI, no wonder inflation is out of control. Coupled with Petrol & food, we should brace for more interest rates.




just what is needed to bring investors back into the property market! 

Considering petrol and food are currently being driven up on the cost side of things, and raising rates isn't going to help bring more investors into the market to help bring new rental stock online, you'd have to question the RBA if they raised solely because of those 3 things. They don't need to raise to try and stamp out any rampant speculation on shares or property, both have been struggling of late, the only benefit I can think of for them to keep raising rates hard is to try and dampen some of the rise in O/S oil & food prices by trying to strengthen the currency. But even then that will possibly fuel more demand for some of the imported items we have in the CPI, such as electronic goods.

Basically it's looking like the RBA will be damned if they do, damned if they don't right now!


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## Tysonboss1 (9 May 2008)

nioka said:


> In 5 years time you money is worth less, your rent will have gone up. The property probably will have been sold and you will probably have been told to go.( nobody will continue to rent a $5m house for $700 week) The place you sold will be worth more than you sold it for and you may not be able to afford to buy back in.
> 
> That is the history of a lot of my friends that have done that sort of thing thinking it was a smart move at the time.




Totally agree,..

That is the price people pay for living above their means,


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## Tysonboss1 (9 May 2008)

Macquack said:


> Better watch out pepperoni, the owner may be thinking of doing the same as you. $5m @ 8% ($7692 a week before tax). Does sound a lot better than $700-800 per week (0.832% gross return!).





Again an over site people make while judging property vs cash,...

Cash investment only gets an 8% return which is fully taxed every year,.... so the capital and cashflow is eroded by inflation year on year,.. interest can also fall from there ten year high which they ar currently at...

Property returnsa smaller cash flow than cash at the moment,.... but both the cash flow and the capital are effectivly hedged against inflaton due to capital appeciation and rent increases,... also you don't get taxed on te capital appreation pat of the equation till you sell years later and you also get a 50% discount on the gain ( or no tax if it is your own home),.... so your capital growth is compounded for years until you finally get taxed on it,..... you can also time the sale for a year when your income is low (such as retirement) so the tax is further reduced.


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## Pommiegranite (9 May 2008)

Tysonboss1 said:


> Again an over site people make while judging property vs cash,...
> 
> Cash investment only gets an 8% return which is fully taxed every year,.... so the capital and cashflow is eroded by inflation year on year,.. *interest can also fall from there ten year high which they ar currently at*...
> 
> Property returnsa smaller cash flow than cash at the moment,.... but both the cash flow and the capital are effectivly hedged against inflaton due to capital appeciation and rent increases,... also you don't get taxed on te capital appreation pat of the equation till you sell years later and you also get a 50% discount on the gain ( or no tax if it is your own home),.... so your capital growth is compounded for years until you finally get taxed on it,..... you can also time the sale for a year when your income is low (such as retirement) so the tax is further reduced.




Inflation can also fall. Or do you property bulls always twist arguments to suit yourselves?

Rents can also fall

So can property prices

The bottom line is that property bulls always use past perfromance as an indicator for future performance. 

Cash can be locked into a long term deposits. So in effect hedged against deflation.


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## nioka (9 May 2008)

Pommiegranite said:


> Inflation can also fall. Or do you property bulls always twist arguments to suit yourselves?
> 
> Rents can also fall
> 
> ...




 History is well and truly against you though.

The reasons;

1. There is no more coastal land available. Most of the coastal land not developed is locked up forever by the conservationists and the Nimbys, this accellerates the law of supply and demand for city and coastal living.
2. Urban spread and the cost of fuel will cause steep rises in city land values.
3. While ever the Aussie balance of payments continues in the negative way it has done for many years now we will have interests rates higher than most of the rest of the world as we struggle to attract overseas money to fund our extravance.
4 Rents will only fall if there is a surplus of rental properties. There will only be a surplus if  a. The population falls or
                     b. A surplus of new homes are built faster than the demand.
Neither of those look like happening.

 I'm not a property bull myself but a long term property investor. I bought my first block of land 60 years ago and the situation hasn't changed in that time. There are flat periods but they don't last long so make the most of those that do.


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## Tysonboss1 (9 May 2008)

Pommiegranite said:


> Inflation can also fall. Or do you property bulls always twist arguments to suit yourselves?
> 
> Rents can also fall
> 
> ...




I am the first to admit that property prices go both up and down,... the value of any freely traded asset does,... but it will up swings will always out way the flat and down periods.

If you take a 10year period,.... I don't think many people would argue that property prices and rents would not increase by atleast inflation,... so if you believe that property prices and rents will atleast be maintained will inflation then property is better than cash.

But I could be wrong I guess,... may be locking your money into an investment vehicle where over 80% of your return is lost in tax and inflation is a good idea,.... thats the choice you hav to make as an investor


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## Pommiegranite (9 May 2008)

nioka said:


> History is well and truly against you though.
> 
> The reasons;
> 
> ...




Your above points can be applied to the UK. Yet house prices are continuing to fall there.

It works the same as in the stock market. A stock could be undervalued and look very appealing, but why not sit on the sidelines and buy even cheaper. This is what is leading to a dip in home sales. 

I agree that the long term trend is up. However, I'm much happier with cash parked at over 8% while watching next to negative gains in the Sydney property market, ready to pounce. In the meantime I am happy to rent a property which suffices. 

I have calculated that the house I desire to buy would have to appreciate close to 3% for me be at a financial loss by renting. Looking at the suburb which I wish to buy in, history is with me.


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## Tysonboss1 (9 May 2008)

Pommiegranite said:


> Your above points can be applied to the UK. Yet house prices are continuing to fall there.
> 
> It works the same as in the stock market. A stock could be undervalued and look very appealing, but why not sit on the sidelines and buy even cheaper. This is what is leading to a dip in home sales.
> 
> ...




Well that depends on where you want to invest,... some parts of sydney will drop a bit, other parts may be flat inner city suburbs will proberly increase over the next year,... the inner suburbs of sydney are a bit of a pressure cooker at the moment.

alot of people are talking about property dropping 30%,.... this simply won't happen, at worst you might see price drops of 5-10% or most likly a bit of stagnation,....

And really if you do your homework there is always deals you can pick up where you can make 5-10% staight away anyway,


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## pepperoni (9 May 2008)

Without giving away my actual address ,  the house is 300m to the beach 300m to mosman villiage, has been offered $4.5m, and is costing me $750 exactly including a gardener.

Its a substantial home with substantial land.

If it is sold the agent has confirmed that he will buy me out of my lease if need be (Its happened once before and IMO is a good little earner).

It is rented through an agent and is indeed the deal of the century but there are many rental bargains ... try to find an amazing deal buying in such an area.

But with rents for such houses topping out at about 2% it makes sense to rent.

Although I doubt I could afford such a property in my 60s, but am living my dream now in my 30s.

Living in my dream house vs owning a PPOR is simply within my means ... which to choose which to choose ha ha.

As for the investment decision, now its cash but it will ALWAYS be separate to the "where and how I live" decision.

For comparison, $750 a week I could get into a $300,000 30 yr mortgage and break my back to own a 2.1m house in my 60s.

Renting with equity invested I can rent + live off the interest (ie retire ... as if) and eventually downgrade to renting a 2008 2.1m house when Im old ;-).

Home ownership as a holy grail is BS which youger generations see through ... this wont be good for property prices as has been the case forever in most of europe.


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## numbercruncher (9 May 2008)

> Home ownership as a holy grail is BS which youger generations see through




Precisely, young people simply arnt buying it, Hence the very very low ownership rates with Gen-y, Houses will be tons cheaper in real terms in the future as the younger ones dictate the price they will pay.


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## gfresh (9 May 2008)

From a gen-Y perspective.. 

I think it's maybe a good thing? Encourages people to instead live life, travel overseas, invest and try other things (businesses, share investment, fixed investments).. Property is in Australia made out to be some golden challice to becoming rich. Maybe too much emphasis, too much tax advantages, that should be reduced.

If you tell some people they'll never be able to afford to buy property, they almost seem disappointed and frustrated. It should almost be a "oh well, I guess I'll just spend my money on more interesting things" and that's that. But the mindset is very hard to break on some people. 

To me, property is very boring. I've never seen the excitement of property at all. Several years ago I was in the situation of property or other things, and it was "nah, stuff it, I'm buying a fast car". And that was hell fun at the time. Now I'm in the position again a few years on to be able to buy (and probably will in 12 months or so), I am simply not that excited at the prospect whatsoever. Again, going through the same thoughts. 

Even some of my friends that have bought in recent years don't seem to happy with what they have, it's almost "I wish we could afford a larger place", or "you're so lucky not to have to worry about mortgage payments", or "f'ing interest rates, when's it going to stop?!". Makes me wonder whether I'm really missing out on too much when I keep hearing these sorts of comments from them. 

If I slaved my guts off for a property, I'll be nearly 60 and wow, I'll have a house I "own". My mother died at 63 and one of my grandmothers not much older. You never know how long life will give you, and 25-30 years is a long time for a mortgage. 

There will surely be others out there seeing the pain of some with interest rates and thinking "this is not for me". Maybe they'll even be more convinced to rent forever.


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## Tysonboss1 (9 May 2008)

numbercruncher said:


> Houses will be tons cheaper in real terms in the future as the younger ones dictate the price they will pay.




Doubt it,...

they can't dictate the price, they can only choose to rent or buy,.. more renters and less people building homes means incresed yeilds.

I would love to see the % of renters to home owners increase, it would make it better for investors.

remember even if prices did not appreatiated much in the future then it would simply make the yeild better,.... either way I win.


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## numbercruncher (9 May 2008)

You guys discount demographics, 70pc+ of societys assets are owned by the over 50s, Our population wont rise forever and we are top heavy in older people, this Housing will all be recycled.

So I do see the price being dictated by what people can/will pay .....

R/E has always returned to its long term mean in relation to Price to Incomes.

Wont happen here is what you guys always say, But US, UK , NZ amoungst many others were saying the same.

Your Yields wont be dictated by what you pay for an asset they will be dictated by peoples ability to pay, hence why average rents to Prices are on about 4pc.

Either way your fine Tysson, you have over 60pc equity, but we are talking about the market broadly, not you


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## pepperoni (9 May 2008)

Tysonboss1 said:


> Doubt it,...
> 
> they can't dictate the price, they can only choose to rent or buy,.. more renters and less people building homes means incresed yeilds.
> 
> ...




If everyone sold (... not possible but for arguements sake ...) and suddenly rented rents wouldnt change - its the people to home ratio not the owner to renter ratio that effect rents. (supply of homes vs demand for them).

Developers will continue to build if there is demand for property at a profitable price.  (Last i heard they were building 600 homes in one development out west very soon)


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## pepperoni (9 May 2008)

numbercruncher said:


> You guys discount demographics, 70pc+ of societys assets are owned by the over 50s, Our population wont rise forever and we are top heavy in older people, this Housing will all be recycled.
> 
> So I do see the price being dictated by what people can/will pay .....




Agree.

And when the older people die they will split the money in their wills leaving a gen of 50 somethings that are lucky to have enough money to buy a fraction of a property.


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## Temjin (9 May 2008)

Tysonboss1 said:


> If you take a 10year period,.... I don't think many people would argue that property prices and rents would not increase by atleast inflation,... so if you believe that property prices and rents will atleast be maintained will inflation then property is better than cash.




 If property is only appreciating in NOMINAL value with inflation over a 10 years period, how is it better than cash? There are costs associated with holding a property, and debt is one major cost. The only way to justify an investment property is the cash flow it generates through rent income and the ability to depreciate the house/land as a deduction against your income tax. Capital appreciation is secondary, but has been a BIG PLUS over the last 10 years due to the credit boom. Otherwise, one will ALWAYS LOSS over the long term just by holding a mortgage and not treating it as an investment property. 

Historically, there have been very few periods where inflation is higher than the offical short term interest rates. (i.e. cash rates) US is in one right now. 

In fact, looking back 10 years is way too short. Try something like 50 years and you will get a better picture. There was a pretty graph posted eariler in this whole thread on the REAL PRICE INDEX for houses in the US and Australia for the last 50 years. The chart does look pretty in the last 10 years, but not when you go further back, it's been averaging around inflation rate (i.e. steady in real price) more or less.


----------



## tigerboi (9 May 2008)

*Re: House prices to keep falling for years*

Supply & demand has sent rent prices through the roof,no secret in that but you also have the dopey owners who overstretched themselves trying to pass on the complete cost of their mortgage repayments.

Look at the couple at fairfield,had to sell up...THEY paid $750,000!! for a house in fairfield...fools..hope they learn a very big lesson.

Now is the time to look around for the fire sales/bargains,its not unlike the market...supply & demand


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## nioka (9 May 2008)

Temjin said:


> If property is only appreciating in NOMINAL value with inflation over a 10 years period, how is it better than cash?
> Historically, there have been very few periods where inflation is higher than the offical short term interest rates. (i.e. cash rates) US is in one right now.
> 
> In fact, looking back 10 years is way too short. Try something like 50 years and you will get a better picture. There was a pretty graph posted eariler in this whole thread on the REAL PRICE INDEX for houses in the US and Australia for the last 50 years. The chart does look pretty in the last 10 years, but not when you go further back, it's been averaging around inflation rate (i.e. steady in real price) more or less.




There are statistics and statistics. Be careful of averages. The average trader will not make money. A lot will lose and bring down the average. That does not mean that a proportion of traders won't do very well. I would say that average property investors do a lot better than average traders.

 Property investors who select the right property will do very well. It all boils down to position, position, position with getting the right price a secondry factor. The best position; close to the coast or city. The worst house in the best street rather than the best one in a bad street. Forget averages.


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## Tysonboss1 (9 May 2008)

pepperoni said:


> If everyone sold (... not possible but for arguements sake ...) and suddenly rented rents wouldnt change - its the people to home ratio not the owner to renter ratio that effect rents. (supply of homes vs demand for them).




Using your example if everyone sold then yes rents would stay the same but prices would go down,... so %yield would naturly go through the roof, either condition is good for investors.


----------



## Tysonboss1 (9 May 2008)

Temjin said:


> If property is only appreciating in NOMINAL value with inflation over a 10 years period, how is it better than cash? There are costs associated with holding a property, and debt is one major cost.
> .




What I was comparing was someone putting say,.. $200,000 in property vs cash.

With cash they will only get 8% interest which they have to pay tax on,.... and their capital in eroded by inflation,...

If they put the same $200,000 in property they would get maybe 4.5% cash flow after costs,..... however he capital is most likely then protected from inflation and the cashflow will also rise with inflation.

This is further bettered by the fact that only 50% of the capital component  of the gain is taxed when the property is sold,... so it has compounded for years before being taxed at a 50% discount.


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## numbercruncher (9 May 2008)

Tysonboss1 said:


> Using your example if everyone sold then yes rents would stay the same but prices would go down,... so %yield would naturly go through the roof, either condition is good for investors.





But not so good for Investors who bought at the peak in 2007.


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## nioka (9 May 2008)

pepperoni said:


> (Last i heard they were building 600 homes in one development out west very soon)




 I also heard that there are 600 Iraquie families that australia is going to allow to settle here as our troops are withdrawn. The story was that they have been working with the aussie troops and they will be at risk when the aussies leave. so they are gone. Then there are the thousands of homeless that Rudd has promised to house and the housing required for disadvantaged aboriginals to be accomodated.

 (If you have done one thing I guess you have kept this thread alive.)

 Question; Are you trying to convince us or convince yourself that you are on the right track. For me you have filled in the time waiting to see which way CNP went.


----------



## Tysonboss1 (9 May 2008)

Temjin said:


> :There are costs associated with holding a property, and debt is one major cost. .




debt is  secondary factor to property investing,... If you are taking on a large amount of debt to invest in a property then offcourse as with borrowing for shares you have to time it right, and you are adding another layer of risk to the investment.

but not all property investors take on large amounts of debt to invest,.... alot just use property as an inflation hedged income stream in which they can park large sums of money,

The way I look at it, when it comes to money you have to play good offence and defence,...

Offence is actually winning the cash by,.... Working, Trading, Building
business cashflow, doing a property development, etc. etc. alot of this requires personal excertion..

Defence is then saving these funds which you have won playing offence in a stable platform where they are protected from inflation and producing a passive cashflow that will oneday allow you to stop relying on offence activities... therefore freeing up time for leisure activites...

When it comes to defencive assets I think property is at the top of the list,...

I myself focus my offence on making money though working in and on my business I then play defence by saving 50% of my earnings into property investments and longterm share holdings,....


----------



## robots (9 May 2008)

hello,

and you have to love that stat from ABS (many people's holy book) that home owners are 5x wealthier than renters,

2.5ys still going strong, congratulations well done to those involved

thankyou

robots


----------



## numbercruncher (9 May 2008)

> Last edited by wayneL : Today at 06:55 PM. Reason: Remove trollish comment





Thanks Wayne, I _nearly_ went down to his level and replied to his comment ...


You may get your wish Robi, but its an Inflation spiral, youll forever play catchup till something breaks.


----------



## wayneL (9 May 2008)

Latest news from the UK



> *Repossessions hit near 1990s peak*
> Dearbail Jordan and Frances Gibb, Legal Editor
> 
> Home repossession orders are nearing the level last seen in the recession of the early 1990s after rising by 16 per cent in the first quarter of this year....
> ...



The remarkable thing about this figure is that we are not "officially" in recession yet. We haven't even begun to see redundancies yet, though the word on the street is that it's getting freakin' hard to get a job atm.


----------



## robots (9 May 2008)

hello,

its already happening number, I couldnt give a rats about inflation as its a zero game, 

its a given, like the sun coming up in the morning

rents will continue to rise and rise as I believe renters have plenty of spare $ and can easily handle at least 50% increase over the next 1-2yrs,

thankyou

robots


----------



## Macquack (9 May 2008)

gfresh said:


> From a gen-Y perspective..
> 
> If I slaved my guts off for a property, I'll be nearly 60 and wow, I'll have a house I "own". My mother died at 63 and one of my grandmothers not much older. You never know how long life will give you, and 25-30 years is a long time for a mortgage.
> 
> There will surely be others out there seeing the pain of some with interest rates and thinking "this is not for me". Maybe they'll even be more convinced to rent forever.




Good post gfresh, I like your perspective.
Some of the other posters in this forum think they will live forever and enjoy the fruits of their "property" in perpetuity. 
If they only thought, *we are all renters in effect*, you cant take it with you.


----------



## wayneL (9 May 2008)

Parts of Londinium still cost a pretty penny :

http://property.timesonline.co.uk/tol/life_and_style/property/article3559490.ece



> A flat in central London has become the most expensive home in the world, with a price understood to exceed £115m.




That's about $240,000,000 pacific pesos... for a flat????


----------



## numbercruncher (9 May 2008)

> Good post gfresh, I like your perspective.
> Some of the other posters in this forum think they will live forever and enjoy the fruits of their "property" in perpetuity.
> If they only thought, we are all renters in effect, you cant take it with you.





Reminds me of some horror movie I watched once, some Psycho murderer was being Interviewed by the cops ... He says or to the effect .... " They work for 40 years doing the same Job paying off a House with a white picket fence then they Die and they call ME Crazy !! "


----------



## Macquack (9 May 2008)

wayneL said:


> Parts of Londinium still cost a pretty penny :
> 
> http://property.timesonline.co.uk/tol/life_and_style/property/article3559490.ece
> 
> ...




They must be printing the stuff up (pounds) over there big time. Nobody could possibly earn that much money without the help of an *out of control growth in the money supply. *
Thats what really peeves me - lack of control of money supply growth.
Every new dollar/pound issued/created *reduces the value of all existing money*.


----------



## wayneL (9 May 2008)

Macquack said:


> They must be printing the stuff up (pounds) over there big time. Nobody could possibly earn that much money without the help of an *out of control growth in the money supply. *
> Thats what really peeves me - lack of control of money supply growth.
> Every new dollar/pound issued/created *reduces the value of all existing money*.




What you have to realize is that the wealth of certain individuals in this country is truly startling. There is the "old money" aristocracy, plus the _nouveau riche_ from Europe (particularly Russia) and the Middle East (oil money).

Some aristocratic blood runs through Missus' family, plus via the horsey scene, have had a first hand look at some of these people's lifestyles. It is just beyond comprehension... absolutely mind boggling.

Whilst I agree with your point, in the instance of absolutely top end London property, printing money by CBs has absolutely nothing to do with it.


----------



## Macquack (9 May 2008)

wayneL said:


> What you have to realize is that the wealth of certain individuals in this country is truly startling. There is the "old money" aristocracy, plus the _nouveau riche_ from Europe (particularly Russia) and the Middle East (oil money)....It is just beyond comprehension... absolutely mind boggling.




*Time for a revolution !*


----------



## wayneL (9 May 2008)

Macquack said:


> *Time for a revolution !*



Maybe, but the Champagne Socialists infesting Whitehall atm are a more imminent danger to the average schmuck. But we get our chance to boot them out in a couple of years. Meanwhile, it is gratifying to see Crash Gordon roasted on the self-created economic skewer of crashing house prices.


----------



## numbercruncher (9 May 2008)

Macquack said:


> *Time for a revolution !*





They own Armies with big shiny Guns ....


----------



## numbercruncher (9 May 2008)

New Zealand is getting Toasted at the moment, Just read Unemployment skyrocketed the most in 19 years ..... Housing is getting hammered too by the reports. But I understand its different here in Oz ?

This is the worst example ive found so far 



> An Auckland couple lost 83 per cent of their investment when they sold a property in one of the city's best urban precincts.
> 
> As the gloss goes off the Auckland housing market, the Mt Albert pair, who paid $349,000 three years ago for a Beaumont Quarter apartment, have sold it for $58,600.
> 
> ...




http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10505043


Ground rent I assume is the same as body corp ?


----------



## wayneL (9 May 2008)

numbercruncher said:


> Ground rent I assume is the same as body corp ?




If it's the same as the UK, there is no such thing as strata title. Apartments are therefore leasehold and rent is paid to the land owner, even though you "bought" the property.

You've really only bought a long term lease.


----------



## numbercruncher (9 May 2008)

Thanks Wayne, I looked it up after posting ... Further to that article they say Ground rents in that complex are increasing by upto 4x in one hit !

Dodgy deal hey, worse than placing faith in Central banks


----------



## Macquack (9 May 2008)

wayneL said:


> If it's the same as the UK, there is no such thing as strata title. Apartments are therefore leasehold and rent is paid to the land owner, even though you "bought" the property.
> 
> You've really only bought a long term lease.




WayneL, does that mean the new owner of 115m pound flat has to pay rent?


----------



## wayneL (9 May 2008)

Macquack said:


> WayneL, does that mean the new owner of 115m pound flat has to pay rent?



I would say so.

Ground rent is not like rent rent and may in some cases be only a nominal amount.

So it's not like paying £150,000 for a flat and still having to pay £650 per month rent. Ground rent might only be £150 per year, up to soething comparable to body corporate fees. (or substantially more in the NZ case)

The value for the freeholder (in the UK at least) is in fees for permission for the leaseholder to do alterations to the property, extending the leasehold, or in the case of leasehold terraces selling the freehold to the leaseholder.


----------



## YChromozome (9 May 2008)

robots said:


> rents will continue to rise and rise as I believe renters have plenty of spare $ and can easily handle at least 50% increase over the next 1-2yrs,




Cool. So if rents go up, renters will spend less money into the economy. They won't go to restaurants, buy consumer discretionaries etc. Businesses will start to hurt, have to slash staff. As staff lose jobs, they also lose their incomes used to service the mountain of debt and lose their homes.

Bring it on I say. The quicker we pop this bubble the better.

Only last weekend I went down stairs to get my Weekend Financial Review and found the newsagent was closed. They have shut up shop. With rising rents, people either don't buy the paper or magazines anymore, or like me, I get the daily paper from the recycle bin once my neightbours have finished with it.


----------



## Tysonboss1 (10 May 2008)

wayneL said:


> If it's the same as the UK, there is no such thing as strata title. Apartments are therefore leasehold and rent is paid to the land owner, even though you "bought" the property.
> 
> You've really only bought a long term lease.




yeah it seems crazy,...

In new york there are some land holders that own the land,.... but other owners that own the building rights,... 

The funny thing is I heard in the UK there was a rich land lord who 100 years ago sold of most of his families property fortune on 999years leases thinking he was safe guarding his families income stream,... how ever he forgot to allow for inflation,.... the family is still in europes richest 100 but the income stream is very poor,.....


----------



## robots (10 May 2008)

helllo,

great news for property owners:

http://www.theage.com.au/news/national/homes-out-of-reach/2008/05/09/1210131265806.html

with the bond department noting a reduction in 10% its clear people are easily soaking up the rises which is awesome news,

yoy 20% chromo? very achievable

thankyou

robots


----------



## numbercruncher (10 May 2008)

Nice one Robi, that article is more about the unfortunate circumstances of others than anything else, do you derive pleasure from this ?

What does the word Chromo mean in your post ?


----------



## Aussiejeff (10 May 2008)

numbercruncher said:


> Nice one Robi, that article is more about the unfortunate circumstances of others than anything else, do you derive pleasure from this ?
> 
> *What does the word Chromo mean in your post ?*




Hahaha. Go up 3 posts. I don't think robi is talking about XChromozomes?

LOL


----------



## numbercruncher (10 May 2008)

Aussiejeff said:


> Hahaha. Go up 3 posts. I don't think robi is talking about XChromozomes?
> 
> LOL





Oh lol @!

So Robi thinks 20pc year on year rental Increases is acheivable ? Thats some sort of twisted fantasy that interest rate rises would stop in its tracks.


----------



## robots (10 May 2008)

hello,

what ten rises so far over a couple of years, and reports from the office of housing showing rent up 15%, haven't done too much NC

whats going on with mr imber, jumped ship from afah? i wonder if he is down and dirty on the street front or just got the handout for the executive salary 

thankyou

robots


----------



## Tysonboss1 (10 May 2008)

numbercruncher said:


> Oh lol @!
> 
> So Robi thinks 20pc year on year rental Increases is acheivable ? Thats some sort of twisted fantasy that interest rate rises would stop in its tracks.




It's achieveable over a short period of a couple of years,... but not longterm,..

However any property that has increasing scarcity such as houses on decent blocks close to the capital cities, will have there rents increase at rates above inflaion in the longterm,... simply because as they become less and less in number and the population grows the supply and demand factor pushes the prices of these houses up,..... Rentals will still be available to average incomes but you will find that the density will increase for the median renters.

however saying that the rent doesn't always grow year by year,... it tends to come in surges and then flat periods,... what we are in now and have been for a few years is an example of a surge.


----------



## YChromozome (10 May 2008)

robots said:


> yoy 20% chromo? very achievable




I have no doubt it is achievable. However is it sustainable - off course not. If rent's continue to go up faster than wages, then at some stage peoples wages will no longer afford the rent.

But its the fall out from the bubble that has me worried the most. I read a couple of days ago about the huge number of people using their super as a last ditch effort to keep their homes. It's all crazy. When the bubble pops, they will have an asset that halfs in its value and have no super. It would be laughable, if it wasn't so serious.


----------



## Tysonboss1 (10 May 2008)

YChromozome said:


> . If rent's continue to go up faster than wages, then at some stage peoples wages will no longer afford the rent.
> 
> .




Thats not true,... the median rent growth will stay within wages growth limits,.. however people will have to move into higher density to get a median rent,... The existing low density homes will increase at a rate faster than inflation,.. 

Ask yourself this,.... In 15years will there be Less of more people wanting to live in Sydney,.... If he the aswer is more,... then they will have to demolish houses to build apartments,.... If they are demolishing houses to built town houses and apartments then the houses become fewer and fewer but the number of people wanting them continues to increase increases,... So the suburbs that remain low density within 10ks of the city will have there rents growing faster than inflation,... while the median rent still remains within inflation because there is a gradual move to high density which will keep the average rent in check.


----------



## numbercruncher (10 May 2008)

In 15 years I would say less as swaths of Boomers leave the city to retire in Greener pastures.


----------



## Tysonboss1 (10 May 2008)

numbercruncher said:


> In 15 years I would say less as swaths of Boomers leave the city to retire in Greener pastures.




Well if that is your opinion then I would not suggest you investing in property,..

How ever I don't believe that to be the case, so I will continue to invest... some of the biggest developments around sydney are retirement villiges and communitues. offcorse there will be % hat leave the capitals but I would suggest that it is not the majority, and will be offset by immigration and population growth,... as well as continued growth in sungle person house holds.... 

One other factor to consider is the large amount of gen Y still living at home, these people will move out over the next 15 years, which wll further offset the baby boomers.


----------



## YChromozome (10 May 2008)

Tysonboss1 said:


> Thats not true,... the median rent growth will stay within wages growth limits,.. however people will have to move into higher density to get a median rent,... The existing low density homes will increase at a rate faster than inflation,




Cool, so I'm posting from the 20th floor in a 565 Apartment complex spanning two towers. I assume that is high density. If I follow you, Will my rent only increase 4.5% this year? If I give you the details of my landlord, can you write to them please?


----------



## Temjin (10 May 2008)

nioka said:


> There are statistics and statistics. Be careful of averages. The average trader will not make money. A lot will lose and bring down the average. That does not mean that a proportion of traders won't do very well. I would say that average property investors do a lot better than average traders.
> 
> Property investors who select the right property will do very well. It all boils down to position, position, position with getting the right price a secondry factor. The best position; close to the coast or city. The worst house in the best street rather than the best one in a bad street. Forget averages.




This an interesting article for everyone to read, both related to property and investors as a whole.

http://www.frontlinethoughts.com/pdf/mwo050908.pdf

I personally see some of "bad" emotions that cause investor to behave badly in some of the posters here. Overconfidence, anchoring and Cognitive dissonance are more dominant.  

I'm not saying property investment is bad. In fact, those who can make money consistently through all market cycles are considered to be both SKILL AND VERY LUCKY. 



			
				Tysonboss1 said:
			
		

> What I was comparing was someone putting say,.. $200,000 in property vs cash.
> 
> With cash they will only get 8% interest which they have to pay tax on,.... and their capital in eroded by inflation,...
> 
> ...




Ok, a little bit misunderstanding here. I was talking about "home mortgage" investment verse "cash" investment, but you are talking about INVESTMENT PROPERTIES. So that's ok. 

You need to be careful with the assumptions you have just made. No one can assume everything would be that consistent (cash rate %, rental yield %, debt cost %, etc) over the long time. But if your timing was not right, where cash rate increased to 15% overnight to halt inflation (yes, happened before) and property value actually stagnates or worse, drop in value for a few years, then you would have been less off over that period of time than simply saving cash alone. 

No one will argue that property investment had one of the best reward/risk ratio as an investment class over the last few years, especially when there are so much tax advantages. Just rental income alone with tax deducation through depreciations were enough to justify the investments alone (if it only appreciate along with inflation). Capital appreciations were just a big bonus that were extraordinary over the past few years. 

But past performance is NO indicators of future performances, and this has always been true no matter how much one argue about it. The credit boom cannot last forever, and this goes along with the local and international economy. Here is a famous quote from Jim Rogers, "How can you trade US steel if you don't know what's happening with rubber in Malaysia". Likewise, "How can you invest in Australian properties if you don't know what's happening with monetary policy in China?". 

This discussion will never ends anyway, we have our own biases I guess.


----------



## Mofra (10 May 2008)

Macquack said:


> Good post gfresh, I like your perspective.
> Some of the other posters in this forum think they will live forever and enjoy the fruits of their "property" in perpetuity.
> If they only thought, *we are all renters in effect*, you cant take it with you.



Agree with this. The majority of people who buy property are renting the money from a lender, so it's a different renting arrangement, not a ceasation of renting altogether.

I like older houses, the sort I wouldn't bother buying myself (lots of character often = lots of maintenance) so I rent. Tax wise, I'm better off buying a cheaper property which earns me the same rent as I pay, being modern there is veryt little maintenance, and the money I rented to purchase it costs me interst which is tax deductable. I'm still happy with my decision and it shouldbe neutrally geared in the short future.

Not sure why the fact that some people being happy with one portion of their investment profile seems to upset others so much.


----------



## Julia (10 May 2008)

I've only read the last couple of pages of this thread but notice that the discussion - perfectly reasonably, of course - is focused on the financial outcomes of renting versus buying to live in/investment/ etc.

What about the emotional aspect of owning the home you live in?  The knowledge that no landlord can throw you out, the fact that you can do as you wish with the place and just the sense of security it provides?

I've lived in the same property for 15 years and can look around it, especially the garden, and see the results of my efforts over that time.   I just really like that.


----------



## Tysonboss1 (10 May 2008)

YChromozome said:


> Cool, so I'm posting from the 20th floor in a 565 Apartment complex spanning two towers. I assume that is high density. If I follow you, Will my rent only increase 4.5% this year? If I give you the details of my landlord, can you write to them please?




Your rent will be affected by supply and demand,.... so it will rise in times of peak demand,.... but as more and more apartsments are built to take advantage of the peak rents normally over construction will cause rents to stagnate or reduce slightly for a couple of years,.... this was seen in sydney in 2003,...

But generally as long as there is enough construction I would expect high density tower apartments to stay within the realms of inflation growth as it is realatively easy to increase supply of apartments, unless there is other factors such as harbour veiws or above average parking spots per unit.

but saying that as I said early rental growth comes is spurts,.. it won't increase at a steady rate with inflation,... but over the years shouldn't outpace inflation.


----------



## Tysonboss1 (10 May 2008)

Mofra said:


> I like older houses, the sort I wouldn't bother buying myself (lots of character often = lots of maintenance) so I rent. Tax wise, I'm better off buying a cheaper property which earns me the same rent as I pay, being modern there is veryt little maintenance, and the money I rented to purchase it costs me interst which is tax deductable. I'm still happy with my decision and it shouldbe neutrally geared in the short future.
> 
> :




I am in a similiar situation,.... I am renting in sydney,.... but invest in brisbane.

I have always found the renting while also investing in property works because you can invest in areas that you think are better investments while living where you have to work.


----------



## xoa (10 May 2008)

robots said:


> rents will continue to rise and rise as I believe renters have plenty of spare $ and can easily handle at least 50% increase over the next 1-2yrs,
> 
> thankyou
> 
> robots




:

Third-world Australia, here we come, eh? Looks like soon we'll be putting 60% of our wages into the rent, just like Indians. 

Every Australian family will receive a room, a bicycle, and three bowls of rice per day.


----------



## robots (10 May 2008)

hello,

look at the case of a couple on average wage, so therefore, total gross is roughly 100k/pa

they can rent a good 2-bed apartment with parking in st kilda, prahran etc for around 350-400/wk, thats chicken feed

massive scope for rent increases

thankyou

robots


----------



## Pommiegranite (10 May 2008)

xoa said:


> :
> 
> Third-world Australia, here we come, eh? Looks like soon we'll be putting 60% of our wages into the rent, just like Indians.
> 
> Every Australian family will receive a room, a bicycle, and three bowls of rice per day.





Indians probably put a smaller % of their wages towards rent than Aussies put towards home/social entertainment.

In 20 years, the jobs that the locals won't take now, will be the jobs that the current immigrants won't be taking. 

In the UK, 95% of the Indians that I know (over 100) are either professionals, own a business, or own an investment property. The number claiming unemployment benefit is zero.

It will also happen here. In a way, this is also supporting property prices, in that many immigrants know of only one way to make money, which is to take a investment loan and see it out by any means.


----------



## xoa (10 May 2008)

Pommiegranite said:


> Indians probably put a smaller % of their wages towards rent than Aussies put towards home/social entertainment.
> 
> In 20 years, the jobs that the locals won't take now, will be the jobs that the current immigrants won't be taking.




I mean Indians living in India.

In supposedly developed nations like Australia, essentials like housing are supposed to consume a modest share of disposable income. The real estate disciples seem to be praying for a future where an oppressive and ever growing share of our income goes to pay for a roof over our heads.


----------



## Aussiejeff (10 May 2008)

xoa said:


> :
> 
> Third-world Australia, here we come, eh? Looks like soon we'll be putting 60% of our wages into the rent, just like Indians.
> 
> Every Australian family will receive a room, a bicycle, and *three bowls of rice per day*.




So sorry! Rice is off menu due to severe worldwide shortage!! (How about some home grown tucker, then - Witchetty Grubs are yummmmmmmm!   ).


AJ


----------



## Mofra (10 May 2008)

Tysonboss1 said:


> I am in a similiar situation,.... I am renting in sydney,.... but invest in brisbane.
> 
> I have always found the renting while also investing in property works because you can invest in areas that you think are better investments while living where you have to work.



Absolutely agree - although my natural aversion to non-deductable debt makes be very much a bias commentator


----------



## Pommiegranite (10 May 2008)

xoa said:


> *I mean Indians living in India*.
> 
> In supposedly developed nations like Australia, essentials like housing are supposed to consume a modest share of disposable income. The real estate disciples seem to be praying for a future where an oppressive and ever growing share of our income goes to pay for a roof over our heads.






Do you anything to back up your statement?

I know many Indians who live in India. To pay rent is laughable for the majority of the Indian population. Even to have a mortgage is unheard of. In fact, it's pretty embarrasing to for an Indian resident to take a loan. 

They tend to stay in the family home (if male) or move in with the husband + in-laws (if female).

In Oz and the other English speaking countries, to have a home loan is seen a normal milestone in life. More like a millstone around the neck, is what I say. 

Oh well, that's western culture for you. Well done you've achieved getting into debt. How independent of you. Now you pay the price for the way you were raised i.e 25-30 years of servitude to the big 4.


----------



## xoa (10 May 2008)

robots said:


> hello,
> 
> look at the case of a couple on average wage, so therefore, total gross is roughly 100k/pa
> 
> ...



...

The median household income is $54k, not $100k. 

Assuming your apartment rented for $375 per week, that means 47% of their net income would be consumed by rent. If you got your 50% rent increase within the year, rent would be consuming 70% of their net income. That's your vision for Australia.



robots said:


> massive scope for rent increases




Just yesterday, you said that renters are 5x poorer than home owners. Now all of a sudden, they can absorb massive rent increases? What changed in the last 24 hours?


----------



## robots (10 May 2008)

hello,

because they spend all of their money, live for today etc,

they can soak up the rises easily, a few less mega-lattes a day, one less tattoo a month

check this, back in 07: average male income 57k, average female income 48k,put that together and around 100k

thankyou

robots


----------



## xoa (10 May 2008)

robots said:


> check this, back in 07: average male income 57k, average female income 48k,put that together and around 100k




Your data is correct, when you exclude the 7 million adults who are unemployed, studying, working part time, carers, on a pension, or otherwise not full time employees. Unfortunately, these 7 million Australians need a place to live too.

Once you include all those unfortunates, the median household income drops to $54k. The median household income of renting households is even lower. On the other hand, your cherry-picked dual-income couple would traditionally own a house.


----------



## Tysonboss1 (10 May 2008)

Pommiegranite said:


> Well done you've achieved getting into debt. How independent of you. Now you pay the price for the way you were raised i.e 25-30 years of servitude to the big 4.




Another major thing some people here are missing is that they think you have to wait 30years till you have paid off your home before you see the fruits of home ownership,... this is not true.

The main benefit is that paying of your home locks in your housing costs,...

for example when my father first started paying off his house it cost him $70 a week which was a massive portion of his pay at the time,...

He could have rented for $30 a week, but five years later renting a house was $80 but dad still only paid $70 per week.

10 years later it was $125 to rent,.... but dad still only paid $70.

Today houses of the same type are are well over $350 per week,.. but guess what dad doesn't have a loan any more he has finished paying it off, But he was benifiting from cheaper accomadation long before he had finished the repayments,... and now he has no rent to pay and a decent asset to sell to fund a better retirement, 

In fact since mum and dad have had alot of surplus cashflow from not having to pay much for there housing in the last 15years they have built up a sizeable investment portfolio.


----------



## Cretin5000 (11 May 2008)

Tysonboss1 said:


> Another major thing some people here are missing is that they think you have to wait 30years till you have paid off your home before you see the fruits of home ownership,... this is not true.
> 
> The main benefit is that paying of your home locks in your housing costs,...
> 
> ...




My parents rented for some years saved and bought the house outright. Nice hey, and they were only in their 40's....House now worth approx 400K according to the estate agent spruikers lol  land is worth more though.


----------



## robots (11 May 2008)

hello,

its like a cheese twist from david jones, any way you like it

great day yesterday, 65% clearance rate up 5% from last week

slow and steady, great new for those looking to buy still

thankyou

robots


----------



## Macquack (11 May 2008)

xoa said:


> In supposedly developed nations like Australia, essentials like housing are *supposed to* consume a modest share of disposable income. The real estate disciples seem to be praying for a future where an oppressive and ever growing share of our income goes to pay for a roof over our heads.




You nailed it, xoa.


----------



## theasxgorilla (11 May 2008)

Tysonboss1 said:


> If they are demolishing houses to built town houses and apartments then the houses become fewer and fewer but the number of people wanting them continues to increase increases,... So the suburbs that remain low density within 10ks of the city will have there rents growing faster than inflation,... while the median rent still remains within inflation because there is a gradual move to high density which will keep the average rent in check.




This is plausible, but unfortunately, it means that most people will not be able to afford to rent a house within 10kms of the city.  More and more people are forced into medium and high density housing for affordability reasons.  Like it or not, the writing is on the wall.  People who think that a market crash is going to deliver them their 3-bedder on a 1/4 acre a half an hour commute from town better hope they've saved a sizable deposit and can service a reasonable mortgage.


----------



## Pommiegranite (11 May 2008)

[FONT=Georgia,]







Tysonboss1 said:


> *Quote:*[/FONT]
> Originally Posted by *Pommiegranite*
> 
> 
> ...




Wow...you certainly are conveniently twisting my point. I plainly said nor meant nothing of the sort. 

Home ownership doesn't give the benefit that you are talking about *unless *the homeloan is paid off early. You are making a huge assumption here, that most of the population does this.

In fact, I would say the opposite is true, in that most homeowners are more than happy to pay off the homeloan over the original term, or even extending the term/taking out equity. 

Isn't this what a major part of the problem is?

Also, what's to say that the 'extra' payments which are made to pay off a homeloan early aren't better off invested elsewhere for better returns?


----------



## Tysonboss1 (11 May 2008)

Macquack said:


> You nailed it, xoa.




I think there will always be affordable housing to rent,.... It won't be a house and land within 10ks of the capital cities though,... there is simply not enough land for every person in the large capital cities to house a house and land each,... as the population grows this situation will simply worsen.

So as the houses close to the city become fewer and fewer obviously they are going to go to the people willing to pay the most for them both to own and rent.

if you want affordable housing you simply have to move further away,... or increase your density,....


----------



## jersey10 (11 May 2008)

Any one watching sixty minutes right now?  A 'leading economist' saying the housing crisis evident in USA will hit Australia within 2 years

Better sell up!


----------



## Tysonboss1 (11 May 2008)

Pommiegranite said:


> [FONT=Georgia,]
> 
> 
> Wow...you certainly are conveniently twisting my point. I plainly said nor meant nothing of the sort.
> ...




I wan't talking about paying off the loan early,.... I was saying that once you have bought a house your weekly payments will pretty much be constant over the next 25 years,... where as the rent a renter pays will increase with inflation.

Rent *increases* with inflation over the years but your homeloan repayment *decreases* with inflation over the years.

So as your wage increases over the years your homeloan repayment takes up less and less of it,... But if you rent the rental payment will increase over the years,.... people that bought houses 10years ago are probally paying less each month now than people that rent similar houses today.


----------



## Tysonboss1 (11 May 2008)

jersey10 said:


> Any one watching sixty minutes right now?  A 'leading economist' saying the housing crisis evident in USA will hit Australia within 2 years
> 
> Better sell up!




If it does I will watch it come and I will watch it go,... It won't decrease the rent I am getting,...


----------



## numbercruncher (11 May 2008)

Tysonboss1 said:


> If it does I will watch it come and I will watch it go,... It won't decrease the rent I am getting,...




If prices fell 50pc and an army of New investors jumped in able to rent out lower than your rentals ? .... your tenants are so faithful to your empire that theyll continue paying your asking price ?


Good article though, sure to add to growing negative sentiment and downward momentum.


----------



## numbercruncher (11 May 2008)

Heres the article beamed to Millions of AUstralians incase anyone missed it ...



> Hold on tight, because it's about to hit hard. The great mortgage meltdown is coming. Already, record numbers of Australian homebuyers are going to the wall. And, if we're to believe some experts, there's a hell of a lot more pain to come. So, who's to blame? Well, a good starting point is the Yanks. You see, it was the greed of American bankers that caused the global financial crisis now pushing interest rates through the roof. In the US, they call it the "subprime crisis", after the dodgy, low security loans that sparked this meltdown. These loans were offered to millions of people who simply couldn't afford them. And when they began defaulting in droves it set off a chain reaction that's now being felt around the world, including right here at home.




http://sixtyminutes.ninemsn.com.au/article.aspx?id=560015


----------



## robots (11 May 2008)

numbercruncher said:


> If prices fell 50pc and an army of New investors jumped in able to rent out lower than your rentals ? .... your tenants are so faithful to your empire that theyll continue paying your asking price ?
> 
> 
> Good article though, sure to add to growing negative sentiment and downward momentum.




hello,

if,if,if,if, could, could, maybe,maybe,maybe, 

thankyou

robots


----------



## numbercruncher (11 May 2008)

Well I was replying to an If, after all ?

What you reckon Robi, that article would of got millions thinking hey ?


----------



## robots (11 May 2008)

hello,

60 minutes ran similar program around 6mths ago, 

keen has been on for months probably years and the guy has a "large" mortgage on inner sydney prop,

its been a great weekend

thankyou

robots


----------



## Julia (11 May 2008)

jersey10 said:


> Any one watching sixty minutes right now?  A 'leading economist' saying the housing crisis evident in USA will hit Australia within 2 years
> 
> Better sell up!




  1.   Jersey, who are you suggesting should 'sell up' and why?

  2.   Do you believe that lending in Australia has been equally as irresponsible as that in America?


----------



## YChromozome (11 May 2008)

Julia said:


> 2.   Do you believe that lending in Australia has been equally as irresponsible as that in America?




OECD data shows our house prices are more overvalued than the US. It shows in our household debt per disposable incom. Australian leaders have probably been more irresponsible.


----------



## numbercruncher (11 May 2008)

> Do you believe that lending in Australia has been equally as irresponsible as that in America?





Absolutely , anyone with a small deposit and a ABN could borrow tons of cash ! Thats little different than Subprime.

Banks went out and lent people absolute max debt when Interest rates where 6pc ish , now they are up 50pc at 9pc+, thats no different than ARM.

Many banks are in the process of fixing that making it am ABN and GST registration for two years i think it is. Other tightening is happening too, that is the equivalent to a credit crunch compared to how easy easy peezi it was before!


----------



## numbercruncher (11 May 2008)

robots said:


> hello,
> 
> great day yesterday, 65% clearance rate up 5% from last week
> 
> ...





Yes and prices are still 10pc below last year, many in Neg equity already, and really badly for some considering high transaction costs of properties .



> BUYERS put their hands up to pull Victoria's property market out of the doldrums at auctions yesterday.
> 
> The clearance rate improved to 65 per cent, reversing the declining trend of this year's sales figures.
> 
> ...




http://www.news.com.au/heraldsun/story/0,21985,23677666-2862,00.html

If you paid 500k in 2006 for your house and it got 20pc gain in 2007 to 600k , you are now back to 540k with this 10pc loss. Factor in massive fees duty interest etc , selling now in 2008 you wouldnt get your cash back ?

How is this possible ?


----------



## jersey10 (11 May 2008)

Julia said:


> 1.   Jersey, who are you suggesting should 'sell up' and why?
> 
> 2.   Do you believe that lending in Australia has been equally as irresponsible as that in America?





1. My comment was very tongue-in-cheek.  I don't think because an economist on 60 minutes says house prices could drop everyone should go out and sell.  Obviously property owners must find out for themselves if they think their own property will lose significant value and whether they want / need to sell.
Irrespective of what the property market does in general, I believe the properties that i own will experience a significant increase in value over the next two years due to the infrastructural changes (bus stations, cafes, medium / high density residential, shopping) planned for the area.

2. I have read and heard a few commentators state that Australian lenders have not been as irresponsible as American lenders.  Still, if they have only been half as irresponsible the property market could still be in for somewhat of a bumpy ride??


----------



## theasxgorilla (12 May 2008)

numbercruncher said:


> If you paid 500k in 2006 for your house and it got 20pc gain in 2007 to 600k , you are now back to 540k with this 10pc loss. *Factor in massive fees duty interest etc , selling now in 2008 you wouldnt get your cash back ?*
> 
> How is this possible ?




Well, if you care to crunch the numbers you'll find that it works like this...

Buy a place for 500k, 10% down, mortgage of 450k @ 9% (interest only).

Your repayments are $778 a week.  Assuming you can rent the same place for half that (quite and assumption, but lets play the game from a real estate bear angle), you are paying an extra $390 a week in interest, vrs renting the same place.  Multiplied over 52 weeks means that it cost you 20k more a year to hold this property than rent...assuming you could rent it for half the interest cost...BIG assumption.

You're a first home buyer, in Victoria (great state that it is), and so you use the grant and bonus to net your stampduty of $22,810 down to $12,810.

Your maintenance and rates and insurances have cost you $5,000 for the year.  Again, big assumption, but lets put some fat in there.

After 12 months the property owes you $37,810.  But according to your news articles (...like we cant find out own news sources!?!) we're up 20% in CY07 so we're appraised at 600k.  Now that the credit crunch has hit, we're down another 10% on the 600k, so we're at 540k.

Take away the $37,810 and you're at something akin to breakeven.  Force a sale and pay 1.5% plus some other selling costs and you'd be at about -$10k.  Some more BIG assumptions here.  Assumes that you're forced to sell.  Assumes that the new home owners didn't do anything to improve the value of the property.  Doesn't factor in the intangible satisfaction owner has knowing they have freedom to do whatever they like with the place.  People can and do pay a premium for this. 

Are you really crunching the numbers or just addicted to Internet news?


----------



## numbercruncher (12 May 2008)

So you wrote all that just to say what I had already said in one sentence ? The " how is this possible " wasnt intended to be taken literally, sorry to waste your time.



> Are you really crunching the numbers or just addicted to Internet news?




No its more TV news im interested in with the RE bubble, like 60m tonight, its what moves the masses ! Aussies tend to take people with " professor " attached to their names seriously.

That math you have done would be interesting with the 600k buy price in December down to 540k now 4 months later.

Anyway theres no "House prices to keep rising for years" come true yet, Ill be the first to let you know when it happens!


----------



## theasxgorilla (12 May 2008)

numbercruncher said:


> So you wrote all that just to say what I had already said in one sentence ? The " how is this possible " wasnt intended to be taken literally, sorry to waste your time.




Not at all.  Helping you count it out, that's all.  I'd hate for the viewers at home to think that you just plaster the thread with select bad news stories and smarmy remarks.


----------



## Tysonboss1 (12 May 2008)

numbercruncher said:


> If prices fell 50pc and an army of New investors jumped in able to rent out lower than your rentals ? .... your tenants are so faithful to your empire that theyll continue paying your asking price ?
> 
> 
> Good article though, sure to add to growing negative sentiment and downward momentum.





Just because te price fell 50% doesn't mean the rent would drop 50%,...

there would still be the same rental demand no matter what the price of the houses are,...


----------



## numbercruncher (12 May 2008)

Tysonboss1 said:


> Just because te price fell 50% doesn't mean the rent would drop 50%,...
> 
> there would still be the same rental demand no matter what the price of the houses are,...




The rents only need to be 10pc lower to undercut you.

If prices fell 50pc (which is unlikely for alot of areas, but has already happened in many parts of Sydney) , alot of people would become owners so rental demand could drop away.

According to the ABS there is 800k unoccupied dwellings in this country, I envision these will increasingly come to market.

Hot off todays newspress is tales of how severe this correction is becoming in Sydney ....



> Sydney properties halve in price
> 
> HOUSE prices in some parts of Sydney have almost halved as battling borrowers struggle to keep up with increasing interest rates.
> 
> One property in Bankstown, bought for $500,000 in August 2005 sold in February for $215,000 - a loss of $285,000.






> The data - complied exclusively for The Daily Telegraph - showed that even the more affluent suburbs are now beginning to suffer. Several homes in Waverley, Coogee and Paddington were sold for losses of more than 25 per cent. The worst hit was the Waverley house bought in July 2003 for $725,000 and sold for $465,000 in March.






> Shane Oliver, chief economist at AMP Capital, said: "The pain of higher interest rates has only just started to kick in and we will see further falls over the next 6-12 months.
> 
> "The Sydney housing market is in a bind - we have a shortage of housing and huge demand but that isn't going to stop prices declining further. I think we'll see prices fall by another 10 per cent this year - and that's without another interest-rate rise." When the RBA decided to leave the cash rate at a 12-year high of 7.25 per cent last week, it hinted that rates might have to rise later this year if inflation kept rising, which would be disastrous for Sydney's homeowners



http://www.news.com.au/dailytelegraph/story/0,22049,23680992-5001021,00.html

Shane Oliver is a respected name, Im sure many many people take his commentary into consideration.


----------



## numbercruncher (12 May 2008)

Plenty of commentry on the housing crash today ....



> IT'S every home owner's heartbreak - watching the value of their home plummet to half the price they paid within a few years.
> 
> And in working-class suburbs around the country, it's becoming an all-too-regular occurrence.
> 
> ...




http://www.theaustralian.news.com.au/story/0,25197,23682102-5013404,00.html



> PROPERTY markets around Australia continued to struggle over the weekend, with auction clearance rates now below 50 per cent in the key markets of Sydney and Brisbane.
> 
> The only city bucking the trend is Melbourne, where the market is being driven by a population boom.
> 
> ...




http://www.theaustralian.news.com.au/story/0,25197,23682106-5013404,00.html

20pc, must be some kind of record ?


----------



## Julia (12 May 2008)

jersey10 said:


> 1. My comment was very tongue-in-cheek.  I don't think because an economist on 60 minutes says house prices could drop everyone should go out and sell.



Thanks, Jersey.  I'm relieved to hear it!
I usually manage to avoid "60 Minutes".  


> I have read and heard a few commentators state that Australian lenders have not been as irresponsible as American lenders.  Still, if they have only been half as irresponsible the property market could still be in for somewhat of a bumpy ride??



Sure.  I'm also a little tired of only the lenders being blamed.  Don't the borrowers have some responsibility also?


----------



## Julia (12 May 2008)

YChromozome said:


> OECD data shows our house prices are more overvalued than the US. It shows in our household debt per disposable incom. Australian leaders have probably been more irresponsible.



Thanks for that chart.  Interesting.   We can't blame all that household debt on housing though.  A decent chunk of it will be credit card debt which a lot of people seem to think is never going to have to be paid back.


----------



## Temjin (12 May 2008)

numbercruncher said:


> Lots of bad news.....




RE bull: Lies! Lies! It hasn't happened to my property yet! The news doesn't matter, what I see in my area is completely different to what they report. Don't trust them! Just keep buying!  

Sorry, just had to pass on this...  Now back on topic...

One thing I'm more interested in is how come our property market is several months lagged behind other Western countries like US and UK? While our share markets are all in sync, the property market doesn't seem to be so even given the same fundamentals. Yes, there were the same HIGH DEMAND and LOW SUPPLY both in US and UK before the blow off, but how come they go off first?


----------



## Temjin (12 May 2008)

Julia said:


> Sure. I'm also a little tired of only the lenders being blamed. Don't the borrowers have some responsibility also?




Unfortunately, this is simple human nature. It's better, or more socially acceptable for one to blame someone else (especially when they are better off) for their problems. Everybody does it. 

But it also comes down to the lack of financial education to those borrowers who blindly believed that the banks/lenders are acting responsibly. Remember, lenders make their money through commission, the more they borrow, the more $$$ they get. Those individuals need to feed their family and to pay their mortgage. So why should they care about the borrowers' financial well being?


----------



## numbercruncher (12 May 2008)

> Originally Posted by Julia
> Sure. I'm also a little tired of only the lenders being blamed. Don't the borrowers have some responsibility also?





What came first the Junkie or the Drug Dealer ?

The alcoholic or the Pub ?

Banks lending people their maximum serviceable loan at 6pc with total disregard for rates rising or lending huge money with nothing but a ABN and 5pc deposit have to wear the brunt of the blame,imho. RE agents and the Media also played a central role in causing RE mania.

But sure those who " bought " into the dream of untold riches for merely joining the pyramid can accept some to, personal responsibility and all, but the most lax lending standards that we will ever see in our lives is what allowed it to happen this way.


----------



## Tysonboss1 (12 May 2008)

numbercruncher said:


> The rents only need to be 10pc lower to undercut you.
> 
> If prices fell 50pc (which is unlikely for alot of areas, but has already happened in many parts of Sydney) , alot of people would become owners so rental demand could drop away.
> 
> .




what your saying doesn't make sense,

a Fall in house prices can't reduce the number of people needing a roof in the market,... If a renter buys a house and moves into it then the person who sold the house still needs some where to live so demand doesn't change.

In short There is no shortage of tenants at the moment lining up for rental properties,.... houses prices falling will not change this, only building more dwellings will, but a fall in prices will actually result in less new construction so the reverse will happen....

I rented a house about a month ago and had 21 applications,.... landlords can pick and choose at the moment, there is simply to much rental demand to lower prices,


----------



## Julia (12 May 2008)

numbercruncher said:


> What came first the Junkie or the Drug Dealer ?
> 
> The alcoholic or the Pub ?
> 
> ...



Well, we will just have to disagree about this, NC.  There is a huge and increasing tendency in all facets of life for people not to take responsibility for their own decisions.  If you are going to get involved in what is for many people the biggest financial decision they will ever make, i.e. buying a house, then it's up to you to educate yourself about such a venture in every aspect.

We are constantly inundated with fantastic offers for everything under the sun, all of which - if we believe the advertising and marketing - will allow us to realise our every dream for next to nothing.   Believe it at your own risk.


----------



## alwaysLearning (12 May 2008)

numbercruncher said:


> So you wrote all that just to say what I had already said in one sentence ? The " how is this possible " wasnt intended to be taken literally, sorry to waste your time.
> 
> 
> 
> No its more TV news im interested in with the RE bubble, like 60m tonight, its what moves the masses ! Aussies tend to take people with " professor " attached to their names seriously.




Yeah I also am intersted in how sentiment is changing in the media. It was only two months ago that all the articles were predicting that the house prices would keep going up and up and up.

Now all the articles have done a back flip and it's all negative sentiment.

I don't trust the media much these days..especially now that I'm reading more into technical analysis. One can see how these types of stories affect the sentiment of buying and selling.

Anyway it's all very educational for me


----------



## numbercruncher (12 May 2008)

Tysonboss1 said:


> what your saying doesn't make sense,
> 
> a Fall in house prices can't reduce the number of people needing a roof in the market,... If a renter buys a house and moves into it then the person who sold the house still needs some where to live so demand doesn't change.
> 
> ...




Well done with your rental, must be a hotspot, ive never had a problem finding rentals, never seen a shortage in Areas I live.

Theres nothing to stop our current small household sizes growing rapidly ie/
A young guy buys a deceased estate, gets 3 mates in renting a room - Dead guys freed up a house, 3 mates make 2 units vacant, plenty of other examples.

Falling prices will also bring some of the many 100s of thousands of vacant homes to market.

Your RE debate seems to only centre around supply/demand and we all know the Gov is going to tackle this head on.

Heres another great example of the Gov attempting to tackle the issue ....



> Chief Minister Jon Stanhope has introduced a bill in the Legislative Assembly to allow low income earners to rent their land for a home, rather than buy it.
> 
> Based on the average price for blocks selling in Franklin this weekend, the rental would be around $150 a fortnight
> 
> Mr Stanhope says under the proposed legislation, residents who are renting land will be able to buy it from the Government when they can afford it.




http://www.abc.net.au/news/stories/2008/05/08/2239326.htm


and the rollout of the National Rental Affordability Scheme



> This Scheme will help create 50,000 new and more affordable rental properties across Australia.
> 
> The National Rental Affordability Scheme offers annual incentives for a period of ten years. The two key elements are:
> 
> ...




http://www.fahcsia.gov.au/internet/facsinternet.nsf/housing/nras.htm


How can a current investor compete with this ? Obviously places more downward pressure on prices and quite possibly rental returns.


----------



## Tysonboss1 (12 May 2008)

numbercruncher said:


> Theres nothing to stop our current small household sizes growing rapidly ie/
> A young guy buys a deceased estate, gets 3 mates in renting a room - Dead guys freed up a house, 3 mates make 2 units vacant, plenty of other examples.
> 
> [.




Won't lower price cause the oppisite though,... with gen y etc being able to buy there fore moving out of home,.... and there would also be less reward for elderly people to down size.

Any way this arrguement is never going to end,... so I might check out for a while,.... only time will tell what happens.

I am not trying to convince anybody here to invest, you guys all have to make your own call on how you see the feild,


----------



## professor_frink (12 May 2008)

Just got around to watching the 60 min vid, found it quite interesting that the report was indirectly trying to link a place like kellyville in Sydney to the subprime fiasco happening now.

From the transcript - 



> PETER OVERTON: It's a similar picture all over the country.
> 
> PROF. STEVE KEEN: This is the bursting of the bubble because some houses here were purchased for $950,000 sold in the last six months for $550,000.
> 
> ...




That entire area has been a disaster zone as far as house prices are concerned for 4-5 years now. It's quite likely that the house he is describing was purchased in 2003 and sold off recently. This area went bust before the term 'subprime crisis' was even coined

Apart from that, was quite a sad story. Having said that, most of the sympathy I had for these people went right out the window when they moved on to talking about what they were doing to their pets

Given the choice between my dogs and the pile of bricks that they live in, I know which one I'd be walking away from, and which I'd be doing my best to protect


----------



## numbercruncher (12 May 2008)

Yes was sad about the Pets ....

I think the gist of the Pets in the US side of the story, thousands are forced into bankruptcy, forced to sell and move and Im assuming they cant take the pets to the rental property.

I recently read one about Townsville, record amounts of pets being dumped at the RSPCA because people cant afford to buy up there and the PIs wont let them have pets.


----------



## alwaysLearning (12 May 2008)

professor_frink said:


> Just got around to watching the 60 min vid, found it quite interesting that the report was indirectly trying to link a place like kellyville in Sydney to the subprime fiasco happening now.
> 
> From the transcript -
> 
> ...




I agree. As a fan of dogs and pets in general I was disgusted with that behaviour. They could have at least taken it to an animal shelter instead of leaving them on the street to die.

It was still a sad story though. Life is hard for a lot of people.


----------



## robots (12 May 2008)

numbercruncher said:


> Yes and prices are still 10pc below last year, many in Neg equity already, and really badly for some considering high transaction costs of properties .
> 
> If you paid 500k in 2006 for your house and it got 20pc gain in 2007 to 600k , you are now back to 540k with this 10pc loss. Factor in massive fees duty interest etc , selling now in 2008 you wouldnt get your cash back ?
> 
> How is this possible ?




hello,

my suburb only down 1.2%, many suburbs have increased,

oh yes we have to wait for next qtr,

thankyou

robots


----------



## robots (12 May 2008)

hello,

http://www.theaustralian.news.com.au/story/0,25197,23682106-25658,00.html

great stuff, 

thankyou

robots


----------



## xoa (12 May 2008)

robots said:


> hello,
> 
> http://www.theaustralian.news.com.au/story/0,25197,23682106-25658,00.html
> 
> ...




Pathetic..

The speculators have only lost a few % so far, and they're already whining for handouts.


----------



## wayneL (12 May 2008)

robots said:


> hello,
> 
> http://www.theaustralian.news.com.au/story/0,25197,23682106-25658,00.html
> 
> ...



The article says that Melbourne is having a population boom.

What is the reason for this? Not too many years ago, Victoria was losing population to the other centers. Why has this changed?


----------



## robots (12 May 2008)

hello,

greatest place in the world bro, seriously

brumby gov is doing a fantastic job, councils are doing a fantastic job, everything is rolling along smoothly,

eastlink to open ahead of schedule, works are being completed

fantastic place

thankyou

robots


----------



## robots (12 May 2008)

xoa said:


> Pathetic..
> 
> The speculators have only lost a few % so far, and they're already whining for handouts.




hello,

everybody else gets them, dont see why some should be left out

thankyou

robots


----------



## wayneL (12 May 2008)

robots said:


> hello,
> 
> greatest place in the world bro, seriously




I've heard the same thing said about so many places.


----------



## Mofra (12 May 2008)

wayneL said:


> The article says that Melbourne is having a population boom.
> 
> What is the reason for this? Not too many years ago, Victoria was losing population to the other centers. Why has this changed?



Growing economy, large investments into infrastructure = more jobs, easier to get around than in most other capital cities, cheaper housing than in Sydney, Canberra, Brisbane, sporting capital of Australia and a vibrant subculture for every taste from wine, food, music to the arts...

... and I live here :


----------



## Mofra (12 May 2008)

xoa said:


> Pathetic..
> 
> The speculators have only lost a few % so far, and they're already whining for handouts.



Well the sky _is_ falling down isn't it?

Either way, I don't think Australian residential housing is on the route map for Benake's "helicopter de cash" so the panickers need to find another mythical sky beast to make everything better - surely we can't let the Wall Street fatcats hold a monopoly on moral hazard now can we?


----------



## CAFA1234 (13 May 2008)

FT - London
*HSBC sees further pain in US housing*

By Peter Thal Larsen, Banking Editor

Published: May 12 2008 11:34 | Last updated: May 12 2008 19:22

The US housing market downturn could last for at least another year, HSBC predicted on Monday as it revealed it had set aside $5.8bn (£3bn) because of the credit turmoil in the first quarter.

Peter Thal Larsen analyses the bank’s writedowns and its outlook for US housing

The bank, one of the first to suffer from the meltdown in the US subprime mortgage market, said any recovery in the US housing market was unlikely this year. “We don’t think this is a 2008 event, it’s a 2009 event,” said Michael Geoghegan, chief executive.


----------



## Lucky (13 May 2008)

Anyone want to go halves in a cheap house?  $50.  Detroit sounds interesting...

http://detroit.craigslist.org/rfs/678329752.html


----------



## theasxgorilla (13 May 2008)

wayneL said:


> The article says that Melbourne is having a population boom.
> 
> What is the reason for this? Not too many years ago, Victoria was losing population to the other centers. *Why has this changed*?




Thinking outside the square...its a hell of a lot dryer than it once was.  You can't really make fun of Melbourne for the rain any more.  Large infrastructure projects like Eastlink and Scoresby freeway (whats the real name???) are being completed ahead of schedule because the bad weather they budgeted for just doesn't come any more.

Other than that...same old arguments...more cosmopolitan than Sydney, more down to earth than Sydney, all the advantages of a really big city (large casino, conventions centers, museums, art galleries, GP, Aust Open tennis, MotoGP, all big name touring acts) without many of the drawbacks.  

And the western suburbs are being developed offering very affordable housing along with the infrastructure.  If you're a Melbournian the western suburbs have a stigma.  If you're an immigrant, you don't care.  You just know that you can commute from your brand new, well-priced McDonalds mansion to your 100k a year job in town within 30 minutes and that makes you happy.

I love Melbourne 

Oh, I nearly forgot to mention.  Home of AFL and that world famous institution, the Melbourne Cricket Ground.


----------



## Macquack (13 May 2008)

theasxgorilla said:


> I love Melbourne
> .




If you love Melbourne so much, *why dont you live there *instead of Helsingborg, Sweden?


----------



## theasxgorilla (13 May 2008)

Macquack said:


> If you love Melbourne so much, *why dont you live there *instead of Helsingborg, Sweden?




Clearly MacQuack you've not met my girlfriend


----------



## prawn_86 (13 May 2008)

theasxgorilla said:


> Clearly MacQuack you've not met my girlfriend




LOL, Classic!


----------



## Macquack (13 May 2008)

theasxgorilla said:


> Clearly MacQuack you've not met my girlfriend




Then marry her and bring her back.


----------



## theasxgorilla (13 May 2008)

Macquack said:


> Then marry her and bring her back.




Do I have to???

Besides, don't you know Macquack?  House prices are going to keep rising for years...I can't afford a wedding :


----------



## robots (13 May 2008)

hello,

http://www.theaustralian.news.com.au/story/0,25197,23688731-25658,00.html

more great reading, 

i hope people hang in there, and if you dont want to buy then dont, the less in the better,

friend just got letter for 8% rent increase, i am going to send one out at end of contract period, so keep it up

please note this is fact not troll

thankyou

robots


----------



## nizar (13 May 2008)

theasxgorilla said:


> And the western suburbs are being developed offering very affordable housing along with the infrastructure.  *If you're a Melbournian the western suburbs have a stigma.  If you're an immigrant, you don't care. * You just know that you can commute from your brand new, well-priced McDonalds mansion to your 100k a year job in town within 30 minutes and that makes you happy.




So true, I agree wholly.
Broadmeadows for example, is only 15km from the city.


----------



## robots (13 May 2008)

hello,

thanks swannie, keep that immigration going will be fantastic

going to go down to salvo's tomorrow pick up some bunk beds for my rooms, i reckon i could get 4 in each room, $800/wk sensational

thankyou

robots


----------



## treibs (13 May 2008)

WHY THOUSANDS AND THOUSANDS OF HOUSES AND FLATS ARE STANDING UNSOLD FOR MONTHS ON END ?


----------



## CamKawa (14 May 2008)

More good news for buyers.

*Heartbreak as repossessions hit suburbs*


----------



## numbercruncher (14 May 2008)

Just another day in the RE correction ?, Largest home builder in NSW gos bust, housing shortage ? .......



> HUNDREDS of people could lose their deposits and their new homes after administrators were appointed yesterday to Beechwood Homes, NSW's largest home builder.




http://www.news.com.au/business/story/0,23636,23696445-462,00.html


----------



## professor_frink (14 May 2008)

numbercruncher said:


> Just another day in the RE correction ?, Largest home builder in NSW gos bust, housing shortage ? .......
> 
> 
> 
> http://www.news.com.au/business/story/0,23636,23696445-462,00.html




When Henley pulled out of NSW a few years back, the impact was fairly minimal, people that were buying homes just went and bought them from another builder, there wasn't exactly a shortage of companies building that type of home. There's still heaps of them around.


----------



## CAFA1234 (14 May 2008)

professor_frink; said:
			
		

> When Henley pulled out of NSW a few years back, the impact was fairly minimal, people that were buying homes just went and bought them from another builder, there wasn't exactly a shortage of companies building that type of home. There's still heaps of them around.




Forgive my ignorance but did Henley go bust?


----------



## professor_frink (14 May 2008)

CAFA1234 said:


> Forgive my ignorance but did Henley go bust?




No. They are still going in Victoria and Sth Oz(I think). Though they disappeared from NSW pretty well overnight and were one of the biggest in the state at the time. Apart from some slight disruptions to the various companies that were supplying them with materials, business went on as per usual. These kinds of companies are a dime a dozen, if they don't control the land content of entire suburbs on their own, then there will be plenty of others that can step in and take over


----------



## numbercruncher (14 May 2008)

robots said:


> hello,
> 
> thanks swannie, keep that immigration going will be fantastic
> 
> ...




Salvos ?

Is your Job under threat in the Building game Robi ? I heard its getting cut throat ....


----------



## CAFA1234 (14 May 2008)

professor_frink; said:
			
		

> No. They are still going in Victoria and Sth Oz(I think). Though they disappeared from NSW pretty well overnight and were one of the biggest in the state at the time. Apart from some slight disruptions to the various companies that were supplying them with materials, business went on as per usual. These kinds of companies are a dime a dozen, if they don't control the land content of entire suburbs on their own, then there will be plenty of others that can step in and take over




Forgive me, but pulling out of a market, and the biggest builder in NSW going bust is two very different scenarios ??? Hundreds of people potentially getting stuffed on their deposits  - I'm sure the press will make hay.

Gives the confidence a tad of a knock - somewhat?


----------



## professor_frink (14 May 2008)

CAFA1234 said:


> Forgive me, but pulling out of a market, and the biggest builder in NSW going bust is two very different scenarios ??? Hundreds of people potentially getting stuffed on their deposits  - I'm sure the press will make hay.
> 
> Gives the confidence a tad of a knock - somewhat?




maybe. maybe not. The difference between the current biggest builder in the state going bust and the biggest builder in the state disappearing a few years ago isn't that much different. The end result was still the same - a rather large player now isn't there anymore. The point I'm making is that there are quite a few companies that build homes that are almost indistinguishable to beechwoods (unless you see the sign out the front during construction of course) that will be more than willing to step up and take up the slack. A few hundred(or thousand??) people will lose their deposits and that's never a good thing to see, but all of the other people that want a house built will still be able to do so with one of the many other companies out there that build this type of home.

But like you mentioned above, I'm sure the press will make a big deal about this, it's the popular thing to do with the housing market right now!


----------



## robots (14 May 2008)

numbercruncher said:


> Salvos ?
> 
> Is your Job under threat in the Building game Robi ? I heard its getting cut throat ....




hello,

no, i am as tight as most around here and would sooner go to salvo's to get some bunk beds for around a tenth of the price as ikea or harvey's joint,

cant wait to rack'em and stack'em in my joint when they arrive

thankyou

robots


----------



## robots (14 May 2008)

hello,

here's one for you:

http://www.seek.com.au/users/apply/index.ascx?Sequence=41&PageNumber=1&JobID=12726998

be reliable, reliable, reliable and reliable and presto you have a very good job,

and the affordability issue could be all history to you

thankyou

robots


----------



## CAFA1234 (15 May 2008)

http://www.bloomberg.com/apps/news?pid=20601087&sid=adsUTJJ8e6WY&refer=home

Interesting state of play in the US.
Foreclosures Climb 65% as Loan Workouts Fall Short (Update3) 
 May 14 (Bloomberg) -- U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short.

More than 243,300 properties were in some stage of foreclosure, the highest monthly total since RealtyTrac Inc., a seller of default data, began in January 2005. One in every 519 households received a filing and Nevada, California and Florida had the highest rates. Filings rose 4 percent from March. 

The worst housing slump since the Great Depression may push the U.S. economy into a recession. Falling home prices, which dropped the most in 29 years in the first quarter, are making it tougher for homeowners to refinance, and voluntary programs to change loan terms for at-risk borrowers haven't helped enough people, said Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington
....
Bank repossessions jumped 145 percent in April from a year earlier to 54,574, according to Irvine, California-based RealtyTrac. The company has database of more than 1.5 million properties and monitors foreclosure filings including defaults notices, auction sale notices and bank seizures.
....
Nevada Filings

Nevada had the highest U.S. foreclosure rate for the 16th consecutive month. One of every 146 households was in some stage of foreclosure, 3.6 times the national rate, RealtyTrac said. Filings almost doubled from a year earlier to 7,276.

California had the second-highest rate, one for every 204 households, and the most filings for the 16th consecutive month at 64,683. Filings more than doubled from a year earlier and were down less than 1 percent from March.

Arizona had the third-highest rate, one for every 224 households. Filings almost tripled from a year earlier to 11,620.

Florida had the second most filings at 35,264 and the fourth-highest rate, one for every 242 households. Foreclosures increased 146 percent from a year earlier and rose almost 17 percent from March. 

New York's Rate (New York as well, this is getting serious!  -CAFA)

Foreclosure filings in New York were up 39 percent from a year ago and up 12 percent from March. The state ranked 29th with 5,696 filings.

In New Jersey, foreclosure filings ranked 15th at 5,143, up 65 percent from a year ago and up 15 percent from March.
--------------------------------------


----------



## robots (18 May 2008)

hello all,

another great day yesterday, even with the bleak weather clearance rate of 63%, awesome stuff

positive time for buyers in melbourne and with news the city of melbourne is number one for domestic tourists in aus,

was thinking last night about mr keen and his television appearance the other week, openly admitting to having a huge mortgage yet so "keen" to comment on debtwatch

thankyou

robots


----------



## wayneL (18 May 2008)

robots said:


> awesome stuff





This phrase is now permanently consigned to the ranks of clichÃ©, never again to be uttered during intelligent discourse.


----------



## Temjin (18 May 2008)

robots said:


> was thinking last night about mr keen and his television appearance the other week, openly admitting to having a huge mortgage yet so "keen" to comment on debtwatch
> 
> thankyou
> 
> robots




That's such a typical response from a skeptic. An analyst is making a claim on certain things with complete facts and evidences. However, instead of analysing the claims in a serious way, the skeptic attempts to dismiss / debunk them by critising the analyst him/herself. It is by the far the most common and easiest way to "arrogantly" ignore a fact. 

This entire thread is making history, and thanks to you Robi. I'm sure even the most "bullish" RE players will try to stay away from you from making a bad name even for themselves. 

If you don't agree with Mr Keen, why don't you provide some evidences to support your claims?


----------



## robots (18 May 2008)

Temjin said:


> That's such a typical response from a skeptic. An analyst is making a claim on certain things with complete facts and evidences. However, instead of analysing the claims in a serious way, the skeptic attempts to dismiss / debunk them by critising the analyst him/herself. It is by the far the most common and easiest way to "arrogantly" ignore a fact.
> 
> This entire thread is making history, and thanks to you Robi. I'm sure even the most "bullish" RE players will try to stay away from you from making a bad name even for themselves.
> 
> If you don't agree with Mr Keen, why don't you provide some evidences to support your claims?




hello,

thanks temjim good comments, 

actually the rba has continually stated that household debt is well under control.

thankyou

robots


----------



## numbercruncher (18 May 2008)

robots said:


> hello,
> 
> thanks temjim good comments,
> 
> ...





Are you ever going to back statements like that up with Quotes from the RBA ? Because it seems you just make them up, its ok to make things up but not to claim another body said it ...



> Mr Stevens also said house prices in Australia were very high relative to household income.
> 
> "Housing prices are very, very high relative to income," he said.




http://www.news.com.au/couriermail/story/0,23739,23483106-953,00.html

And they have warned this many times since as early as 2004 ..... All went well when property was being " flipped " for a profit ...



> One consequence of these changes is that the overall riskiness of the mortgage portfolios of financial institutions is likely to have increased. *Residential property prices are high relative to historical benchmarks, household debt levels are much higher relative to income than they have been in the past*, borrowing by investors has grown rapidly, competition for loan origination has been very strong, and some borrowers who previously would not have been able to obtain mortgages can now do so. These developments raise the possibility that future default rates may not be as benign as those in the past




http://www.rba.gov.au/PublicationsAndResearch/FinancialStabilityReview/Mar2004/Html/financial_stability_review_0304.html


----------



## robots (18 May 2008)

numbercruncher said:


> Are you ever going to back statements like that up with Quotes from the RBA ? Because it seems you just make them up, its ok to make things up but not to claim another body said it ...
> 
> 
> 
> http://www.news.com.au/couriermail/story/0,23739,23483106-953,00.html




hello,

i note you say they "also" said...

people can always get a second job or a higher paying job if affordabilty is an issue or they can rent, no big deal really

thankyou

robots


----------



## numbercruncher (18 May 2008)

robots said:


> hello,
> 
> i note you say they "also" said...
> 
> ...





This is just more incessant waffling, why didnt you just write the rba *hasnt* continually stated that household debt is well under control as I Robots previously and falsely claimed.

No Big Issue.

Thankyou.


----------



## robots (18 May 2008)

robots said:


> hello,
> 
> *people can always get a second job or a higher paying job if affordabilty is an issue or they can rent, no big deal really*
> 
> ...




hello,

no big issue at all, might affect the handouts though doing a bit

the great divide is upon us

thankyou

robots


----------



## explod (18 May 2008)

Had not looked in on this thread for a few weeks as it is never on topic "...ouse prices to keep rising..." but more on the mechanical imbecile.

What a joke, nothing has changed.


With the white boards going up around my area one will soon start on "How far will house prices crash?"

Lot of rentals too, seems young ones moving back with Mum and Dad.  Older ones renting by the room instead of units.   My parents rented a room when I was born in 1946.

And the tough times are just starting.   Price of higher oil and food wont' bite the economy for 12 months yet.

Cheers to the tin man


----------



## Kauri (18 May 2008)

Not Gero, not even Cheltenham.... but what the....??

Cheers
............Kauri
  Full article in The West Australian....  
http://www.thewest.com.au/default.aspx?MenuID=146&ContentID=73674


----------



## robots (18 May 2008)

hello,

you are right explod nothing has changed, SRO has all the sales going thru for great prices,

took a drive to mt martha last weekend explod to visit mum, still the lucky country all through the estates in mornington

fine article kauri, but how is it so, many here tell me RE only moves with inflation? inflation is 4% i thought

well done to the owners of the house great effort,

thankyou

robots


----------



## YChromozome (18 May 2008)

explod said:


> Lot of rentals too, seems young ones moving back with Mum and Dad.  Older ones renting by the room instead of units.   My parents rented a room when I was born in 1946.




I been observing this too. My landlord has naturally sold the apartment I rent in a dash for the exit now that prices are falling.

I was out pounding the pavements yesterday as Robi would say. I looked at two rentals in the same apartment block I did 1 year ago. Last year, it was typically three lift loads of people going up to look at these apartments. Yesterday, we all fitted in the same lift - and the lift hasn't changed size since last year.


----------



## robots (18 May 2008)

YChromozome said:


> I been observing this too. My landlord has naturally sold the apartment I rent in a dash for the exit now that prices are falling.
> 
> I was out pounding the pavements yesterday as Robi would say. I looked at two rentals in the same apartment block I did 1 year ago. Last year, it was typically three lift loads of people going up to look at these apartments. Yesterday, we all fitted in the same lift - and the lift hasn't changed size since last year.




hello,

thats because people are staying put and evident here in Vic with a reduction by 10% of new bonds being received by the bond department,

people are accepting the rent rises and I look forward to getting the best return on my investment, nothing wrong with that is there?

thankyou

robots


----------



## YChromozome (18 May 2008)

robots said:


> people can *always* get a second job or a higher paying job if affordabilty is an issue or they can rent, no big deal really




Not if you keep getting your bunks from the Salvos. Over here in the home furniture clusters of Paramatta and Alburn many of the furniture outlets are going broke and shutting up shop. As rents are rising, consumers must spend more to service the roof over their heads and hence they are no longer buying furniture. 

Think of the direct and indirect flow on effects. The immediate sales staff, managers, logistics, delivery drivers, their jobs and their mortgages. They then employ accountants, marketing people, printers, even the local kid to deliver the pamphlets. The staff also buy lunch from the corner deli, maybe get a paper to read at lunch from the newsagent etc.

More money as a percentage of household disposal income into rents & mortgages = less money into the economy.


----------



## YChromozome (18 May 2008)

robots said:


> thats because people are staying put




Over here, just about half the building is up for sale. Most of the specuvestors are bailing out big time and as fast as they can. How can you stay put then?


----------



## explod (18 May 2008)

robots said:


> hello,
> 
> you are right explod nothing has changed, SRO has all the sales going thru for great prices,
> 
> ...





Yep the smart money is selling to the mugs big time.  Allways the same at the end of a run, same with the dot.com bubble and Telstra 2, mugs get to hold the empty bag.   It is also happening on Wall Street as we think.


----------



## robots (18 May 2008)

hello,

thats it chromo, just go with the flow,

see what happens over time I guess, (dont take it to mean anything else please)

thankyou

robots


----------



## theasxgorilla (18 May 2008)

YChromozome said:


> Think of the direct and indirect flow on effects. The immediate sales staff, managers, logistics, delivery drivers, their jobs and their mortgages. They then employ accountants, marketing people, printers, even the local kid to deliver the pamphlets. The staff also buy lunch from the corner deli, maybe get a paper to read at lunch from the newsagent etc.
> 
> More money as a percentage of household disposal income into rents & mortgages = *less money into the economy.*




Most of the things you describe involve the local economy of those areas.  As we boom the wealth-effect (if you want to call it that) emanates outward and as things get tight it contracts inward.  Those at the fringes are exposed to the wealth effect for the shortest period of time, compared with those who live nearer the epicentre.  The wealth effect allows people to get their balance sheets in order so they can weather the bad times, in simplest terms, pay down debt.

A lot of these areas at the fringes received these big furniture centres for the first times during the last 5 or so years.  Ballarat in Victoria is one of them.  Whether the boom has continued long enough, or was indeed strong enough, for the businesses in these areas to get their balance sheets in good enough order to weather the contraction is the real question, IMO.  If not, they must close.  If so, they become an established business in the area.

And even if the economic conditions were adequate for the business owner/manager to _get their house in order_ before the contraction, that doesn't mean that the business hasn't been mismanaged.

What each individual has done with their personal balance sheet will determine how well they weather the contraction eg. "did you make hay while the sun shone?".


----------



## Bronte (18 May 2008)

Kauri said:


> Not Gero, not even Cheltenham.... but what the....??
> 
> Cheers
> ............Kauri
> ...



ROTFLOFAO 
We know Horrocks well. 
A great post Kauri
Thank you


----------



## Kauri (18 May 2008)

Bronte said:


> ROTFLOFAO
> We know Horrocks well.
> A great post Kauri
> Thank you




  Hi Bronte,
          Long time no hear,
             Good that my tongue in cheeks post..
                    drew you out of the closet...
             Now that you are back..
                    Keep them..                           
                              coming.            :emp:

    Cheering
.................Kauri


----------



## andy87 (19 May 2008)

Firstly, i think that people forget that every boom has a bust.  This is the third 'boom' in 30 odd years, and sooner or later is going to pop and economists can say 'yeh its going to keep on rising' but its got to stop, and its going to be sooner rather than later.  And im sick to death of hearing the media yap on about house prices to further increase.  There knobs, and if they could, they will tell you that your sh*t smells like roses and people will soon be saying 'hey barry, i love the smell of roses in the morning.'

Secondly, house prices are always going to increase, but not as a medium.  There are always going to be certain areas that experience positive capital growth when the majority are not.  

Thirdly, i might sound harsh here, but i have no one to blame but the idiots who chose to get a loan far greater than their income would allow.  Household debt has increase 5 fold since the late 70's and net household savings has been negative since 2002.  Funny that, considering the 'housing boom' kicked off a litte prior to 02.  The fact that people have wanted to get something bigger and better than they should, were now in a pickle where people are paying 50% more than what the house is actually valued.  

You dont have to be an economist to realise thats its going to stop.  Look at the numbers being crunched and its all going to stop fast, otherwise a recession is inevitable


----------



## gfresh (19 May 2008)

What will higher unemployment do to property values? When people simply cannot pay, as they are not employed?

We are at a record low of 4.2% presently.


----------



## Temjin (19 May 2008)

gfresh said:


> What will higher unemployment do to property values? When people simply cannot pay, as they are not employed?
> 
> We are at a record low of 4.2% presently.




Robi had a great idea on this one. Get a new job or a second job!! That will solve the problem! Easy! 



			
				explod said:
			
		

> Yep the smart money is selling to the mugs big time. Allways the same at the end of a run, same with the dot.com bubble and Telstra 2, mugs get to hold the empty bag. It is also happening on Wall Street as we think.




Yep, the smart money are definitely packing up and cashing in their profit. My girlfriend's ex-boss is a real estate developer (albert quite a successful one, probably earned him a few cool million during the last few years of boom) but he is now cashing in and slowing down his speculation business.


----------



## andy87 (19 May 2008)

Temjin said:


> Robi had a great idea on this one. Get a new job or a second job!! That will solve the problem! Easy!




this has to be for a giggle, right?


----------



## zt3000 (19 May 2008)

andy87 said:


> Firstly, i think that people forget that every boom has a bust.  This is the third 'boom' in 30 odd years, and sooner or later is going to pop and economists can say 'yeh its going to keep on rising' but its got to stop, and its going to be sooner rather than later.  And im sick to death of hearing the media yap on about house prices to further increase.  There knobs, and if they could, they will tell you that your sh*t smells like roses and people will soon be saying 'hey barry, i love the smell of roses in the morning.'
> 
> Secondly, house prices are always going to increase, but not as a medium.  There are always going to be certain areas that experience positive capital growth when the majority are not.
> 
> ...




LoL

We are in a resources Super Cycle ... PERIOD.

The gorgon gas project will require 3000 engineers alone... just engineers ... not to mention all the other engineering/mining projects in the pipeline. you cant just pull the plug on these projects.

These people will need a place to live or rent, and the simple matter of fact is as we have seen with recent economic data that development approvals are falling creating a major shortage in housing. Govt is now going to try increase skilled migration to alleviate the skilled labour shortage ... all this creates price pressures

At the moment we in a phase were people are being told different things from different people. Why is China wanting to increase stake in BHP ... because its going to reduce its demand for raw materials in the future? I think not. 

IMO even better times ahead and I'm waiting to be told I'm wrong.

The only way we will have a downturn is if the media moguls spin enough crap to brainwash the people into a downward sheep mentality which I can see already happening ... 

These were my . not financial advice but for your entertainment and maybe to hit a few nerves too hahah lol not really ...


----------



## andy87 (19 May 2008)

Im not doubting that we are, and not for a second, but just cause we have another resource boom doesnt mean we should discredit the fact that we have increasing household debt with increasing unemployment, inflation and interest rates.

And when we talk about housing prices, people arnt talking about mining towns which house a small portion of Australia's total employment. Like I said, you will get areas of high growth, but the majority can be negative

I think everyone should read this.  You might be surprised.


----------



## gfresh (19 May 2008)

I have to disagree slightly with points in that article which suggests that the US will have to effect China significantly (it may, but I'm leaning towards less so).. US has been slowing down in consumer spending, and their property market severely crashed for several years now.. where is the flow on so far? 

It hasn't been enough to stop prices for coal, iron ore, etc doubling in the last 12 months, while the US situation has just been continuing on its way getting worse and worse. 

The Dow Jones, their largest companies (and reflection of overall health for US economy?) has essentially been flat since 1998.. well practically - 11,000 to 13,000 or 18% return over 9 years is pretty damn poor.


----------



## andy87 (19 May 2008)

yeh gfresh, some points i dont agree with either, but they're stating the facts, not hypotheticals and you have to admit that it looks a little scary.  Dont forget the lag from the US to China. it doesnt happen over night and we still dont know the full extent of America's problems.  A whole city/town of 120,000 people became bankrupt in California.  

Also,  zt3000, dont think that China will be our saving grace.  There talking about devaluing, or at least revaluing, the yuan which is potentially a very bad situation.  At the moment they're even they are having battles with their inflation, currently 8.5%, because of high commodity prices.  So K-Rudd and his posse of show pony's can shove the 'china will keep us afloat and out of inflations way' up there asses cause it is a load of poppycock


----------



## Go Nuke (19 May 2008)

Ah the old housing affordability topic.

A touchy subject no doubt.
As a tradie i always love hearing this...



> Govt is now going to try increase skilled migration to alleviate the skilled labour shortage ...




So being a Boilermaker in the city of Brisbane i dont get paid anywhere near a Boilermaker in the mines...so hey, lets bring in some immigrants to keep the wages pressure down.
Who cares that more than 30% of my income already goes to paying rent for a 2 bedroom unit!

Personaly I hope whats happening in the U.S does come to Australia, because I'll be waiting all cashed up to finaly buy a property when i think it hits bottom.
And even though it would be political suicide, I think there has to be some changes made to negative gearing to help renters get into a place of their own.
There will always be people who are happy to rent, but its almost at a stage where you dont really have a choice.

Surely property prices will be out of reach for aussies and something has to give. Here in brissy you only have to drive on our roads to see that other than the government being behind the 8 ball on infrastructure, people are also being forced to move further and further out because of high rent/property prices...which in turn clogs our roads.

Anyway thats my  for now


----------



## robots (19 May 2008)

Temjin said:


> *Robi had a great idea on this one. Get a new job or a second job!! That will solve the problem! Easy!*
> 
> 
> 
> Yep, the smart money are definitely packing up and cashing in their profit. My girlfriend's ex-boss is a real estate developer (albert quite a successful one, probably earned him a few cool million during the last few years of boom) but he is now cashing in and slowing down his speculation business.




hello,

in the "getting a base capital started" thread one poster told us how he took on a second job as pizza delivery man and done well, 

thankyou

robots


----------



## YChromozome (19 May 2008)

robots said:


> one poster told us how he took on a second job as pizza delivery man and done well,




There is a good book worth reading called "The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke". While it looks into the two wage family, it also addresses people with multiple jobs.

Essentially at the start some families started getting two jobs to get ahead. This was though as great as they "diversified their risks". If one person in the family got sick or lost their job, they would have the other wage.

The only problem is doing this simply meant house prices rose with the dual incomes and the net effect was nil - or at least it seemed.

Rather now these households are more risker. They now need two wages to survive and hence there is a much bigger risk that one of the two jobs is lost or one member in the family gets sick. Couple this with a slowing economy and rising unemployment and you have bigger risk and more ticking timebombs just waiting to go off.


----------



## robots (19 May 2008)

YChromozome said:


> There is a good book worth reading called "The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke". While it looks into the two wage family, it also addresses people with multiple jobs.
> 
> Essentially at the start some families started getting two jobs to get ahead. This was though as great as they "diversified their risks". If one person in the family got sick or lost their job, they would have the other wage.
> 
> ...




hello,

and you would cheer chromo if an individual went down wouldnt you,

tall poppy syndrome all over again, thats what the property threads are genuinely about, 40+k views

this is not trollish this is fact and lets discuss!

thankyou

robots


----------



## explod (19 May 2008)

robots said:


> hello,
> 
> in the "getting a base capital started" thread one poster told us how he took on a second job as pizza delivery man and done well,
> 
> ...




Trouble is Robots, with tough times less people can afford to buy a pizza.  Restaurants in  fact are reporting a considerable drop off.  And as more and more jobs drop off, then more and more people will buy less and that means even less jobs and so on, so that it compounds out the door and onto the street.  This is what happens in a big down turn and that looks like where we are headed.

Love your optimism but at some stage common sense needs to kick in if one is to be able to withstand the tough times.  Most are oblivious and unfortunately thier pain is going to be great.


----------



## wayneL (19 May 2008)

robots said:


> hello,
> 
> and you would cheer chromo if an individual went down wouldnt you,
> 
> ...



I'm having trouble linking Chromo's post with the tall poppy syndrome 'bot.

A bearish opinion <> Schadenfreude.


----------



## robots (19 May 2008)

hello,

for many working is the way, 2 jobs, smarter work, working smarter but it is ridiculed and questioned,

and I wonder if it is the working issue or the property issue,

thankyou

robots


----------



## explod (19 May 2008)

robots said:


> hello,
> 
> for many working is the way, 2 jobs, smarter work, working smarter but it is ridiculed and questioned,
> 
> ...




I have worked two jobs and for short times three.  Also double shifts on main job.  And in normal times it is easy.  That is not the issue.  The point is that we are fast approaching a time when there will be little or no jobs, particularly in outlying areas and for the decreased jobs in the inner areas there will be fierce competition by those on location.  

My Grandparents explained to me well what hard times are about and this time around (1980 was a walk in the park) we are going to have very bad times.   The fundamentals compared to the 1920's are worse this time and they are global.  They are also different because people could return to the land in the 1920's and find something to feed themselves with.   A lot of the good inner farmland now has houses on it here in Vic.

House prices are going to go down IMHO . period


----------



## wayneL (19 May 2008)

robots said:


> hello,
> 
> for many working is the way, 2 jobs, smarter work, working smarter but it is ridiculed and questioned,
> 
> ...



That does not answer my question. How is it tall poppy syndrome?

I think people are just questioning the "get off your @rse and earn more" answer to high house prices. It leaves folks vulnerable to a drop in this "extra" income for whatever reason.


----------



## Mofra (19 May 2008)

House prices may have risen overall in recent years, but they are still the poor cousing on a dollar vs dollar comparison basis:

http://www.news.com.au/business/money/story/0,25479,23721991-5013953,00.html


----------



## Temjin (19 May 2008)

robots said:


> hello,
> 
> and you would cheer chromo if an individual went down wouldnt you,
> 
> ...




Wow, you are already using the term "tall poppy syndrome" as a basis for your argument. A fact???!!! You are merely critising and is pretty much the same for trolling.

We are not being negative or being jealous of other accomplisment, we are just being REALISTIC. Like I said, plenty of successful property investors (and personally I know two, the other is a developer himself) are BEING REALISTIC and SMART by cashing all in and wait for the correction to finish off. They have a bearish view on the property market for a valid reason.


----------



## Gspot (19 May 2008)

explod said:


> I have worked two jobs and for short times three.  Also double shifts on main job.  And in normal times it is easy.  That is not the issue.  The point is that we are fast approaching a time when there will be little or no jobs, particularly in outlying areas and for the decreased jobs in the inner areas there will be fierce competition by those on location.
> 
> My Grandparents explained to me well what hard times are about and this time around (1980 was a walk in the park) we are going to have very bad times.   The fundamentals compared to the 1920's are worse this time and they are global.  They are also different because people could return to the land in the 1920's and find something to feed themselves with.   A lot of the good inner farmland now has houses on it here in Vic.
> 
> House prices are going to go down IMHO . period




Going down? Yes, on the east coast, where people are selling up and moving to WEST OZ, where the labour shortage is still huge! 
And when they move here, where do they live? All over the state. At the moment real estate isn't giving great returns,maybe, but the rent is more than covering the cost of holding these properties. The secret is buying affordable houses, which can be found in the south west, and easily rentable.

I know of alot of people working 2 weeks on, 2 weeks off, on the mines. They are taking their families to little seaside towns to live, like Denmark, Walpole, Dunsborough, Augusta. Great fishing, surf, wine. Why wouldn't you?
Let's also not forget, that the baby boomers retiring, has only just started.


----------



## wayneL (19 May 2008)

Gspot said:


> ...but the rent is more than covering the cost of holding these properties.



eh?


----------



## Gspot (19 May 2008)

wayneL said:


> eh?




Bought a 4 x 2 in Denmark for $295000. Rent for $260 a week. Negative gear, plus depriciation tax, makes it only $100 a week out of my pocket, give or take a few dollars. For me it's better than putting in the bank.


----------



## wayneL (19 May 2008)

Gspot said:


> Bought a 4 x 2 in Denmark for $295000. Rent for $260 a week. Negative gear, plus depriciation tax, makes it only $100 a week out of my pocket, give or take a few dollars. For me it's better than putting in the bank.



Fair enough, but that doesn't cover holding costs.


----------



## Kimosabi (20 May 2008)

Gspot said:


> Bought a 4 x 2 in Denmark for $295000. Rent for $260 a week. Negative gear, plus depriciation tax, makes it only $100 a week out of my pocket, give or take a few dollars. For me it's better than putting in the bank.



I'm still trying to work out why people think making a loss is so great. Maybe people should start running their investment property's as a business.

Running a business at a loss isn't much fun so I can't see how running a investment property at a loss is considered such a great thing.

Just because the herd is running off a cliff does it doesn't make the herd smart.

But the real question is, why does the Government reward and encourage us to go into debt???


----------



## WaySolid (20 May 2008)

Kimosabi said:


> I'm still trying to work out why people think making a loss is so great. Maybe people should start running their investment property's as a business.
> 
> Running a business at a loss isn't much fun so I can't see how running a investment property at a loss is considered such a great thing.
> 
> ...



It's not great, just a kick along for investment return.

I guess the idea is that the private sector will provide housing to the population and the government won't have to.

Why would the govt subsidize someone to take a margin loan and invest in shares is another question to ask.


----------



## robots (20 May 2008)

hello,

its a myth that years ago all property was positively geared,

in 1998 when i bought one unit the total cost of mortgage, rates etc was around $270/wk, could of rented same place in complex for $180/wk

how long has negative gearing being going for?

thats right waysolid, people get deduction on margin loan interest if in negative situation (thats okay though)

thankyou

robots


----------



## Tysonboss1 (20 May 2008)

Kimosabi said:


> I'm still trying to work out why people think making a loss is so great. Maybe people should start running their investment property's as a business.
> 
> Running a business at a loss isn't much fun so I can't see how running a investment property at a loss is considered such a great thing.
> 
> ...




It's only a cashflow loss for the first few years till inflation of the rent catches up with your loan payments, and you have the capital growth also to look forward to.

Think of it like taking a loan to by some shares,... with current margin loan rates around 10.1% does it mean that any stock paying less than 10.1% dividend yeild is a bad investment, No it doesn't because the investor accepts that they will have a shorterm cashflow loss but over time as the share price and the dividend increase the short term loss is quite small compared to the over all gain.

If lossing $50 or $80 a week from your pay secures you a $250,000 asset that increases at 10%, then in my book thats better than putting that $80 a week in a cash account.


----------



## Mofra (20 May 2008)

Tysonboss1 said:


> If lossing $50 or $80 a week from your pay secures you a $250,000 asset that increases at 10%, then in my book thats better than putting that $80 a week in a cash account.



.. a cash account whose real capital value is guaranteed to fall due to inflation. Always love those that advocate "safe" "low risk" investments.

Risk is a tool to be mitigated, not avoided completely.


----------



## ColB (20 May 2008)

Glad someone pointed that out TysonB 

Quote: "...If losing $50 or $80 a week from your pay secures you a $250,000 asset that increases at 10%, then in my book thats better than putting that $80 a week in a cash account..."

I purchased a house 7 years ago for $140k fully geared.  Was paying $1030 per month loan payment and only getting $830 pm rent.  Yeah it was costing me $200 a month out of my own pocket plus rates etc so on paper I was suffering a (tax deductible) Loss.

Just sold the property 2 months ago for $347k and after CGT of around $50k and paying the loan balance of $80k I end up with over $200K in the hand which I would have never saved had I not bought the property.

Not a bad investment but if I had put my money into shares over the same period I may have done better.  

Anyway the reason I sold was to get out at what I thought was the peak of the market.  House prices will keep rising but not like they have over the last 3-4 yrs.  Next strong cycle 3-4 yrs away.

CB


----------



## pepperoni (21 May 2008)

Mofra said:


> .. a cash account whose real capital value is guaranteed to fall due to inflation. Always love those that advocate "safe" "low risk" investments.
> 
> Risk is a tool to be mitigated, not avoided completely.




At 8% for a 3 month term cash is guaranteed to return about double inflation right now - looking alot better than shares or property that are on average giving negative returns BEFORE people are foolhardy enough to increase the loss through 10%+ interest borrowings.

Shares and property are certain to do worse in months to coming with $130 oil and food prices soaring putting pressure on rates.

Risk is to be completely avoided where possible and always minimised unless you enjoy the multiple bankruptcy lifestyle.

Certainly avoid when the risks are as high as they are now.

On property specifically, 2 weeks back residex quoted a 29% auction clearance rate for mosman and 49% for the north shore. However Im sure they will level out arounf 50% as agents counsel sellers to lower their selling expectations.


----------



## Temjin (21 May 2008)

It beats me when people say property is a "safe" investment when their investment capital is usually geared 10 or even up to 20 times. Hardly anybody realise it or even bother to do a mental comparsion between that and standard share margin lending. 

Remember, if you put down 10% deposit for a house and borrowed the rest, a decline in asset value of even just 5% would mean half of your initial investment capital is essentially wiped out, without counting the cost of holding the property! Of course, people then argue that house prices never fall and you never receive a "margin call". 

Obviously though, negative gearing worked wonders for the past 8-10 years while the credit boom is in full force. This give the false illusion that such good time will continue forever and the same strategy will work for eternity.


----------



## stock_man (21 May 2008)

pepperoni said:


> residex quoted a 29% auction clearance rate




Thats is if you believe these so called 'experts'. (Residex)
According to their suburb profiling (no longer on their website, surprise surprise), my last house should be worth $790K by the years end. Currently worth about $450K.

This analysis was done back in 2005.

Where do they get their data from?


----------



## pepperoni (21 May 2008)

Housing affordability confirmed to hit a new low todaydue to rate rises which will continue to flow through to the bottom of the market and will to some degee hurt investors wishing to sell thereby hitting there ability to pump up the top of the market.

http://business.smh.com.au/firsthome-buyer-hopes-fade-20080521-2gox.html


On the flip side I saw 8.5% term deposits at citi and bankwest today.  Good news for savers (if bad for negative gearers).

Of course when saving comes back into fashion Im sure I will again find bargains in property and will be back at it with a vengance.

.... Until the bellhops start talking about property investment again, at which point I will cash out again.


----------



## Tysonboss1 (21 May 2008)

Temjin said:


> Hardly anybody realise it or even bother to do a mental comparsion between that and standard share margin lending.
> 
> Remember, if you put down 10% deposit for a house and borrowed the rest, a decline in asset value of even just 5% would mean half of your initial investment capital is essentially wiped out, without counting the cost of holding the property! Of course, people then argue that house prices never fall and you never receive a "margin call".
> 
> .




how is this dufferent from margin lending for shares,... the ratio of debt to equity applies with both asset classes


----------



## Go Nuke (21 May 2008)

> Of course, people then argue that house prices never fall and you never receive a "margin call".




Haha tell that to the people of Sydneys western suburbs whos value in their house price has fallen to less than what they bought it for.

Property CAN go down


----------



## Gspot (21 May 2008)

Go Nuke said:


> Haha tell that to the people of Sydneys western suburbs whos value in their house price has fallen to less than what they bought it for.
> 
> Property CAN go down




 All depends where you invest in property, shares or other.
Do your homework and pick a good stock or good area and your investment will profit. Pick a dud and you will lose sleep. Patience is the key for any good investment today, something which is lost on many.
I have invested in the sea change locations on the west coast, because immigration and retiring baby boomers are the big picture. This will insulate us from the likes of west sydney.


----------



## robots (21 May 2008)

pepperoni said:


> Housing affordability confirmed to hit a new low todaydue to rate rises which will continue to flow through to the bottom of the market and will to some degee hurt investors wishing to sell thereby hitting there ability to pump up the top of the market.
> 
> http://business.smh.com.au/firsthome-buyer-hopes-fade-20080521-2gox.html
> 
> ...




hello, 

hang on, I thought prices have crashed every where,

so wouldnt these HUGE crashes well and truly negate the IR rises?

thankyou

robots


----------



## explod (21 May 2008)

robots said:


> hello,
> 
> hang on, I thought prices have crashed every where,
> 
> ...




House prices have nothing to do with interest rates.  The supply of money does.   Hard to simplify what I am saying without writing a book.  Lending is now a very risky business even between banks, so for the risk a higher premium has to be paid.

Sorry Robots, but interest rates will go higher and house prices will drop lower.   Gold is up because the US have suddenly realised that Europe is going to increase rates when in fact their pundits tipped they would fall.  The world has been living in dreamland for 40 years, the rude awakening has just begun.


----------



## robots (21 May 2008)

explod said:


> House prices have nothing to do with interest rates.  The supply of money does.   Hard to simplify what I am saying without writing a book.  Lending is now a very risky business even between banks, so for the risk a higher premium has to be paid.
> 
> Sorry Robots, but interest rates will go higher and house prices will drop lower.   Gold is up because the US have suddenly realised that Europe is going to increase rates when in fact their pundits tipped they would fall.  The world has been living in dreamland for 40 years, the rude awakening has just begun.




hello,

maybe you should read the article sir,

the latest IR rises have supposedly again worsened house affordability,

but my question is hasnt RE crashed everywhere across aus and wouldnt this greatly change the affordability index?

furthermore, with the crash in prices has the income to house cost ratio graph dipped or is it still up there at the wonderful 6x income?

ahh, the great divide 

thankyou
robots


----------



## explod (21 May 2008)

robots said:


> hello,
> 
> maybe you should read the article sir,
> 
> ...




Yep, see your point.  I look at things a bit different obviously.  As a Farther and Grandfather my concern goes out to those struggling with higher prices, interest rates and mortgages.   The playing field in our day has been pretty good, but not so for those taking the reins for the future.

Just depends on which side of the fence you are.


----------



## Bronte (21 May 2008)

Kauri said:


> Hi Bronte,
> Long time no hear,
> Good that my tongue in cheeks post..
> drew you out of the closet...
> ...




Hi Kauri,
Missed this post...sorry
Thank you for the support.
All the very best......
Bronte


----------



## robots (21 May 2008)

hello,

yes same here explod, some people are struggling in the current environment

lots can be done about it though on an individual basis

thankyou

robots


----------



## theasxgorilla (21 May 2008)

explod said:


> Yep, see your point.  I look at things a bit different obviously.  As a Farther and Grandfather my concern goes out to those struggling with higher prices, interest rates and mortgages.   The playing field in our day has been pretty good, but not so for those taking the reins for the future.
> 
> Just depends on which side of the fence you are.




I can only partly agree with this.  

If people, young people, were prepared to just block out all the other cr@p they're being fed these days...all the temptations of advertising, all the messages of fear being fed by the media, and all the other temptations like drugs and other peer group pressures...and managed to put their heads down and their bums up and focus on preparing themselves for subsequent stages of life, I think you'll find that in this day and age the old Oprah Winfrey saying will still ring true for them:

"luck is opportunity meeting preparation"

The news story for many years now has been, "skilled labour shortage".  All people had to do was become "skilled labour" and they'd be on their very own version of easy street.


----------



## Mofra (21 May 2008)

pepperoni said:


> At 8% for a 3 month term cash is guaranteed to return about double inflation right now - looking alot better than shares or property that are on average giving negative returns BEFORE people are foolhardy enough to increase the loss through 10%+ interest borrowings.



8% _gross_ return: take out 46.5% tax on earnings leaves you with 4.28% return.
Underlying inflation ~ 4.1%. Real rate of return 0.18% _before_ deflation of underlying cash security is taken into account.

Not my choice of investment, but each to their own.


----------



## theasxgorilla (21 May 2008)

Mofra said:


> 8% _gross_ return: take out 46.5% tax on earnings leaves you with 4.28% return.
> Underlying inflation ~ 4.1%. Real rate of return 0.18% _before_ deflation of underlying cash security is taken into account.
> 
> Not my choice of investment, but each to their own.




Yep...and even as a foreign resident you can't avoid the capital gains tax like you can if you were buying and selling property, shares etc.


----------



## CAFA1234 (22 May 2008)

andy87 said:


> Im not doubting that we are, and not for a second, but just cause we have another resource boom doesnt mean we should discredit the fact that we have increasing household debt with increasing unemployment, inflation and interest rates.
> 
> And when we talk about housing prices, people arnt talking about mining towns which house a small portion of Australia's total employment. Like I said, you will get areas of high growth, but the majority can be negative
> 
> I think everyone should read this.  You might be surprised.




Andy - your attachment presents some 'views' as facts. I tend to agree with much of what you have posted but to mix up views within a number of facts is misleading to say the least my friend.


----------



## CAFA1234 (22 May 2008)

theasxgorilla said:


> Yep...and even as a foreign resident you can't avoid the capital gains tax like you can if you were buying and selling property, shares etc.




Mr Gorilla - pray, tell me how you avoid CGT when selling property & Shares.

I'd like to know how to avoid this tax as well, as I'm sure would many others.

Spill the Kool Aid quickly as the end of year will soon be upon us.


----------



## theasxgorilla (22 May 2008)

CAFA1234 said:


> Mr Gorilla - pray, tell me how you avoid CGT when selling property & Shares.
> 
> I'd like to know how to avoid this tax as well, as I'm sure would many others.
> 
> Spill the Kool Aid quickly as the end of year will soon be upon us.




Foreign residents and foreign resident entities are exempt from paying Australian CGT.


----------



## CAFA1234 (22 May 2008)

theasxgorilla; said:
			
		

> Foreign residents and foreign resident entities are exempt from paying Australian CGT.




ATO web site
The Government announced changes to capital gains tax for foreign residents in the 2005–06 Budget.

The following changes were introduced into Parliament in June 2006 and received Royal Assent on 12 December 2006. The changes are:

    * aligning Australia’s law more closely with OECD practice through narrowing the range of assets on which a foreign resident is subject to Australian CGT to real property, and the business assets of Australian branches of a foreign resident, and
    * protecting the integrity of the current tax rules by applying CGT to non-portfolio interests in interposed entities (including foreign interposed entities), where the value of such an interest is more than 50% attributable to Australian real property.
-------------------------------

Is this out of date?


----------



## pepperoni (22 May 2008)

Mofra said:


> 8% _gross_ return: take out 46.5% tax on earnings leaves you with 4.28% return.
> Underlying inflation ~ 4.1%. Real rate of return 0.18% _before_ deflation of underlying cash security is taken into account.
> 
> Not my choice of investment, but each to their own.




What are we comparing real net cash return vs all others as gross and nominal???? 

You do realise all investments are taxed right? 

This is the sort of thinking that s making cash returns so high now.

Cash will win in all but the flukeiest cases right now ie

shares or property less than 0% _gross_ return: take out tax on earnings (oh noes I earnt nothing) leaves you with less than 0% return.
Underlying inflation ~ 4.1%. blah blah blah


----------



## pepperoni (22 May 2008)

theasxgorilla said:


> Foreign residents and foreign resident entities are exempt from paying Australian CGT.





Good luck qualifying for it!!!

Rich people maximise net returns ... property nuts risk the enitre return to save a few tax dollars???  To each their own.


----------



## pepperoni (22 May 2008)

Anyone else foolish enough to scoff at cash should remember that year-to-date, the ASX200, is down about 9%.  And it only rose about 12% in 2007.

Not a very good year.  Not even good over 2 years.  

Do the after tax return vs inflation math on that one


----------



## Tysonboss1 (22 May 2008)

pepperoni said:


> What are we comparing real net cash return vs all others as gross and nominal????
> 
> You do realise all investments are taxed right?




yes but 100% of the return on cash is taxed every year,...

where as the capital gain in shares and property is compounded every year until it is finally sold possiblly 15 or 20years later,... it then receives a 50% discount so only half of this compunded growth gain is taxed at what ever your marginal tax rate is,....

you can benefit further by timing the sale for a year when you have low income such as when you have retired,...


----------



## Tysonboss1 (22 May 2008)

pepperoni said:


> Anyone else foolish enough to scoff at cash should remember that year-to-date, the ASX200, is down about 9%.  And it only rose about 12% in 2007.
> 
> Not a very good year.  Not even good over 2 years.
> 
> Do the after tax return vs inflation math on that one




another way to look at it would be that it is the best time to start investing in the stock market,... I certainly wouldn't be sitting on piles of cash at the moment.

If you had a crystal ball back in august then I would aggree to sell all shares and put funds in cash,.... but with the share market already so low, I would do the opposite and start turning cash back into assets,...


----------



## nioka (22 May 2008)

pepperoni said:


> Anyone else foolish enough to scoff at cash should remember that year-to-date, the ASX200, is down about 9%.  And it only rose about 12% in 2007.
> 
> Not a very good year.  Not even good over 2 years.
> 
> Do the after tax return vs inflation math on that one




If what you say is correct why am I spending the day trying to work out a tax minimising strategy as the end of the financial year approaches. I have calculated that so far this year I have made a profit of $72,500 per $100,000 invested in the stock market. What would that have given me in cash deposits. I keep $20,000 in a cash deposit which has earnt 7.5% and inflation has taken half of that at least.


----------



## CAFA1234 (22 May 2008)

nioka; said:
			
		

> If what you say is correct why am I spending the day trying to work out a tax minimising strategy as the end of the financial year approaches. I have calculated that so far this year I have made a profit of $72,500 per $100,000 invested in the stock market. What would that have given me in cash deposits. I keep $20,000 in a cash deposit which has earnt 7.5% and inflation has taken half of that at least.





Nioka, if you are serious about making 72.5% return on 6 figure sums then please, we need to speak. I need a mentor  - you are doing far better than me over the past year. Like about 5/7 times better.


----------



## pepperoni (22 May 2008)

nioka said:


> If what you say is correct why am I spending the day trying to work out a tax minimising strategy as the end of the financial year approaches. I have calculated that so far this year I have made a profit of $72,500 per $100,000 invested in the stock market. What would that have given me in cash deposits. I keep $20,000 in a cash deposit which has earnt 7.5% and inflation has taken half of that at least.





What I have said about the asx is a verifyable fact ... unlike your crazy claim.

Even if you did make such a return, you would be unlikely to be able to repeat it such that you make above market returns.  Also a fact.

If you could you would have investment banks and super funds lining up to pay you 7 or 8 figures, and would be so gifted as to be ignored in any such discussion of investment decisions as an anomoly.

As for tax minimisation, I cant say your choice of shares as being  the way to go ... and Im not sure you would have any tax problem this financial year if you were telling the truth ... unless you have already cashed out your 70% return which makes the whole thing even more outlandish.


----------



## pepperoni (22 May 2008)

Tysonboss1 said:


> another way to look at it would be that it is the best time to start investing in the stock market,... I certainly wouldn't be sitting on piles of cash at the moment.
> 
> If you had a crystal ball back in august then I would aggree to sell all shares and put funds in cash,.... but with the share market already so low, I would do the opposite and start turning cash back into assets,...




.... unless you agree with the Buffets and analysts that the correction has some way to go.  Too risky out there for mere mortals like us.

I think that in investment slow and steady wins the race.  Also good for quality of life.


----------



## pepperoni (22 May 2008)

Tysonboss1 said:


> yes but 100% of the return on cash is taxed every year,...
> 
> where as the capital gain in shares and property is compounded every year until it is finally sold possiblly 15 or 20years later,... it then receives a 50% discount so only half of this compunded growth gain is taxed at what ever your marginal tax rate is,....
> 
> you can benefit further by timing the sale for a year when you have low income such as when you have retired,...





... provided you are happy to be locked in for years to minimise tax as opposed to being ready to move when opportunities present.

I agree with what you say for lazy money and have 60k doing just that ... but Im keeping 1.9m virtually at call for property/share bargains. 

EG Ive while Ive been earning 8% Ive watched these good properties fall from 2.2m towards mid ones in a few months 

http://www.realestate.com.au/cgi-bi...er=&cc=&c=9854180&s=nsw&snf=rbs&tm=1211431405

http://www.realestate.com.au/cgi-bi...er=&cc=&c=9854180&s=nsw&snf=rbs&tm=1211431405

There are usually huge profits in simple DEVELOPMENTS ... never really in simple mugs property negative gearing.

To each their own ... but this is working for me starting from scratch 10 years ago.


----------



## nioka (22 May 2008)

pepperoni said:


> What I have said about the asx is a verifyable fact ... unlike your crazy claim.
> 
> Even if you did make such a return, you would be unlikely to be able to repeat it such that you make above market returns.  Also a fact.
> 
> ...




 Check my posts over the last year. LYC, AGM, AOE, ADI, MCR, FNT, for a start. The volatility this year has been the best thing that has happened all year. I couldn't give a !!!//// as to whether you believe me or not.


----------



## nioka (22 May 2008)

CAFA1234 said:


> Nioka, if you are serious about making 72.5% return on 6 figure sums then please, we need to speak. I need a mentor  - you are doing far better than me over the past year. Like about 5/7 times better.




 It has all been in my posts. However I'm not always right so DYOR.


----------



## pepperoni (22 May 2008)

nioka said:


> Check my posts over the last year. LYC, AGM, AOE, ADI, MCR, FNT, for a start. The volatility this year has been the best thing that has happened all year. I couldn't give a !!!//// as to whether you believe me or not.




Lies luck or a freakish gift ... Im not assuming any of them but the market is down and just because a few people might have made money deosnt mean everyone should dive into shares.

Super funds are mostly in red so if you did regularly it you should be running one.


----------



## nioka (22 May 2008)

pepperoni said:


> Lies luck or a freakish gift ... Im not assuming any of them but the market is down and just because a few people might have made money deosnt mean everyone should dive into shares.
> 
> Super funds are mostly in red so if you did regularly it you should be running one.




 It is because others are in the red that I have done well. If it was not for the lemming factor causing people to sell at low prices or not recognising emerging producers I would have probably only made a modest return. For every loser there is a winner. By using an edecated guess you are right more than 70% of the time. It is not lies, luck or a freakish gift in any manner of form. Just research and making good use of information available to all and often found on ASF. By the way I have researched over 25 companies today and invested in one. All have had a mention on ASF this week.


----------



## theasxgorilla (22 May 2008)

pepperoni said:


> Good luck qualifying for it!!!
> 
> *Rich people maximise net returns* ... property nuts risk the enitre return to save a few tax dollars???  To each their own.




Pepperoni, I don't know what you are talking about.  Have you read that document?

Practically every item is a standard activity that most people do when they move overseas.  It's absolutely not difficult to qualify for this tax status when you genuinely reside in another country.

*I would say that Rich People have money.  How they get/got it and what they do with it are the variables.  You are right, each to their own.*


----------



## Tysonboss1 (22 May 2008)

pepperoni said:


> ... provided you are happy to be locked in for years to minimise tax as opposed to being ready to move when opportunities present.
> 
> .




I never invest simply to minimise tax,... the tax benefits are just a side benefit.

Money invested in a well managed leveraged portfolio that combines Property, shares and businesses with financel structures that allow equity to move across the portfoilio to where the best opportunties are i not lazy money.


----------



## Macquack (22 May 2008)

theasxgorilla said:


> Pepperoni, I don't know what you are talking about.  Have you read that document?
> 
> Practically every item is a standard activity that most people do when they move overseas.  It's absolutely not difficult to qualify for this tax status when you *genuinely reside* in another country.




I hope you are not just "using" Annika for your own financial gain?


----------



## ColB (22 May 2008)

Hey CAFA,  

*[Quote:]* "...Nioka, if you are serious about making 72.5% return on 6 figure sums then please, we need to speak. I need a mentor - you are doing far better than me over the past year. Like about 5/7 times better..." *[Unquote]*

I think Pepperoni needs a mentor more than you.  I don't doubt his ability to amass a good property portfolio but to suggest that money is currently much safer in the bank is ludicrous.  Whilst I can't boast Nioka's 'Magnificent' returns I as an inexperienced market investor have returned in excess of 20% on money invested on the stock market since the 19/2/08.


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## nioka (22 May 2008)

ColB said:


> Hey CAFA,
> 
> *[Quote:]* "...Nioka, if you are serious about making 72.5% return on 6 figure sums then please, we need to speak. I need a mentor - you are doing far better than me over the past year. Like about 5/7 times better..." *[Unquote]*
> 
> I think Pepperoni needs a mentor more than you.  I don't doubt his ability to amass a good property portfolio but to suggest that money is currently much safer in the bank is ludicrous.  Whilst I can't boast Nioka's 'Magnificent' returns I as an inexperienced market investor have returned in excess of 20% on money invested on the stock market since the 19/2/08.




 I haven't posted to boast. There are plenty doing much better than I am and they are posting on ASF. I look at it as a defeat not to have doubled my money. I'm just pointing out that it is there to be made. My simple advice is to do plenty of research, don't follow the mob, especially the lemmings, and don't make it a gamble.


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## theasxgorilla (22 May 2008)

Macquack said:


> I hope you are not just "using" Annika for your own financial gain?




Hell no!  She cooks and cleans and looks hot in and out of a bikini.  Financial gains are ancillary benefits Macquack.


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## Macquack (22 May 2008)

theasxgorilla said:


> Hell no!  She cooks and cleans and looks hot in and out of a bikini.




Is she in the Swedish Bikini Team?


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## Julia (22 May 2008)

nioka said:


> I have calculated that so far this year I have made a profit of $72,500 per $100,000 invested in the stock market.



And without leverage, as I recall.  Congratulations Nioka.  That's a great result.


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## Mofra (22 May 2008)

pepperoni said:


> Anyone else foolish enough to scoff at cash should remember that year-to-date, the ASX200, is down about 9%.  And it only rose about 12% in 2007.
> 
> Not a very good year.  Not even good over 2 years.
> 
> Do the after tax return vs inflation math on that one



Do you know many people who consider at property (which is the subject of this thread) a short term investment? Most investers I know treat residential property as a long term investment.

If you want to compare apples with apples, please provide your analysis which shows cash has outperformed property over the last 7 years +

Thanks in advance


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## CAFA1234 (23 May 2008)

nioka; said:
			
		

> It is because others are in the red that I have done well. If it was not for the lemming factor causing people to sell at low prices or not recognising emerging producers I would have probably only made a modest return. For every loser there is a winner. By using an edecated guess you are right more than 70% of the time. It is not lies, luck or a freakish gift in any manner of form. Just research and making good use of information available to all and often found on ASF. By the way I have researched over 25 companies today and invested in one. All have had a mention on ASF this week.




Nioka, nows your chance for fame, as you have already made your bet, post the details so we can all follow. Accepting that you will only be right 70% of the time.  Which stock did you buy yesterday?


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## nioka (23 May 2008)

CAFA1234 said:


> Nioka, nows your chance for fame, as you have already made your bet, post the details so we can all follow. Accepting that you will only be right 70% of the time.  Which stock did you buy yesterday?



 I'm too old to worry about fame. However, without any recommendation and DYOR, I bought MOS. I have had MOS before and lost a little on the deal. I have bought back in for a long term investment as they are starting to go forward now as I see the situation. Read the MOS thread on ASF and read the company announcements.


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## CAFA1234 (23 May 2008)

nioka; said:
			
		

> I'm too old to worry about fame. However, without any recommendation and DYOR, I bought MOS. I have had MOS before and lost a little on the deal. I have bought back in for a long term investment as they are starting to go forward now as I see the situation. Read the MOS thread on ASF and read the company announcements.




thanks - appreciate your candidness - I'm equally open about my investments, I never mind after i have got in 

All of these boards would be much better if people did actually post their buys and sells - I'm sure there would be a few less bullsh*iters around !


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## pepperoni (23 May 2008)

Mofra said:


> Do you know many people who consider at property (which is the subject of this thread) a short term investment? Most investers I know treat residential property as a long term investment.




I dont consider property a long term investment. If I did I wouldnt expect much better return than cash.

But thats not the point ... who wants to follow a market down?

And a PPOR is a PPOR ... I dont see the point in investment dictating where or how I live.

Cash is doing well now.  We can crap on about tax but all gains end up taxed to a substantial degree.

And we can crap on about inflation but Im hardly going to buy $2m worth of petrol and bananas ... Ill but shares or property both of which are about 10% down this year on my observations ... so I guess on your your sort of quick and dirty comparative analysis Im making 18% pa before tax.


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## pepperoni (23 May 2008)

nioka said:


> I haven't posted to boast. There are plenty doing much better than I am and they are posting on ASF. I look at it as a defeat not to have doubled my money. I'm just pointing out that it is there to be made. My simple advice is to do plenty of research, don't follow the mob, especially the lemmings, and don't make it a gamble.




Congratulations if its true, but to make those returns or even aspire to them you are definitely gambling ... although there may be some gambling type system behind it (charts or whatever).

And Ill bet my screen name you dont ever do it again.  And doing it means doing  ACROSS YOUR WHOLE PORTFOLIO FOR A WHOLE FINANCIAL YEAR.   Not "I made 70% on a share one month but all my others are down 50%."

In fact Ill bet you cant even average more than Buffets 30% odd over 2 years ... and that assuming you are of similar genius to him.


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## nioka (23 May 2008)

pepperoni said:


> Congratulations if its true, And Ill bet my screen name you dont ever do it again.  And doing it means doing  ACROSS YOUR WHOLE PORTFOLIO FOR A WHOLE FINANCIAL YEAR.   Not "I made 70% on a share one month but all my others are down 50%."




If it was for tax reasons that I was working on so it IS for the WHOLE year. It is for profit made. You know, the profit made if you sell for more than you pay. You know the bit the ATO is interested in. You know the bit that shows AFTER you deduct the losses. Maybe I wont have an AGM or an LYC or an AOE next year but then it could be NSL (showing me up 91.39% today) or another lot of AOE (showing me up 91.74% today) plus a few others mostly in green. Of course there is CNP, just in red ink at the moment but an educated guess tells me I will make wages out of it soon. ADI is also one of my holdings which has a better than 50% chance of bettering this year on it's own. 

:


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## CAFA1234 (24 May 2008)

WASHINGTON (Reuters) - The pace of existing home sales in the United States fell 1 percent in April to a 4.89 million-unit annual rate, the National Association of Realtors said in a report on Friday that was slightly better than expectations.

But inventories of unsold homes rose measurably, surging 10.5 percent to 4.55 million units at the end of April. At the current sales pace that would put the supply of homes at 11.2 months' worth, the highest since the association began tracking single family and condo properties together in 1999.

For single family homes, at the current sales pace there were 10.7 months' worth, the biggest supply since June 1985 when it stood at 11.4 months.

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

So, bigger supply than the deep recession of 1992. According to the L.A. Times this morning over 100 mortgage lenders have withdrawn from the market since Jan 2007. The big issue is the reluctance of lenders to lend to anyone other than the highest credit score people. Many people simply can't get financing without a good deposit.


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## Mofra (24 May 2008)

pepperoni said:


> I dont consider property a long term investment. If I did I wouldnt expect much better return than cash.



So it's a short term investment then? Ok, stamp duty isn't much of a burden anyway 



pepperoni said:


> But thats not the point ... who wants to follow a market down?
> 
> And a PPOR is a PPOR ... I dont see the point in investment dictating where or how I live.



Following a market down? Not every suburb in Australia is falling, and rents are rising. I'm happy with a short term fluctation a few suburbs further away whilst my rents rise.
I don't own a PPOR - don't like deductable debt, and I like to live in older style houses that generally cost more to maintain (and I don't want to pay for that maintennace) so the second point is moot.



pepperoni said:


> Cash is doing well now.  We can crap on about tax but all gains end up taxed to a substantial degree.



Cap gains indexed over a number of years are not taxed anywhere near the top marginal rate.
Having a property to leverage against as a form of cheap capital is quite handy as well - borrowing against cash offers less flexibility (most lenders will substitute to cash but not set-up a new loan against it at mortgage rates)



pepperoni said:


> And we can crap on about inflation but Im hardly going to buy $2m worth of petrol and bananas ... Ill but shares or property both of which are about 10% down this year on my observations ... so I guess on your your sort of quick and dirty comparative analysis Im making 18% pa before tax.



No, you are making approx 0.18% net regardless of the movement of the broader equities market, bananas or toy unicorns. 
Personally, as a net credit spread ETO trader I'm happy with any extra volitility in the market as a high proportion of my yearly investment income does not rely on the direction of the broader market, just the fact that it in fact does move at all.


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## Tysonboss1 (24 May 2008)

CAFA1234 said:


> WASHINGTON (Reuters) - The pace of existing home sales in the United States fell 1 percent in April to a 4.89 million-unit annual rate, the National Association of Realtors said in a report on Friday that was slightly better than expectations.
> 
> But inventories of unsold homes rose measurably, surging 10.5 percent to 4.55 million units at the end of April. At the current sales pace that would put the supply of homes at 11.2 months' worth, the highest since the association began tracking single family and condo properties together in 1999.
> 
> ...





Given That the real estate markets differ widely between suburbs in certain parts of cities and states, coastal or country,... city or rural or regional centres there is thousands of real estate markets in Australia all performorming differently. 

You then have sectors within each market such as houses, town houses, low density units, high density units, commerial, retail and other various commerial, various industrial, Offices etc etc etc.

Why would you think that USA housing market has any relavence to Australian markets.


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## explod (24 May 2008)

Tysonboss1 said:


> Given That the real estate markets differ widely between suburbs in certain parts of cities and states, coastal or country,... city or rural or regional centres there is thousands of real estate markets in Australia all performorming differently.
> 
> You then have sectors within each market such as houses, town houses, low density units, high density units, commerial, retail and other various commerial, various industrial, Offices etc etc etc.
> 
> Why would you think that USA housing market has any relavence to Australian markets.




The oversimplification , like blind sheep we allways do what the US of A does.

My gut says,  the US market is falling apart because people have been living beyond their means on borrowed money against rising real estate but at a level beyond what they can repay against income.    And from what I can see Aussies have been doing the same and so it will come to the same end here as well.


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## CamKawa (24 May 2008)

Tysonboss1 said:


> Given That the real estate markets differ widely between suburbs in certain parts of cities and states, coastal or country,... city or rural or regional centres there is thousands of real estate markets in Australia all performorming differently.
> 
> You then have sectors within each market such as houses, town houses, low density units, high density units, commerial, retail and other various commerial, various industrial, Offices etc etc etc.



I agree with you on that. That's why it's a tuff market to analyse, a lot of leg work has to done by buyers to work out how much is how much.


Tysonboss1 said:


> Why would you think that USA housing market has any relavence to Australian markets.



Yes we are a different market to the US. Our house prices are higher and we are in more debt. When the correction hits us here it may be worse.


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## robots (24 May 2008)

hello,

care to tell us where I can get a ninja loan in aus?

i know low docs still around to lvr say 70-80%, but we never had ninja loans in aus

thankyou
robots


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## CamKawa (24 May 2008)

Low doc loans with a no doc policies were available at RAMS right up until about the middle of 2007. They have peeled back a bit  to loans that are half *No Income No Asset* (NINA) loans.
http://www.rams.com.au/default.asp?page=/home+loans/all+our+products/rams+100%+option

Found an article for you robots 
http://www.domain.com.au/Public/Art...=How to sell property in a buyers++39; market


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## robots (24 May 2008)

hello,

the ninja was for no income, no job or assets

we never had this stuff in aus, 

its a great time to be be buying with what many have identified as a seasonal dip on the graph,

but we know many here arent interested in property at all except to dig the boots in

thankyou
robots


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## CamKawa (24 May 2008)

robots said:


> the ninja was for no income, no job or assets
> 
> we never had this stuff in aus,



We had "flexible" loans in Aus. Again, low doc loans with a no doc policies were available at RAMS right up until about the middle of 2007. 

With RAMS low doc loans with a no doc policies no employment or repayment history was required.




robots said:


> its a great time to be be buying with what many have identified as a seasonal dip on the graph,



Could be a l o n g season




robots said:


> but we know many here aren’t interested in property at all except to dig the boots in



Some people maybe but I'm not, I'm a realist.

I thought that this thread here at ASF was negative on property until I had a wonder thorough the house price thread on a property forum, leaves us for dead.


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## Mofra (24 May 2008)

CamKawa said:


> We had more "flexible" loans in Aus. Again, low doc loans with a no doc policies were available at RAMS right up until about the middle of 2007.



Low & No Doc loans are nothing like NINJA loans.
LVR restrictions apply (generally 70% for No doc & 80% for low doc) zero default policy except for the trigger happy telcos applies as well.

The majors also charge LMI above 65% LVR.


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## CamKawa (24 May 2008)

Mofra said:


> Low & No Doc loans are nothing like NINJA loans.
> LVR restrictions apply (generally 70% for No doc & 80% for low doc) zero default policy except for the trigger happy telcos applies as well.
> 
> The majors also charge LMI above 65% LVR.



When I look at what we have in Aus, low and no doc and a combination of the two plus 100% loans, I'd use the word similar not "nothing like".


----------



## Mofra (24 May 2008)

CamKawa said:


> When I look at what we have in Aus, low and no doc and a combination of the two plus 100% loans, I'd use the word similar not "nothing like".



I'd definately use the word nothing like. Comparing an 80% restricted Low Doc loan with verification of the company running at least 2 year, postcode & security restrictions & confirmation of a 20% saved equity where the borrower must cover costs if the security is sold and there is a shortfall in loan cover whilst the entire loan is LMI protected vs the US model where any idiot off the street can obtain a 100% loan with no Job, Income or Assets with impared credit and little zipcode restriction.


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## Macquack (24 May 2008)

Mofra said:


> I'd definately use the word nothing like. Comparing an 80% restricted Low Doc loan with verification of the company running at least 2 year, postcode & security restrictions & confirmation of a 20% saved equity where the borrower must cover costs if the security is sold and there is a shortfall in loan cover whilst the entire loan is LMI protected vs the US model where any idiot off the street can obtain a 100% loan with no Job, Income or Assets with impared credit and little zipcode restriction.




Just a suggestion Mofra, but can you put your point forward in plain english.
I am loosing it with the LMI's, LVR's, SRD's, Low Doc's, No Doc's RAMS and NINJA Turtles.


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## Mofra (24 May 2008)

Macquack said:


> Just a suggestion Mofra, but can you put your point forward in plain english.
> I am loosing it with the LMI's, LVR's, SRD's, Low Doc's, No Doc's RAMS and NINJA Turtles.



Apologies, get used to talking in the lingo, forget it barely makes sense to 99% of the population.

Basically, in the US these NINJA loans (No Income, No Job, No Assets - think a bum walking in off the street) were given to all & sundry. Often this was the entire value of the house, 100% LVR (LVR = Loan to Valuation Ratio).

The mortgage brokers had no problems with this, because once they received their upfront commission, the trail was based on a very low interest rate, which would be reset a few years later.

Bascially, the US lenders wrote a truckload of loans for people who would never be able to see their commitment through. What made it worse was the fact that (generally) if you hand the security (the property which the borrower purchased, for example) back and the lender didn't recoup enough costs to repay the loan, they had no recourse to the borrower.


In Australia, the industry is not as mature & is more highly regulated so lending standards are much higher. The closest we have the the US subprime problems are either:
a. 100% loans which are only full doc (ie full evidence of income required) with no defaults on your credit history, or:
b.  Low & No Doc loans, where evidence of income is not required (you sign a statement declaring what you think your current income is, or just that you will repay the loan if it is a No Doc) 

With Low & No Doc loans, the amount you can actually borrow is limited to a percentage of what the security is worth; fopr example, a No Doc loan is generally capped at 70%, so for a $100k property you cannot borrow more than $70k. In other words, there is a buffer to cover the loan in the event of a property being re-possessed & sold.

In addition, in Australia if there is a deficit upon repossession & the loan is not fully cleared, the lender or the mortgage insurer (LMI) will keep pursuing the borrower for every last dollar.
LMI = Lenders Mortgage Insurance, a fee paid by the borrower (generally at higher LVRs) that protects the lender (not the borrower) in the event of default. Some securitised lenders like Suncorp or Macquarie (who provide the loans for Aussie, Virgin as well as their own branded products) will have all their loans protected by LMI, with teh client only paying for the LMI is the LVR is above 80%.

Any further questions (or if I've confused things again) don't hesitate to ask.


----------



## robots (25 May 2008)

hello,

another great day yesterday in melb, 64% clearance rate so things going well still,

mofra, would it be fair to say that with low-doc and no-doc that the LVR's where a bit higher "previously" and the ir rates where basically the same as a full doc from a big four?

previously=prior to credit crunch

now, low doc and no doc products have been hit with some big IR rises

thankyou

robots


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## Temjin (25 May 2008)

robots said:


> hello,
> 
> the ninja was for no income, no job or assets
> 
> we never had this stuff in aus,




Not true, no-doc loans have existed in Australia for a while, but not as widespread as the US.



> its a great time to be be buying with what many have identified as a seasonal dip on the graph,
> 
> but we know many here arent interested in property at all except to dig the boots in
> 
> ...




From a contrarian point of view, NOT BUYING is the thing to do right now.  Go and ask everyone around on the street, you will still find 90+ people are a minimum have a neutral or bullish view on investment properties. I have observed the sentiment for quite a while now. Even though it got more negative since the credit crisis, a lot are still interested and are "blindly" believe that Australia is a UNIQUE place on this planet and that the China boom will go forever without a hipcup and that unemployment rate will remain low for the next 100 years.


----------



## robots (25 May 2008)

hello,

re-read mofra's posts, aus never had or had anything like ninja loans

give people a link to one please,

thats right temjin, I hope people stop buying off the plan, investors stay out of the prop market, it will be fantastic

you also right on aus being a unique place, the best country in the world, the land of opportunity

thankyou
robots


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## wildkactus (25 May 2008)

Robots,
Why have investors out of the prop market, as an investor I find this the best time to be looking at property, there are lots of property around that is at a good purchase price, some even well below market price.

The people that I would like to see out of the market are the sepculators that buy for the short term gain, (like to see prices double in just 1 or 2 years). plus most of these are the buy of the plan types.
This is where I see the Biggest problem in the current property market being the speculators not the investors, and the down side is that the people who want to own their own home suffer the most, they get caught in the middle of this crazy price drive and this is not right on them as most pay well above the market value for their home, then can not hold on to it when time get tough.

Most property investors I know like to hold for min 10 plus years, and see a good return over that period. I myself like to holder for ever if I can.

This is only one of the resons behind the current price rises there are many more as already mentioned above by others, but as I see it this is one of the biggest.


----------



## robots (25 May 2008)

hello,

in melb since around 03-04 we have not been building enough units/houses etc because many investors got out of buying because of numerous reasons,

some went to the existing 70's or 80's style units, where things are more transparent

one could point to the increases in re as a result of not building enough,

its a fine line because we need new stock for population issues but investors dont want to be ripped,

i see UK going thru same with demise of btL and now probably rental vacancy going like ours

thankyou

robots


----------



## wildkactus (25 May 2008)

Robots,
Your right one of the reasons investors moved from new homes / units was a lack of supply in the areas that they look in, this did not just happen in Melboure it happen all over. 
For me I only like city areas 5-10 KMs form the CBD with all the goods, The old location thing, and for me it has to be a house or block of land that I can develope into two dewllings, as this is what I find rents the best in these areas smaller houses with all the goods.

Supply is becoming a big problem in this country we are just not building any where near the required dwellings to house everyone. there is a shortfall right across the country. 
The master builders say this in their monthly newsletter month after month.


----------



## Mofra (25 May 2008)

robots said:


> mofra, would it be fair to say that with low-doc and no-doc that the LVR's where a bit higher "previously" and the ir rates where basically the same as a full doc from a big four?



The rates are higher for Low & No Docs than standard full doc loans, incentive for people to provide more financial evidence where they can.
LVRs are still where they have been for a number of years, even teh postcode restrictions have been fairly steady.

Only real changes have been LMI's reigning in high LVR loans which have are full doc in Australia anyway.


----------



## pepperoni (26 May 2008)

No surprise to those in the know ....

http://news.smh.com.au/business/house-prices-down-early-in-2008-survey-20080523-2hk7.html

At least 10% down is what Im seeing in mosman and the northern beaches of syd.

I expect these are the early effects of recent rate rises but that the full effects will be around 15%.  Also expecting more like 20% is inflation and particularly oil continues to rise.

Of course none of this would mean anything if all you followed were the clearance rate.

"House prices to keep rising for years?" - M Y T H   B U S T E D. :


----------



## pepperoni (26 May 2008)

Mofra said:


> So it's a short term investment then? Ok, stamp duty isn't much of a burden anyway





Ever heard of property development.  Ever spend you days wondering why they sell asap and dont rent them out and negative gear like the mugs.    SD is factored in when deciding to develop property.



Mofra said:


> Following a market down? Not every suburb in Australia is falling, and rents are rising. I'm happy with a short term fluctation a few suburbs further away whilst my rents rise.




Every suburb is falling there are just a few morons paying above market to get into the lucrative negative gear game.  It will get worse.  Rents spiked but have stalled or gone back.  Watch this space.

We can agree rates are up though ... soon you will be able to lose $3 to save $1 in tax..



Mofra said:


> No, you are making approx 0.18% net regardless of the movement of the broader equities market, bananas or toy unicorns.




No the money is earmarked for property or shares both of which are down about 9% so Im about 17% on the average "follow that market downers".  If I was going to buy 2mil of premium unleaded you would have a point.


----------



## numbercruncher (26 May 2008)

Seems RE is continuing its downward spiral .... Still in the denial phase I believe though ....




> Auction rates plumb new lows
> 
> AUCTION results in every major city continued their disappointing run over the weekend.
> 
> ...




http://www.news.com.au/business/money/story/0,25479,23758020-5013951,00.html


----------



## Temjin (26 May 2008)

numbercruncher said:


> Seems RE is continuing its downward spiral .... Still in the denial phase I believe though ....
> 
> 
> 
> ...




I forgot, what's the next stage after denial? Anger?


----------



## numbercruncher (26 May 2008)

Temjin said:


> I forgot, what's the next stage after denial? Anger?




Yes then Bargaining , Depression and finally Acceptance


----------



## professor_frink (26 May 2008)

numbercruncher said:


> Yes then Bargaining , Depression and finally Acceptance




according to the authority on everything, the simpsons, it's denial, anger, fear, bargaining and then acceptance



> *the deadly blowfish*
> Dr. Hibbert: Now, a little death anxiety is normal. You can expect to go through five stages. The first is denial.
> Homer: No way! Because I'm not dying!
> Dr. Hibbert: The second is anger.
> ...


----------



## pepperoni (26 May 2008)

Silly warren has money in cash earning only .00000000000003 of a percent while the markets fails.  What a fool ... he should come here to learn from the rich and successfull  



Buffett says US is already in recession
Email Print Normal font Large font May 26, 2008 - 7:08AM

Advertisement
Warren Buffett, whose business and investment acumen has made him one of the world's wealthiest men, was quoted in an interview published on Sunday as saying the US economy is already in a recession.

Asked by Germany's Der Spiegel weekly whether he thinks the US could still avoid a recession, he said that as far as the average person is concerned, it is already here.

"I believe that we are already in a recession," Buffett was quoted by Spiegel as saying.

"Perhaps not in the sense as defined by economists. ... But people are already feeling the effects of a recession."

"It will be deeper and longer than what many think," he added.

The 77-year-old chairman and chief executive of Berkshire Hathaway Inc was in Europe last week for what he called a "deferred shopping tour", looking for possible acquisitions.

*Omaha-based Berkshire has about $US35 billion ($A36.62 billion) in cash and is looking to invest. : *


----------



## gfresh (26 May 2008)

He obviously doesn't believe in any of our "miracle stories" with China and the rest... Wonder if he even knows where Australia is :


----------



## pepperoni (26 May 2008)

gfresh said:


> He obviously doesn't believe in any of our "miracle stories" with China and the rest...




... if he did Im sure he would be spend all 35 bil in melbourne units and negative gearing ... abs statistics have shown its the proven way to wealth.


----------



## nioka (26 May 2008)

nioka said:


> I'm too old to worry about fame. However, without any recommendation and DYOR, I bought MOS. I have had MOS before and lost a little on the deal. I have bought back in for a long term investment as they are starting to go forward now as I see the situation. Read the MOS thread on ASF and read the company announcements.




Just to prove a point to the sceptics. The MOS shares are up over 10% and the options up over 40% so far and I bought both.


----------



## CamKawa (26 May 2008)

Temjin said:


> I forgot, what's the next stage after denial? Anger?



 Source: http://qsuper.qld.gov.au/public/members/educational_tours/FYF/07w-Investoremotions.asp


----------



## numbercruncher (26 May 2008)

Thanks Camkawa !


Should put (2007) Beside " Euphoria " ?


----------



## nioka (26 May 2008)

pepperoni said:


> Buffett says US is already in recession
> Email Print Normal font Large font May 26, 2008 - 7:08AM
> 
> "I believe that we are already in a recession," Buffett was quoted by Spiegel as saying.
> ...




Maybe he was downramping so that he will get better value for the $US35billion he has to invest. If things are that bad why is he shopping?


----------



## numbercruncher (26 May 2008)

nioka said:


> Maybe he was downramping so that he will get better value for the $US35billion he has to invest. If things are that bad why is he shopping?





He must expect alot more pain !

Whys he sitting on so much USD ? strategic error ?


----------



## Macquack (26 May 2008)

pepperoni said:


> ... if he did Im sure he would be spend all 35 bil in melbourne units and *negative gearing *... abs statistics have shown its the proven way to wealth.




I dont think Buffy Boy needs the tax deduction. 
On current prices he could buy over 100,000 Melbourne home units for *cash* (and thats just his pocket money).


----------



## numbercruncher (26 May 2008)

Interesting little article about Australia's RE Auction/Joke/Scam

Looks like Realtors are getting unpopular and exposed ?

http://blogs.theage.com.au/moderntimes/archives/2008/05/who_do_those_shinyshoed_real.html



> Auctions: an absolute joke
> 
> 
> Who do those shiny-shoed real estate bozos think they are kidding? Here's the scene from a recent auction in Kensington:
> ...





Hilarious !    ( all part of the Clearance rate fudge I imagine )


----------



## nioka (26 May 2008)

numbercruncher said:


> He must expect alot more pain !
> 
> Whys he sitting on so much USD ? strategic error ?




Error yes. And with the US$ getting worth less and less he can't have a good year this year. Ah well we can't be right all the time.


----------



## robots (26 May 2008)

hello,

thats right peepie, the abs has shown that home-owners are 6x wealthier than the renters, great stats from ABS

glad you remember, you should ask you're father to bookmark the ABS page on the family computer for you,

even better as the rents go up and up

thankyou

robots


----------



## gfresh (26 May 2008)

What a useless stat... 

So it means all the poor people who couldn't afford a property anyhow (nor would ever be offered finance)  should go and buy one so they can all become wealthy?  

Or maybe the reason they rent is that they're not wealthy enough to afford a property to begin with!

The rich get richer, and the poor make robots rich eh..


----------



## robots (26 May 2008)

hello,

no, it just tells me that most renters blow the $ week in and week out,

and then rock up on forums carrying on about re prices,

i am amzed because the rent vs buy discussion has been around for a while now, i believe in the rent/and invest pathway but many just dont do it

who saves 50% of their rent per week?

nothing wrong with renting, its the price of accommodation

i just think there is massive upside yoy in rents and as i move into my senior years i know i will have a roof over my head 

thankyou

robots


----------



## numbercruncher (27 May 2008)

All figures now showing a spanking for RE the last quarter ....




> House prices on the decline
> 
> FALLING house prices have confirmed the days of a red-hot property market are over as buyers battle high interest rates and rising inflation, new figures suggest.
> 
> ...




http://www.news.com.au/perthnow/story/0,21598,23750278-2761,00.html

I find Mr Dyett's of the REIA comment a little bearish, if a 8.4pc decline in Melbourne etc etc is " the housing market is _beginning_ to suffer " ....


----------



## Junior (27 May 2008)

robots said:


> hello,
> 
> no, it just tells me that most renters blow the $ week in and week out,
> 
> ...




Generally speaking rental yields just don't stack up at the moment when compared to dividend yields on the ASX (and fully franked).  As a young person it is much easier/less stressful to rent and grow a blue chip share portfolio rather then try and get into the housing market.


----------



## pepperoni (27 May 2008)

Junior said:


> Generally speaking rental yields just don't stack up at the moment when compared to dividend yields on the ASX (and fully franked).  As a young person it is much easier/less stressful to rent and grow a blue chip share portfolio rather then try and get into the housing market.




Too true ... for $750 a week Im renting a $4m-$5m house on balmoral slopes .. yes its a bargain but small bickies to the owner Im sure.

For the same money I could service a $300k mortgage that would get me a house in cabramatta, redfern or maquarie fields.  Of course Id also get the privilege of burn money on my most hated things ... stamp duty and agents!!!!

Property investment = oxymoron. Moron being the operative part.

Property improvement/development CAN be profitable if you really know your stuff.


----------



## pepperoni (27 May 2008)

Another funny article ... 

http://www.smh.com.au/news/national...website-crashes/2008/05/27/1211653994588.html

Im betting rents to go flat or fall if inflation and particularly oil squeeze "rental affordability" for the nuff nuffs.

There was a article in syd north shore paper saying that they were having trouble renting roperties again.


----------



## CAFA1234 (27 May 2008)

Tysonboss1 said:


> Given That the real estate markets differ widely between suburbs in certain parts of cities and states, coastal or country,... city or rural or regional centres there is thousands of real estate markets in Australia all performorming differently.
> 
> You then have sectors within each market such as houses, town houses, low density units, high density units, commerial, retail and other various commerial, various industrial, Offices etc etc etc.
> 
> Why would you think that USA housing market has any relavence to Australian markets.




Sorry for delay. Are you claiming that the current credit contraction in the US, Spain, UK, Ireland, Iceland, nearly all the ex soviet booming economies has no impact on the Aussie housing market??? Have you looked at the NZ market of late. Just got back from Vancouver, Canada - the market has stopped. BTW Canada is running a large current account surplus and has lot of natural resources and budget surpluses - does that ring a bell?

We will have to disagree, but my view is that this is a function of a major credit crunch , as many of the worlds economists tend to think.

Your logic in that there are different markets is correct, but flawed in your final analysis.


----------



## nomore4s (27 May 2008)

Tysonboss1 said:


> Given That the real estate markets differ widely between suburbs in certain parts of cities and states, coastal or country,... city or rural or regional centres there is thousands of real estate markets in Australia all performorming differently.
> 
> You then have sectors within each market such as houses, town houses, low density units, high density units, commerial, retail and other various commerial, various industrial, Offices etc etc etc.
> 
> *Why would you think that USA housing market has any relavence to Australian markets.*




The current US housing market should serve as a warning to us here in Oz imo, property prices can go down very quickly when the bubble does burst.

Whether the bubble is getting ready to burst here I've got no idea but something has to give sooner or later - either prices coming down or wages going up. Both senarios cause problems imo.
As housing gets more unaffordable for your average Joe Blow the more chance we have of a situation like the US.

There are plenty of people out there who will get themselves in way above their heads for the dream of owning a house without any thought to how they will actually repay the loan.


----------



## Tysonboss1 (27 May 2008)

CAFA1234 said:


> Sorry for delay. Are you claiming that the current credit contraction in the US, Spain, UK, Ireland, Iceland, nearly all the ex soviet booming economies has no impact on the Aussie housing market??? Have you looked at the NZ market of late. Just got back from Vancouver, Canada - the market has stopped. BTW Canada is running a large current account surplus and has lot of natural resources and budget surpluses - does that ring a bell?
> 
> We will have to disagree, but my view is that this is a function of a major credit crunch , as many of the worlds economists tend to think.
> 
> Your logic in that there are different markets is correct, but flawed in your final analysis.




I am saying quoting what is happening in other markets has little relavence to Australian longterm viabilty of property investment.

I mean you can't even say "sydney residential market is down, So I better not invest in brisbane industrial property",... so why would you say "detroit real estate is down so North coast NSW is in trouble"


----------



## CAFA1234 (27 May 2008)

Tysonboss1 said:


> I am saying quoting what is happening in other markets has little relavence to Australian longterm viabilty of property investment.
> 
> I mean you can't even say "sydney residential market is down, So I better not invest in brisbane industrial property",... so why would you say "detroit real estate is down so North coast NSW is in trouble"




I'm sorry to say that the point is missed. This is not about a particular market or sub-market, it is about the credit crunch that is impacting much of the western world. The US is the leading indicator, for a number of reasons, and "MAY" show what can happen in a market decline. The SCALE of the decline is the issue - this is bigger than the 1992 housing recession, and many financial indicators point to this being the biggest threat to financial markets since the 1930. This may or may not be correct. However to put one's head in the sand and suggest that there is zero impact is naive to say the least. 


The Aussie housing market may not crash, however it is the view of many that it will not increase too much over the next few years. There will be pockets of course that do well, just as some shares will always go up, but for the masses property investment may not be the game it was in the years 2000 - 2006, and for some will be financial ruin. My view.

Declared Interest. Property on North Shore, Sydney, + Unit on Northern Beaches, Sydney and house in Brisbane suburb. Long term investor and not looking for much above 5% over long term inflation rate.

PS Small unit near Seal Beach, CA (next to Long Beach - look it up on Google maps) sold last week for $145k. It is for over 55s and all units are ground floor and in a security complex. Last year these were selling for over $200k


----------



## Markcoinoz (27 May 2008)

Cafa1234,

Couldn't agree with you more.

The simple fact is "Can Australia justify paying 8 times their Avg Ann Income" to service their mortgage?

I read somewhere that the US should be around 3 - 3.5 times Avg Ann Income.

They appear to be coming very close to that figure now.

Cheers markcoinoz


----------



## Flipper15 (27 May 2008)

Interesting thread which I have been following for a while.

In the short term only time will tell who is right and who is wrong. It is likely to be a combination of the 2. ie. under current high interest rates with high debt levels house prices are not likely to go through the roof on average across the board but also because of our strong economy they are not likley to plummet either. 

My view of the rental situation and the economy is this:-

Rents will continue to rise because of supply side issues which have been well documented and investors wanting a decent return faced with high interest rates will demand higher rents from their tenants. Managing agents are the broker so to speak in between conditioning the tenant (as well as the media) to accept the higher rents. If I were a tenant I would not be happy either, but everything is going up.

Everything comes down to supply & demand. If you want to stay in that town or city as a tenant you basically have no choice but to pay the higher rent unless you want to move every 2 years or live in a big shared house which is not practical for most.

But the missing link in most analysis/discussion I see is that the flow on effect is that the renter will not tolerate rising rents at the current levels for to much longer but as I have stated most will not have much choice so will go to their boss and ask for a pay rise. Some people may move back with parents or into bigger shared houses but this is likely to be a small proportion of the overall.

So if the employer wants to keep the employee then suddenly the employer is stuck with this higher wage demand and thus the buck stops with him. You would call it a cost of living pay rise and nothing to do with performance.

Based on the above I believe we are heading for a classic wages prices spiral.

The current employment wages indicators I have heard have not indicated a wages breakout.

But in my view it must be coming and is probably already happening or soon to happen all over Australia right now.

There will be a lot of pressure on all employers big and small and in the end they will have no choice but to pay higher wages. But they will respond by raising the prices of their services or goods. So there we have it a spiral which because of the nature of our economy and expanding government infrastrucure budgets and spending etc can only really slow down via higher interest rates which in this strong economy can only lead to further rent increases and the cycle continues. And IMO it will continue and not end until China and others stop demanding our raw materials. If China and the rest of the world stops industrialising then we have a totally different situation that we will have to deal with. We seem to like building things so while in the next 20 plus years we might see some slowdown it will never stop.

If for eg the day that demand for our raw materials slows right down was 20 years from now then imagine what rents and property prices will be in 20 years time.

In the short to medium term we will come out the other end with rents catching up to housing prices to get back to some sort of equilibrium with higher wages and higher costs (which we are already experiencing).

So based on this reasoning then I believe house prices across the board will not plummet. In the short term only a 10 - 15% correction (which is already occurring in some areas) is the likely result. But considering how far property has gone up in the last 5 years then anyone who bought 5 years ago would be still well ahead.

I think over the long term there can be no argument. Short term analysis is a totally different argument with possible outcomes either way. There will be movements up and down in the short term, this is the nature of markets and peoples situations. But on a long term analysis ask what your parents paid for their houses in the 1960's and 1970's and what are the prices now. Even if they had similar economic conditions as we have now (and as far as employment and economic growth etc there is a good argument to say it has never been better) and are likely to have over the next 20 plus years then why would the result be any different.

I don't have the figures but average house prices in the early 1970's you could say were around $20-$30K. Same houses now are $300 - $500K and even more in some cases. Its called inflation. Unless we as a human race change our reaction/response to higher prices for goods and services then inflation is with us forever.

Too much analysis I see is short term with little focus on any time frame over 5 years.

This is my view only as I see it.

Flipper


----------



## CAFA1234 (27 May 2008)

Flipper15 said:


> Rents will continue to rise because of supply side issues which have been well documented and investors wanting a decent return faced with high interest rates will demand higher rents from their tenants. Managing agents are the broker so to speak in between conditioning the tenant (as well as the media) to accept the higher rents. If I were a tenant I would not be happy either, but everything is going up.
> Flipper




Interesting situation with rents. Much of the commentary in the US a few months ago consisted of the same logic, especially those poor souls walking away from their mortgages - they HAVE to live somewhere - right?

Funny thing has happened - all those over developed blocks of units that can't be sold for anywhere near what the bankers proposal suggested retail prices, are now flooding onto the rental market. Compared to 12 months ago when I first rented in Los Angeles, the value is significantly better now. Can now get a larger town house for the same price I'm currently paying for a unit - probably about 15% variance compared to May 2007.

There has been no mention from my landlord or agent regarding an increase, or even if I wanted to stay and extend the lease (now out of lease contract) -  just happy to have the payments made each month. This is VERY different compared to the 'norm' in L.A. Hey, maybe I'm just a mug paying too much


----------



## numbercruncher (27 May 2008)

There is no shortage of rentals, let me repeat NO shortage.

There is how ever a shortage in certain "desirable" areas and this is used by the spruikers dishonestly as a blanket debate.

Check out realestate.com.au there is squillions of places available for rent.

The abs even says there is 800k vacant residential properties in this country.

No shortage, more RE spruiker lies.

Thankyou.


----------



## pepperoni (27 May 2008)

numbercruncher said:


> There is no shortage of rentals, let me repeat NO shortage.
> 
> There is how ever a shortage in certain "desirable" areas and this is used by the spruikers dishonestly as a blanket debate.
> 
> ...




Id go further and say there is no shortage anywhere.

There was a spike, caused most likely by slum lords struggling under higher rates trying to pass on the costs.  Many abandoned their properties looking for cheaper rents and in some cases agreed to silly rents but this is well and truly over hence the sudden lack of "rent crises" news reports.

Inthe middle of it all I got offered 3 properties at negotiated discount bargain rents.

In fact now in many desirable areas properties are sitting empty for over a month.  This will no doubt exacerbate the problems of the greedier slum lords ... cant say I fell sorry for them or would support their cries for goverment help ala US credit crunch "victims".

Thank you.


----------



## Temjin (27 May 2008)

Here is an interesting new site attempting to debunk the theory of "rental shortage crisis". 

http://bubblepedia.net.au/tiki-index.php

It's quite a brand new site, I found this from another forum. (obviously biased to being BEARISH) http://forum.globalhousepricecrash.com/index.php?showtopic=32341&st=0

SMH.com.au also posted a news article TODAY (27/May) related to this new site, http://www.smh.com.au/news/national/housing-shortage-myth/2008/05/26/1211653939197.html.

Their server is being hammered at the moment due to the news article, so you may have trouble accessing it at this time. As for the maps, it is still in early stage, but I hope more and more people will populate them.


----------



## theasxgorilla (27 May 2008)

pepperoni said:


> Inthe middle of it all I got offered 3 properties at negotiated discount bargain rents.




Top end properties like the one you're renting are a complete other kettle of fish.  There are fewer candidate leasees so landlords have to be prepared to move their price points.  A lot of these properties are trophies owned by rich folk and ex-pats and the like who are more interested in holding the property than renting for any kind of yield that makes sense.  It stands to reason that you'll find a place which you can rent for less than you could afford the mortgage.  You can think of it like a subsidised house-sitting assignment (you subsidising the actual owner  ).  And of course it's win-win so there is nothing wrong with that.

But you obviously haven't been at the open-for-inspections in out in the 'burbs in Melbourne these last 6-12 months.  Don't expect landlords to have been discounting anything.  Expect to have to use your elbows to ensure your application gets submitted toward the front of the list.


----------



## numbercruncher (27 May 2008)

theasxgorilla said:


> .
> 
> But you obviously haven't been at the open-for-inspections in out in the 'burbs in Melbourne these last 6-12 months.  Don't expect landlords to have been discounting anything.  Expect to have to use your elbows to ensure your application gets submitted toward the front of the list.





I see the spruikers can even fool people on the other side of the world .....


A quick look for rentals at domain.com.au shows 7532 properties available for rent in Melbourne, and considering realestate.com.au is heaps more popular you could probably treble that number. (just cant search for total listings at re comau)

Sure there might be hoards of people at SOME of these places but no way at all of them.

http://www.domain.com.au/Public/SearchResults.aspx?mode=rent&State=VIC&Areas=Bayside%2cNorth+East%2cEast%2cNorth+West%2cGeelong+%26+District%2cPhillip+Island+%26+District%2cInner+City%2cSouth+East%2cMornington+Peninsula%2cWest%2cNorth%2cYarra-Dandenong+Ranges&agid=


----------



## Flipper15 (27 May 2008)

As we know there are a lot of different factors at play here such as type of property and location etc. So we can all build an argument around a particular facet of the property market and actually be correct.

It all depends on what viewpoint you are coming from.

In the end we all need somewhere to live and unless our population starts to go into decline then in an overall sense there can be only one result. More demand for housing. Supply is going to be constrained because of the lack of available land within a reasonable distance of the major capital cities. Not many people are going to travel to work in the city if they live 60kms from the city. There are many jobs outside of the CBD's but young people in particular want to be where the action is. Most of our major sporting and entertainment stadiums are in or near the capital cities with the exception of Homebush in Sydney.

Whether we like it or not most of us choose to live in or very near the big capital cities that cannot sprawl out much more than they already are. So in 20 years time if the population of Australia is for eg say 10 million more than now then where will all these people live.

One solution to this is satellite cities (or CBD's) outside of the major city's CBD. But these satellite cities are usually still within 50 kms of the major CBD. So the little circles or ripples that will be created around these satellite CBD's are going to intertwine with the major CBD anyway creating more density and pressure on housing.  

In the long term the well established trend of rising prices for everything has strong historical foundations and there is no reason to suggest that this trend and history will not impact significantly on housing prices and rents in an upward manner well into the future. Couple this with population and density issues and it is clear if we took at 20 year plus view that we are headed only in one direction. 

On the other hand a 1-2 year view is a totally different analysis.

Flipper


----------



## wayneL (27 May 2008)

Flipper15 said:


> ...it is clear if we took at 20 year plus view that we are headed only in one direction.
> 
> *On the other hand a 1-2 year view is a totally different analysis.
> *
> Flipper



'zactly.

And this could be the source of a lot of disagreements on this thread, that is, the time horizon of the argument.

As long as we have the current monetary system, and we will unless is breaks down completely (unlikely), fiat currencies will continue to be gradually debased. Over the long term, the trajectory of all general asset classes (apart from cash) is up in nominal terms.

This offers the person willing to gear their investments a significant advantage. Short term, there will be fluctuations in both nominal and real terms as we are now seeing here in the UK with property suffering it's eighth MoM fall in a row. 

I can state categorically that there are hundreds of thousands of people here in the UK, who have invested in property in the last 2-3 years for the long term, who have been utterly screwed over by short term considerations.

This is the message the more sober bears have been trying to get across. No longer are the property cautious ridiculed at dinner parties for not buying "now before it's too late". In fact property is not even mentioned at dinner parties anymore... only credit problems, interest rates and job prospects.

Property will recover, once relative value is restored. As most here will know, I'm a property bear (too soon as the record will show), but only in the medium term. As holder, I remain a long term bull and there will be a point when I become a medium term bull as well.

As a side issue, on the news this morning, so called "liar loans" (the stock in trade of the whole industry for years) are being called in. Various sting operations have been launched with dozens of brokers losing their accreditations so far. It didn't matter when prices were rising, but it is now an enourmous issue as prices are falling and is another reason credit is being squeezed.

The next shoe to fall IMO is unemployment.

(comments relate to UK)


----------



## Macquack (27 May 2008)

pepperoni said:


> Too true ... for *$750 a week *Im renting a $4m-$5m house on balmoral slopes .. yes its a bargain but small bickies to the owner Im sure.




I did'nt think pizza delivery boys earnt that much.
Must be the "tips".


----------



## Mofra (27 May 2008)

pepperoni said:


> Ever heard of property development.  Ever spend you days wondering why they sell asap and dont rent them out and negative gear like the mugs.    SD is factored in when deciding to develop property.



Yes I have - have you ever heard of development finance? If so yous hould be able to answer your own question 



pepperoni said:


> Every suburb is falling there are just a few morons paying above market to get into the lucrative negative gear game.  It will get worse.  Rents spiked but have stalled or gone back.  Watch this space.



Every suburb is falling? Please show me the figures that show every suburb in Australia is falling - or that, over a reasonable period (ignoring a short term fluctuation) of say 7 years that a high proportion of suburbs have fallen. 



pepperoni said:


> We can agree rates are up though ... soon you will be able to lose $3 to save $1 in tax.



Yes, and inflation is up too, further eroding the real return on cash. Not sure how many people invest solely to save on tax - I don't hold any forrestry scheme investments myself.




pepperoni said:


> No the money is earmarked for property or shares both of which are down about 9% so Im about 17% on the average "follow that market downers".  If I was going to buy 2mil of premium unleaded you would have a point.



All property or equities are down 9%? If you honestly believe your investment performance is merely going to match the wider market, I can understand your fear & trepidation based on short term volitility. 

Perhaps you should look at some professional financial help to try and obtain some long term  higher than market returns. Good luck.


----------



## Mofra (27 May 2008)

pepperoni said:


> Id go further and say there is no shortage anywhere.



ROFL at this one... no shortage anywhere 

Good one. 

http://www.news.com.au/heraldsun/story/0,21985,23743830-2862,00.html

0.3% Vacancy rate for inner-city Melbourne properties, 0.7% for the Geelong region. Please explain how these rates could be so far off the mark, and how rents are rising so quickly if there is no shortage of suitable properties.

Cheers


----------



## CAFA1234 (28 May 2008)

Flipper15; said:
			
		

> As we know there are a lot of different factors at play here such as type of property and location etc. So we can all build an argument around a particular facet of the property market and actually be correct.
> 
> It all depends on what viewpoint you are coming from.
> 
> ...




Flipper, all of your arguments to support ever increasing house values over the longer term appear sound, especially to those who's only view of the world stops at the east and west coasts. Maybe you should check out Tokyo home prices since about 1980. Anyone buying property there in 1989 is STILL trying to get their money back. As a property investor myself, I like your views, but we should aim to give a balanced and analytical view to others?


----------



## CAFA1234 (28 May 2008)

CAFA1234; said:
			
		

> Flipper, all of your arguments to support ever increasing house values over the longer term appear sound, especially to those who's only view of the world stops at the east and west coasts. Maybe you should check out Tokyo home prices since about 1980. Anyone buying property there in 1989 is STILL trying to get their money back. As a property investor myself, I like your views, but we should aim to give a balanced and analytical view to others?




The first quarter S&P/Case-Shiller figures show that home prices declined by 15.3% in the composite of the 20 largest U.S. metro areas and were down by 14.4% in the 10 largest metro areas.

Metro Detroit saw a 17.9% fall in home prices in the first quarter as compared to the first three months of 2007, according to the index.

And metro Detroit remains the only metro area in the top 20 that has an index level under 100. Metro Detroit had a 95.57 index level in March, below the 100 set in 2000 as the baseline. That means home prices did not appreciate enough since 2000 to offset the current erosion.
---------------------------------------

Now I know metro Detriot is not everyone's idea of an ideal home, however it is one of the larger cities, and now worth less than in 2000 after over 8 years later. Overall in the 10 cities we are back to September 2004 prices - period.

The S&P/Case-Shiller is the most respected house price index world wide, as it uses actual sale prices of homes that have previously been sold e.g. it tracks actual individual houses, as opposed to medium sale prices. 

This removes the impact of 'more low end houses sold' etc. 

Even this standard can not take into account the money spent on upgrades and general improvements that individuals generally perform on their homes, or indeed destruction by DIYers.

Why is this relevant? Well in a raging bull market, houses or shares, it really is rather easy to make money. In a bear market it becomes a struggle to preserve your capital. Do not listen to those who put up all sorts of arguments that house prices "must rise for ever" without doing your own research, and in depth. 

House prices are showing various levels of stress in most western markets - why do you think Australia will be exempt. Maybe the same logic as those that in Dec 2007 were saying that the drop in US share markets would not impact the ASX - they had one good logic reason after another why the ASX would stay on the 'golden egg' scenario - and where are we now? 

PS Los Angeles is down over 21% in 1 year - S&P/Case-Shiller. 
Las Vegas   down 25.9%
Miami        down 24.6%
Phoenix     down 23.0%
Los Angeles down 21.7%
San Diego    down 20.5%


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## theasxgorilla (28 May 2008)

CAFA1234 said:


> Maybe you should check out Tokyo home prices since about 1980. Anyone buying property there in 1989 is STILL trying to get their money back. As a property investor myself, I like your views, but we should aim to give a balanced and analytical view to others?




Is it balanced to suggest that people who  brought property in Sydney or Melbourne in 2008 should consider that they might still be in negative equity in 2027?  That sounds extreme, as opposed to balanced.

ASX.G


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## CAFA1234 (28 May 2008)

theasxgorilla; said:
			
		

> Is it balanced to suggest that people who  brought property in Sydney or Melbourne in 2008 should consider that they might still be in negative equity in 2027?  That sounds extreme, as opposed to balanced.
> 
> ASX.G




Your view, not mine. I simply reported a factual situation. If you wish to extrapolate this to Aussie house prices then, your call. 

However, those that purchased Tokyo in 1989 also thought that a 20 year bear market was absolutely impossible. And of course this is in the country with the 2nd highest GDP in the world, a consistent exporter, and a car industry that has decimated the established players, plus a leading edge electronics industry.  Not exactly a basket case? 

Bubbles are bubbles and for the last few hundred years there have always been great stories about how it is different this time.

I think you will find that the Japanese stock market peaked at 40,000 in 1989. Now 20 years later, where is it. I guess with hindsight they were just plain old fashioned suckers?


----------



## theasxgorilla (28 May 2008)

CAFA1234 said:


> Bubbles are bubbles and for the last few hundred years *there have always been great stories about how it is different this time*.
> 
> I think you will find that the Japanese stock market peaked at 40,000 in 1989. Now 20 years later, where is it. I guess with hindsight they were just plain old fashioned suckers?




Yeah, poor guys.  But what's the chances of that happening again?  Isn't it different every time?


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## CAFA1234 (28 May 2008)

theasxgorilla; said:
			
		

> Yeah, poor guys.  But what's the chances of that happening again?  Isn't it different every time?




YES, YES, YES. That is the point. It IS different every time, otherwise investors would learn  

Look at the PE ratios on railways stocks, steel stocks - early 20th century, internet stocks (2000), financial stocks (2007). Until about a year, may 2 years, Spanish property was in a bubble - look at the mess right now. Chart out a little stock called RCA - it used to be the Microsoft of it's time (Radio Corporation of America) - read the press and investment reports of the time - this stock was going to make everyone rich.

Housing, generally, will perform according to basic macro economic inputs e.g. if the super rich find that the nice penthouse in Sydney harbor is now 5 times the price of a beach front pad on Long Beach then they may well move? If low income housing is priced out of reach, then where do you get the cleaners to live and still clean? Santa Barbara, CA has this problem right now  - they are having to implement more social housing in one of the most expensive towns in the US because teachers, civil servants, security guards, shop workers etc are driving upwards of 50 miles each way to do minimum / low wage jobs. 

Simple logic should be able to tell you something. If wage inflation runs at 4% for the next 20 years (interest rates will be used to constrain this), and house prices rise at 6% for said 20 years (and lots of people on this site think that there are a myriad of reasons why they should be 10/12/15%), then at the end of the period the average worker will be paying about 50% more than they are now for their property or their rental. Do you honesty think that people have the ability or the will to pay these amounts of their disposable income?

Just for fun - using 4% and 8% = more than 100% increase, and for those with their heads in the clouds and believe the 'this time it's different' lets look at 4% and 10% = 3 and a half times current expenditure. You know, I just don't see it.

The really worrying thing is that house prices never have risen as much as the headlines would have you believe. It would be nice to know how much is spent on renovations / repairs every year. Does anyone have any reliable figures to show how much value is added to the housing stock each year by improvements? During the 2000 - 20004 boom in Sydney a significant number of older properties were pulled down / gutted and new Mac mansions built, so a $1m wreck turned into a $2m sales figure. The owner probably made a couple of hundred thousand in a year - great for them, and what fantastic news for the overall increase in house prices! And yes this is an exaggerated view and would not have a major impact, but the point needs to be raised.


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## WaySolid (28 May 2008)

Anybody interested in the Brisbane market might want to check Michael Matusik's website tomorrow when he places up a presentation he gave tonight about the next few years for Brisbane. It's got a lot of data and what I consider high quality research in it.

Also.. Some good stuff on affordability, will need to digest past the headlines and pretty charts though.
http://www.stgeorge.com.au/corporate-business/institutional-financial-markets/
Scroll down to the bottom for economic reports.

I won't put my opinion to it as it appears the regular posters on this thread have stated and restated their positions many times, just mentioning two decent data sources for people to do some more research.


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## CAFA1234 (28 May 2008)

Mofra; said:
			
		

> Perhaps you should look at some professional financial help to try and obtain some long term  higher than market returns. Good luck.




Serious question - where does one get 'good' financial advice? 

The average qualified financial planner will give you average, often 'big 4 bank' sourced, generic plans focused on diversification by use of various mutual funds. They are SO risk adverse that it is almost a joke. 

I had hourly paid planners from 2 of the large bank planning groups create plans for me back in 2004/6 and although interesting reading, neither could plan in different income streams kicking in at different times within the pension phase. 

And if you go for a specialty financial planning house then be very careful - much of the mezzanine finance for house developments (and now lost money) was sourced via financial planners. Like accountants or lawyers, average planers are two a penny, but good ones are very difficult to sniff out. 


Serious question - where does one get 'good' financial advice? 

Does anyone know of a sophisticated software model e.g. excel spreadsheet to model lifestyle financial planning?

Declared Interest:- qualified financial planner DPF 1-8 inclusive.


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## brettc4 (12 June 2008)

During the finance report on ABC in Adelaide tonight, they talked about the number of employeed persons decreasing and should a graph of unemployment for the last 50 years.

They then also should a graph of house-hold debt over the last x years and said that the last time Australia was in a recession, household debt was 50% whereas it is currently around 150%.

I am not saying we are in a recession, but with increased unemployment there is the potential for increased financial hardship and possible foreclosures.

My personal view, is the property market is going to slow down, if not head in the opposite direction for a couple of years.  That is my hope anyway as I will be looking to upgrade my property in 12-18 months 

Brett


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## Temjin (12 June 2008)

Hey! This thread got revived.  I was a little depressed to see it was gone. 

The property is going to take a LONG WHILE to go through this potential downturn cycle. (unlike the share market where bad things can happen in less than 24 hours)


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## professor_frink (12 June 2008)

Oh dear god it's back

Would be nice if it stays civil this time folks


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## bowseruni (13 June 2008)

I personally think that house prices are dropping an in the next 6 months people will be dropping atleast 25% off current asking prices.

Between my house and the closest Westfield is about 3km's, use this as an example as i travel this road almost everyday for work/uni. I have been noticing that 3 months ago there was 4 houses forsale along this road, then 5, then 6. yesterday whilst riding my bike along i counted 10 places forsale and 1 lease wanted place. 

Now this is only one street and i would say an average income area (not poor or dodgy and not mansions), I think this is a result from interest rates, sky rocketing fuel and general cost of goods increases.

Surely if this keeps happening house prices must seriously drop, can't see interest rates getting any better (possibly worse) in the near future and petrol, well that's a whole new topic.

what are your thoughts? house prices seriously drop in the next 6-12 months?


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## stock_man (13 June 2008)

bowseruni said:


> what are your thoughts? house prices seriously drop in the next 6-12 months?




I think certain areas will drop by a good %, but overall I am seeing the market stay flat for years to come. Take Sydney for instance, it really hasn't had any price movement of significance for the last 5 years. Another 5 years of this would not hurt.

There will be a definate bottom to the market if it does drop. There are way too many property investors/speculators in this country. As soon as the price of a house drops to anywhere near neutral gearing, people will dive in - regardless of yeild (I know of property investors who would not even know the meaning of this word).

Maybe this is the new market cycle? Flat for long periods allowing inflation/wages/rent to catch up, followed by small bursts of increases?


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## Temjin (13 June 2008)

stock_man said:


> Maybe this is the new market cycle? Flat for long periods allowing inflation/wages/rent to catch up, followed by small bursts of increases?




This is essentially the best case scenario outcome. It really depends on the ability of Australians to keep their jobs and maintain their overall ability to service the debt while the world go through a new downturn cycle. If China does not seriously crash and just stagnate with modest growth, then maybe, just maybe...things will be not as basd.

But of course, if US goes down in a hard recession / depression style, then the emerging economics go down with it, then we will say hello to massive asset deflation in Australia.


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## gfresh (13 June 2008)

ahhh, good to see this thread back. It made good reading, and there was always both sides of the story which have some merits. I never noticed too much bickering - maybe some friendly arguments  

Place for lease now downstairs this week.. I notice the rent price has actually dropped $10/wk (I remember because it was for lease 6 months ago). We'll see how long this takes to get filled, but another up the road has been vacant for weeks. Rental shortage, not enough properties? 

While there is this talk of rental price hikes, some owners out there must surely be a little scared in jacking the price at the loss of a tenant in some areas? Even a few weeks could seriously damage somebody who is heavily geared.


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## Macquack (13 June 2008)

Robots, where are you?


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## numbercruncher (14 June 2008)

gfresh said:


> ahhh, good to see this thread back. It made good reading, and there was always both sides of the story which have some merits. I never noticed too much bickering - maybe some friendly arguments
> 
> Place for lease now downstairs this week.. I notice the rent price has actually dropped $10/wk (I remember because it was for lease 6 months ago). We'll see how long this takes to get filled, but another up the road has been vacant for weeks. Rental shortage, not enough properties?
> 
> While there is this talk of rental price hikes, some owners out there must surely be a little scared in jacking the price at the loss of a tenant in some areas? Even a few weeks could seriously damage somebody who is heavily geared.





Yes the Rental shortage is just a scam perped by the dishonest Spruikers and their media mates, sure certain desirable suburbs have a shortage but the spruikers use that as a blanket debate.

No shortage, prices falling , plenty of vacancys and as we can see even rent falling in places.

Realestate.com.au - check it out 10s of thousands of rentals available simply because so many people fell into the RE boom/trick thing that was going on 

I also noticed so much RE coming to market forsale quite unbelievable, so much for a shortage eh ?


----------



## Temjin (14 June 2008)

Here is one on the housing shortgage myth. Always wanted to post this link but this thread was closed before the blog entry was out. 

http://cij.inspiriting.com/?p=458



			
				numbercruncher said:
			
		

> Yes the Rental shortage is just a scam perped by the dishonest Spruikers and their media mates, sure certain desirable suburbs have a shortage but the spruikers use that as a blanket debate.




You are quite right there numbercruncher. 



> So, what is there such a superstition in the first place? In reality, the housing 'shortage' superstition is the result of an illusion. The illusion arises from the fact that there is a mismatch of housing demand and supply. In some parts of Sydney, there is an over-demand for housing, which gives rise to the housing ’shortage’ illusion. In other parts of Sydney, there is an over-supply of housing (some of them brand new) that are unwanted.




Never fully believe what the media tells you.


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## robots (14 June 2008)

hello,

have been down at folks place in mt martha for the week, didnt have password to log-in but kept up with some reading,

place next door to folks just sold (only days ago) went for 50k less than original asking price, it was a deceased estate

place was on market for just under 3-mths, parnets having lived in area for 10yrs now were amazed at the price considering all the hype that the world had ended,

thankyou

robots


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## explod (14 June 2008)

robots said:


> hello,
> 
> have been down at folks place in mt martha for the week, didnt have password to log-in but kept up with some reading,
> 
> ...




That is a huge drop for Mount Martha.   For the retiring baby boomers probably the most desirabe destination anywhere.   No crime, isolated yet near to everything.  Best medical, beach, and on and on.

Good try old Pal, but you cannot compare Mount Martha with normal real estate values.


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## saiter (14 June 2008)

Temjin said:


> Here is one on the housing shortgage myth. Always wanted to post this link but this thread was closed before the blog entry was out.
> 
> http://cij.inspiriting.com/?p=458
> 
> ...




Doesn't that still mean that there is a housing shortage in those parts of Sydney and that the media storm was justified?


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## robots (14 June 2008)

hello,

just for the record the auction clearance rates in Melbourne over the last 3-4 weeks have been around the 62-64% mark, great news

i know many look forward to my auction reports, a bit like bigdogs daily report on stocks,

auction rates around this figure were last seen in 03-04 before the big leg up that occurred in 07, i wonder if this is the start of the next big leg up in time to come

thankyou

robots


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## explod (14 June 2008)

Dear Robots, 

Sefton Grange Estate, east side of Napean Hwy off Craige Road, Mount Martha, 3 months ago $450,000 now offering for 320,000 and still cant sell them, one of the few that did sell, owners very distraught.   

Close to Melbourne people still buying big time to be near work due to fuel prices.  Of course few people realise there is a problem yet.  Be interesting when the rising costs really hit home in August/September.

thankyou
explod


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## robots (14 June 2008)

hello,

thanks for the information, good to see someone doing some research like myself, great stuff

you are a bit like me explod out there getting the facts and reporting them for fellow asf users,

thankyou

robots


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## rub92me (14 June 2008)

stock_man said:


> I think certain areas will drop by a good %, but overall I am seeing the market stay flat for years to come. Take Sydney for instance, it really hasn't had any price movement of significance for the last 5 years.



Huh? The better suburbs (Lower North Shore, Inner West, East) have probably seen an increase of 40% to >100% over 5 years.


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## CAFA1234 (15 June 2008)

rub92me said:


> Huh? The better suburbs (Lower North Shore, Inner West, East) have probably seen an increase of 40% to >100% over 5 years.




Is this based on any form of fact - like tax returns or local authority assessments? Yes, there are individual examples of these increases, but also a lot of going no where. 

Regular readers will know that I own single family home on North Shore, and part owner of unit in Manly area (Northern Beeches), and I don't think the values have moved very much since about 2003/4.

Please post details of areas (as opposed to single houses) where there has been 100% increase since Jan 2004 in Sydney.


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## bowseruni (15 June 2008)

explod said:


> Of course few people realise there is a problem yet.  Be interesting when the rising costs really hit home in August/September.




exactly, that is why i will be looking to buy around christmas or jan/feb. People are in too much debt, fuel is ridiculous...and not going to get any better
unemployment rate isn't too bad at the moment....but time will tell how that changes.

house prices have no choice but to go down (in the real world anyway) The only thing i see increasing is the very inner city places because of rising fuel costs.


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## brettc4 (15 June 2008)

Interesting to see on tonights news that auction clearance rates in Adelaide this weekend (14/15 June) were at 40%.

Brett


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## explod (15 June 2008)

bowseruni said:


> exactly, that is why i will be looking to buy around christmas or jan/feb. People are in too much debt, fuel is ridiculous...and not going to get any better
> unemployment rate isn't too bad at the moment....but time will tell how that changes.
> 
> house prices have no choice but to go down (in the real world anyway) The only thing i see increasing is the very inner city places because of rising fuel costs.




Depends where you are looking to buy.   The economics of this downturn, oil, food, unemployment will be severe and last for many years in my view.   I would not put a time frame on my return to property investment.   Like the sharemarket, it is the direction of the market that determines my decisions.

Having said that, a run on the banks could see money best sitting in property for the longer term.


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## motion (16 June 2008)

bowseruni said:


> exactly, that is why i will be looking to buy around christmas or jan/feb. People are in too much debt, fuel is ridiculous...and not going to get any better
> unemployment rate isn't too bad at the moment....but time will tell how that changes.
> 
> house prices have no choice but to go down (in the real world anyway) The only thing i see increasing is the very inner city places because of rising fuel costs.




I was thinking the same towards the end of the year would be a great time to buy. I think the media is trying to hype the market up as everywhere I read they are saying house prices are set to rise to record highs between the end of the year and 2011. Now all I can see is the housing market slowing down at the moment... 

This is from news.com.au on the front page. 

http://www.news.com.au/business/story/0,23636,23869827-462,00.html

"HOUSE prices are tipped to rise next financial year as Australia's fastest population growth in two decades outweighs the effect of higher interest rates."


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## gfresh (16 June 2008)

snap.. working in tandem it seems - http://business.theage.com.au/house-prices-to-soar-20080616-2r6g.html

"Buy, buy, you'll miss out, buy now"  

No doubt the scenes played out in this article are occurring right now here in Australia: http://tvnz.co.nz/view/page/411749/1843300

They forgot to mention there is a snowball chance of the RBA lowering rates significantly in the next 12 months at least. Even the RBA has stated they don't wish to encourage speculative property investment, and encourage saving rather than spending. We are stuck with high interest rates for many years, until our miners stop bringing billions of dollars into the country.


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## gfresh (16 June 2008)

bowseruni said:
			
		

> fuel is ridiculous...and not going to get any better




But how much is it really costing people each week I wonder if they sat and did the sums? A 30% increase in fuel prices has cost me, wait for it (avg large car), $8/week.. and I do slightly more than the average at 20000km a year.. Even if I did a ridiculous 40,000km a year it would cost me an extra $16 compared to what it did 6 months ago. 

People can't afford $20 a week more out of their budget? Are we that indebted we struggle with this?


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## wayneL (16 June 2008)

gfresh said:


> But how much is it really costing people each week I wonder if they sat and did the sums? A 30% increase in fuel prices has cost me, wait for it (avg large car), $8/week.. and I do slightly more than the average at 20000km a year.. Even if I did a ridiculous 40,000km a year it would cost me an extra $16 compared to what it did 6 months ago.
> 
> People can't afford $20 a week more out of their budget? Are we that indebted we struggle with this?



YES!!!


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## CamKawa (16 June 2008)

Does a bank own BIS Shrapnel?


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## Macquack (16 June 2008)

motion said:


> I was thinking the same towards the end of the year would be a great time to buy. I think the media is trying to hype the market up as everywhere I read they are saying house prices are set to rise to record highs between the end of the year and 2011. Now all I can see is the housing market slowing down at the moment...
> 
> This is from news.com.au on the front page.
> 
> ...




News Corporation must be suffering from declining real estate advertising revenues.

If you read the BIS Shrapnel report, you will see that News Corp have just picked out the "bits" it likes. For example BIS Shrapnel actually says "all Australian residential property markets will experience *marginal price increases* in 2008/09. News Corp prefers to interpret this as "HOUSE prices are tipped to rise next financial year as Australia's fastest population growth in two decades outweighs the effect of higher interest rates." Neglecting to include the word "marginal" has more impact.

The BIS Shrapnel report headline states " Interest rate rises to *stall residential property price growth *in most centres despite record net overseas migration and a rising deficiency of dwellings".

This is another example of creative journalism from News Corporation to twist the truth.


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## Adam A (16 June 2008)

Is it just me? or do others feel that the media are squeezing what seems to me to be the very last drop out of the real estate market ? 

I mean i nearly choked on my spam dinner when ABC news had a map of Aus with 10 to 20% price increases forecast for the near future! 

Apparently the number of new immigrants per year are going to increase demand. 

I think im going mad


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## Nyden (16 June 2008)

gfresh said:


> But how much is it really costing people each week I wonder if they sat and did the sums? A 30% increase in fuel prices has cost me, wait for it (avg large car), $8/week.. and I do slightly more than the average at 20000km a year.. Even if I did a ridiculous 40,000km a year it would cost me an extra $16 compared to what it did 6 months ago.
> 
> People can't afford $20 a week more out of their budget? Are we that indebted we struggle with this?




It's not just the fuel costs though - it's the high interest rates (many were already struggling prior to the numerous rises), the ever-increasing costs of food, energy, even water! Here in Victoria, I believe we're getting a 10 or 20% price hike on our water bill soon ... surely you can see how all these increasing costs can hurt those who simply weren't prepared (dare I say it, the bulk of people).

I know quite a few people who basically pay 95%+ of their combined paychecks into bills (including mortgage) - just think about that for a moment, 95%+; no savings, & very little room for another rate rise / increase of costs! I'm sure there are many more out there already stretching their budgets, & teetering on the absolute edge. All it takes is one final nail in that coffin for the mass of defaults to occur ...


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## Adam A (16 June 2008)

Totally agree Nyden 

Many people out their hanging on by their fingernails

Read advice in a sydney paper on the weekend (if buying today budget for 4 x.25% interest rate rises) 

Great advice considering were now on our what, 7 or 8th straight increase?


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## kenny (17 June 2008)

It's not just the mortgage holders struggling though. The renters and those on fixed incomes are doing it pretty tough too. Sure, their term deposits are earning more but I'm sure some have been thinking about drawing on their capital to tide themselves over. A slippery slope indeed.

Cheers,

Kenny


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## explod (17 June 2008)

Related families, siblings, cousins etc will move together into the 4 bedroom homes.  In the late 40's whole families starting out rented by the room. 

As unemployment increases (due to oil, food and general financials) the Government will slow immigration.

I notice a lot of new subdivisions in my area devoid of activity.    Looks bleak to me.


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## Gspot (17 June 2008)

explod said:


> Related families, siblings, cousins etc will move together into the 4 bedroom homes.  In the late 40's whole families starting out rented by the room.
> 
> As unemployment increases (due to oil, food and general financials) the Government will slow immigration.
> 
> I notice a lot of new subdivisions in my area devoid of activity.    Looks bleak to me.




Not so bleak in the West, where the real money is made and used to prop up the weak Eastern states.
 If people can't afford a cappaccino then Melbournians are in trouble. 
Findind good labour is still the biggest problem over here, followed by finding something decent to rent. Hence more people immigrating and looking for somewhere to live.


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## pepperoni (17 June 2008)

i saw the bis shrapnel nonsense ... amidst the spuiking they admitted "flat prices this year".

They were quoting "12% increases" in sydney, with the small print stating they are not annual but 3 year returns 

Syd north shore/northen beaches are best prices and buying conditions for years right now ... back to 2002 prices and Im not sure if it can get better for buyers.

Im buying asap once a suitable property lists.

2 examples of money to be made in the next 5 years:

Amazing position with some of the best views on northern beaches of syd, same house I posted weeks ago, started at 2.1 which seemed reasonable compared to similar properties ... now suggesting 1.6 may be acceptable. 

http://www.realestate.com.au/cgi-bi...r=&cc=&c=43493524&s=nsw&snf=rbs&tm=1213665592



9 year old double brick house in northbridge, expectations of 2.8m, now languishing on market for 6 weeks at "around $2m" 

http://www.realestate.com.au/cgi-bi...er=&cc=&c=7911637&s=nsw&snf=rbs&tm=1213665054


In fact there have been no sales near market value in northbridge for weeks now .... and more properties listed than ever .... the bad conditions for sellers are just now starting to compound in sydneys supposed "crash proof" markets.


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## pepperoni (17 June 2008)

the odd bit of common sense from the media ... but we all knew that 100 000 migrants from peru, vietnam and somalia wont put any pressure on the median house price of $450k if the come with $1000 net worth 

http://www.smh.com.au/news/opinion/...on-house-prices/2008/06/16/1213468325999.html


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## gfresh (17 June 2008)

From above:



> Predictions that property prices will rise by 18 per cent over the next three years will offer comfort to Sydneysiders worried about the value of their homes.




Nothing to write home about, especially when people take into account 9.4% home loan rates. They're still going backwards with current rates. Without rises of 30% any newer entrant is going backwards. 

Whatever hardship people are facing, RBA doesn't seem to be keen on lowering rates anytime soon. Will raise them if wages start going up it seems (allowing people to get back in front) - therefore people better start getting used to it... 

http://business.theage.com.au/economy-under-control-rba-20080617-2rxc.html



> In the minutes, the RBA said the board recognised the Australian economy was now slowing after 12 interest rate rises in the past 6 years.
> 
> The central bank has forecast employment growth could begin to slow as a side-effect of the drop in business spending, confidence, credit growth and the broader economic contraction.
> 
> ...


----------



## nioka (17 June 2008)

gfresh said:


> Nothing to write home about, especially when people take into account 9.4% home loan rates. They're still going backwards with current rates. Without rises of 30% any newer entrant is going backwards.




You HAVE to take RENT into account. If you are not paying off a home and are paying rent you are getting a long way behind. Sometimes the rent is more than the interest on a mortgage or at least close to it.


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## Nyden (17 June 2008)

nioka said:


> You HAVE to take RENT into account. If you are not paying off a home and are paying rent you are getting a long way behind. Sometimes the rent is more than the interest on a mortgage or at least close to it.




I don't think renters are falling behind? Paying rent is far less expensive than paying off a house; this allows people to save up money ... how is this falling behind? Granted, it is falling behind if house prices are sky-rocketing, but I think those days are over for quite a while


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## Julia (17 June 2008)

Nyden said:


> I don't think renters are falling behind? Paying rent is far less expensive than paying off a house;



But, Nyden, at the end you own an asset if you're paying off your house.  Paying rent you own nothing.


----------



## nioka (17 June 2008)

Nyden said:


> I don't think renters are falling behind? Paying rent is far less expensive than paying off a house; this allows people to save up




In my experience I have never see many renters saving money. Usually it's the opposite. Ofter renters would pay just as much as mortgage payments would be for a similar residence. With inflation after one or two years home owners are well ahead. Particularly those that don't insist on a McMansion as their first home. There are very few homeowners that think renting would have been a better proposition. Over the years it is mostly renters who tell me how lucky I am. You start getting lucky when you buy your first home.


----------



## pepperoni (17 June 2008)

Interest is dead money, especially when its against an asset that is giving below market returns, or losing money.

Consider a median aussie house .... rents are usually less than 5% (often less than 3%) whereas mortgage rates are often more than 9%.

Any equity tied up in the home has a holding/opportunity cost (ie it could be invested at call for 8+%.)

Its not a simple as our parents told us 20 years ago (when median house price was 4x average earnings) and the younger generation have this less simplistic outlook when considering whether or enter into a 30 year debt.


----------



## Nyden (17 June 2008)

Julia said:


> But, Nyden, at the end you own an asset if you're paying off your house.  Paying rent you own nothing.




I don't know about that - at the end of paying rent, you would have amassed a large sum of savings; which could be used to pay off 60-80% of the house upfront. I actually know a friend that did this, after 6 years he paid off a house ... no mortgage.

I know other people who are on home-loans which are set to last for 20 years +, will that home that they own really be as valuable as all the interest they've paid? This works well if it's an area that actually has growth, but there are many suburbs that simply don't appreciate in value at that rate (the lower end areas) - it isn't all that great to hold an asset you've paid 2-3 times more than what it's worth.


----------



## pepperoni (17 June 2008)

Nyden said:


> I don't know about that - at the end of paying rent, you would have amassed a large sum of savings; which could be used to pay off 60-80% of the house upfront. I actually know a friend that did this, after 6 years he paid off a house ... no mortgage.
> 
> I know other people who are on home-loans which are set to last for 20 years +, will that home that they own really be as valuable as all the interest they've paid? This works well if it's an area that actually has growth, but there are many suburbs that simply don't appreciate in value at that rate (the lower end areas) - it isn't all that great to hold an asset you've paid 2-3 times more than what it's worth.





Exactly,

Ive rented for 2 years and saved six figures each year ... anyone that cant save without debt would most likely end as one of the current wave of defaulters?????????


Anyway here are some actual facts on residential:

http://www.news.com.au/business/story/0,23636,23873158-31037,00.html

Here are some facts on commercial:

http://business.smh.com.au/prime-city-sites-for-sale-but-no-one-is-buying-20080615-2qx7.html


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## Nyden (17 June 2008)

nioka said:


> Ofter renters would pay just as much as mortgage payments would be for a similar residence.




I've never seen that actually? The payments themselves may be the same, but the home-owners also pay tax on the property, they pay insurance, rates, & many other costs associated with the house.

It's much easier to rent a dump than to buy a dump - I could care less if the home I lived in wasn't exactly pretty if I didn't own it; but when buying I would probably feel compelled to purchase something a little more upscale - a saving right there.

That is the key though; when *buying* a house (something you're most likely stuck with for 20 years) one is more likely to want something a little better than something they would rent - and there's nothing wrong with that.

I know a few people (once again, lower end) renting a house for 200 a week - that's absolutely minimal, & quite easy to save up a lot of money. Another couple are paying off a mortgage .... very similar house, just a lot of new things (that all new home buyers seem to get); such as the marble kitchen tops, the new sofa, big screen TV ... This couple is paying off the mortgage at $500-600 a week - & at current interest rates, this only just covers the blooming interest! Talk about dead money.

^ & it's the people like that, of which probably make up for a lot of home owners. Defaults, here we come


----------



## nioka (17 June 2008)

Last time I posted a lot on this thread I provoked enough emotion to have the thread closed. I'll just accept the fact that, while my experience of many years proves to me that I am right, I will never convince some of the definite advantages of home ownership. I rest my case before there is a repeat suspension.


----------



## Nyden (17 June 2008)

nioka said:


> Last time I posted a lot on this thread I provoked enough emotion to have the thread closed. I'll just accept the fact that, while my experience of many years proves to me that I am right, I will never convince some of the definite advantages of home ownership. I rest my case before there is a repeat suspension.




Hmm, perhaps I haven't explained correctly ...

I completely understand, & agree with you on the advantages of home-ownership; I think we merely disagree on methods of getting there? I'm only stating that it's perhaps better to rent a property much cheaper than the house you wish to buy; so that you may save a lot of money, & buy it near-outright. ... I think pepperoni is on the same page as well.

I'm also stating that this is probably the best option for the time-being as well, given my opinion that house-prices are due for a crash here in Australia, & to be holding an asset which could be cut drastically in value is never desirable.


----------



## Pommiegranite (17 June 2008)

Nyden said:


> I don't know about that - at the end of paying rent, you would have amassed a large sum of savings; which could be used to pay off 60-80% of the house upfront. *I actually know a friend that did this, after 6 years he paid off a house ... no mortgage.*




Why did he do that if renting and saving was more profitable?


----------



## Nyden (17 June 2008)

Pommiegranite said:


> Why did he do that if renting and saving was more profitable?




Well, it's not just about profit. Many people do enjoy the freedom & security of home ownership; this was his goal - to save, & to buy. Probably cheaper living in a home you own (no mortgage payments) than to rent as well :


----------



## Pommiegranite (17 June 2008)

Nyden said:


> Well, it's not just about profit. Many people do enjoy the freedom & security of home ownership; this was his goal - to save, & to buy.* Probably cheaper living in a home you own (no mortgage payments) than to rent as well* :




I have to say that your posts on this subject seem to be very contradictory.


----------



## Nyden (17 June 2008)

Pommiegranite said:


> I have to say that your posts on this subject seem to be very contradictory.




I don't think so?

Living in a house you have *paid off* is indeed cheaper than renting - as you no longer have to pay to live there (aside from obvious costs) ... ? Unless you factor in loss of earnings from renting the place out to other people.

But living in a house that you have *not* paid off (yet "own") is more expensive than renting; as you are not only paying off the loan, but you are also paying off interest, & costs.

Obviously if the house is paid off, you're no longer paying interest, nor loan repayments, I guess I didn't make myself clear enough.


----------



## Pommiegranite (17 June 2008)

Nyden said:


> I don't think so?
> 
> *Living in a house you have paid off is indeed cheaper than renting - as you no longer have to pay to live there (aside from obvious costs) ... ? Unless you factor in loss of earnings from renting the place out to other people.*
> 
> ...




No, I'm talking about selling the property if it is paid off and putting the money in the bank and earning interest (which is akin to saving by not owning)+rent cheaper property+save other income, which is what you said is a good idea in a previous post.


----------



## Nyden (17 June 2008)

Pommiegranite said:


> No, I'm talking about selling the property if it is paid off and putting the money in the bank and earning interest (which is akin to saving by not owning)+rent cheaper property+save other income, which is what you said is a good idea in a previous post.




Hmm, once again - either I've not come off very clear, or I've been completely misinterpreted. My whole argument of it being better to rent a cheaper property, & save other income is for the *goal* of buying a house outright (or at least a very high % deposit) -without 10 years of mortgage payments, & owning it.


----------



## gfresh (17 June 2008)

Ok, to get some better figures on this (for owners, not investors of course).. and going on the "18% capital appreciation in sydney in 3 years" - I've attempted a spreadsheet.

Not taking into account other miscellaneous buying costs + rates + any maintenance - which may add $20k+ onto this equation. 

Purchase would be a $400k home. It would be assumed the buyer *had* a 10%, $40k deposit ready, leaving a $360k mortgage. Over 25 years repayments should be $719/wk (using mortgage calculator, may not add in extra loan fees)

-- 
*Mortgagee*

Interest Rate:	9.40%
Loan:	$360,000
Interest /year:	$33,840
Interest /wk:	$650.77
Interest x 3 years:	$101,520
Capital Appreciation: 	18.00%
Capital Appreciation (3yrs):	$64,800
Mortage (wk) - 25 yrs:	$719.00
Capital Paid Off (wk):	$68.23 (above - interest paid/wk)
Capital Paid Off (3yrs):	$10,644

*Net Mortgage Cost:*	-$26,076

(capital appreciation + capital paid off - interest)

*Renter*

Rent Equiv (wk): 	$400 (to rent approx $400k home)
Rent/year:	        $20,800
Rent x 3 years: 	$62,400

For renter, instead $40k deposit goes into term deposit. 

Deposit:	$40,000
Savings Account:	8.00%
Interest /yr: 	$3,200
Tax @ 30%:	$960.00
Net Term Deposit Savings x 3yrs:	$6,720

Extra Savings(wk) = (mortgage-rent):	$319
Extra Savings x 3yrs:	$49,764

*Net Rental Cost:*	$5,916 

Above is: income from term deposit + savings - rent

*Difference to renter over 3 years:* 	+$31,992

Above is Mortgage owner - renter. The renter is saving, it's costing the mortgagee here. 

True, it's simplistic, in that compound interest is not calculated. Under the current environment, with high rates, doesn't look too attractive to buy until the equation tips the other way. 

I know long term there are quite a few reasons why the mortgagee will be better off (longer term avg appreciation may be higher, not subject to rental inflation), but this is considering the current environment, where savings accounts pay high interest, and interest rates for property owners is high. 

It's true, maybe renters will not save the money, but it's quite easy to have an automatic savings plan which will be the same as what a bank does anyhow. If they can't save each week in this fashion, maybe they shouldn't be buying at all.


----------



## Mofra (17 June 2008)

Nyden said:


> I don't think renters are falling behind? Paying rent is far less expensive than paying off a house;



Initially, yes. However, inflation eats debt in real terms over time, whilst rents at _a minimum_ tend to track CPI.

The only times renters are ahead of mortgage holders are:

a. If they use the spare income/cashflow to save/invest (which I very much doubt the majority do, from my personal experience in financial services the hardest savers were those looking to purchase property in the short term anyway)

b.  If they leverage the spare lending capacity to gear into income producing assets, not limited to residential property (in my experience this group, albeit small, tends to do far better than homeowners over time). This is the category I fit into, at least I'm putting my financial plan where my mouth is


----------



## Mofra (17 June 2008)

pepperoni said:


> They were quoting "12% increases" in sydney, with the small print stating they are not annual but 3 year returns



So this thread title *is* correct!


----------



## gfresh (17 June 2008)

Note: there was an error in my calcs above.. For the capital appreciation, it should of course be based on the $400k figure, not $360k. So that gives $72k for property appreciation, and renter advantage is $24,792.


----------



## Macquack (17 June 2008)

http://business.theage.com.au/econom...0617-2rxc.html

Quote:
In the minutes, the RBA said the board recognised the Australian economy was now slowing after 12 interest rate rises in the past 6 years.

The central bank has forecast employment growth could begin to slow as a side-effect of the drop in business spending, confidence, *credit growth* and the broader economic contraction.


*RBA Board Meeting conversation*

*Deputy Governor of the RBA Ric Battellino:*
Stevo, just drafted the lastest minutes of the RBA for distribution to the peasants....... 
"The central bank has forecast employment growth could begin to slow as a side-effect of the drop in business spending, confidence, *creating money out of thin air* and the broader economic contraction."

*Govenor of the RBA Glenn Stevens:*
Rico, you had better change "*creating money out of thin air*" to read "*credit growth*".

*Deputy Governor Ric*:
BUT IT IS creating money out of thin air.

*Govenor Steven*:
YES, but we cant let the punters know that, or we will all be out of a job.


----------



## saiter (17 June 2008)

Are the housing prices in Sydney going to settle or slow down?
If more businesses are going to move their headquarters out of Sydney CBD and into the West (e.g. Commonwealth Bank to Homebush), I'm guessing this will result in a drop in prices for houses immediately surrounding the CBD and an increase in those in the West. How long would this take though? 10, 15, 20 years?


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## theasxgorilla (18 June 2008)

Julia said:


> But, Nyden, at the end you own an asset if you're paying off your house.  Paying rent you own nothing.




I like the idea of renting a property versus renting the money that you can then use to control a property.  I think it behoves one to realise that when you rent your are protected but your ability to control the property is well limited.


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## bowseruni (18 June 2008)

refering to house prices in sydneys west.

Increase - If more businesses move out there, the chances of many coming out past homebush or even parramatta is very slim IMHO.

decrease - westies travel into city by car, fuel increase, toll cost, car running cost, interest rate increase = not being able to afford it for much longer, public transport - too slow. 

Therefore i see a divide in house prices, the inner city and CBD will increase as everyone moves closer to work to escape fuel costs and decrease in the west as fuel/travel cost hit.

I have noticed lately in the paper/tv that they are predicting house boom in the next 3 years. I'm wondering if the authors of these documents live under a rock as they clearly have no idea of how close to the borderline people are
at the moment. Krudd's tax cuts are useless as the increase in petrol has on average become greater than the tax cuts!

I think in the coming 1-3 years if current trends stay the same (inflation, fuel costs, interest rates) house prices have no choice but to go down.


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## stock_man (18 June 2008)

Nyden said:


> I know a few people (once again, lower end) renting a house for 200 a week - that's absolutely minimal, & quite easy to save up a lot of money. Another couple are paying off a mortgage .... very similar house, just a lot of new things (that all new home buyers seem to get); such as the marble kitchen tops, the new sofa, big screen TV ... This couple is paying off the mortgage at $500-600 a week - & at current interest rates, this only just covers the blooming interest! Talk about dead money.




The idea of saving to buy outright (or minimal mortgage) vs high gearing on your own home is definately a case by case sceanrio.

My real life example:

House value: $450K
Mortgage: $405K (10% deposit)
Repayments: $735 / week (@8.74% over 30 years)

Rent: $410 (equivalent residence)
Difference: $325 / week (between mortgage and rent)


If I was to rent, and save the $325 / week, it would take me *24 years *to save up enough to buy the house outright. 

Assumptions:
1) rent does not increase
2) house price does not fluctuate
3) 8.74% is the average interest rate over 24 years
4) interest on the cash is negligible as long term interest on cash is close to inflation after you take out tax

Any increases in income over the years is also negligible, as this could be used to either save more if renting, or pay of mortgage faster if owning.

Obviously if a cheaper, lower quality house was rented it would start to tip the scale a little bit more the other way. But 18 - 24 years is a long time....

It all comes to down to affordability. If you can not afford the $735 / week, as in this example, then a default is a high risk. But on the flip side, this means the average renter in the same scenario would not be saving the $325 / week, unless they wish to start defaulting on rent and get kicked out either way.


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## Junior (18 June 2008)

Stockman,

You need to take into account land tax, maintenance etc. for the home owner.


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## robots (18 June 2008)

hello,

anybody got info on the residex report out? from what I understand some fascinating results

the carry-on is still testament to the strength in property and is evident if you even use the layman's income to asset ratio as an indicator, fabulous

there must be a graph out there somewhere on one of those goon websites with 08 income to asset ratio or is it not worth publishing?

thankyou

robots


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## nioka (18 June 2008)

Junior said:


> Stockman,
> 
> You need to take into account land tax, maintenance etc. for the home owner.




Homeowners don't pay land tax. It is paid on property you do not occupy. It is one of the costs that increase rents.


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## Julia (18 June 2008)

gfresh said:


> Ok, to get some better figures on this (for owners, not investors of course).. and going on the "18% capital appreciation in sydney in 3 years" - I've attempted a spreadsheet.
> 
> Not taking into account other miscellaneous buying costs + rates + any maintenance - which may add $20k+ onto this equation.
> 
> ...



In the above example, unless I'm missing a bit, what isn't pointed out is that at the end of the period the houseowner has an appreciating asset.
And yes, I know at present prices are down (though not here where I live) but the long term trend, as with the sharemarket, is always up.  Can't say the same for cash.


----------



## Macquack (18 June 2008)

Julia said:


> In the above example, unless I'm missing a bit, what isn't pointed out is that at the end of the period the houseowner has an appreciating asset.
> And yes, I know at present prices are down (though not here where I live) but the long term trend, as with the sharemarket, is always up.  Can't say the same for cash.




gfresh has included 18% capital appreciation over the 3 years.


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## robots (19 June 2008)

hello,

http://business.theage.com.au/building-salaries-rising-20080618-2sxs.html

very strange situation when "new starts" aus wide have been on a downward spiral since say 03-04, 

great though for people who want to get out there and change their own circumstances, 

thankyou

robots


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## Naked shorts (19 June 2008)

Why not get a loan from a japanese bank? the interest rate set by the bank of japan is 0.5%
http://www.bloomberg.com/markets/rates/japan.html

anyone tried doing this?


----------



## gfresh (19 June 2008)

julia said:
			
		

> In the above example, unless I'm missing a bit, what isn't pointed out is that at the end of the period the houseowner has an appreciating asset.
> 
> And yes, I know at present prices are down (though not here where I live) but the long term trend, as with the sharemarket, is always up. Can't say the same for cash.




As above, the capital appreciation is included ($72k: compounded @ 6% p.a. - there was an error in the first one posted) - so in my model the house prices are actually going up, even above inflation. The interest costs right now are so large, that they are much larger than the appreciation of the property, given a relatively flat market, or even slightly upward market. 

Longer term, obviously savings accounts don't pay anywhere near that high, and interest rates aren't that high. 

This is really only a short-term calculation based on the now, or near term if I was entering the market, and things staying as they are for the next couple of years. This is actually close to my situation, so this is why I was curious to run some figures. 

For my situation, it seems it becomes profitable over rental (or the best time to enter) if rates go back under 9%. I assume this would encourage others to enter the market again, pushing prices back up further, and hence giving further advantages. 

Although, obviously 'picking the bottom' or when house prices may turn around obviously is not so easy.


----------



## Temjin (19 June 2008)

Naked shorts said:


> Why not get a loan from a japanese bank? the interest rate set by the bank of japan is 0.5%
> http://www.bloomberg.com/markets/rates/japan.html
> 
> anyone tried doing this?




That's a carry trade, it's been done by lots of ppls a long while ago, except that it backfired when the currency movement was unfavourable to those who are short JPY and long whatever currencies.


----------



## pepperoni (21 June 2008)

http://business.smh.com.au/beware-the-property-markets-slippery-slope-20080620-2u78.html?page=2


More fine print from bis shrapnels poor attempt at spruiking .... 

In its report, BIS Shrapnel says Sydney house prices stabilised in 2006-07 after falls in 2004-05 and 2005-06, but are still much lower in real, or after-inflation, terms than in March 2004. The researcher expects the Sydney median house price to reach $550,000 this quarter and edge up to $560,000 by June next year, though it says that would still represent a 17 per cent decline in real terms from the March 2004 peak.


Not great, even as against lowly term depsits that are up over 16 percent in real terms.


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## Mofra (21 June 2008)

pepperoni said:


> Not great, even as against lowly term depsits that are up over 16 percent in real terms.



16% in real terms? A depreciating asset up 16% in 4 years?

Lets assume a 3% inflation rate & 30% tax rate, with very generous 7% average gross return

$100 cash at 3% inflation = $88.85 today in 2004 dollars
Yr 1 $97.09
Yr 2 $94.25
Yr 3 $91.51
Yr 4 $88.85

7% gross return (assuming max interst payable upfront, being generous here)
$7.00 year 1  -  $2.10 Tax  =  $4.90
$6.80 Year 2  -  $2.04 Tax  =  $4.76
$6.60 Year 3  -  $1.98 Tax  =  $4.62
$6.41 Year 4  -  $1.92  Tax =  $4.49

So $18.77 is after tax cash gains without taking into account deflation, which leaves us a real return of $7.62 over 4 years. No where near 16% in real terms


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## robots (22 June 2008)

hello,

massive day yesterday with auction clearance rate at 62% for melbourne,

just run of the mill, great time for people looking to buy a home still,

thankyou

robots


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## Lucky_Country (22 June 2008)

The worst is yet to come in the real estate market imo.
Higher unemployment, higher interest rates, and a general slowing in the economy with little chance of capital gains over the next 3 years.
Sitting tight waiting for the downturn.


----------



## robots (22 June 2008)

hello,

i am sitting tight waiting and waiting 

thankyou

robots


----------



## overlap (22 June 2008)

robots said:


> hello,
> 
> massive day yesterday with auction clearance rate at 62% for melbourne,
> 
> ...




The clearance rate doesn't make housing good or bad.


----------



## explod (22 June 2008)

overlap said:


> The clearance rate doesn't make housing good or bad.





Yep, I took him to task on it months ago but he continues to hang his hat on it.

In fact, there is an old saying, "never try to catch a falling knife".    IMHO property is falling and one needs to wait till the "knife hits the floor."   

But I dont' know much and have been wrong before


----------



## tadpole (22 June 2008)

hi

my parents sold their home a few days ago in brisbane. it was time to move into a retirement village. took them 6 months to get an offer and had to lower their price 150k. i'd say yes houses are coming down.


----------



## Lucky_Country (22 June 2008)

Unemployment is the key imo its been at record levels once a few start to default it affects all property.
Interest rates well whats happening there seems no clear direction for futher RBA moves.
Property is a 10 year cycle sp theres no rush to get into the market people are sweating.


----------



## robots (22 June 2008)

explod said:


> Yep, I took him to task on it months ago but he continues to hang his hat on it.
> 
> In fact, there is an old saying, "never try to catch a falling knife".    IMHO property is falling and one needs to wait till the "knife hits the floor."
> 
> But I dont' know much and have been wrong before




hello,

only reporting the figures, dont jump to any conclusion

but the RBA likes to look at the data i report,

its also great to see a situation where i and others can continue to increase the yield on my investment year in year out because of the current market situation,

a far cry from 02-05 when couldnt even lift things $5/wk, 

this upside, and real "return" is going to be great, not some fairytale dividend paid out of borrowings

thankyou

robots


----------



## CamKawa (22 June 2008)

robots said:


> hello,
> 
> massive day yesterday with auction clearance rate at 62% for melbourne,
> 
> ...



The auction clearance rate last weekend was 67% so it actually plunged 5%.


----------



## robots (22 June 2008)

CamKawa said:


> The auction clearance rate last weekend was 67% so it actually plunged 5%.




hello,

thats right camkawa, plunged 5%

apparently it doesnt mean anything as indicated by others,

thankyou

robots


----------



## Pommiegranite (22 June 2008)

CamKawa said:


> The auction clearance rate last weekend was 67% so it actually plunged 5%.




'Plunged'? Are you sure you didn't mean 'plummetted'?


----------



## Lucky_Country (22 June 2008)

The worst is yet to come !
Thye full effects of the WA gas crisis has not yet been felt and still has 2 months to run.
People getting laid off with the inability to run factories will send a ripple through the national economy.


----------



## CamKawa (22 June 2008)

Anything above 65% may be a sign of a healthy market, but sometimes the clearance rate will go up because REA's are getting better at counselling vendors to lower their expectations.
 
"Blue chip inner suburbs such as East Malvern, Hawthorn and Kew are very solid at auction and maybe that is because the selling agents have “adjusted” their vendors to the market well. Outer lying areas such as Balwyn North are now beginning to sell when the vendors realise the buyer’s market is no longer there for prices per sqm matching Balwyn, Camberwell and Canterbury."
http://www.jamesbuyeradvocates.com.au/marketnews.html#mal


----------



## Pommiegranite (22 June 2008)

Lucky_Country said:


> The worst is yet to come !
> Thye full effects of the WA gas crisis has not yet been felt and still has 2 months to run.
> People getting laid off with the inability to run factories *will send a ripple through the national economy*.




I think I'll sleep easy at night as I've yet to hear anyone say "Watchout...here comes a ripple". ..ROTFL!!

Plunge...Ripple...Thanks for making my Sunday guys.


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## CamKawa (22 June 2008)

Pommiegranite said:


> 'Plunged'? Are you sure you didn't mean 'plummetted'?



Plunged sounds fine.

http://www.thefreedictionary.com/plunge
*plunge* 
_Verb_
[*plunging*, *plunged*] 
to descend very suddenly or steeply


----------



## motion (22 June 2008)

Well ever night I wish prices would drop we have been looking for a place in Elsternwick, but the price has always been just out of our budget. I have seen the prices steady here but not drop, lets just see how the ball drops we might be out of this quicker than people think if they are allowing more people immigrate to Australia over the coming couple of years.


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## natashia (22 June 2008)

So this guy that talks on 6PR about property in Perth (sometimes I get to hear him) Craig Turnbull .. Perth based author, speaker, financial commentator and multi-millionaire investor seems to think if you are going to buy property here. now is the time ???? He seemed hesitant to think that the sentiment of the properties bearing on LOCATION LOCATION would go down any further... 

Mixed barrage of signals here

I for one think that property in Perth will pick up in Year 2010...Yet my lawyer states there are many migrants arriving in Perth and houses are in dire need... so where are these people ??
I am confused


----------



## Lucky_Country (22 June 2008)

natashia said:


> So this guy that talks on 6PR about property in Perth (sometimes I get to hear him) Craig Turnbull .. Perth based author, speaker, financial commentator and multi-millionaire investor seems to think if you are going to buy property here. now is the time ???? He seemed hesitant to think that the sentiment of the properties bearing on LOCATION LOCATION would go down any further...
> 
> Mixed barrage of signals here
> 
> ...



Have these immigrants got jobs credit history deposits etc ?
Some may stay some may go but are the banks willing to lend money for properties to these people ?


----------



## natashia (22 June 2008)

Lucky_Country said:


> Have these immigrants got jobs credit history deposits etc ?
> Some may stay some may go but are the banks willing to lend money for properties to these people ?





LOL oh gosh thats a hard one..usually these people that come here that way end up owning the banks...or the country  


But in all fairness he did say people comming to Perth not just migrants-if that helps I dont know...
Fire the Lawyer?


----------



## explod (22 June 2008)

High oil price, higher food prices will take 3 to 6 months to hit our bottom line.  Unemployment will be one result.  People will downsize and doublebunk.  Another is our growing dollar on tourism.  Parts of our economy (but it is a select area, the mining boom) will remain very strong compared to many others so our currency will go beyond parity with the $US to the detriment of many other business types.   

The 3 P's will allways hold up at a certain (dare I say) class level.   The real problems and implications of the combined financials have not occurred to most people yet.   By the end of this year we may all have a very different view, not only of property, but many other difficulties, IMVHO.


----------



## natashia (22 June 2008)

http://www.propertyupdate.com.au/


----------



## Macquack (22 June 2008)

explod said:


> our currency will go beyond parity with the $US




Are the american people going to allow their currency to be *worth less *than the banana republic down under?


----------



## CamKawa (23 June 2008)

natashia said:


> Mixed barrage of signals here
> 
> I for one think that property in Perth will pick up in Year 2010...Yet my lawyer states there are many migrants arriving in Perth and houses are in dire need... so where are these people ??
> I am confused



It's a difference of opinion that makes markets work. For example, when you sell shares you may be doing so because you think the price will fall, but remember that the person who buys your shares expects them to go up. It's the same in housing at the moment.


----------



## CamKawa (23 June 2008)

natashia said:


> http://www.propertyupdate.com.au/



I wouldn't be surprised if these self-proclaimed successful multi-million dollar property gurus that are talking the market up, are actually off loading their property as fast as they can. The "gurus" next step after the property market crash will be to say that it was totally predicable. lol


----------



## finnsk (23 June 2008)

This article is from 6/4/08 dont know if it already has been refered to but I have just seen it.
http://www.iht.com/articles/2008/04/04/business/wbmarket05.php 


> As a weakening housing market appears to be dragging the U.S. economy into recession, the International Monetary Fund warned this week that home prices in other industrial countries were even more overvalued.





> That overvaluation was barely a third as high as in Ireland, where the IMF estimates that house prices were 32 percent higher than fundamentals would support. The Netherlands, Britain, Australia, France and Norway all showed overvaluations of at least 20 percent.


----------



## gfresh (23 June 2008)

natashia said:
			
		

> Yet my lawyer states there are many migrants arriving in Perth and houses are in dire need... so where are these people ??
> I am confused




People are meant to be moving to the Goldcoast in record numbers as well, but plenty of rentals available where I live. Three in my street vacant in fact, for no more than they listed 12 months ago. Shortage is stretching it. Looking at others areas I am familiar with in SEQ and Melb, similar story there too. 

Do you see people walking the street who do not have homes?

I'm starting to believe this "supply shortage" is the last clinging hope for property owners, just as the China story is the last hope for share owners, or the economy in general  It keeps getting rolled out by either camp.


----------



## explod (23 June 2008)

Macquack said:


> Are the american people going to allow their currency to be *worth less *than the banana republic down under?




Not sure the American people have mach say in the matter.  The Bush admin and the Federal reserve have knocked up and allowed so much debt since 2001 that down the gurglar is the only direction I can see.    Be worth you checking the "Imminent and servere market correction" thread


----------



## Temjin (23 June 2008)

Macquack said:


> Are the american people going to allow their currency to be *worth less *than the banana republic down under?




Why not? It's the easiest way out of their trillion dollar national debt. 

Can't repay the debt?? Easy! All you have to do is to jack up the printing press and devalue the dollar so we will end up owning "less" in absolute term! It's the foreigners who are losing out anyway and their stupidity for lending us money when they know we can't repay them back, it's not our fault! 

That's what happening right now.


----------



## pepperoni (23 June 2008)

Auctions are generally being abandoned now which is making clearace rate even more irrelevant.

In fact agents are continuing to try to sell me 2007 $2m properties at 2001 prices ... here is one from this morning after I asked for an update on a property that was selling for 2.2m 2 months ago ...


"Hi 



Waiting for a response from solicitors 

If bank will allow us to sell between $1,4m to $1,5m



Have two offers at $1,4m

Will call every body back when I have more info."


I takes money to make money, and those that thought it was possible to get rich with property using almost entirely other peoples money are realising that the people providing the money also expect a good return on it.

Super funds have been targeting 8.5% long term and are down 5% this year ... at the moment 8.5% is doable at call as cash once again assets itself.

And of course with $1m or more incredble rates can be negotiated on 1-3 month terms.

Borrowers for a while seem to have forgotten the golden rule ... those with the gold make the rules.


----------



## robots (23 June 2008)

hello,

whats going on with the income to price ratio? surely keenie, ghpc or shilling must have a new one to show everybody if pep's info is what is going on

any link?

thankyou

robots


----------



## Naked shorts (23 June 2008)

pepperoni said:


> Auctions are generally being abandoned now which is making clearace rate even more irrelevant.
> 
> In fact agents are continuing to try to sell me 2007 $2m properties at 2001 prices ... here is one from this morning after I asked for an update on a property that was selling for 2.2m 2 months ago ...
> 
> ...




Hahaha they are getting desperate for money.. see how much you can squeaze them!

Do you believe they are telling the truth when they say "Have two offers at $1,4m"? It seems like they are trying the age old trick of making it seem like the deal will only last a minute


----------



## wayneL (23 June 2008)

In the paper today:

http://www.dailymail.co.uk/news/art...06-Now-8217-s-resold-auction-just-71-000.html

Huge drops are restricted to flats atm, but houses are dropping as well.

According to Rightmove.co.uk there are 15 sellers for every buyer at present.


----------



## Temjin (23 June 2008)

wayneL said:


> In the paper today:
> 
> http://www.dailymail.co.uk/news/art...06-Now-8217-s-resold-auction-just-71-000.html
> 
> ...




It kinda surprised me that city-centered flats would experience such a drop in prices. I guess even the low supply, high demand areas are not totally invulnerable to selling pressure. 

Though one need to be aware that media always love to dramatise stuff. On one hand saying house prices will rise by 30% over the next year and the next house prices dropped by 70%.


----------



## wayneL (23 June 2008)

Temjin said:


> It kinda surprised me that city-centered flats would experience such a drop in prices. I guess even the low supply, high demand areas are not totally invulnerable to selling pressure.
> 
> *Though one need to be aware that media always love to dramatise stuff. On one hand saying house prices will rise by 30% over the next year and the next house prices dropped by 70%. :*D



Notice the difference though. One is a prediction based on (??? BS really), whereas one is recorded fact.

Have a look at this ad:

http://www.rightmove.co.uk/viewdetails-10048392.rsp?pa_n=false&tr_t=buy

A year ago you would NEVER have seen those words on a house price ad ( Any offers will be open to consideration!). That pile of crap is still way overpriced, but we are a long way from the bottom IMO.


----------



## michael_selway (23 June 2008)

wayneL said:


> In the paper today:
> 
> http://www.dailymail.co.uk/news/art...06-Now-8217-s-resold-auction-just-71-000.html
> 
> ...




hi do you have related info for Australian properties?

thx

MS


----------



## wayneL (23 June 2008)

michael_selway said:


> hi do you have related info for Australian properties?
> 
> thx
> 
> MS



Sorry, no.


----------



## wayneL (23 June 2008)

London was supposed to be immune to price falls.


----------



## theasxgorilla (23 June 2008)

Temjin said:


> It kinda surprised me that city-centered flats would experience such a drop in prices. I guess even the low supply, high demand areas are not totally invulnerable to selling pressure.
> 
> *Though one need to be aware that media always love to dramatise stuff.* On one hand saying house prices will rise by 30% over the next year and the next house prices dropped by 70%.




And the marketers like to use the media to dramatise stuff when they're trying to shift product.

I think of Docklands and Southbank.  Fundamentally excellent areas which experienced very stagnant price growth for many years, even during the best boom years.  These high-density flats make about the worst kind of property investments IMO...but as a low cost place to live where you will have low repayments and close proximity to transport and ammenities they can make a lot of sense.


----------



## wayneL (23 June 2008)

theasxgorilla said:


> And the marketers like to use the media to dramatise stuff when they're trying to shift product.
> 
> I think of Docklands and Southbank.  Fundamentally excellent areas which experienced very stagnant price growth for many years, even during the best boom years.  These high-density flats make about the worst kind of property investments IMO...*but as a low cost place to live where you will have low repayments and close proximity to transport and ammenities they can make a lot of sense....*




...at the right price.


----------



## theasxgorilla (24 June 2008)

wayneL said:


> ...at the right price.




Absolutely...buy the dip.  If you have one of the so-called hifalutin professions paying you good coin and you can put yourself close to work for monthly cost that starts look more like rent than a mortgage...it can make a lot of sense.  I know of several people who did this in '03-'04 in Melb...granted this dip seems more severe, and may impact the hifalun job sector in the 'city' over there.


----------



## wayneL (24 June 2008)

More from the impregnable Londinium:

http://www.thelondonpaper.com/cs/Sa...152887435?packedargs=suffix=ArticleController


----------



## robots (24 June 2008)

hello,

but the thing with "btl" or "off the plan" here in aus (and probably uk)is the construction needs to occur,

in melbourne, a ride around the blocks at the docklands, southbank or melb shows how the lights are now on, balconies have tables & chairs, bbq's etc

my block in st kilda hasnt had a change in resident for 2yrs now, new bond applications are down 10% 

the UK will be haeding this way

thankyou

robots


----------



## Pommiegranite (24 June 2008)

Just thought I'd add my part about the UK.

Currently half of my relatives over there are trying to sell their properties. I hear their stories very week. One has been trying to sell her appartment for 8 months (Reading). She has been chasing the market down from £205K. She is currently at £165K, with still NO viewings.

On the flipside, I have a relative who has managed to sell his house in the same town. It also has taken close to 6 months. However, he has only come down from £210k to £190K.

There is a definite disconnect between the performance of appartments and houses. My view is that because houses can be rented out by the room and be altered to accomodate more tenants, this is cushioning house prices. However, sooner or later (with an increase in unemployment), even the demand for those will fall significantly. Not even higher yields will be seen as worth risking the capital losses.


----------



## pepperoni (24 June 2008)

I dont think we are anywhere near the UK situation yet and dont think we will get quite there.

However I do think further falls are possible especially in the unlikely event of further rate rises.

http://smallbusiness.smh.com.au/growing/finance/august-rise-still-on-cards:-bank-909677750.html

And with shares down 17% for the year there will be lots of people feelling alot less richer than last year (even my token remaining holdings are $40k down).

http://business.smh.com.au/shares-likely-to-remain-out-of-favour-20080623-2vga.html


Wish I followed my instincts and sold all shares last year and put in cash which seems to be the only investment making gains ... and healthy ones over 8% to boot.

Good time to be saving and being picky when it comes to property.


----------



## pepperoni (24 June 2008)

Naked shorts said:


> Hahaha they are getting desperate for money.. see how much you can squeaze them!
> 
> Do you believe they are telling the truth when they say "Have two offers at $1,4m"? It seems like they are trying the age old trick of making it seem like the deal will only last a minute





Real estate agents are the biggest liars and unfortunately many people get sucked in and pressured by the lies. Its probably a big part of the recent boom sucking in the necomers caught up in the hype.

Ive been in property for over 10 years so i know the game but here are some emails from the same agent

5/5/08

"Hi David

Still working on it two buyers at $1,8m still don’t have a deposit

I now have a valuation report dated 07/07

Have you finished your house I do have buyers for completed product.

Regards"


19/5


Hi 

The buyer at $1,8m including materials has fallen over

We have a time extension from the bank the property is now going to tender 

With a dead line 12 June 08 offers over $1,6 without materials will be considered."


Small bickies compared to the property at hope island that was selling for $25m and a few weeks back was sold by the bank at $5m-10m.  Cant remember the details but this was one of the biggest houses in aus built over the equivalent of many waterfront blocks in the hope island estate.


----------



## explod (24 June 2008)

> However I do think further falls are possible especially in the unlikely event of further rate rises.




In the UNLIKELY event, I am a bit more ambivilant on that.  Cost of money to the banks are going north due to a growing shortage of the stuff.



> And with shares down 17% for the year there will be lots of people feelling alot less richer than last year (even my token remaining holdings are $40k down
> 
> Wish I followed my instincts and sold all shares last year and put in cash which seems to be the only investment making gains ... and healthy ones over 8% to boot.




Physical gold is up 35% for the year.


----------



## Temjin (24 June 2008)

wayneL said:


> Notice the difference though. One is a prediction based on (??? BS really), whereas one is recorded fact.
> 
> Have a look at this ad:
> 
> ...




That is quite true though, unfortunately, people tend to listen to what they want to hear and will ignore (deny) the facts whenever possible.

I think we can all start singing, "London's Real Estate is falling down, falling down, falling down!" 



			
				explod said:
			
		

> Physical gold is up 35% for the year.




As well as other commodities such as oil/natural gas/agriculture stuff. When financial assets are falling down, commodities tend to go up.


----------



## pepperoni (24 June 2008)

explod said:


> In the UNLIKELY event, I am a bit more ambivilant on that.  Cost of money to the banks are going north due to a growing shortage of the stuff.
> 
> 
> 
> Physical gold is up 35% for the year.





Hope you are right about cost of money ... bank initiated increases have stopped for a bit and I was thinking supply was improving considerably.

Good point on gold, had a mate tell me 12 months ago gold would do well but I thought he was nuts.


----------



## gfresh (24 June 2008)

Good perspective into the UK market Wayne.. 

Doesn't the UK have fairly high immigration? Did they throw out the same "not enough supply" line a couple of years back? Did they push the fact that rental prices would shoot up due to lack of supply and high immigration? Would be interested to hear if the catch-cry's were familiar. 

I heard on the radio here the other day "your own investment property for only $50 a week.. yes.. only $50 a week!"  - when you hear that sort of thing you start thinking the party must be ending..


----------



## wayneL (24 June 2008)

gfresh said:


> Good perspective into the UK market Wayne..
> 
> Doesn't the UK have fairly high immigration? Did they throw out the same "not enough supply" line a couple of years back? Did they push the fact that rental prices would shoot up due to lack of supply and high immigration? Would be interested to hear if the catch-cry's were familiar.



Yeppers!

They were slamming it for all it was worth up until about 4 months ago. (Some are still trying it on, resulting in guffaws)

What they fail to mention is that many immigrants are heading back... especially the eastern Europeans... Poles, Czechs etc. (This is bad news for a lecher )

Also, there are apparently around a million empty properties that people have bought on spec, but haven't put tenants in (in case they soil them ) and lots of holiday properties around the south west and the Cotswolds (my area) that lie empty most of the year,

This could materialize into oversupply... depending on how the economy travels. The game has only just started.


----------



## pepperoni (24 June 2008)

Funny how spruikers keep claiming our prices will soar while others fall ... somehow we are the only country with growing population and less than infinite housing


----------



## Mofra (24 June 2008)

gfresh said:


> I'm starting to believe this "supply shortage" is the last clinging hope for property owners, just as the China story is the last hope for share owners, or the economy in general  It keeps getting rolled out by either camp.



Funny you mention that - have 2 people who are (were) looking for rental properties recently, out in the burbs of Melb (where prices are getting hit) there seemed to be a reasonable enough supply of rentals - anywhere inner city and unless you gave the agent a wad of cash & bid over the weekly rental, you couldn't even submit your application. I live 4.5kms from the CBD & rentals are getting stupid, approaching and occasionally exceeding some commercial gross-yields.


----------



## wayneL (24 June 2008)

According to latest figures, the situation is deteriorating further as the number of mortgages falls to its lowest level since records began... down 56% YoY.

There is a very big London auction being run as I type this (viewing via livelink) and the results are disastrous. The few properties being sold are going at 2001-2003 levels... with the chandelier and the painting of Churchil on the back wall doing most of the bidding.

It's turning into carnage here folks.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/24/bcnhouse124.xml


----------



## Mofra (24 June 2008)

WayneL,

As someone who knows the UK market well, are there any more reputable sites that will show UK resi yields? This site:

http://www.homemove.co.uk/news/24-06-2008/rental-yields-hit-64.html

Is run by a struggling lender which appears to have as much credibility as RAMS.

Cheers


----------



## wayneL (24 June 2008)

Mofra said:


> WayneL,
> 
> As someone who knows the UK market well, are there any more reputable sites that will show UK resi yields? This site:
> 
> ...



6.4%!! Hohohohoho.... Heheheheheh...Ahhhhaahahahaha

No there is no credible site that I know of that accurately measures yields.

The only way I know is to either find the actual sale price (if purchase was recent) via www.houseprices.co.uk , or determine a reasonable saleable value based on recent sales in the area, and do the sums myself.

Labourious, but accurate.

The house I'm renting, a near new Georgian 3 bedroom townhouse is yielding 3.9% GROSS. My IPs are roughly the same... but was worse based on last years valuation. (Though they were purchased some years ago when yields were fantastic))

Generally, yields range from 3-6% as a maximum... average based on what I know, about 4-4.5%

There is a situation here where yields can be higher, in HMO's (Houses of multiple occupation) i.e. student lets, or big houses where rooms are rented out individually. But costs, voids and hassles are higher. These can be 7-8% GROSS on average. This could be what is skewing the average upwards in their figures.


----------



## Naked shorts (24 June 2008)

gfresh said:


> I heard on the radio here the other day "your own investment property for only $50 a week.. yes.. only $50 a week!"  - when you hear that sort of thing you start thinking the party must be ending..




You must RUN when you hear that. 
sell houses, buy commodities...


----------



## robots (25 June 2008)

Naked shorts said:


> You must RUN when you hear that.
> sell houses, buy commodities...




hello,

lets build nothing too, it will be great

can keep pumping up the yield on my investment, just be a zero game as you score on the commodity and hand over to the landlord, fantastic

thankyou

robots


----------



## robots (25 June 2008)

hello,

http://www.theage.com.au/national/155aweek-lalor-shack-highlights-rental-crisis-20080624-2w6j.html

this is a bargain, plenty of houses in richmond have outdoor toilets and rent for around 3-times that figure,

if I was the landlord i would also put a double set of bunk beds in there (fit them in easy), 

thankyou

robots


----------



## wayneL (25 June 2008)

Wow! Considering that we are only really 6 months in, the headlines are astonishingly bad. That would have caused some indigestion on the tube going home.

http://www.thisislondon.co.uk/stand...iggest+new+homes+crash+in+70+years/article.do


----------



## gfresh (25 June 2008)

robots said:
			
		

> this is a bargain, plenty of houses in richmond have outdoor toilets and rent for around 3-times that figure,




Looks like plenty available in Richmond under $350/wk ($175/wk ea. for a couple, pittance).. less than the average rent up here (not even a proper business centre). Shortage my ass:

http://www.realestate.com.au/cgi-bi...me=50&pxe=350&minbed=&maxbed=&cat=&p=10&o=def



			
				robots said:
			
		

> hello, http://www.theage.com.au/national/15...0624-2w6j.html




That article is a load of speculative rubbish!  

Since when have you ever been able to rent anywhere decent for $155/wk ?? If we become half-realistic, lots of rentals under $250/wk in Melbourne.. seems like plenty to me.. So who's blatantly lying? The agents putting up dead listings, or the agents from the REIV spruiking a shortage?

http://www.realestate.com.au/cgi-bi...me=50&pxe=250&minbed=&maxbed=&cat=&p=10&o=def


----------



## Temjin (25 June 2008)

gfresh said:


> That article is a load of speculative rubbish!
> 
> Since when have you ever been able to rent anywhere decent for $155/wk ?? If we become half-realistic, lots of rentals under $250/wk in Melbourne.. seems like plenty to me.. So who's blatantly lying? The agents putting up dead listings, or the agents from the REIV spruiking a shortage?
> 
> http://www.realestate.com.au/cgi-bi...me=50&pxe=250&minbed=&maxbed=&cat=&p=10&o=def




Yeah, another stupid attempt by the media to use "selective" property to make their point. How could anyone read this article and then generalise that the entire Melbourne city is in a rental shortgage crisis??? 



			
				robots said:
			
		

> can keep pumping up the yield on my investment, just be a zero game as you score on the commodity and hand over to the landlord, fantastic




Robots my friend, do you even understand the concept of zero game? 

Or maybe I can say, the money you received as a landlord will be used to purchase commodities/energy, thereby, bidding up the commodities prices and make us even more profits. 

So it doesn't make sense.


----------



## pepperoni (25 June 2008)

wayneL said:


> Wow! Considering that we are only really 6 months in, the headlines are astonishingly bad. That would have caused some indigestion on the tube going home.
> 
> http://www.thisislondon.co.uk/stand...iggest+new+homes+crash+in+70+years/article.do




Enjoying these UK reports ... Pretty interesting stuff.

Sounds like they are doing a bit worse than aus.

Any idea why they, and the US, are suffering these falls, especially when their rates are so much lower than ours?

It strikes me that Aus could be doing much worse than it is!


----------



## Mofra (25 June 2008)

wayneL said:


> The house I'm renting, a near new Georgian 3 bedroom townhouse is yielding 3.9% GROSS. My IPs are roughly the same... but was worse based on last years valuation. (Though they were purchased some years ago when yields were fantastic))
> 
> Generally, yields range from 3-6% as a maximum... average based on what I know, about 4-4.5%
> 
> There is a situation here where yields can be higher, in HMO's (Houses of multiple occupation) i.e. student lets, or big houses where rooms are rented out individually. But costs, voids and hassles are higher. These can be 7-8% GROSS on average. This could be what is skewing the average upwards in their figures.



They have included HMO's which appear to be the equivalent of our share & mutilple occupancy yields? They'd just about fall under the commercial/non-resi yields in Australia as I understand it.

No wonder their share price is down a whopping 86%


----------



## robots (25 June 2008)

gfresh said:


> That article is a load of speculative rubbish!
> 
> Since when have you ever been able to rent anywhere decent for $155/wk ?? If we become half-realistic, lots of rentals under $250/wk in Melbourne.. seems like plenty to me.. So who's blatantly lying? The agents putting up dead listings, or the agents from the REIV spruiking a shortage?




hello,

lots and lots of affordable houses in melbourne as well, 

perhaps you could do a search on rei.com.au for houses and put them up, or the computer says NO when you want to do that

thankyou

robots


----------



## EZZA (25 June 2008)

i'm selling off an apartment within 5 km's from melb city, has been a lot of interest, i'm hoping the market hasn't pulled back much, and i can still sell it off for decent price.  my assumption is that the market hasn't pulled back too much, maybe it takes a little longer to sell of the properties as interest rates are quite high at the moment.  

in terms of rentals and living inner city ur looking at atleast the mid 200's for decent accommodations, imo.


----------



## theasxgorilla (25 June 2008)

Naked shorts said:


> You must RUN when you hear that.
> sell houses, buy commodities...




You would have run away from the best parts of the boom with that philosophy.  I remember seeing these sorts of things printed on the back of CDs in fish and chip shops in the later part of the 90's.

I don't think this is your canary in the coal mine I'm afraid.  In fact from what I remember the fish and chip shop CD was a legitimate tax-effective method for holding an investment property for very little net outlay each pay-cycle and could very effectively be formed into a legitimate investing strategy.  I know people who because wealthy from it in fact.


----------



## YChromozome (25 June 2008)

Weak US house prices fall 23pc - The Australian Business - June 25th.

US house prices dropped 22.8 per cent over the last three months as American consumer confidence slumped.

What happened to house prices only go up?


----------



## robots (25 June 2008)

hello,

come on, shilling, keen and imber are all into spreading propaganda,

these guys spruik all the headlines then behind the scenes take out great mortgages themselves,

these guys wouldnt look you in the eye

thankyou

robots


----------



## numbercruncher (27 June 2008)

pepperoni said:


> Enjoying these UK reports ... Pretty interesting stuff.
> 
> Sounds like they are doing a bit worse than aus.
> 
> ...




Im convinced the Oz market is doing stacks worse than the Media ( who are in bed with the spruikers) are currently reporting !

Watch the carnage when they cant hide the truth from the Sheeples any longer !!

Anyone using ASF would of known about this great crash 12 months ago and been all ready for it though hey ??


----------



## natashia (27 June 2008)

numbercruncher said:


> Im convinced the Oz market is doing stacks worse than the Media ( who are in bed with the spruikers) are currently reporting !
> 
> Watch the carnage when they cant hide the truth from the Sheeples any longer !!
> 
> Anyone using ASF would of known about this great crash 12 months ago and been all ready for it though hey ??





Well we could flip the coin and ask would anyone have known when property was overtaking the sky's limits and prices kept escalating to the oblivious? ....I wonder how many sold too early and cut themselves short of thousands!! That's another way to look at it..
Its not so great after the fact is it.


----------



## Pommiegranite (27 June 2008)

I've just offloaded a property for $510K. Its a 4 months old project home. I haven't sold it too cheap or too pricey. It was on the market for a couple of months and I had offers for arounf $480K. There seem to be a lot of 'bargain' hunters around these days.

Anyways....the same house on the same size block of land would cost the buyer around $570K (Including stamp duty). Surely some of these project home builders are suffering declining sales. With cost also rising, some have to be on the verge of closing down. Surely not many people are that silly to enter a new build contract these days?


----------



## Mofra (27 June 2008)

numbercruncher said:


> Im convinced the Oz market is doing stacks worse than the Media ( who are in bed with the spruikers) are currently reporting !



NC, I'd ask what you are basing that on, but I have my own theory (for outer-suburban areas anyway) based on conversations I've had with people in default management (1 bank, 1 mortgage intermediary).

The default rates reported in the media are actually filtered down results of lenders taking action (non-banks lead the actions taken with 80%+ despite only representing a small fraction of the market themselves).
Banks can routinely take over 180 days to repossess a property, by which time the borrowers may sell prior to an "official" repossession being lodged.

Had a rule of thumb guide of tripling the repossession rate to get some idea of the real rate of forced sales, however can't substantiate this.


----------



## pepperoni (27 June 2008)

numbercruncher said:


> Im convinced the Oz market is doing stacks worse than the Media ( who are in bed with the spruikers) are currently reporting !
> 
> Watch the carnage when they cant hide the truth from the Sheeples any longer !!
> 
> Anyone using ASF would of known about this great crash 12 months ago and been all ready for it though hey ??




Do you mean this ASF?? With the house thread being "house prices to keep rising for years" and the original thread "house prices to stagnate" being locked ha ha 

Im as bearish and anyone on property but where I am, whilst there is some weakness in areas, some average or poor properties are still smashing records?????

One property with a crumbling shell of a house and no view in a nothing part of northbridge went for $1.6m ... over 300k above what anyone would have expected. Really shocking. Another 300m away the same week with a livable house, better aspect and DA passed in without a sensible bid other than the vendor at 1.48?????

I think overall the market is down a bit on average and prices on average are possibly at or a bit below 2004, but there are still sales at WTF high prices just like during the boom???? 

I think our market is inexplicable resilient compared to the US and UK and that only a recession or higher rates will cause the crashes they have had.

But Im hoping it will all crash and burn in hell much sooner having sold up in late 2006 haha.


----------



## wildkactus (27 June 2008)

Have seen some of these WTF prices you are talking about on the Gold coast.
We were looking at a property in the kirra area which sold at $200K above our bid, which was above market anyway, it turned out that it was the guy who own the adjacent blocks, making sure he had the land for a future development.

So I guess now we are starting to see the land bankers starting to come in.


----------



## pepperoni (27 June 2008)

wildkactus said:


> So I guess now we are starting to see the land bankers starting to come in.




I do remember after the "tech crash" around the start of the last boom an auctioneer saying "when shares are down property goes up".

 I thought he was nuts with so many taking a net worth hit on shares and super but low and behold property started to go nuts???

In 2006 I anticipated prices being flat till now in my part of Sydney but from here Im more like an even bet on steady fall to steady increase.


----------



## robots (27 June 2008)

hello,

bit more spruiking from the usual suspects,

http://compareshares.com.au/show_news.php?id=S-493855

could always pull the pushie out to get that litre of milk or get the walking shoes on,

are we down to 4x income yet?

thankyou

robots


----------



## motion (27 June 2008)

Again I have to agree house prices are on the rise in areas people want to live in the most . The thing I hate is the agent saying the house will go for 550k to 600k but it ends up going for around 680k to 730k and this is not uncommon at the moment as this has been the case 8 out of the last 8 auctions we have been too..

I think there is a lot more money out there than people are making out. Off to auctions tomorrow so will see what it brings....


----------



## Tysonboss1 (27 June 2008)

pepperoni said:


> One property with a crumbling shell of a house and no view in a nothing part of northbridge went for $1.6m ... over 300k above what anyone would have expected. Really shocking. Another 300m away the same week with a livable house, better aspect and DA passed in without a sensible bid other than the vendor at 1.48?????
> 
> I think overall the market is down a bit on average and prices on average are possibly at or a bit below 2004, but there are still sales at WTF high prices just like during the boom????
> 
> .




your not to far from where I live, I think parts of the north shore will outperform the rest of sydney, thats the thing with property you can never paint the whole market with one brush and if you try you will always be wrong atleast 50% of the time.


----------



## gfresh (28 June 2008)

I think many are still thinking an early 2000's type pullback (which is in their most recent memory), rather than an early 90's, or early 80's pullback where unemployment soared.. Looking at the precarious states of the world economies, I think it's more likely to be the latter. 

I know I had this argument with my brother, who bought in that period, and now looking at a investment property - "but it was like that when we bought our first place, and now it's worth heaps, so we're looking at buying now". Whereas I'm of the argument, it's still got a bit further to go before diving in. 

There still is a lag time of 12-36 months before we really see too much flow on, and if we assume mid 2007 was the peak, the trough may not be until mid 2009-2010  Most people seem to be of the mindset that recovery may be next year in property based on their most recent memories of more minor economic contractions. Maybe it will be just that, and I'll be wrong,but anybody who has been following the world markets (as most of us do here) will see, this is more a once in 30 year event, rather than a once in 7. 

A few businesses we deal with at work are going into liquidation, and people are bitching and whingeing and times as I see it aren't even hard yet. When your mates, or members of your family start losing their jobs, or finding it really hard to find work, then you know times have changed for the worst. At the moment I know in my circle, it's definitely not like that.



			
				motion said:
			
		

> I think there is a lot more money out there than people are making out.




Depends when they bought I would have thought. Even 2 years ago they may be sitting on still solid gains if they're selling now. Thing is if they buy now, expecting they're picking the bottom, and in 2 years time it's still flat, or even negative, was there any point  they're probably losing money in this interest rate environment if they added up all the true costs.


----------



## gfresh (28 June 2008)

wildcaktus said:
			
		

> We were looking at a property in the kirra area which sold at $200K above our bid, which was above market anyway, it turned out that it was the guy who own the adjacent blocks, making sure he had the land for a future development.




My suburb  What are your thoughts on the area? 

For me, it confuses me a little to be honest! The beaches here are some of the most beautiful in Australia, I will grant that being attractive to live for that aspect. However the affordability...  

Everybody here, other than a certain (mostly baby boomer) bracket doesn't seem that wealthy, nobody seems fully employed with 9-5 jobs. There is no established industry, other than tourism, which doesn't pay all that well for those that work in it. Finding a "professional" job with anything other than a small company is pretty difficult anywhere on the Gold Coast. Even then, wages are lower than Melbourne or Sydney. 

It's 40 minute hell-drive to the "main" centre of the gold coast, making it a fair distance to where most of the established companies are located. I do it each day, but I've probably got more tolerance than some for that sort of thing - most think I'm crazy for doing it. 

I earn probably just above the average wage, and I definitely seem to be the exception. Not many drive flashy cars, and there isn't much outward display of wealth. People who live nearby seem quite poor to be honest, constant churn through rentals. 

There are a lot of high rise ($600k+) apartment blocks going up along the beach. But who is buying these things? It's definitely not me or the people around me. Some of the rent on these are $400+, which is definitely out of reach of the "average" local. People just don't clear $1000/wk to be able to afford that sort of place to live in.

My only assumption is that it may be a bit like Surfers, Broadbeach, etc with them going to overseas and interstate investors. And I guess there is also the sea-change mentality, people who have earned their wealth elsewhere and off to live here to take it easier.


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## Mofra (28 June 2008)

motion said:


> Again I have to agree house prices are on the rise in areas people want to live in the most.



Agree, the typical "flight to quality" that characterises the transition period from "boom over" to "more stable pricing". 
I'd hate to be holding mortgage belt properties, but no way am I looking to offload anything close to the CBD.


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## Macquack (28 June 2008)

gfresh said:


> My suburb  What are your thoughts on the area?
> 
> For me, it confuses me a little to be honest! The beaches here are some of the most beautiful in Australia, I will grant that being attractive to live for that aspect. However the affordability...
> 
> ...




I agree.

The downside for "low income" earning "locals" is that Kirra is a *world renowned surfing location*. Current world champion Mike Fanning is a local. Also, eight-times world champion Kelly Slater rates Kirra as the *best point breaking wave on the planet*. With such recommendations, sounds like a good place for a beachside apartment.


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## Tysonboss1 (28 June 2008)

gfresh said:


> I think many are still thinking an early 2000's type pullback (which is in their most recent memory), rather than an early 90's, or early 80's pullback where unemployment soared.. Looking at the precarious states of the world economies, I think it's more likely to be the latter.
> 
> .




heres a 5 min commentary you may be interested in,

http://www.propertyinvesting.com/go/299


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## Tysonboss1 (28 June 2008)

Macquack said:


> I agree.
> 
> The downside for "low income" earning "locals" is that Kirra is a *world renowned surfing location*. .




that doesn't sound like a down side to me.


----------



## Macquack (28 June 2008)

Tysonboss1 said:


> that doesn't sound like a down side to me.




Downside in reference to housing affordability as the "locals" compete with wealthy investors from across the globe for local real estate.


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## wildkactus (28 June 2008)

Gfresh,
I was looking to buy the property for my folks as there retirerment home. the area is what they liked, quitish, close to the beach & airport, an not in the middle of the GC.

I myself also think the area has a lot of growth Potential, but as you said it's not for the 9-5 worker at present, it is really a place for the retirerment crowd, Surfer or the self employed, but that said so was surfers 20 yrs ago.
I think this whole area south of palm beach is the best part of the coast, and is a really good spot to live, also think that the property in the area will be some of the hottest on the coast in the future, as there is just becoming less land that close to the beach and with the block sizes that are still on offer. The height restrictions on building are also a good thing as this will limit the amount of dwellings that can be built in the area.

From what I can see most of the apartments are going to O/S or intersate buyers, there is a property seminar up here (HK) for AUS property every couple of weeks.


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## Tysonboss1 (28 June 2008)

Macquack said:


> Downside in reference to housing affordability as the "locals" compete with wealthy investors from across the globe for local real estate.




well obviously expecting a low income earner to beable to afford prime beach front land is not really realistic, we live in a supply and demand market economy.... If there is not much of somthing that allot of people want then it will go to the person willing to pay the most for it.

As the area has more and more wealthy people wanting a slice, then lower income earners must lower their expectations and settle for less than there dream beachfront 5 bedroom home,

Maybe if they absoulutly have to live in the area then renting is there only option, i mean saying that people should be able to always afford to buy into a certain location just because they were born there is a bit crazy.


----------



## gav (28 June 2008)

Landlords get greedy, exploiting the fact that only 1 in 100 rental properties are vacent, so rent prices go through the roof.  I know quite a few ppl sleeping on relatives couches for months at a time because for every rental property there are so many applications.

Then those same landlords complain when these low income earners renting their properties dont keep up with payments - some because of increased cost of living (food, fuel, etc) and yes, some do bring it upon themselves with interest free purchases and the like.

I rented in what I would call a '****-hole' for 14 months, because I could not afford anything better within 45mins of where I work.  After paying a rediculous amount for rent for the 12 month contract, the landlord put it up another 20% per week.  Finally my brother (uni student) and I found somewhere nicer, newer, closer to my work, and we moved in with our other brother who had been sleeping on our couch for the past 2 and a half months.  We got lucky, it must have been our 20th application.  And the applications are so personal these days, demanding all our past bank statements for over a year (wtf?), pay slips, conducting interviews with past & present employers and referees that went for over 10mins, etc.  I swear, it was easier to get into the Army! (i did that for 4yrs too)

Then the real estate agency get all ****ty that we are moving out, saying "well you obviously dont have a financial problem, you've payed every week on time".  Then they give less than 24hrs notice (which is against what is stated in our contract) for countless number of inspections.  Yes I could refuse them entry because they arent giving 24hrs notice, but I have done everything right so far, and I want my $1300 bond money back after the inspection next week.

I know there are cases where its the other way around.  8yrs ago my parents bought a home that they wish to live in when they retire, and have been renting it out.  They retired last month, and told the real estate agency to give the tenant 4 months notice a while back.  The house was vandalised, he had horses on the property which damaged the back yard, yet he was given his bond back.  The real estate agency told my parents if they believed the tennant was responsible for the damage they would have to report it to the police and it wasnt their problem.  My parents also later found out this same tenant was evicted from his last property, and was in prison for 12yrs prior to that (not sure what for).

My point being, for those of you who own investment properties with GOOD tennants who keep the place clean and pay on time, dont get greedy and jack up the rent.  Being greedy will come back to bite you... Eventually


----------



## Tysonboss1 (28 June 2008)

gav said:


> I know quite a few ppl sleeping on relatives couches for months at a time because for every rental property there are so many applications.
> 
> Then those same landlords complain when these low income earners renting their properties dont keep up with payments - some because of increased cost of living (food, fuel, etc) and yes, some do bring it upon themselves with interest free purchases and the like.
> 
> I




Supply and demand factor in perfect operation in your first paragraph, if there is that much demand then rents must go up,... this should then ensure more developments occur to soak up the excess demand.

secondly in response to your second paragraph, if they can't afford to pay rent then they should be downsizing or moving into a cheaper area, or perhaps budget better or work more hours.


----------



## Tysonboss1 (28 June 2008)

gav said:


> My point being, for those of you who own investment properties with GOOD tennants who keep the place clean and pay on time, dont get greedy and jack up the rent.  Being greedy will come back to bite you... Eventually




Annual rent increases is not being greedy.

Do you really expect to rent a property indefiantatly with out a rental increase?

If the rent doesn't rise each year then it is actually going down each year.

It's simple if the rent is to high then rent somewhere cheaper, land lords hate vacant property so if the asking price is to high it will be vacant till they put it down, however if there is no other better property for you to rent for the same $ amount and the applications are steadily coming in then the price is probally just right.

Don't be afraid to offer the land lord a lesor amount if you truly believe the property is over priced, a land lord will accept a lower offer rather than have a vacant property, however if there are other aplications coming in accepting the advertised rent then it is propbally not over priced.


----------



## robots (28 June 2008)

hello,

the big issue is if the likes of trigieboff, central equity and others get in and build the "run of the mill" accommodation that is required to help people like gav,

at the moment development is aimed right at the owner/occupier with  a smaller % of units for investment, 

for instance on st kilda rd you have a few developments that are for OO's, serviced apartments, the ones that are "run of the mill" have got into issues as investors have walked away

people have forgotten back around 01-04 you couldnt get a $5/wk increase in your rent,

the "private investor" needs more incentives to dive into "new" investment property if the gov is not going to build and maintain it, with maintenance being the costlier of the 2

when I grew up in frankston we had a housing commiss home 4-doors down,  new people came about every 2-yrs, it got trashed every time,

put you're hand out and trash it as parting gift, wonderful

so the maintainence was enormous every 2-yrs, on every property they owned

thankyou
robots


----------



## theasxgorilla (28 June 2008)

gav said:


> My point being, for those of you who own investment properties with GOOD tennants who keep the place clean and pay on time, dont get greedy and jack up the rent.  Being greedy will come back to bite you... Eventually




People should keep the place clean, pay on time, and expect to pay market rates for rent.  That goes without saying IMO.

It brings up bad memories hearing your story...I hate property managers (mass generalisation), the way they play God with prospective tenants.  It's a good motivating factor in getting out of renting and into owning.  But I dare say anyone in this predicament now might need to keep preparing for the transition for a little while longer as I'm not convinced it's the best time to buy just yet.


----------



## CamKawa (28 June 2008)

I've been keeping an eye on the number of rental properties available in what Domain.com.au defines as the Melbourne region for the last month. Here's what I have found.

Date ------------# of properties for rent in Melbourne
07.06.2008 ----7770
14.06.2008 ----7949
21.06.2008 ----8100
28.06.2008 ----8158

As you can see the number of properties for rent in Melbourne is steadily increasing. I can't see rents soaring in the face of increased supply.


----------



## robots (28 June 2008)

hello,

we must all thank Gav for posting his/her REAL life experience when dealing with renting a residential property,

keep the real life experiences coming,

thanks camkawa for that info, just shows plenty of choice when it comes to renting a place in the melbourne region, I am sure plenty would be interested in a place in Toolangi or The Gurdies, 

so if the landlord bumps it up you can move on, no big deal really

thankyou

robots


----------



## CamKawa (28 June 2008)

gav said:


> After paying a rediculous amount for rent for the 12 month contract, the landlord put it up another 20% per week. Finally my brother (uni student) and I found somewhere nicer, newer, closer to my work, and we moved in ...



A case in point here, renters are a price sensitive crowd that show no loyalty to landlords. Good on you for giving the landlord the finger and finding a better cheaper place elsewhere.





gav said:


> Then the real estate agency get all ****ty that we are moving out, saying "well you obviously dont have a financial problem, you've payed every week on time".



Not a very intelligent comment but that's the sort of behaviour desperate REA's have lowered themselves to in order to keep tenants.





gav said:


> My point being, for those of you who own investment properties with GOOD tenants who keep the place clean and pay on time, dont get greedy and jack up the rent. Being greedy will come back to bite you... Eventually



Well said.


----------



## pepperoni (28 June 2008)

One recent interesting view on interest rates attached ... more recent views seem to be pointing to high imported inflation and extreme domestic inflation brought about by crazy happenings in resources eg recent ore prices etc.

If these things ever eventuate may god save the rba cause nothing will save house prices ha ha.


----------



## gav (28 June 2008)

Tysonboss1 said:


> secondly in response to your second paragraph, if they can't afford to pay rent then they should be downsizing or moving into a cheaper area, or perhaps budget better or work more hours.




mate if it was that simple id just ask my boss if i could work 60hrs per week. and i cannot get a 2nd part time job, as my main job requires me to be flexible with days & hrs.  my one day off per week changes week to week.  it is not a huge problem for me, i may not earn much but i can budget and put a tiny bit away most weeks.  the area i live in is pretty cheap, and there are alot of ppl in my area that are greatly affected by these rent increases, some of them are leaving & moving in with relatives. the state that they leave the houses in is disgusting, but i cant say i blame them, especially when they are asked to pay 30% more

i guess i have gone off topic a little. some of the comments i have read just really annoy me, as do greedy landlords


----------



## kitehigh (29 June 2008)

gav said:


> the area i live in is pretty cheap, and there are alot of ppl in my area that are greatly affected by these rent increases, some of them are leaving & moving in with relatives. the state that they leave the houses in is disgusting, but i cant say i blame them, especially when they are asked to pay 30% more




Sorry but leaving someones property in a mess isn't justified ever!  If someone every done that to my property they would regret it.  I had an old school upbringing and believe in the old school way of getting things sorted.   You lost all sympathies with that comment.  



gav said:


> i guess i have gone off topic a little. some of the comments i have read just really annoy me, as do greedy landlords




Like others have stated before, we live in a supply and demand society.  I don't get a say when they put up interest rates, council rates etc.  It all comes around in swings and roundabouts and at the moment the Landlords have the upper hand.  It wasn't too long ago that the shoe was on the other foot though and like others have mentioned you couldn't get even a small increase, if anything it rent reductions were the order of the day.  

You live in a country which has the greatest amount of opportunities  available to able and willing workers.  You just have to be prepared to go take those opportunities or put up and stop your whinging.  I know whinging is an Australian favouriate past time but really it is the lucky country and people should thank there lucky stars they were born here and not say Iraq or Afganistan.


----------



## CamKawa (29 June 2008)

kitehigh said:


> You live in a country which has the greatest amount of opportunities available to able and willing workers. You just have to be prepared to go take those opportunities or put up and stop your whinging. I know whinging is an Australian favouriate past time but really it is the lucky country and people should thank there lucky stars they were born here and not say Iraq or Afganistan.



That's a fairly harsh comment. It looks like some landlords must be really under the pump. Have you thought about selling?


----------



## wayneL (29 June 2008)

This thread has been closed once already due to folks getting a bit too personal.

Let's stick to the economics of housing here, rather than getting into criticism and condemnation.

Landlords and tenants have a symbiotic relationship, a bit of respect for each other goes a long way (and ensures this thread stays open).

Cheers


----------



## robots (29 June 2008)

hello,

good morning all looks like another great day,

auction clearance rates for melbourne ROCKETED to 65% yesterday (from 62% last week), fanatastic news,

thankyou

robots


----------



## explod (29 June 2008)

robots said:


> hello,
> 
> good morning all looks like another great day,
> 
> ...





Yes the vendors are dropping their prices and getting out.  Those who are desperate to live closer to the city (to cut fuel costs) are taking advantage of that.   Many think that things have bottomed.   But out here at Mount Martha the new property sales offices are like ghost towns.  I know many in the RE business here and feel sorry for the employees also.

I think we need to change the name of the thread.  "Property Clearance Rates Rocketing Downhill" with acknowledgements to Robots of course


----------



## wayneL (29 June 2008)

explod said:


> Yes the vendors are dropping their prices and getting out.  Those who are desperate to live closer to the city (to cut fuel costs) are taking advantage of that.   Many think that things have bottomed.   But out here at Mount Martha the new property sales offices are like ghost towns.  I know many in the RE business here and feel sorry for the employees also.
> 
> I think we need to change the name of the thread.  "Property Clearance Rates Rocketing Downhill" with acknowledgements to Robots of course



The estate agency industry is hemorrhaging jobs here too, with the knock on effect that retailers of hair gel and cheap shiny suits are also suffering. 

True story.


----------



## robots (29 June 2008)

explod said:


> Yes the vendors are dropping their prices and getting out.  Those who are desperate to live closer to the city (to cut fuel costs) are taking advantage of that.   Many think that things have bottomed.   But out here at Mount Martha the new property sales offices are like ghost towns.  I know many in the RE business here and feel sorry for the employees also.
> 
> I think we need to change the name of the thread.  "Property Clearance Rates Rocketing Downhill" with acknowledgements to Robots of course




hello,

thanks explod, they have just ROCKETED up up and up so i think you may need to re-address the title,

it going to be a great time for prop if construction drops even further,

thankyou

robots


----------



## overlap (29 June 2008)

robots said:


> hello,
> 
> thanks explod, they have just ROCKETED up up and up so i think you may need to re-address the title,
> 
> ...




Interesting leaps of logic.

Clearance rates are a measure of turnover - sort of depending how you can swallow self interest spun into figures by the real estate industry. It says next to nothing about who's gaining or losing in the medium to long term on property, any more than turnover in shares does about the stock market. All activity must be viewed in a context.

Real estate agents and stock brokers love turnover more than anything else. Their trick is to convince the joe blows that activity is all goodness for the rest of us.

Your reasoning might turn out to be correct to a point, but time is a great leveller of markets and investment classes. The trick is not to be forced or spooked away from sensible strategy.


----------



## Mofra (29 June 2008)

wayneL said:


> The estate agency industry is hemorrhaging jobs here too, with the knock on effect that retailers of hair gel and cheap shiny suits are also suffering.



Cheeky, but probably fair 

Your comments do raise an issue pertinent to house prices - the immediate future of the mortgage borking industry. Recently (2 months ago anyway) there were suggetsions the mortgage broking industry is on the cusp of major reform & consolidation - with the numbers of practising mortgage brokers to halve from appox 10,000 to 5,000. Any consolidation tends to lead to a higher degree of self-regulation (despite some efforts and the odd state-based guidelines, there are no national mortgage broking regulatory guidelines yet), so there is the hope that higher professional standards for the industry are imminent. Like financial planners, there is a slow shift to the more ethical, professional mortgage brokers surviving and the cowboys in the industry (and I have dealt with hundreds) having to move on to something they are perhaps more suited to - such as selling used cars.

Given the inevitable reduction in housing activity in many suburbs, you would expect a similar (albeit less comprehensive) consolidation amongst th real eestate industry is immanent as well.


----------



## pepperoni (29 June 2008)

Yes clearance rates are great for a RE agents comissions ...... but pity the poor building labourer who has been brainwashed by same RE into thinking they will somehow help his hail mary property plunge. 

Its all supply and demand ... and demand at higher prices is always going to be limited by what people can afford.


----------



## Tysonboss1 (29 June 2008)

CamKawa said:


> I've been keeping an eye on the number of rental properties available in what Domain.com.au defines as the Melbourne region for the last month. Here's what I have found.
> 
> Date ------------# of properties for rent in Melbourne
> 07.06.2008 ----7770
> ...




It depends where they are and the type of property, it's possible for certain types of property to increase rent yeilds as others stagnate, depending on the demographics, same can be said for certain suburbs,

for instance an over supply of 1 bed apartments in outer sydney, won't affect the rents of tight supply 3 bed inner city units with harbour veiws and car spaces.

figures that blanket whole cities and different classes of property are next to useless.


----------



## gav (29 June 2008)

kitehigh said:


> Sorry but leaving someones property in a mess isn't justified ever!  If someone every done that to my property they would regret it.  I had an old school upbringing and believe in the old school way of getting things sorted.   You lost all sympathies with that comment.
> 
> You live in a country which has the greatest amount of opportunities  available to able and willing workers.  You just have to be prepared to go take those opportunities or put up and stop your whinging.  I know whinging is an Australian favouriate past time but really it is the lucky country and people should thank there lucky stars they were born here and not say Iraq or Afganistan.




I agree, leaving a property in a mess is never justified, but I wouldnt have any sympathy for the land lords in those few cases that I mentioned.  Even with my bad experiences with the place I'm currently moving out of, I guarantee you that come inspection time next week, that place will be spotless and squeeky clean.  Just because I get treated bad, does not mean I would lower myself and do the same.  I was brought up better than that.

And as for your comment about the amount of opportunities we have in this country, I totally agree.  I served in the Army for 4yrs and was deployed overseas.  Some of the things I have seen, I will never ever share with another person.  It breaks my heart to see the world that these ppl have to live in.

If I have offended anyone with any of my comments, that was not my intent, and I dont want this topic locked. I was just bringing to light some of my personal experiences, and the experiences of those around me - because often Land Lords have no contact with tennants, they just go through the real estate agent.  Which means they have no idea of the tennants side.  I would hate to hear of a someones property being left like a dump, the whole point of this was to let Land Lords know that if they have good tennants, then treat them well because there are alot of bad ones out there.

Robots, CamKawa, thanks for your kind comments.  Robots, I rent near the area you spoke of in your post, properties getting trashed around here arent uncommon.  Im currently on 35K per yr, but I no longer go wasting my money on cars, alcohol, etc like my mates, and can budget which means I can pay all my bills, and put a little away most weeks, which is better than alot of ppl who are renting.  I only recently began investing in shares, hopefully one day I'll have enough to own a house myself


----------



## gfresh (29 June 2008)

mofra said:
			
		

> Your comments do raise an issue pertinent to house prices - the immediate future of the mortgage borking industry.




Maybe this sparked your thinking, but there was a segment on Inside Business this morning, stating that the share of mortgage brokers is dropping rapidly, and also commissions are plunging, and layoffs are occurring. The share of bank lending has also soared comparative to non-bank lenders, back to the levels  when mortgage deregulation was introduced in the mid-90's. This is probably not a good thing for borrowers in the long run, as mortage rates creep further and further above the RBA cash rate. Less competition is not good for borrowers, although maybe less sharks out there. 

Also on property - another segment with another "expert" predicting a 20-30% fall in property prices to the longer term trend line as per US and UK. When they're up on the website I will post them up. Probably nothing anybody hasn't heard before however. 



			
				wildcaktus said:
			
		

> I think this whole area south of palm beach is the best part of the coast, and is a really good spot to live, also think that the property in the area will be some of the hottest on the coast in the future




I think so too, even if it doesn't stack up in my head the local demographics compared to the values.. It's amazing what you can find compared to the rest of Australia, where similar (and less quality beaches) sell for $1M+. With the airport right here (of which is silent, and I am about 5 mins walk), it's also attractive for wealthier interstater's to fly in for a holiday house. I mean the difference what you'd pay in melb or sydney, you could spend on an airfare each week and still be in front. I'm still considering, when the time comes to buy an IP, whether here or Brisbane would work out better... Guess I have to look at growth/yield/quality tenants equation. I think it would suffer on the later two.   



			
				tysonboss1 said:
			
		

> heres a 5 min commentary you may be interested in,




Some valuable advice in there. I've got an open mind to any positive or negative thoughts really. 

Robots: Brother just bought another house in Brunswick yesterday,  maybe that was your 3% increase in clearance?


----------



## kitehigh (29 June 2008)

CamKawa said:


> That's a fairly harsh comment. It looks like some landlords must be really under the pump. Have you thought about selling?




No doing just fine thanks, no intention of selling a inner city character house that is in high demand from both renters and owners.


----------



## kitehigh (29 June 2008)

gav said:


> I agree, leaving a property in a mess is never justified, but I wouldnt have any sympathy for the land lords in those few cases that I mentioned.  Even with my bad experiences with the place I'm currently moving out of, I guarantee you that come inspection time next week, that place will be spotless and squeeky clean.  Just because I get treated bad, does not mean I would lower myself and do the same.  I was brought up better than that.




Good to hear, I know that 90% of people are good and its normally the 10% that cause the grief for the rest.  



gav said:


> And as for your comment about the amount of opportunities we have in this country, I totally agree.  I served in the Army for 4yrs and was deployed overseas.  Some of the things I have seen, I will never ever share with another person.  It breaks my heart to see the world that these ppl have to live in.




I was in the army for 12 years and got the pleasure to serve in some of the worst countries on the planet.  You should share your experiences with others especially those that have never had the options to travel and experience extreme poverty and destitution.  I am still living and working in these poor countries and am exposed to extreme poverty every day of my life.
   What annoys me though is to hear Australians who have limited exposure to the other world that these people live in, than complaining constantly how tough they have it.  Most Australians are rich beyond these poor peoples wildest dreams, even our so called poor have it damn good.   



gav said:


> If I have offended anyone with any of my comments, that was not my intent, and I dont want this topic locked. I was just bringing to light some of my personal experiences, and the experiences of those around me - because often Land Lords have no contact with tennants, they just go through the real estate agent.  Which means they have no idea of the tennants side.  I would hate to hear of a someones property being left like a dump, the whole point of this was to let Land Lords know that if they have good tennants, then treat them well because there are alot of bad ones out there.




My tenants actually get a good deal, they are currently paying below market rent because they have been there for awhile now, take good care of the property and always pay there rent on time.  Also because I self manage my property and know my tenants personally I always struggle to put up the rent.  I will be putting up the rent again soon, but still it will be below the market rent by a substantial amount.



gav said:


> Robots, CamKawa, thanks for your kind comments.  Robots, I rent near the area you spoke of in your post, properties getting trashed around here arent uncommon.  Im currently on 35K per yr, but I no longer go wasting my money on cars, alcohol, etc like my mates, and can budget which means I can pay all my bills, and put a little away most weeks, which is better than alot of ppl who are renting.  I only recently began investing in shares, hopefully one day I'll have enough to own a house myself




Good to hear you have you head screwed on right and are trying to get ahead.  I would seriously be looking at finding a way to increase your income though, especially in this current economic cycle that Australia is going through.  I know in WA, there are kids leaving school and going to work in the mines, where the starting wage is around 80k per yr and thats without any trade etc.   Good luck in your endeavors.


----------



## Mofra (29 June 2008)

gfresh said:


> Maybe this sparked your thinking, but there was a segment on Inside Business this morning, stating that the share of mortgage brokers is dropping rapidly, and also commissions are plunging, and layoffs are occurring. The share of bank lending has also soared comparative to non-bank lenders, back to the levels  when mortgage deregulation was introduced in the mid-90's. This is probably not a good thing for borrowers in the long run, as mortage rates creep further and further above the RBA cash rate. Less competition is not good for borrowers, although maybe less sharks out there.



Cheers gfresh, the dropoff in non-bank lending is obviously a direct result of sentiment over the credit crunch as NBLs (RAMs & Macquarie being two major culprits) and non-conformers (Bluestone) raise rates independantly of the RBA at a much faster rate than the majors.
Regardless of what happens in the future, bridges have been burnt & relationships damaged so brokers are sending the bulk of their work to deposit holding institutions. That in itself is fuelling a rise in the banks dominating the sector, who have largely halted branch closures as they are now seen as one stop shops for a variety of financial products.

Put simply, industry polling shows Joe Average doesn't want to visit a seperate Financial Planner, Bank Manager, Consumer Lender, Business Lender & Insurance Broker anymore. Aggregators know this and the sector consolidation is gathering pace. Relationship packages are now obtainable at average mortgage sizes.


----------



## Mofra (29 June 2008)

Tysonboss1 said:


> figures that blanket whole cities and different classes of property are next to useless.



Agree 100%, although there seem to be a number of posts on this thread (going waaaay back to the beginning) that have been happy to suggest otherwise.


----------



## Macquack (29 June 2008)

gav said:


> I no longer go wasting my money on cars, alcohol, etc like my mates.




It's official. Australia is in a recession - when a hard working bloke with two jobs cant even enjoy a *cold VB* and a drive in his *V8*.



gav said:


> I only recently began investing in shares, hopefully one day I'll have enough to own a house myself




And the last straw, a long shot akin to buying a lottery ticket.


----------



## robots (29 June 2008)

hello,

top effort gav, keep putting it away

thankyou

robots


----------



## theasxgorilla (29 June 2008)

Macquack said:


> It's official. Australia is in a recession - when a hard working bloke with two jobs cant even enjoy a *cold VB* and a drive in his *V8*.




I think you'll find drink driving laws put a stop to that, not economic conditions.


----------



## Pommiegranite (29 June 2008)

Surely this *whole *thread comes down to one theory: Decoupling

So why not just have a discussion about that rather than "Theres a lot more 'For Sale' boards on my street than this time last year"

OR

"Property always goes up"


----------



## gav (29 June 2008)

Macquack said:


> It's official. Australia is in a recession - when a hard working bloke with two jobs cant even enjoy a *cold VB* and a drive in his *V8*.
> 
> And the last straw, a long shot akin to buying a lottery ticket.




I got rid of the V8 over a year ago, now drive a Hyundai Accent.  It hurt the pride at first, but it was the right decision.  Also, I have a rather expensive hobbie (bodybuilding) which requires alot of food, vitamins, supplements.  It was either give up the car or give up bodybuilding.  I am lucky that I am sponsored, so I get some stuff for free, and the rest I only pay wholesale.  If I did not have a set budget, I would not be able to afford my bodybuilding as well.

No way I'd buy a lotto ticket, I see my boss waste nearly $50 every week on that.  I'd prefer to put that money away each week.  It will take alot of time and hard work before I'll ever own a house, just have to be disciplined and patient, I know I'll get there.  

Started in shares 6 weeks ago, and so far im up 29%, which is equal to about 2 months savings for me.  I did alot of research before investing, but I have been very lucky also.  Sorry, gone off topic a bit here...


----------



## nomore4s (29 June 2008)

gav said:


> I got rid of the V8 over a year ago, now drive a Hyundai Accent.




A bodybuilder driving a Hyundai Accent after selling his V8 - that's just wrong, what's the world coming to, damn oil prices:


----------



## gav (29 June 2008)

LOL i see the irony, but thats how it goes...  I see ur in Darwin.  I was posted there for 3yrs, its where I bought the V8 too


----------



## robots (30 June 2008)

hello,

http://business.theage.com.au/higher-rentals-seen-as-spur-for-investment-20080629-2yu8.html?page=2

very clean honest article about where things area at in melb, and probably aus in general

wow, house in sunshine for 265k! is that an error must send that info to Mr Imber at vcoss

thankyou

robots


----------



## gav (30 June 2008)

robots said:


> hello,
> 
> http://business.theage.com.au/higher-rentals-seen-as-spur-for-investment-20080629-2yu8.html?page=2
> 
> ...




I used to live over that side of town.  I doubt that would be an error, that place makes Frankston look like Brighton


----------



## gfresh (30 June 2008)

Worth a read for QLD'ers.. 

http://www.localgovernment.qld.gov....ections2007/population-projections-part-1.pdf


----------



## pepperoni (30 June 2008)

Continuing my program of bold and inflamatory statements, there is no "housing shortage crisis" unless:

- the 1000s of high density unit developments are cardboard cut outs
- they have leveled the 1000s of uninhabited properties and 
- somone has hidden the millions that are now forced to live under bridges.

The greater issue, which IS pushing prices down, is the Affordability crises, and inflation, rates, and economic conditions generally.

My past weeks experience from sydneys north (where the whole riduculous boom/craze more or less started):

- near to city prices are dipping in almost all cases; and
- the blue chip northern beaches has unofficially crashed at the top and middle of the housing market (you heard it here first) ... for sale prices dropping materially, very little selling, agents chasing and begging, and no idea when the prices will stop dropping.

But Im sure the auction clearance rate is 100%  as people are in almost all cases opting for long for sale campaigns.

Anyway here are some more official, but lagging, figures on the falls and reasons for these and possibly further falls ....


http://business.smh.com.au/steam-is-out-of-credit-growth-20080630-2z5x.html


http://business.smh.com.au/lending-inflation-rise-20080630-2z46.html


My hot tips are (1) ignore the last ditch "increasing yeild" propaganda which becomes more ridiculous as inflation and rate risks increase (2) hold on tight, and (3) dont give any RE agents your real number as they will wear your phone out with ever increasing call backs :


----------



## explod (30 June 2008)

pepperoni said:


> Continuing my program of bold and inflamatory statements, there is no "housing shortage crisis" unless:
> 
> :




Agree with everything you say pepper..

Remember that best selling book a few years ago "101 Properties in a coupla years or somthin"   Well they all got into it everywhere on the good ole low doc and now they are all realising the ballance sheet looks bad and the margin calls are wisperin.

And I see ominous signs for the Ole Wizard Home Loans with GE wanting to unload the agencies to the Banks and package up the debt to some other mug, if there are any left with money of course .

Yep, have to agree I'm afraid Pepper


----------



## robots (30 June 2008)

pepperoni said:


> Continuing my program of bold and inflamatory statements, there is no "housing shortage crisis" unless:
> 
> - the 1000s of high density unit developments are cardboard cut outs
> *- they have leveled the 1000s of uninhabited properties and
> - somone has hidden the millions that are now forced to live under bridges*





hello,

this is the thing that really bugs me about all the "affordability" crew,

whats it to YOU/OR ANYBODY else if someone has a house/unit left empty for 1 day, 1 month, 1 years or 10 years,

i would be homeless too if didnt get up and go to work each day but these guys/girls just expect to get everything, they arent forced

oh yeah i go to work just so I can hand the chap out the front of Prahran coles a $1 so he can hop of to get a cap, get out of here

thankyou

robots


----------



## explod (30 June 2008)

robots said:


> [/B]
> 
> hello,
> 
> ...




Getting upset is not going to help.  Pepper is just pointing out that things are very much worse than the r/e (and the news media who feed off it) fraternity want you to think.

And I dont' see too many with the cap out that are not in a bad way due to shocking socialogical shortfalls in Government for the last 30 odd years.

Money needs to be spent on education (so that they can help themselves).  Not on baby bonuses that just create more problems at the wrong end, and one could go on.


----------



## robots (30 June 2008)

explod said:


> Getting upset is not going to help.  *Pepper is just pointing out that things are very much worse than the r/e (and the news media who feed off it) fraternity want you to think.*




hello,

and much the same with Mr Imber (VCOSS), anglicare etc all carrying on about affordable accomm. when camkawa greatly showed us around 8000 places to rent in Melbourne region

houses for great prices across melbourne, look at the Tanti Estate in Mornington for example, very easy to get a place for 220-240k, a local worker can easily get in,

these charity groups are not to dissimilar to RE agents really, pull in the funds so their "executive" salary can be pumped all with the help of the media by the sounds of it,

thankyou

robots


----------



## explod (30 June 2008)

robots said:


> hello,
> 
> 
> houses for great prices across melbourne, look at the Tanti Estate in Mornington for example, very easy to get a place for 220-240k, a local worker can easily get in,
> ...




Problem with Tanti Avenue is that there are virtually no jobs, nearest that unskilled can get is at least an hour away.   Because everyone wants to live on the nice Mornington Peninsula, the higher skilled will work for less.   Cuts out the bottom feeder.

Cost of fuel is going to stop Australia in its tracks till we can move to alternative options.  And those will take years.


----------



## robots (30 June 2008)

robots said:


> houses for great prices across melbourne, look at the Tanti Estate in Mornington for example, very easy to get a place for 220-240k, *a local worker* can easily get in,
> 
> these charity groups are not to dissimilar to RE agents really, pull in the funds so their "executive" salary can be pumped all with the help of the media by the sounds of it,
> 
> ...




hello,

a local worker, not everyone travels 60min to work every day

thankyou

robots


----------



## explod (30 June 2008)

robots said:


> hello,
> 
> a local worker, not everyone travels 60min to work every day
> 
> ...




If there are no jobs then there will be no local worker to take his place at Tanti Avenue accomodation.

Am I missing something here.


----------



## robots (30 June 2008)

hello,

has bays hospital closed, beleura hill private closed, safeway and coles gone, all the light industrial gone from Mornington

yes you are missing something

thankyou

robots


----------



## explod (30 June 2008)

robots said:


> hello,
> 
> has bays hospital closed, beleura hill private closed, safeway and coles gone, all the light industrial gone from Mornington
> 
> ...




As I said earlier, all of those jobs are taken.  I do know from professional involvement that trying to get a job here is very difficult.  Do not think I am missing too much.


----------



## robots (30 June 2008)

hello,

what about someone renting or living at home WHO currently works in local area and wants to buy home? or are all the homes taken as well

thankyou
robots


----------



## explod (30 June 2008)

robots said:


> hello,
> 
> what about someone renting or living at home WHO currently works in local area and wants to buy home? or are all the homes taken as well
> 
> ...




That is the whole point of what we are talking about, there are empty unsold and unleased homes in growing abundance.  But nothing to make it possible for people to live in them.  Too far from AVAILBALBE WORK, mon ami


----------



## robots (30 June 2008)

hello,

are you in local government

thankyou

robots


----------



## Macquack (30 June 2008)

pepperoni said:


> My past weeks experience from sydneys north (where the whole riduculous boom/craze more or less started):
> 
> - near to city prices are dipping in almost all cases; and
> - the blue chip northern beaches has unofficially crashed at the top and middle of the housing market (you heard it here first) ... for sale prices dropping materially, very little selling, agents chasing and begging, and no idea when the prices will stop dropping.




Well it hasn't crashed at the bottom end of the market yet.

Check out this *little bargain*. Two bedroom *mobile home *in North Narrabeen Caravan Park for *just $330,000 *( plus I believe $140 per week rent).
http://www.realestate.com.au/cgi-bi...r=&cc=&c=97507181&s=nsw&snf=rbs&tm=1214825520


----------



## Go Nuke (30 June 2008)

How can house prices continue to rise without wages growth to keep up??

Wages growth = inflation, something our government is trying to keep a lid on (_yes..thats our wages)_
Personaly I'd like to see a government commit political suicide by changing the negative gearing laws.
Instead of seeing wealthy people buy up all the cheap housing to rent to those less fortunate to gain a deposit quick enough.
Don't get me wrong..I'm a landlord myself having bought a cheap house in the middle of nowhere because I was able to live with my parents till I was 24 and save some cash.
But these people who buy multiple cheap housing, i just don't think its fair. especially on the younger people today.
No wonder so many have given up on the dream of ever owning a home.

Yes yes...They should just lower their standards and move furhter out of town I hear you say...but then of course you have fuel and extra running cost.

Not to mention...how do you pay a morgage on a single income if you decide to have kids?? You cant.
Even child care is what...$60 a day!

Something has to give. there must be alot of Aussies living on a knifes edge. sadly alot of those are the ones that work the hardest IMO.



> I would seriously be looking at finding a way to increase your income though, especially in this current economic cycle that Australia is going through. I know in WA, there are kids leaving school and going to work in the mines, where the starting wage is around 80k per yr and thats without any trade etc. Good luck in your endeavors.




Good luck indeed. A public misconception is that its easy to get a mining job. Its Not.
As a boilermaker with 10yrs experience, Ive not managed to get a mining job yet.
But yes...goodluck.


----------



## Go Nuke (30 June 2008)

Macquack said:


> Well it hasn't crashed at the bottom end of the market yet.
> 
> Check out this *little bargain*. Two bedroom *mobile home *in North Narrabeen Caravan Park for *just $330,000 *( plus I believe $140 per week rent).
> http://www.realestate.com.au/cgi-bi...r=&cc=&c=97507181&s=nsw&snf=rbs&tm=1214825520






> just $330,000




Ahh the worst words in the English language...."just" and "only" lol.

Mate correct me if im wrong, but the repayments on about $330K is what...about $600/ week?
OMG..is that what "_affordable_ is??
In my household thats about roughly 40- 45% of our desposable income.

Looks nice. But I bet there are management fees to pay on top of that morgage. Rediculous


----------



## Tysonboss1 (30 June 2008)

Go Nuke said:


> Personaly I'd like to see a government commit political suicide by changing the negative gearing laws.
> Instead of seeing wealthy people buy up all the cheap housing to rent to those less fortunate to gain a deposit quick enough.
> 
> But these people who buy multiple cheap housing, i just don't think its fair. especially on the younger people today.
> No wonder so many have given up on the dream of ever owning a home.




Yeah,... don't forgot to mention all those evil investors buying up all the companies too,

It's just plain wrong the system we live how some parts of the population work hard, spend less than they earn and end up owning a bunch of assets while the bulk of the aussie battlers live the consumer lifestyle spending more than they earn on life style and doodads and end up with no assets the government should be doing more to stop people who work hard and invest and help the people that blow there cash and want more for doing less..... tonge in cheek.

At the end of the day Negative gearing just means you can offset the interest on your loans against your income, there is nothing wrong with that.


----------



## wayneL (30 June 2008)

Tysonboss1 said:


> At the end of the day Negative gearing just means you can offset the interest on your loans against your income, there is nothing wrong with that.




Depends on your point of view. Other businesses where a trading loss is the intentional result, are not allowed the deduction. There must be an intention to make a trading profit, irrespective of capital profits.

The trading loss should be accounted for somehow... perhaps offset against future profits if/when the property goes profit positive... and/or against future capital gains.

The current negative gearing rules however, are not in keeping with general taxation philosophy.

This artificially supports house prices. 

However it does help to suppress rents. Oz rents are still quite cheap by western world standards. 

Yin & Yang


----------



## theasxgorilla (1 July 2008)

Go Nuke said:


> How can house prices continue to rise without wages growth to keep up??




Well at least you're asking the right questions.

Taxes can go down.

The cost of certain other good and services can go down making more disposable income available.

People can resign themselves to the idea (wilfully, coerced or otherwise) that they're happy with less space than in the past.  Net effect, people pay more for less.

People can take interest only loans allowing them to service larger mortgages.

Just because something happens not to make sense by traditional economic measures, or is even considered absurd compared with norms of only a few years ago, doesn't mean that in the future it won't become the norm...as much as that might seem to suck.

The next question to ask is, what if this is the future and it's here to stay?  Or one step beyond that, what if things get worse/harder?


----------



## theasxgorilla (1 July 2008)

wayneL said:


> This artificially supports house prices.




As you pointed out, it keeps rents artificially low too.  So it's kind of like stealth socialism, or maybe more fitting would be to call it 'voluntary socialism' .  Only instead of forcing everyone to put their tax dollars toward social housing people get to choose if they want to participate...in exchange for the risk they're rewarded with cap gains.

It seems fair to me at least...just another way to socialise housing without the overhead of having government administer the system.  In Sweden there is a MASSIVE rental shortage problem in all capital cities.  Guess who dishes out practically all rental accomodation...the government.  Guess what the 'all-for-one-and-one-for-all' Swedes do...get a contract and never relinquish it!  What would you do with a contract that you waited in a queue 20 years to get?

This year will probably see the first private 'rental' apartments being built.  Until this as an individual owner of an apartment you were forbidden from letting your apartment without first getting consent from the 'body corporate'.  Typically you needed a damn good reason like a work offer overseas, and even that might get you a 12 month exception.

So, as an additional answer to the question raised above regarding how prices can keep going up when wages don't: legislation can change.


----------



## robots (1 July 2008)

wayneL said:


> Depends on your point of view. Other businesses where a trading loss is the intentional result, are not allowed the deduction. There must be an intention to make a trading profit, irrespective of capital profits.
> 
> *The trading loss should be accounted for somehow... perhaps offset against future profits if/when the property goes profit positive... and/or against future capital gains.*
> 
> ...




hello,

just substitute the word share for property,

its an even playing field for everybody, 

the government will actually have to increase the negative gearing benefits in the future for property investors/providers,

yes rents were "dulled" during 01-04 when oversupply of apartments was present in most aus capitals,

now all those apartments are far more occupied and the big players who had glossy brochures are building different things

thankyou

robots


----------



## robots (1 July 2008)

hello,

http://www.theaustralian.news.com.au/story/0,25197,23949777-25658,00.html

where's numbercruncher? everything was going to be walloped, read here first

melbourne down 0.02%, fantastic results

Tech's town going well up 4.6%,

thankyou

robots


----------



## wayneL (1 July 2008)

robots said:


> hello,
> 
> just substitute the word share for property,
> 
> ...



'bot

As far as I'm aware, you can't file a form 221 (or whatever the hell it is) against your PAYE income tax on negatively geared shares.

Perhaps one of the tax experts could clarify that.


----------



## robots (1 July 2008)

hello,

yes you can

thankyou

robots


----------



## Tysonboss1 (1 July 2008)

wayneL said:


> Depends on your point of view. Other businesses where a trading loss is the intentional result, are not allowed the deduction. There must be an intention to make a trading profit, irrespective of capital profits.
> 
> The trading loss should be accounted for somehow... perhaps offset against future profits if/when the property goes profit positive... and/or against future capital gains.
> 
> ...




Yeah I see what you mean, But I guess it's no different to share investors using margin loans, I would dare say most margin loan facilities are not presently positivly geared, investors would be investing in share paying 5% or 6% while paying 10.25% interest.

the government wants a steady flow of development projects to help keep up supply of rental accomadation, and without investors buying the end product the amount of developments being completed would be servely reduced,


----------



## Mofra (1 July 2008)

Go Nuke said:


> Ahh the worst words in the English language...."just" and "only" lol.



No doubt Macquack was being facetious - despite the hype about the current volatile housing market, there will always be ridiculously overpriced shacks available.


----------



## CamKawa (1 July 2008)

*Home buyers struggling with mortgages should sell now*

*HOMEOWNERS already struggling with mortgage repayments need to cut their losses and sell up before it is too late, an industry insider has warned.*

Those homeowners feeling the pinch from rising interest rates and living costs need to put their house on the market now because things are about to get much worse, Wizard Home Loans founder Mark Bouris said

...

The Reserve Bank board holds its monthly meeting on interest rates today, but most economists predict rates will remain steady. 

But despite that slight reprieve, Mr Bouris said there was a "major problem looming" for struggling homeowners over the next few years. "I know this because of what I hear in the industry and what my customers are telling me every day. 

"Interest rates have gone so high in the last few years that ... homeowners really are battling. And there's worse to come. Much worse." 

Mr Bouris said people who singed up for a fixed loan three or four years ago - before rates shot up - are about to get a shock. These homeowners will soon be switched from their introductory fixed rate to a much higher loan. 

"*They have no idea what is about to hit them*," he said. 

He also said that interest rates have risen so much in recent years that the calculations once applied to assess someone's capability to pay back a loan "are now nonsense". 

"Mums and dads need to take their heads out of the sand and start looking at the next six months, because these high interest rates could last for another year or so. There's only so long some people can hang on."


----------



## Temjin (1 July 2008)

I was reading the public comments in that article and I have to tell you that there is flame just about every one of them! 

The only thing I don't get is why would the founder of Wizards Home Loan would say something like this?? What is his true intention? As true as what he is advising to people, how "genuine" is he in making the comments? Doesn't his company earn money through lending money out for the long term? By telling people to sell, he is essentially trying to reduce his company's business. Or is he trying to protect his business to urge those who are struggling to get out first in good terms because being foreclosed and get sold in fire sale prices. Which would essentially means Wizards Home Loan might get less if it is a negative equity and more people "default" on their loan.


----------



## pepperoni (1 July 2008)

If things keep at this rate I can see a worst case scenario for owners as affordability fallings back 1980s and 1990s levels.

The only thing stopping it are the last remnants of the property overvaluers/over bidders, who see 80s and 90s affordability type prices as just too cheap, and 80s and 90s as the ignorant dark ages from a property valuation point of view.

There are plenty of properties for sale so its not a supply issue ala dubai or something.


As an aside I had this exchange starting from the bottom on the "2.8m" almost finished project ... 3 storeys, 350m2 double brick with huge ocean views, which has dropped from 2.2 to 1.3 in 2 months!!!!!! 300k to finish internally tops.  He later called and I said name your price or forget it again .... I havent seen this RE Agent desperation this decade at least.


Hi

If you’re interested please forward best offer 

At the level you’re willing to buy property.

And fax letter back to 



Hi,

I have the money in a term deposit maturing in 2 weeks.

I am very happy to purchase the property for around 1.3 if they wish to directly negotiate with me.

However I dont want to get involved in tenders or dutch auctions.

Regards



Hi

The trustee contacted me today

Please submit your best offer 

They will submit it to St George Bank

Regards


----------



## robots (1 July 2008)

hello,

could pepperoni please post a link for this bargain in syd?

thankyou

robots


----------



## CamKawa (1 July 2008)

pepperoni said:


> As an aside I had this exchange starting from the bottom on the "2.8m" almost finished project ... 3 storeys, 350m2 double brick with huge ocean views, which has dropped from 2.2 to 1.3 in 2 months!!!!!! 300k to finish internally tops. He later called and I said name your price or forget it again .... I havent seen this RE Agent desperation this decade at least.



I saw a house on Saturday in inner eastern Melbourne that had fallen from 1.2m to 1.0m in seven weeks and the REA still can't find a buyer. Your price pullback beats mine though.


----------



## Go Nuke (1 July 2008)

> Mr Bouris said people who singed up for a fixed loan three or four years ago - before rates shot up - are about to get a shock. These homeowners will soon be switched from their introductory fixed rate to a much higher loan.
> 
> "They have no idea what is about to hit them," he said.
> 
> He also said that interest rates have risen so much in recent years that the calculations once applied to assess someone's capability to pay back a loan "are now nonsense".




Ive heard EXACTLY the same thing mentioned by one of these companies on the business channel a few months back. And its so true.
Imagine locking in your interest for sya 3-5 yrs...all of a sudden your about to be paying something like 10% interest.

bring it on I say.
As someone who is working hard to save a deposit, its like your forever trying to keep up with rising prices.
A nice little burst of this house price increase will suit me fine



> At the end of the day Negative gearing just means you can offset the interest on your loans against your income, there is nothing wrong with that.



I know what it is. As I stated, I'm an investor myself. I'd still like to see the laws changed to prevent the rich getting richer by buying up cheap housing.



> Oz rents are still quite cheap by western world standards.




OMG..is it??
Gee what % of income does the rest of the world pay for rent?
Again, maybe I don't know enough about economics, but living here in Brisbane I don't see how people will continue to afford  the skyrocketing rents.
Keep in mind the so called bs average income in this country is what..about $58K?
Seems I know alot of below average people


----------



## robots (1 July 2008)

hello,

yes bro we still very much the lucky country,

both prices and rents in europe are very very high

thankyou

robots


----------



## Snakey (1 July 2008)

robots said:


> hello,
> 
> yes bro we still very much the lucky country,
> 
> ...



How much has your property increased in value this month robots or should i say decreased :


----------



## robots (1 July 2008)

hello,

wouldnt have a clue,

but I gladly reported that my suburb St Kilda had dropped by 1.2% for the last figures (which I think were March)

given Melbourne is reportedly down 0.02% this quarter i will look forward to the new figures,

whether the numbers go up or down my costs are decreasing while the costs for the guy & girl next door renting are going up, sure its taken 7 yrs

but abs stats indicate the prop owner comes out 5x better than the renter ( not everyone)

thankyou

robots


----------



## BSD (1 July 2008)

robots said:


> but abs stats indicate the prop owner comes out 5x better than the renter




What are you smoking???

More fun to contemplate for the future:

http://www.bloomberg.com/apps/news?pid=20601087&sid=azTY5tt691sM&refer=home

U.K. house prices fell in June by the most since the end of the last recession 

*The price of an average home declined 6.3 percent from a year earlier to 172,415 pounds (US$343,278), the biggest drop since November 1992, *Britain's fourth-biggest mortgage lender said today in a statement. Prices dropped 0.9 percent from May. (annualise that!!!!)

------

What is the average cost price of an Australian residence?

How many people live here? How much space do we have?

Who is lining-up to pay almost double the average UK price to live in the outer suburbs of Sydney in a no jobs zone 30kms from the city with interest rates 40% higher than the UK?

People about to go broke I would assume. 


Robots, you are pulling your pud


----------



## gfresh (1 July 2008)

I'm a renter at the moment, got lots of spare money each week.. However if I was a property owner right now I would probably be suffering under rising food prices, interest rates, petrol prices and everything else that everybody is whingeing about. I can easily cop another 30% rise in rent and still be much better off than my property owning friends. Some are already taking out their frustration at times "but you've got heaps of money, we've got a mortgage!".. hmm !



			
				temjin said:
			
		

> Or is he trying to protect his business to urge those who are struggling to get out first in good terms because being foreclosed and get sold in fire sale prices. Which would essentially means Wizards Home Loan might get less if it is a negative equity and more people "default" on their loan.




Was it on the 4corners segment? but I remember, somebody who helps those in financial hardship, said the biggest problem is that people try and hang on too long. If they tackled it earlier, they would be able to get out with some equity left. Instead they keep going and going, until they owe more than they own, which often leads to major problems, and then bankruptcy. That's probably when the lender takes a hit. So I think it's definitely in a non-bank lenders best interests like Wizard to not have defaulters on their books. 

Massive number of properties listed in a Brisbane area I looked at even just 4 weeks ago, which had very few listed. Amazing how new supply can suddenly appear. Unless buyers are going to come surging forward in the next 6 months, these people if they want a sale are going to have to drop the price. Should be some good bargains there in 6-12 months. Not quite yet, but they will come.



			
				pepperoni said:
			
		

> I havent seen this RE Agent desperation this decade at least.




Must be a few that are pretty wet behind the ears as well. Have noticed so many smaller agencies spring up over the years, as wealthier agents have splintered off from older agencies.  Surely many will not survive a sustained downturn.


----------



## gfresh (1 July 2008)

> Mr Bouris said people who singed up for a fixed loan three or four years ago - before rates shot up - are about to get a shock. These homeowners will soon be switched from their introductory fixed rate to a much higher loan.




This was talked about a few pages back, but it will definitely be a cause for further hardship for many. Woman at work the other day was in tears on the phone because the bank was being a hard-ass not giving them any special treatment when negotiating their 9.x% rate, up from 7.x% or so from 3 years ago. Absolutely no sympathy from the bank, nor special treatment. 

This could be $100/wk+ switch for many. Hard to just come up with that much extra overnight.


----------



## robots (1 July 2008)

gfresh said:


> I'm a renter at the moment, got lots of spare money each week.. However if I was a property owner right now I would probably be suffering under rising food prices, interest rates, petrol prices and everything else that everybody is whingeing about. *I can easily cop another* *30% rise in rent* and still be much better off than my property owning friends. Some are already taking out their frustration at times "but you've got heaps of money, we've got a mortgage!".. hmm !
> 
> 
> Must be a few that are pretty wet behind the ears as well. Have noticed so many smaller agencies spring up over the years, as wealthier agents have splintered off from older agencies.  Surely many will not survive a sustained downturn.




hello,

couldnt agree more there bro, most people renting will be getting a letter every year from now on i think, definitely different from 01-04,

great for people on good incomes, low mortgages etc who have done the hard yards like our mothers and fathers before us

thankyou
robots


----------



## explod (1 July 2008)

robots said:


> hello,
> 
> couldnt agree more there bro, most people renting will be getting a letter every year from now on i think, definitely different from 01-04,
> 
> ...



Trouble is, no more low mortgages or good incomes, and the letter every year will mean more moving in with Mom and  Dad or shacking up with whoever just to cut down the pain.  Sorry but us landlords are in for tough times.   Think I should get rid of everything and rent in Fiji for awhile


----------



## Beej (1 July 2008)

BSD said:


> What are you smoking???
> 
> [snip]
> 
> ...




Thought I'd chime in here.... (long time lurker...)

At least compare apples with apples! The UK is a BIG country also (without the 80% dessert/arid that Oz has), and MOST houses are not within 30kms of the centre of London! In fact, try buying any house within 30kms of London central and be prepared for Sydney to look VERY cheap!

Re houses 30kms from Sydney CBD - well, that's area's like Hornsby, Paramatta, Hills District, and "The Shire" - none of which are "no jobs" zones, and are actually pretty solid areas socio-economically speaking, also with mostly good public transport, and other established area infrastructure. If you go further out to the S/W and outer West of Sydney, a decent 3 bedroom house can be bought for $250k-$300k - and that seems like pretty good value to me - can't see them getting much cheaper.... 

So the answer to your question is that in fact no-one is lining up to pay double UK average prices for average houses in no-jobs areas in outer Sydney at all.

Cheers,

Beej


----------



## xoa (1 July 2008)

Nonsense. House prices will always go up. Us Aussies can afford to spend 101% of our incomes on rent/mortgages, we're the lucky country. And unlike the rest of the world, we have a shortage of land and stuff. In comparison to Europe or Asia, we're practically packed in like sardines.


----------



## Temjin (1 July 2008)

robots said:


> but abs stats indicate the prop owner comes out 5x better than the renter ( not everyone)
> 
> thankyou
> 
> robots




Seriously robots, have you EVER considered once that the rapid rise in property prices over the past 5 years was an extraordinary event brought by the greatest credit boom the world has ever seen since the past several decades? And this is not caused by a simple "supply and demand" thing or a simple "cyclical" event? 

Or you don't believe that the credit boom ever existed? Or you don't believe that the level of debt that an average Australian carry has NOT INCREASED RAPIDLY over the past several years?

You should be more aware of your recency cognitive bias. Everyone suffers from it. It's not just property alone, even uni kids these days think the share market should rise by 30% every year because it has done so for the past 3-4 years. And when you tell them that they should "realistically" expect no more than 9% p.a., they would think it's unrealistic.


----------



## wayneL (1 July 2008)

Temjin said:


> Seriously robots, have you EVER considered once that the rapid rise in property prices over the past 5 years was an extraordinary event brought by the greatest credit boom the world has ever seen since the past several decades? And this is not caused by a simple "supply and demand" thing or a simple "cyclical" event?
> 
> Or you don't believe that the credit boom ever existed? Or you don't believe that the level of debt that an average Australian carry has NOT INCREASED RAPIDLY over the past several years?
> 
> You should be more aware of your recency cognitive bias. Everyone suffers from it. It's not just property alone, even uni kids these days think the share market should rise by 30% every year because it has done so for the past 3-4 years. And when you tell them that they should "realistically" expect no more than 9% p.a., they would think it's unrealistic.


----------



## dhukka (2 July 2008)

I haven't been following this thread much but I thought the following article from the Courier Mail might be of interest:



> *Stand-off between Brisbane house buyers and sellers*
> 
> SELLERS want up to 30 per cent more for their homes than buyers will pay, and the stand-off has caused falling sales volumes in southeast Queensland.
> 
> ...


----------



## Kimosabi (2 July 2008)

The anti-robots speaks.  A good article from Neil Jenman


> *THE TOUGH TRUTH*
> *What sellers need to know.*
> 
> *by Neil Jenman*
> ...




http://www.jenman.com.au/news_article.php?id=237


----------



## wayneL (2 July 2008)

Holy Dooley!!! Never thought I'd see this in The Gaurdian!

http://www.guardian.co.uk/commentisfree/2008/jul/01/houseprices.property?gusrc=rss&feed=uknews



> House prices: too high for too long
> 
> *Let's welcome further price falls in the housing market as a return to something approaching sanity*
> All comments (34)
> ...


----------



## robots (2 July 2008)

hello,

great to see all the posters coming out of the woodwork,

keep it comimg, great post from beej

was great to see Rolf Harris inducted into the Aria hall of fame, 

have a fantastic day

thankyou

robots


----------



## theasxgorilla (2 July 2008)

Temjin said:


> Seriously robots, have you EVER considered once that the rapid rise in property prices over the past 5 years was an extraordinary event brought by the greatest credit boom the world has ever seen since the past several decades?




Speaking of recency cognitive bias, didn't the property boom really get in gear way back in 1997?


----------



## pepperoni (2 July 2008)

Temjin said:


> Seriously robots, have you EVER considered once that the rapid rise in property prices over the past 5 years was an extraordinary event brought by the greatest credit boom the world has ever seen since the past several decades? And this is not caused by a simple "supply and demand" thing or a simple "cyclical" event?
> 
> Or you don't believe that the credit boom ever existed? Or you don't believe that the level of debt that an average Australian carry has NOT INCREASED RAPIDLY over the past several years?
> 
> You should be more aware of your recency cognitive bias. Everyone suffers from it. It's not just property alone, even uni kids these days think the share market should rise by 30% every year because it has done so for the past 3-4 years. And when you tell them that they should "realistically" expect no more than 9% p.a., they would think it's unrealistic.




+1.

I would have added that the abs statistic about owners and renters confuses cause and effect, but then we have said that numerous times already on this thread.


----------



## pepperoni (2 July 2008)

theasxgorilla said:


> Speaking of recency cognitive bias, didn't the property boom really get in gear way back in 1997?






Funny you should say because I cant remember exactly.

I remember my first house cost $400k in 1998 which was not boom by any means.

I think I sold 4 years later when things were moving a little and that prices started moving 2 years before I sold but not sure exactly.  The price was $890k.  Ridiculous in 4 years IMO.

After I sold until ... maybe 2004 ... things really went nuts but havent gone much further since then.



My dad sold a 600sqm new house with views in collaroy plateau for about 890k in 1998.  It took over 6 months to sell and the price seemed fair.  Today it would list over, if not well over, $2.5m.  But with recent events it wouldnt get that,

Luckily dad bought a barely livable place in probably 1999 with views near the one he sold ... for $750k! He got bitten but today that shack would still sell for 1.3m in a few days.  At the top of the boom they would have asked around 2m for that shack.

I guess Im a huge bear because I was shaking my head through all of it.  BTW this just the northern beaches of syd only which I have since left.


I see the whole boom as being cause by the credit bubble AND a rush of people valuing houses by reference to what they could borrow rather than any inherent value having regard to historical prices (which they seemed to think they were smarter than).  

Prices are hanging in a little in spite of 12 rate increases (or whatever it is) ironically because of recent historical values. However I can definitely see things coming back more when they realise where rates are and what could happen if there is any recession over their 30 year - every cent they could borrow - loans (which is essentially what their valuations were based on)


As an aside dad was also lucky to quickly build a bigger house on the last block ... for $400k.  He says today it would cost $1m to OWNER BUILD the same house.  He talks $600k minimum to owner build a small quality house so building costs have gone up almost as fast as properties.

This is hurting some properties alot.

Not long ago people bought knowckdowns thinking they could get a builder to build a mansion for $300k.  They all got burnt and more people realise this now which is why in my area anything that needs work is suffering the most.


----------



## gfresh (2 July 2008)

Jenman speaks some sense there, you can sell anything at the right price - and if there are no buyers, you're asking the wrong price. Whether it's property, shares, or marbles, the principles are exactly the same. Maybe some will "give up" and try and hold onto the property for better times, but there will be many that do not have a choice. 

You're dealing with the lowest common-denominator here, those that are most desperate to sell, and have to sell. And there will be plenty of those coming up, it will no longer be optional. Buyers out there will be taking those properties at those prices - not the profit takers who've probably already locked into their head how much they've made. Buyers know the tide has turned, and most will wait until prices come into their range. And for the last couple of years especially, the price was creeping way above most people's comfortable range. 

Goldcoast small businesses are starting to fall over (we deal with them, and they're not paying their bills, telling us others are also chasing them money, get in line).. the coffee shop owner, the hairdresser, the beauty therapist, etc - all are demand driven, and very much optional for consumers. As other price rises bite, people are giving up these optional niceties, and these businesses will start shutting up. All more than likely own property, and probably have their business equity staked on their home. This is why I think the Goldcoast could particularly get nasty, even if population growth is continuing to rise. It's all very much small businesses, construction, tourism. All of which are very much boom focused.


----------



## Mofra (2 July 2008)

Kimosabi said:


> The anti-robots speaks.  A good article from Neil Jenman
> 
> 
> http://www.jenman.com.au/news_article.php?id=237




"Salespeople are eternal optimists."

Never a truer word spoken. Expectations a ridiculous in some areas - my street is a perfect examle.

A sale of $472k in April last year followed by a $500k sale a few months later.
A very similar property (nicer kitchen however no backyard) in early June was passed in... at $769k reserve!

Sold last week for $730k, at least some sellers are becoming realistic.


----------



## Temjin (2 July 2008)

theasxgorilla said:


> Speaking of recency cognitive bias, didn't the property boom really get in gear way back in 1997?




Yeah, but then people don't usually look back "far" enough. The good old, "It's different this time!".  

The chart below was posted in this thread in a few pages eariler, but I always love to refer to it. It's an excellent shock therapy for those who never fully appreciate this particular cognitive bias. Though certain people tend to "ignore/denial" it. Probably doesn't fit their believes.  

I'm actually looking for an updated chart with the real price index of the US is now turning back down, I've seen it before but couldn't find it. 

Kimosabi, great article there. Done in a simple, no-BS language.


----------



## Go Nuke (2 July 2008)

Indeed that was a fantastic article Kimosabi! Thx. And so true too.

Property is eactly like shares. Once the prices runs away too high..expect a pullback. And typicaly with a pullback...the buyers disappear to see how low she will go

Thats an interesting chart Temjin.
To be honest i don't really understand it...but its way off the chart right about now hey!!

As i say...property prices have far exceeded peoples desposable income.
Somethings got to give


----------



## kingbrown (2 July 2008)

The whole housing industry is a Joke imo 
And is destined for failure 
It appears we are on the American tram of more people the better 
Thats an unsustianable and a false economy  imo 

One only has to try and find a place to rent 
Or drive in or around a major city
Melbourne's traffic chaos is tipped to rise 100 % wtf ?
Becoming no more the land of a fair go 
its just how much you can be robbed 

Many ppl have no where to go as all cheap rentals have dried up 
I even know of some people heading up bush 
Yes living in state forrests like ferals but at least they can live  

Funny we never hear the real estate agents using the word over capitalised these days 
i hope this phrase will be back in vogue soon 

Otherwise all our children may end up in the mines ? 


*Housing crisis will hit elderly the hardest*
HOUSING affordability in Australia is becoming a problem, with affordability levels at the lowest they have been in decades and with little hope of relief in sight.

The problem is exacerbated for older Australians, people with a disability, or anyone trying to balance a budget with a pension as their only means of income.
High interest rates tend to slow home purchases, which reduces the pool of affordable housing stock and inflates rents.


http://business.theage.com.au/housing-crisis-will-hit-elderly-the-hardest-20080630-2zgk.html

*A million houses needed to avoid shortfall*

A MILLION new homes need to be built over the next five years to cope with Australia’s booming population, new figures out from the Housing Association show.

The number of houses currently being built falls well short of this, and according to the HIA, there'll be a shortfall of at least 175,000 houses if current building rates continue. 

Record-low affordability

A shortage of housing is one of the key drivers in record-low housing affordability.

The Housing Industry Association (HIA)/Commonwealth Bank First Home Buyer Affordability Index fell 3.5 per cent in the quarter, and was down 10 per cent on the same time last year. 

Mortgage repayments now account for 29.1 per cent of an average first home buyer’s income – the highest percentage on record. 

http://www.news.com.au/story/0,23599,23944631-2,00.html?from=public_rss


----------



## robots (2 July 2008)

hello,

yes its tuff out there for the hard workers,

thankyou

robots


----------



## robots (2 July 2008)

hello,

http://www.tradingroom.com.au/apps/view_article.ac?articleId=151680

fantastic news, approvals down 6%

things are looking great for investors of all sorts,

this is why the gov has to look at providing "better" incentives for people to get involved in the construction of new dwellings, 

whether it be improving negative gearing or capital gains concessions, funding etc

the rental program they want to introduce will do nothing

the good days for building workers will most likely roll on,

pep's has highlighted the increase in building (labour) costs

thankyou

robots


----------



## CamKawa (2 July 2008)

robots said:


> hello,
> 
> http://www.tradingroom.com.au/apps/view_article.ac?articleId=151680
> 
> fantastic news, approvals down 6%



The reason why building approvals are down is because there's no demand for them. It's a signal that prices will fall.


----------



## robots (2 July 2008)

hello,

plenty of demand for existing stock though,

tenants union of victoria say 1% vacancy rate lowest for as long as they can remember, 

i am new to this, so if prices fall will rents fall as well camkawa?

thankyou

robots


----------



## motion (2 July 2008)

well it seems things are just going up and up in Sydney within a 8km radius. Will be interesting to see if it falls at all over the next 6 months, because a lot of people are saying we are at the bottom..

Who do you believe, the agent, the press or the chat in the local pub !!


----------



## Temjin (2 July 2008)

Go Nuke said:


> Thats an interesting chart Temjin.
> To be honest i don't really understand it...but its way off the chart right about now hey!!
> 
> As i say...property prices have far exceeded peoples desposable income.
> Somethings got to give




Here is a brief explanation on the chart,



> The current housing bubble is a global phenomenon. Most OECD countries have seen rapid rises in house asset prices in the past decade. Before we look at the Australian market, Yale economist and author of Irrational Exuberance, Robert J Shiller, has probably the best picture of the current house asset boom, albeit in the US. *Temjin - Nigel Stapledon added the Aus index onto his chart.
> *
> 
> 
> ...





In a brief sense, house prices have always increased in price in nominal term at the rate of inflation since back in 1880 to 2000 with 30% of so deviation from it. In theory, if house prices track inflation rate perfectly, the chart should have a straight horizontal line. The last 10 years see this trend completely changed. 



As usual, I still get IGNORED by *robots.*  He is definitely very "selective" in what to read and what to write.


----------



## YChromozome (2 July 2008)

Temjin said:


> I'm actually looking for an updated chart with the real price index of the US is now turning back down, I've seen it before but couldn't find it.




I don't have one of real house prices (i.e adjusted for inflation), but here is one of true house prices. ABS vs Case Shiller Index :




It still needs to be indexed properly - but you get the point. Depending upon the dataset you get, I believe Australian property has had much bigger gains than the US which is not evident in the above data.


----------



## theasxgorilla (3 July 2008)

Well what do you know...according that chart house prices have been rising for years.


----------



## CamKawa (3 July 2008)

I shake my head in disbelief when I read articles like this. What a complete and total bunch of crap.

Home prices to explode, ANZ Bank predicts

Maybe the headline should read "If house prices fall, the banks are f***ed"


----------



## wayneL (3 July 2008)

CamKawa said:


> I shake my head in disbelief when I read articles like this. What a complete and total bunch of crap.
> 
> Home prices to explode, ANZ Bank predicts
> 
> Maybe the headline should read "If house prices fall, the banks are f***ed"



Oz seems to be six months behind here in the sort of pronouncements that MSM/Banks are making. In other words, we were hearing the same stuff here six months ago.

fwiw

-------

The market here is just dreadful. The lowest mortgage approvals on record, and two of the largest builders in the country look to be in danger of going under. A few banks are looking a bit dodgy too.

In the development where I am living (A Taylor Wimpey development, who failed to secure finance today), houses selling like hotcakes last year for 350,000 are available to today for 250,000... if you can complete within 4 weeks.

The speed at which things have changed is astonishing.


----------



## Sean K (3 July 2008)

wayneL said:


> The market here is just dreadful. The lowest mortgage approvals on record, and two of the largest builders in the country look to be in danger of going under. A few banks are looking a bit dodgy too.



Time to buy yet?


----------



## wayneL (3 July 2008)

kennas said:


> Time to buy yet?




Nope, the blood is not yet running in the streets, but there are some semblances of value here and there. I think it will take a couple of years to play out... then plenty of stagnation before it moves off again.

I'm happy to sit on the fence for a lot longer yet.

Re Taylor Wimpey:

http://business.timesonline.co.uk/t.../construction_and_property/article4258534.ece



> From The Times
> July 3, 2008
> Taylor Wimpey fundraising fails
> Angela Jameson and DearbÃ¡il Jordan
> ...


----------



## pepperoni (3 July 2008)

YChromozome said:


> I don't have one of real house prices (i.e adjusted for inflation), but here is one of true house prices. ABS vs Case Shiller Index :
> 
> 
> 
> ...




Oh god yes we have had the biggest boom in the westrn world IMO.

Nobody was seriously booming during the early part of ours.  I was in the us for a bit at the time and it was flat.  And you could buy a house in malibu with a view for less than the same house on the northern beaches.

Re that ANZ article .. never say never ... I think there will be falls but Im not aware of all factors.

EG ASX looks like it might go even lower today ... if it doesnt recover soon Im not sure if that will hurt houses through a wealth effect or if more investment funds will go towards houses.

You only need another 2-5% of people in the market desperate to park their money to have an impact.

I think its safest to buy now at the odd reasonable or firesale price .. im trying to.


----------



## Pommiegranite (3 July 2008)

wayneL said:


> *Oz seems to be six months behind here in the sort of pronouncements that MSM/Banks are making. In other words, we were hearing the same stuff here six months ago.*
> 
> fwiw
> 
> ...




I agree.

I have also seen first hand the problems which are facing builders. One has already gone under (Beechwood). The simple fact of the matter is that project homes are going up in price due to increasing costs, whereas the second hand house market is lagging/falling. This difference is increasing weekly. It is inevitable that many builders will go out of business. 

I will start with putting my money on Henley. Aren't they owned by Barratt homes (UK)?


----------



## professor_frink (3 July 2008)

wayneL said:


> Nope, the blood is not yet running in the streets, but there are some semblances of value here and there. I think it will take a couple of years to play out... then plenty of stagnation before it moves off again.




I hope your right. I want to be in a position to pick myself up a nice waterfront if the **** hits the fan good and proper, and I certainly won't have the current mortgage paid down enough in 6 months to do it. Give it 2 years though......


----------



## CamKawa (3 July 2008)

pepperoni said:


> EG ASX looks like it might go even lower today ... if it doesnt recover soon Im not sure if that will hurt houses through a wealth effect or if more investment funds will go towards houses.



Some speculation is going the other way, saying that margin calls are causing investors to offload other investments, including property, to cover the call.




pepperoni said:


> You only need another 2-5% of people in the market desperate to park their money to have an impact..



That's what they said about gold when it got to $1000 predicting it could soon reach $4,000 - $6,000. While it has risen in the last week it's still short of those forecasts.




pepperoni said:


> I think its safest to buy now at the odd reasonable or firesale price .. im trying to.



Catching a falling knife and bottom picking are dangerous investment strategies. I think that waiting for the market to recover and then buy with confidence that the house will appreciate may be a better way to go.


----------



## pepperoni (3 July 2008)

CamKawa said:


> Some speculation is going the other way, saying that margin calls are causing investors to offload other investments, including property, to cover the call.
> 
> 
> That's what they said about gold when it got to $1000 predicting it could soon reach $4,000 - $6,000. While it has risen in the last week it's still short of those forecasts.
> ...




All good points.  

Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak. But with transaction costs the way they are this time Im looking for just the right place to rent OR live as Ill need to hold just about forever.

Im a huge bear .... but with a raging case of "impending bull" paranoia.


----------



## Go Nuke (3 July 2008)

> Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak.




Aren't you concerned that on the graph above that Australian house prices are likely to follow in the same footsteps as whats happening in the U.S. now?

Perhaps worse so because while the Fed has been cutting rates in the U.S, our Mr Stevens is looking hard at raising rates.

It will probably go back to something like the 80's where rates where what..15+ %...but people (probably like myself) will still buy houses.

*_Personaly, I don't think Robots sounds like a man who is doing it tough atm. No offence Robots, but i get the feeling your a little out of touch with the lower/middle income people around here_

Though eveyones opinion is worth while listening too..and I respect that!


----------



## Tysonboss1 (3 July 2008)

gfresh said:


> I'm a renter at the moment, got lots of spare money each week.. However if I was a property owner right now I would probably be suffering under rising food prices, interest rates, petrol prices and everything else that everybody is whingeing about. I can easily cop another 30% rise in rent and still be much better off than my property owning friends..




But time catches up with renters, your rent will rise with inflation indefantly, where as the home owners weekly payments will stay pretty much the same there fore decreasing with inflation over the years, home owners also end up living rent free once the loan is cleared, all the while the renters rent keeps climbing, 

You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now.


----------



## kingbrown (3 July 2008)

*Commercial land rats trying to jump the off the Titanic*

This Contradicts the ANZ today 
I think this is more of reality then spin 

Todays Australian :

*Commercial sales plunge*

*SALES of commercial property around the country fell 60 per cent to $3 billion in the first six months of 2008, plumbing depths not seen for 15 years,* according to research from agent CB Richard Ellis.

At the same time, more buildings are pouring on to the market in the wake of the credit crisis, with analysts estimating anywhere between $12 billion and $20 billion worth of Australian property is for sale. 

And expect things to get worse. 

"Buyers appear reluctant to commit at this time, uncertain whether prices may fall further on the back of an increasing cost of borrowing," CBRE Research executive director Kevin Stanley said. 

"Given the higher cost of borrowing and the nervousness of banks, achieving viable purchases may require yields to be significantly softer still than the current industry estimates." 

Agent Jones Lang LaSalle is of a similar opinion. It reported a first-half sales tally of $2.85 billion, down from $6.51 billion a year ago. "There has not been a single investment-grade deal done this year in Sydney," JLL head of capital markets John Talbot said.

more here 
http://www.theaustralian.news.com.au/story/0,25197,23959319-25658,00.html

Finally people are starting to see the insanity that has gripped our property market and in particular the immense gains of the commercial sector


----------



## theasxgorilla (3 July 2008)

pepperoni said:


> All good points.
> 
> Ill still buy if I can though happy in the knowledge that Im buying at somewhat less than peak. But with transaction costs the way they are this time Im looking for just the right place to rent OR live as Ill need to hold just about forever.
> 
> *Im a huge bear .... but with a raging case of "impending bull" paranoia. *




At least you're honest!


----------



## robots (3 July 2008)

Tysonboss1 said:


> But time catches up with renters, your rent will rise with inflation indefantly, where as the home owners weekly payments will stay pretty much the same there fore decreasing with inflation over the years, home owners also end up living rent free once the loan is cleared, all the while the renters rent keeps climbing,
> 
> *You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now*.




hello,

yes great paragraph, 

still so much choice when looking at prop to buy across numerous price brackets, 200k up to 20mil, australia wide

something for everyone in there, who knows what will happen in the future,

many seem to think the shortage will underpin it all, many are taking advantage of this in the rental market with bunk beds sold out at Harvey's joint,

thankyou

robots


----------



## Pommiegranite (3 July 2008)

robots said:


> hello,
> 
> yes great paragraph,
> 
> ...




Thats irrelevent if people can't get credit for those properties.

It's rapidly becoming a buyers market where buyers can't afford to buy.


----------



## robots (3 July 2008)

Pommiegranite said:


> Thats irrelevent if people can't get credit for those properties.
> 
> It's rapidly becoming a buyers market where buyers can't afford to buy.




hello,

and thats clearly not the case

thankyou

robots


----------



## gfresh (3 July 2008)

tysonboss1 said:
			
		

> You are probally paying the same in weekly rent today as what the people who bought 5 years ago are paying on loan repayments, and in 5 or 7 years time the amount your rent has increased to would probally easily cover the loan repayments had you bought in now.




Not sure about 5 years ago (was no position to do so), however I'm still paying a lot less in rent than the people I know who have bought 3 years ago are paying in repayments - in their early 30's, as the only time they could afford to buy. 

They are also paying a heck of a lot more than their comfort zone if they didn't fix their loan back then for long period. Most didn't believe interest rates could ever reach current levels so quickly, so they didn't. Most can't even afford to have children because the cost of their mortgage is too high. This is a very disturbing trend for the country. 

Anyhow, I'm fine at the moment, and my rent is much less than the interest would be swallowing at a 9.4% in this current climate. Instead my deposit is earning me 8% right now which is being added to weekly. I'm going forward, many newer entrants are going backwards right now, just hoping for the better times. 

I will be buying, when the time is right. To be totally honest, about 3 years ago I had the common sense to see/read house prices were getting beyond people's true affordability, and have waited it out. I'm 100% confident I've made the right decision there.

I understand the points made there longer term, and I'm not a property bear at all (I actually own 1/3 a property in Melbourne, to be sold soon). Just recently, greed and fear have taken over from rationality.


----------



## Pommiegranite (3 July 2008)

robots said:


> hello,
> 
> and thats clearly not the case
> 
> ...




It is all over the Western suburbs of Melbourne. The number of houses for sale and rent are increasing. 

Houses are taking at least twice as long to sell as at the beginning of the year (from communications with numerous RE agents!.

I sold earlier on in the year (Febraury, and fell through due to no FIRB approval) and I had no shortage of offers within 2 weeks of listing. 

I have just resold the same property at a reduced price, and it took closer to 2 months to get a half decent offer.


----------



## theasxgorilla (3 July 2008)

Pommiegranite said:


> It is all over the Western suburbs of Melbourne. The number of houses for sale and rent are increasing.




This happened during the last slow patch from 02-05 (roughly).  Should one reasonably expect the western suburbs to be upstanding during soft patches?


----------



## Pommiegranite (3 July 2008)

theasxgorilla said:


> This happened during the last slow patch from 02-05 (roughly). Should one reasonably expect the western suburbs to be upstanding during soft patches?




2002-2005 : low inflation+low interest rates = softpatch

2008: High Inflation+High interest rates = ?


----------



## lusk (3 July 2008)

There you go 

2002-2005 : low inflation+low interest rates = softpatch

2008: High Inflation+High interest rates = :grenade:


----------



## pepperoni (3 July 2008)

lusk said:


> There you go
> 
> 2002-2005 : low inflation+low interest rates = softpatch
> 
> 2008: High Inflation+High interest rates = :grenade:




Good  point.

Could this article support the idea that further falls are likely?

http://business.smh.com.au/australia-in-mortgage-recession-20080703-313n.html


----------



## wayneL (3 July 2008)

Pommiegranite said:


> 2002-2005 : low inflation+low interest rates = softpatch
> 
> 2008: High Inflation+High interest rates...




...+ credit crunch + rising unemployment + impending recession =?

Just thought I'd add to the equation.


----------



## dhukka (3 July 2008)

wayneL said:


> ...+ credit crunch + rising unemployment + impending recession + deflation




In 2009 the conversation will shift to deflation in the developed world not inflation.


----------



## explod (3 July 2008)

As the prices of all things continue to rise, (oil, food etc.,) money in the bank will shrink to nothing so having a bit of dirt will become very important.  And a bit of gold in the meantime some insurance.

At the end of it all, it will be tangible assets that you can see that will survive.


----------



## gfresh (4 July 2008)

Banks & Mortgages article:

http://www.abc.net.au/news/stories/2008/07/03/2293917.htm

Brian Johnson, the managing director and banking analyst at JP Morgan Australia: 







> "I find it bizarre that Australia would be the only country in the world where there wouldn't be some kind of decline in housing property values."


----------



## CamKawa (4 July 2008)

gfresh said:


> Banks & Mortgages article:
> 
> http://www.abc.net.au/news/stories/2008/07/03/2293917.htm
> 
> Brian Johnson, the managing director and banking analyst at JP Morgan Australia:



The ABC seems to be giving fairly straight answers, as opposed to The Age newspaper which has sold out to its real estate and banking advertisers. The Age is only really good for starting fires with IMHO at moment.

One point I found interesting in the article was

"Mr Johnson said Australian banks are actually more vulnerable to the credit crunch than many of their global counterparts because of their high levels of gearing, or loan to capital ratios.

"We're talking banks geared 25-30 times, whereas the global peers may be geared 15-20 times... even a moderate loan-loss cycle creates negative earnings," he said."

and we keep getting told how secure our banks are here – interesting.


----------



## pepperoni (4 July 2008)

dhukka said:


> In 2009 the conversation will shift to deflation in the developed world not inflation.





If it werent for 1 billion chinese beavering away for 1 cent a month inflation would probably be over 5% already.

Trouble is this wont last and our reliance on them will result in huge imported inflation (they already run at 8% or something over there).


----------



## pepperoni (4 July 2008)

Here are some of the most telling stats ive seen ... average mortgages up from 96k in 2002 to 400k in syd today! 

Holy baby jesus what has gotten into these peope ha ha.

400k is alot of money IMO ... I hope the the average mortgage holder earns a fair bit more than the average salary!

http://www.smh.com.au/news/National...cent-in-7-years/2005/02/23/1109046971276.html

http://www.news.com.au/story/0,23599,23966531-2,00.html


----------



## wayneL (4 July 2008)

pepperoni said:


> Holy baby jesus what has gotten into these peope ha ha.




I believe somebody wrote a book on the subject... Mass Delusions and Hysteria or something like that.

All about tulip booms etc etc.


----------



## gfresh (4 July 2008)

That's a pretty staggering statistic in those two articles.. In 2002/03 the average outstanding mortgage (Australia wide) was $96k, in 2008 it's $341k.. 

6 years, 255% increase


----------



## YChromozome (4 July 2008)

gfresh said:


> That's a pretty staggering statistic in those two articles.. In 2002/03 the average outstanding mortgage (Australia wide) was $96k, in 2008 it's $341k..
> 
> 6 years, 255% increase




For sure. It's the level of debt and the serviceability of it that will kill us in the end.

The above figures don't take into account wage growth, or increasing household incomes. If you think the period 2002/3 onwards was bad have a look at household debt as a percentage of household disposal income (i.e factoring in wage growth) since about '91 onwards.




In say '91, for every dollar your household took home, you had 40 cents debt. Now it's $1.60. Interesting the first quarter this year it fell for the first time since, well, in a very long time.


----------



## Mofra (4 July 2008)

gfresh said:


> That's a pretty staggering statistic in those two articles.. In 2002/03 the average outstanding mortgage (Australia wide) was $96k, in 2008 it's $341k..
> 
> 6 years, 255% increase



Would love to see a breakdown of loan purpose - most people assume that he mortgage rise is solely due to people borrowing up to the hilt to fund property purchases, however there a good many financial advisers/accountants/brokers & snake oil salesmen who have been convincing people to draw down the equity in their properties to fund their investment portfolio. This is a phenomenon that was largely unprecedented in the history of domestic personal lending.

The recent credit explosion was not simply confined to a single asset class - the significance of the onflow must be taken into account.

Lets put all our equity into bank shares - they never go down do they


----------



## explod (4 July 2008)

Mofra said:


> Lets put all our equity into bank shares - they never go down do they





Dont' seem to go up much either.  NAB are the same price today as they were in the year 2000.  Good job there is a bit of a dividend.


----------



## CamKawa (4 July 2008)

Mofra said:


> Would love to see a breakdown of loan purpose - most people assume that he mortgage rise is solely due to people borrowing up to the hilt to fund property purchases, however there a good many financial advisers/accountants/brokers & snake oil salesmen who have been convincing people to draw down the equity in their properties to fund their investment portfolio. This is a phenomenon that was largely unprecedented in the history of domestic personal lending.



In the past share market falls property has gone up because it has been seen as a safe haven. Maybe we aren't seeing it this time because people have borrowed against their house to buy shares with the prospect of getting even richer. Some even went a step further and took out a margin loan against the shares they bought with the equity in their house to buy even more shares. Now faced with a falling stock market the collateral underpinning all this may have be called upon, leading to a greater supply of houses with fewer interested buyers. Houses prices can only move in one direction from here.


----------



## Warren Buffet II (4 July 2008)

Why people keep thinking that immigration is going to keep the house prices rising for years?

70% of people come from very poor countries, they do not have access to any credit and it will take them years to even been able to buy a unit.

I know an immigrant that has been in Oz for 4 years, he is in the IT industry and makes 60K in Brisbane, he is married and with one kid, he has around 20K for a deposit, no credit card debt. He went to the bank to buy a property at Forest Lake for $320.000, the bank checked its paperwork and rejected his application.

Now explain to me how immigration is going to help with the current prices?, I do not think so, this is happening so demand is less now and supply is increasing by the day.

WBII


----------



## Temjin (4 July 2008)

Warren Buffet II said:


> Why people keep thinking that immigration is going to keep the house prices rising for years?




Because the economists say so? 

YChromozone, thanks, similar but it doesn't seem to have the type of "volatility" around the index (100). I.e. It looks quite smooth from the 1990s, where as, there were mini booms in my previous chart. I was looking for the same one but with updated data. 

I actually did a very brief research on the Canada housing market and it seem to have fairly similar characteristics as to Australia. They have tons of resource, and we have them too. They have yet to experience the type of house prices drop that US/UK is experiencing right now. As for public sentiment, it's around the same between us and the Canadians but it's extremely negative for those in the US/UK right now. If one pick just any bloke in the US/UK and tell them that how house prices will ALWAYS RISE because supply/demand and immigrations, they will think you are BSing. Hardly anybody there now are believing house prices will always rise, they've seen reality now. 

However, if you do the same here and in Canada, you may get some BSing as more and more people realise the truth, but you would also get the traditional "in agreement" responses. Reality has not yet fully present itself upon us yet. The housing market here does seem to be "lagging" amoung those two major western economics.  My guess is that the resource boom that our two countries are benefiting from is indeed shielding us to a certain extent, though it would only delay the inevitable.

Can't wait to see the general sentiment when we went pass the denial stage.


----------



## pepperoni (4 July 2008)

Warren Buffet II said:


> Why people keep thinking that immigration is going to keep the house prices rising for years?
> 
> 70% of people come from very poor countries, they do not have access to any credit and it will take them years to even been able to buy a unit.
> 
> ...




I made the same point before on this thread.

I remember Hawke and Keating bringing in rich Hk Chinese and South Africans almost as if to counterbalance the $a flowing offshore/cook the books .. well sort of .

Anyway those migrants may have given the market a kick.  But nowadays most of our migrants seem to come from thrid world type economies and I suspect most have never had $1000 to their name.  I really cant see that type of immigration supporting house prices or rents.


----------



## Pommiegranite (4 July 2008)

....it just gets worse and worse. When they say 'more to come'...what do they mean...lol?

http://business.theage.com.au/bank-lifts-home-loan-rate-interest-20080704-31o5.html

*Bank lifts home loan rate interest*

July 4, 2008 - 3:15PM 


St George Bank has lifted its standard variable home loan rate by 0.20% to 9.67%.
Australia's fifth largest bank attributed the rise to the continuing high cost of funds it sources itself.
The 0.20 per cent rate rise equates to an increase in a home loan payment of about $10 per week on an average sized loan of $250,000 over 30 years.
*More to come*
AAP


----------



## Tysonboss1 (4 July 2008)

Warren Buffet II said:


> Now explain to me how immigration is going to help with the current prices?, I do not think so, this is happening so demand is less now and supply is increasing by the day.
> 
> WBII




Is this said person living on the street, or is he occuping a property.

If he is living on the street then it's true, he has no effect on the housing demand, however if he is renting he is there fore taking a house that would otherwise be available to rent or sell to some one else. so he is adding pressure both to rental prices and eventually through incresed rental yeild he is adding preasure to prices.


----------



## wayneL (4 July 2008)

Tysonboss1 said:


> Is this said person living on the street, or is he occuping a property.
> 
> If he is living on the street then it's true, he has no effect on the housing demand, however if he is renting he is there fore taking a house that would otherwise be available to rent or sell to some one else. so he is adding pressure both to rental prices and eventually through incresed rental yeild he is adding preasure to prices.



You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...

...except for adding to urban sprawl.

The other factor is that if things get too bad, folks will emigrate, reducing demand.

The picture is far more complicated than "immigration immigration!".


----------



## robots (4 July 2008)

wayneL said:


> You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...
> 
> ...except for adding to urban sprawl.
> 
> ...




hello,

where's the complication?

a. a look on RE.com.au shows plenty of affordable homes are available world wide

b. camkawa has identified plenty of places are available to rent with various asking prices

c. aus has very low unemployment so plenty of jobs going

no complications I would say, people dont have to invest in RE, shares, art etc

they can spend all of there money or shove it all under the bed

great discussion though, keep it all coming

thankyou

robots


----------



## wayneL (4 July 2008)

robots said:


> hello,
> 
> where's the complication?



It's in erroneous conclusions drawn from incomplete data.

Over here, the property bulls have been bleating about immigration, small island, undersupply, good economy, blah tiddily blah blah blah. Just like over there.

Yet prices are crashing around our ears.

People forgot to factor in the real factors... like credit supply, empty stock, emigration, sentiment and a whole host of things. The true picture is than in most areas, there is an oversupply of housing. It showed up as turnover dropped off.

Think about that one.


----------



## theasxgorilla (4 July 2008)

wayneL said:


> The picture is far more complicated than "immigration immigration!".




Too true.  Although its a factor in the immediate term...not all immigration is the same.  Unskilled immigrants don't really have an immediate impact that same as someone who turns up with a lot of money ready to slap down their hard earned for a piece of the so-called 'great Australian dream'.  However, in the longer term, immigration has a more remarkable effect.  A lot of the people we've been competing with for housing during the last decade or so are the children of the first generation immigrants.  They've had all the opportunities as the rest of the Australian population...and this has made a difference IMO.


----------



## wayneL (4 July 2008)

The most hilariously bullish website in the world:

http://www.brunopow.150m.com/website/

Let it download and scroll all the way down... ROTFLMAO

(BTW STR = Sell To Rent)


----------



## kotim (4 July 2008)

The chickens will come home to roost.  Don't forget never before in history have people who made so much money in property been able to access that unrealised profit and use it for whatever.  An awful lot of people invested in the stock market on margin with the equity in their properties and  effectively anyone who has invested in Shares since 2005 is underwater.

People can only take so much pain, you can never ever avoid the bigger the gain the bigger the pain that follows.  Certainly history has shown that all good things must come to an end, even if only temporary in the scheme of things.

Our whole system is debt based on the advancement of credit.  All our currencies are actually debt based instruments, the Banks do not lend money, they EXTEND credit.  IN a credit based society you have something that is not worth much at the bottom in terms of tangibles that ultimatley is passed around and extended upon time and time again so that in effect the current money system is an inverted pyramid.

In other words the largest layers at the top, which means the removal of things at the top do not show up obviously at first becasue the hgiher the level of layers the more in the layer, so pulling down that layer means that the removal  of a higher level takes longer at first because it is made up of a greater number but has the same height.

America and the rest are ultimatley all about the lack of real value that underpinned the vast extension of credit.  When the going is good people don't look at why they jsut wanna be in on the action.

The system is what it is, no more no less.  Think of the tide, the tide can move quite a lot before people who are not actively watching whether the water is coming or going, but sooner or later when the movement is large enough it becomes obvious even to those who aren't going out of their way to look.  At this point it is too late.

We are almost at that point now.

What people forget is that we walk into the financial adviser and they punch in a heap of figures and out comes the result.  The resuls shows some potential painful moments along the way, but ultimatley it is a winner and people only see the result, but in real life when they actaully have to experience some of that pain, they can no longer see the result becasue it is ultimately hypothetical and the pain is NOW.

Anyway it is always good for idle discusion because talk is cheap and that includes my talk.


----------



## Pommiegranite (4 July 2008)

wayneL said:


> The most hilariously bullish website in the world:
> 
> http://www.brunopow.150m.com/website/
> 
> ...




Bloody hell Wayne. How on earth did you come across this gem?

Just out of interest, did you see the guy from housepricecrash.co.uk a couple of days ago on the BBC, being interviewed by Declan?

There was a time when the BBC would never have interviewed someone from such a website.


----------



## explod (4 July 2008)

kotim said:


> People can only take so much pain, you can never ever avoid the bigger the gain the bigger the pain that follows.  Certainly history has shown that all good things must come to an end, even if only temporary in the scheme of things.
> 
> What people forget is that we walk into the financial adviser and they punch in a heap of figures and out comes the result.  The resuls shows some potential painful moments along the way, but ultimatley it is a winner and people only see the result, but in real life when they actaully have to experience some of that pain, they can no longer see the result becasue it is ultimately hypothetical and the pain is NOW.
> 
> .




Excellent post Kotim, refreeshing to get some new intelligent input.

Hope you drop into the "Immenent And Servere Market Correction"  thread also.

With no disrespect to other fine posters, just good to see new blood on our forum.


----------



## wayneL (4 July 2008)

Pommiegranite said:


> Bloody hell Wayne. How on earth did you come across this gem?
> 
> Just out of interest, did you see the guy from housepricecrash.co.uk a couple of days ago on the BBC, being interviewed by Declan?
> 
> There was a time when the BBC would never have interviewed someone from such a website.




Yes I saw it. Somebody even recorded it (hat tip to http://thecrownblogspot.blogspot.com/
):


I love the look on the face of the woman from Savilles. LOL


----------



## Temjin (4 July 2008)

wayneL said:


> Yes I saw it. Somebody even recorded it (hat tip to http://thecrownblogspot.blogspot.com/
> ):
> 
> 
> I love the look on the face of the woman from Savilles. LOL





Hehe I love the word used, "economic realism!!!". People just can't seem to "grasp" the truth because it has never happened in reality. (note: reality as in THEIRS, everyone have their own definition of reality) 

Though the interview was toooo short to really convince any of those out there and would still largely dismiss him as a lunatic. That's including the interviewer who obviously seem to be in disagreement with him based on how his way of questionings (skeptical) and laughing at the website name. 

OHhh, and yes WayneL, love that site, but I am actually skeptical if the author of the website really meant it. haha I'm pretty sure even most of the hardcore bulls would avoid siding with that lunatic.


----------



## wayneL (4 July 2008)

Temjin said:


> OHhh, and yes WayneL, love that site, but I am actually skeptical if the author of the website really meant it. haha I'm pretty sure even most of the hardcore bulls would avoid siding with that* lunatic*.



Bruno is well known around the UK property boards... and yes, there are real concerns about his sanity.


----------



## professor_frink (5 July 2008)

kotim said:


> An awful lot of people invested in the stock market on margin with the equity in their properties and  effectively anyone who has invested in Shares since 2005 is underwater.




Hi kotim,

just wondering how you came to that conclusion? My index data shows the XJO top in 2005  to be around the 4965 level, and as far as I'm aware of, it isn't below that now. And that's not taking into account 2 1/2 years worth of dividends. So how are they underwater


----------



## Tysonboss1 (5 July 2008)

gfresh said:


> Not sure about 5 years ago (was no position to do so), however I'm still paying a lot less in rent than the people I know who have bought 3 years ago are paying in repayments - in their early 30's, as the only time they could afford to buy.
> 
> .




The houses that I Bought when I was first starting out in property back in 2002 are now all positve geared, The first one i bought was for $218,000 getting $250 / week rent, It is now getting $410 a week rent. It's a similar story with most of my others they are all at varying levels heading towards positive territory.

Now I rent myself because the I don't wish to invest in the area where I live, but if I had purchased that property to live in people at the time could have said to me " why pay so much in loan repayments when you can rent it for only $250/week". Statements like that are very short sighted....

As you can see the rent will climb indefinantly from both inflation and increased demand for that patch of land, where as the repayments are pretty much capped and actually decrease with inflation as your pay rises year by year.

Yes interest rates can go up in the short term, but the will also eventually go down. and if you fix your loan you can give yourself more security.


----------



## Tysonboss1 (5 July 2008)

wayneL said:


> You forgot to factor in physical supply. If one extra house is added to supply, his net effect is neutral...




Sort of,.. but there are other factors, such as....

Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.

So the inner city suburbs that remain at low density will attract a premium price from those high income earners willing to pay $1M+ to live there, while the lower income areas will be built out with apartments increasing the price / square metre of land there too. 

Failing to recognise this is a key fault people make by making assumptions on house prices by comparing the number of dwellings coming to market, and also comparing house prices with incomes. 

Saying things like "there are more and more dwellings being built, so house prices should be going down", Is just flawed thinking.

As is saying things like "Houses prices will be limited by peoples income", as cities grow there will be more and more high income earners competing for a smaller and smaller amount of houses due to large number of suburbs being built out with high density, 1 family might not be able to afford $2.3M for a 3 bed home and land But 20 families can afford it after a developer has built 20 units on it and sells the units/ homes to twenty families.


----------



## Pommiegranite (5 July 2008)

Tysonboss1 said:


> Sort of,.. but there are other factors, such as....
> 
> Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.
> 
> ...





It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days.


Macroeconomic factors need to be taken into account.
First home buyers simply can't afford to prop up the housing market.
There is a definite fear factor creeping in.


----------



## Tysonboss1 (5 July 2008)

Pommiegranite said:


> It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days.
> 
> 
> Macroeconomic factors need to be taken into account.
> ...




Yes, but pretty much all of the "Valid" factors the bears are mentioning are short term situations, Not fundamental issues with property investment.

I have said over and over again that property investment should not be taken as a short term stratergy unless you are an expert.

My Comments were merely pionting out some of the miss conceptions people have about how property industry is affected by growth and inflation.

In my veiw there is pros to investing in property and owning a home even if there was no population growth and prices and rents *"only"* grew by inflation,... As I have said in the past the way I treat my property investments is as an inflation headged income stream.


----------



## robots (5 July 2008)

hello,

anybody bought a front row block for 50k yet?

thankyou
robots


----------



## Mofra (5 July 2008)

Tysonboss1 said:


> Sort of,.. but there are other factors, such as....
> 
> Total number of dwellings can increase, By knocking over houses and building back units, there fore increasing supply of units, but decreasing supply of house and land homes,.... so while the total number of dwellings increases, supply of houses and land may be contracting therefore even if total dwelling / tenant ratio remains the same prices of land will increase with density increases.
> 
> ...



Excellent addition Tyson, it does touch on the fact we really do not have a single housing market in Australia; we have a multi-tiered market, whereby lower demand properties in the outer suburbs (new developments where ~80%of the value is in structure) have been falling and will likely continue to fall (after outperforming other more desireable areas anyway) whilst inner city, high demand locations with access to multiple forms of public transport have bucked the major trend and many have risen faster than inflation since the credit crisis really took hold in Aug 07.


----------



## nioka (5 July 2008)

Pommiegranite said:


> It's all very well talking about demand and supply. It seems to be the only argument that property bulls can put forward these days




From an article in a local Property guide.

                   " A MILLION NEW HOMES REQUIRED IN 5 YEARS"

"New research from Housing Industry confirms a requirement for almost a million new homes to meet Australia's growing population. The research considers Australia's permanent and short term immigration intake,household formation trends and demolition activity."


----------



## Pommiegranite (5 July 2008)

nioka said:


> From an article in a local Property guide.
> 
> " A MILLION NEW HOMES REQUIRED IN 5 YEARS"
> 
> "New research from Housing Industry confirms a requirement for almost a million new homes to meet Australia's growing population. The research considers Australia's permanent and short term immigration intake,household formation trends and demolition activity."




Thanks for sparing us a link to the report from an organization with a vested interest in property.

I bet nowhere in their report is any consideration that there could be fall in immigration.

Also, it doesn't matter how many houses are needed if people simply can't afford them!


----------



## Pommiegranite (5 July 2008)

I've also just been chatting to the REA who sold my home. He was stood outside a house in Sanctuary Lakes (one of the best performing Melbourne suburbs in Q108).

He has had only 2 attendees at 8 opens today. He can't remember such a poor attendance for a day with such good viewing weather.


----------



## CamKawa (5 July 2008)

Pommiegranite said:


> He has had only 2 attendees at 8 opens today.



I'm having trouble getting my head around that figure. Just to clarify, are you saying the REA had only 2 people through 8 houses open for inspection today?


----------



## Pommiegranite (5 July 2008)

CamKawa said:


> I'm having trouble getting my head around that figure. Just to clarify, are you saying the REA had only 2 people through 8 houses open for inspection today?





That is correct. 

Obviously, other factors need to be taken into account eg the houses could all be very prohibitively overpriced in comparison to others in the area. 

However, there are various indicators in the area which point to a marked slowdown. It will be interesting to see the Q2 figures.


----------



## YChromozome (5 July 2008)

Pommiegranite said:


> He has had only 2 attendees at 8 opens today.




Did the agent say the 2 attendees were serious buyers, or just sticky beak neighbours?

I was inspecting some rentals in Sydney last week amidst the worst rental crisis where vacancies were 0.9%. The only other person inspecting was down from an apartment a couple floors up having a sticky beak.


----------



## CamKawa (5 July 2008)

Pommiegranite said:


> That is correct. .



Wow, I thought the market was soft but not that soft. How's the REA think he's going to sell a house if nobodies even looking at them, let alone making an offer?


Pommiegranite said:


> However, there are various indicators in the area which point to a marked slowdown. It will be interesting to see the Q2 figures.



Are you talking about REIV figures? Do you know when they will come out?


----------



## Pommiegranite (5 July 2008)

YChromozome said:


> Did the agent say the 2 attendees were serious buyers, or just sticky beak neighbours?
> 
> I was inspecting some rentals in Sydney last week amidst the worst rental crisis where vacancies were 0.9%. The only other person inspecting was down from an apartment a couple floors up having a sticky beak.




He didn't say. I'm assuming that they aren't neighbours as the homes have been on for a while, and usually neighbours do their viewings as soon as a property is listed. 

However, that doesn't mean that they are genuine buyers. When we sold ours, we had viewings by people who weren't even sure about what suburb they wanted to live in! Others were pushed to attend by the REA (we know because we bugged our house during the 'open for inspection')


----------



## Pommiegranite (5 July 2008)

CamKawa said:


> Wow, I thought the market was soft but not that soft. How's the REA think he's going to sell a house if nobodies even looking at them, let alone making an offer?




Obviously, one day's viewings doesn't set a trend in itself. This REA will be okay I think. Afterall, he managed to talk someone into buying mine!



CamKawa said:


> Are you talking about REIV figures? Do you know when they will come out?




Yes, I believe they should be out at the end of this month. Maybe someone can correct me though.


----------



## gfresh (5 July 2008)

I think you can find some fairly self-explanatory information on the way things are going.. as at April 2008. Best of all, it's (pretty much) independent.. 

http://www.abs.gov.au/AUSSTATS/abs@...mmary&prodno=5609.0&issue=Apr 2008&num=&view=

Purchase of new dwellings falling rapidly since late 2007 (wouldn't want to be a developer right now), and number of owner-occupied financed has been falling for 10 months.

New ABS figures for May out this Wednesday, which should paint maybe a clearer picture.

Here is what happened in the US.. although obviously many differences to our market, it's worth a look. Ignoring the y-scale, but as a general trend indication. New property construction plunged pretty much off a cliff, number for sale increased rapidly, then sure enough, number for sale plunged, and median prices pretty have pretty much tracked this as well.


----------



## Bronte (5 July 2008)

Home prices to explode, ANZ Bank predicts
By Craig Binnie July 03, 2008 08:14am 

*"Mother of all" housing booms coming, says ANZ *

Chronic housing shortage will push up prices 
THE ANZ Bank says the growing housing shortage is setting Australia up for the "mother of all" housing booms. 

New home building figures showing slumping building approvals have sparked fears of a price and rent explosion that will price even more prospective buyers out of the market. 

The ANZ's senior economist, Paul Braddick, said yesterday Australia faced a critical and potentially chronic shortage of housing. 

"A growing housing shortage is setting the scene for the mother of all housing booms," Mr Braddick said. 

"Demand has accelerated and rising immigration, both permanent and temporary, shows no sign of abating. Meanwhile, rising interest rates continue to stymie any building recovery. 

"Underlying housing demand is already outstripping new supply, and the gap is set to widen sharply, driving pent-up housing demand to record levels," he said. 

The Australian Bureau of Statistics said yesterday new apartment approvals fell 18.2 per cent in May and were down 4.2 per cent over the past 12 months. 

New house approvals fell 1.2 per cent and were down 1.7 per cent over the year. In Victoria total building approvals were up 2.8 per cent. 

Commonwealth Securities chief equities economist Craig James said buyers had fled the property market because of high interest rates. 

"With population growing at the fastest rate in 18 years, we simply should be building more homes, not less," he said. 

"Interest rate hikes have spooked investors and budding owner-occupiers. 

"Investors are putting their money in the bank and people are staying in the rental market longer. But the situation is unsustainable." 

Mr James said rents and house prices would be forced up because of the tight conditions, which would eventually attract more investors and lead to more building. 

"The latest slump in new dwelling approvals is clearly bad news for those renting," he said. 

"The supply of apartments isn't rising but the number of people wanting to rent certainly is." 

Victorian rents are at record highs and housing affordability is close to record lows. 

The Commonwealth Bank's senior economist, Michael Workman, said interest rates would need to start falling and buyers would need to believe prices were rising before they would re-enter the market. 

The building approval slump has cut the odds of another interest rate increase from the Reserve Bank. 

A very interesting article.
A million new homes required:
http://www.news.com.au:80/business/money/story/0,25479,23944631-5013951,00.html


----------



## Pommiegranite (5 July 2008)

Home prices to explode, ANZ Bank hope


----------



## numbercruncher (5 July 2008)

Hello,


Just checking in, RE crash seems to be unfolding as predicted, absolutely MASSIVE rise in unsold inventory .....


Yes we know what happens next !


Thankyou !


----------



## robots (5 July 2008)

hello,

you may be able to answer my question number, the others today couldnt

am I able to pick up  a front row block for lets say half price yet?

anywhere? anybody?

even pepporini couldnt send the link about the house in syd he/she has been spruiking has dropped from 2m to 1.3m

or is it still wait wait wait, have a great evening  

thankyou

robots


----------



## wayneL (5 July 2008)

robots said:


> hello,
> 
> you may be able to answer my question number, the others today couldnt
> 
> ...



Patience, Grasshopper.


----------



## Warren Buffet II (5 July 2008)

This image makes a really good point of what is happening

Non-banks

The number of owner occupied dwellings financed by non-banks (seasonally adjusted) decreased by 8.7% in April 2008 compared with March 2008, after a revised decrease of 11.6% in March 2008. The trend series in the number of owner occupied dwellings financed by non-banks decreased by 5.1% in April 2008, the eleventh consecutive monthly decrease. The number of commitments for owner occupied dwellings financed by wholesale lenders n.e.c. (seasonally adjusted) increased 2.3% while the trend series has continued to decline (down 5.0%). 







WBII


----------



## Warren Buffet II (5 July 2008)

Another jewel:

http://www.news.com.au/couriermail/story/0,23739,23968923-3102,00.html

No words needed.

WBII


----------



## robots (6 July 2008)

hello,

great news in melbourne, auction clearance rate rocketed again yesterday to 66%, fantastic

looks as though things are just rolling along nicely, anybody do any firsthand research yesterday?

landlord's maybe interested to know Harvey's joint has been re-stocked with bunk bed's so get'em while they are available

thankyou
robots


----------



## Aussiejeff (6 July 2008)

Warren Buffet II said:


> Another jewel:
> 
> http://www.news.com.au/couriermail/story/0,23739,23968923-3102,00.html
> 
> ...





Shhhh!!!

The REAL Estate people are trying to keep all this SECRET!! 

And what if Melbourne catches on to this horror? 

WHAT IF ROBOTS' FANATICAL ENTHUSIASM FOR REAL ESTATE suffers a blow??? GOD HELP US ALL THEN :hide:


----------



## Aussiejeff (6 July 2008)

robots said:


> hello,
> 
> great news in melbourne, auction clearance rate rocketed again yesterday to 66%, fantastic
> 
> ...




robots

are you really a top exec in the ANZ home loans and auctions branch?

pity about the tiny 44% fraction who couldn't clear at auction....

chiz
aj


----------



## Pommiegranite (6 July 2008)

robots said:


> hello,
> 
> great news in melbourne, auction clearance rate rocketed again yesterday to 66%, fantastic
> 
> ...





Most properties aren't available for purchase at auction, so auction clearance rates don't mean much without sale prices.
I expect auction clearance rates to remain stable due to vendors lowering their reserves substantially, thereby sucking in buyers who think they are getting a bargain.


----------



## Warren Buffet II (6 July 2008)

robots said:


> hello,
> 
> great news in melbourne, auction clearance rate rocketed again yesterday to 66%, fantastic
> 
> ...




He may be saying the right thing and point to the right situation.....

When you have a fire sale your clearance rates will skyrocket and this may be happening in Melbourne already, I posted an article just before about Brisbane and they are selling 1 property out of 10 each week, so if in 3 or 4 weeks all those people put their properties back in auction for 20% or 30% less, the clearance rate will be magnificent, probably what our friend robots from ANZ says 66%.

Enjoy the ride

WBII


----------



## Sean K (6 July 2008)

robots said:


> hello,
> 
> great news in melbourne, auction clearance rate rocketed again yesterday to 66%, fantastic
> 
> ...



66% is fantastic? 



And, they rocketed?

Again?

Anyone got some facts to say what the usual clearance rates are.

And, is clearance rate an indication of strength?

Perhaps the prices have been lowered to ensure sales...

Or not.

Whatever the case, 66% sounds a little sick to me. 

(With absolute no first hand knowledge of the current market in Melbourne.)

Property is booming in Lima!


----------



## Macquack (6 July 2008)

Aussiejeff said:


> robots
> 
> are you really a top exec in the ANZ home loans and auctions branch?
> aj




Aussiejeff, you have blown Robots cover. Is he really the ANZ's senior economist, Paul Braddick who claims we are in for the "mother of all" housing booms.

Here is another Paul Braddick gem - "Houses no different to bananas".


----------



## Mofra (6 July 2008)

kennas said:


> 66% is fantastic?
> 
> 
> 
> ...



Hard to judge against last year's figures as 2007 was such an unusual year, and in any case judging the stregth of the property market via clearance rates alone is akin to judging the performance of a stock by the volume alone. 

As a rule of thumb, 75% is average to ok, above is great, anything below 60% is abyssmal - again, it doesn't mean too much without prices, and if anyone has access to a breakdown of how many of the sales were sold _after_ auction as the reserve wasn't reached, they'd be much appreciated.


----------



## Tysonboss1 (6 July 2008)

Pommiegranite said:


> First home buyers simply can't afford to prop up the housing market.
> .




Yes then can, They just have to plan and budjet and invest to create a deposit and start small, 

Offcoarse you can't arrive at the age of 30 having blowen all your earnings for the last 10years on cars and lifestyle and expect to beable to buy the "Mc Mansion" of your dreams with all the mod cons. 

But if you put in place a savings and investment plan from when you were 18, then started off with a modest older 1 bed flat you can easily build a foot hold in the property market.


----------



## xoa (6 July 2008)

Tysonboss1 said:


> Yes then can, They just have to plan and budjet and invest to create a deposit and start small,
> 
> Offcoarse you can't arrive at the age of 30 having blowen all your earnings for the last 10years on cars and lifestyle and expect to beable to buy the "Mc Mansion" of your dreams with all the mod cons.
> 
> But if you put in place a savings and investment plan from when you were 18, then started off with a modest older 1 bed flat you can easily build a foot hold in the property market.




Only in the past few years, has the situation emerged where the average worker cannot afford the average house.

It's getting to the point where the average worker cannot afford even the average 1-bedroom flat.

This is a short-term aberration. Understandably, new entrants don't want to sacrifice 70% of their earnings for a "foot hold" on a shaky pyramid scheme.


----------



## gfresh (6 July 2008)

Come on, even those from Sundan can afford a property on Centrelink apparently.. 

http://www.smh.com.au/news/national...argets-refugees/2008/07/04/1214951042696.html


----------



## xoa (6 July 2008)

gfresh said:


> Come on, even those from Sundan can afford a property on Centrelink apparently..
> 
> http://www.smh.com.au/news/national...argets-refugees/2008/07/04/1214951042696.html




A prime example of the "rock solid" lending practices here in Oz.

When I was a kid, I remember when my dad (an engineer) applied for a loan on his first investment property. Even though he had a good income and paid off a large share of his first house, he had to dress up in a full suit, and took two rejections before he got the money.

Now, unemployed asylum seekers can secure a $400,000 mortgage...


----------



## Pommiegranite (6 July 2008)

A huge proportion of immigrants are/were cashed up Poms.

Should some arrive with some profit from the sale of their homes, does anyone think that they will jump from one crashing market into another?

Maybe someone can ask one of these poor wannabe Aussies:

http://britishexpats.com/forum/showthread.php?t=526748&page=11

I wonder where all of this REAL demand for housing is going to come from. 
I wonder who can afford a house for 10x earnings. 
I wonder if they will be able to sceure the credit for such a large homeloan.


----------



## robots (6 July 2008)

hello,

whats considered average clearance is around 65-70% for melbourne,

i think aussiejeff means 34% fraction as well, buts that okay aussie no big deal at my house,

average worker wont be able to afford a can of coke will be written soon with the amount of spruiking coming out of the handout crew,

get a better job, promotion, work 2 jobs, save save save

keep them coming

thankyou

robots


----------



## Pommiegranite (6 July 2008)

When I first moved to Australia, I was rather 'taken' by the skill with which real estate agents worded their adverts. 

However, recently it seems as though the bar is being raised through sheer desperation.

This one is 'penned' so eloquantly that it brings a tear to my eye:bowdown: :


----------



## explod (6 July 2008)

robots said:


> hello,
> 
> 
> average worker wont be able to afford a can of coke will be written soon with the amount of spruiking coming out of the handout crew,
> ...




Yep we are headed in that direction.   In Germany 1924, inflation became so bad that one gentleman of the time said that on a Monday he could cash an empty wine bottle for more than the cost of entire bottle and contents on the Saturday night.


----------



## Tysonboss1 (6 July 2008)

xoa said:


> Only in the past few years, has the situation emerged where the average worker cannot afford the average house.
> 
> .






Do you think the average person can afford to buy a house and land in Newyork, londan, paris, tokyo, or any other large capital city.... no the average person rents apartments.

Even if you mandated and capped the price of house and land in a city like sydney, there simply wouldn't be enough land for every family to have a 1/4 acre block, the population is just two large, So no matter what happens some one has to miss out and move into high density,

In the capitalist system the first people to miss out are the low incomes, and it slowly moves up the income ladder as the population grows,

XAO, are you saying that it should be possible that an average family should always be able to afford a house and land no matter what the population in the given area is.


----------



## Pommiegranite (6 July 2008)

Tysonboss1 said:


> Do you think the average person can afford to buy a house and land in Newyork, londan, paris, tokyo, or any other large capital city.... no the average person rents apartments.
> 
> Even if you mandated and capped the price of house and land in a city like sydney, there simply wouldn't be enough land for every family to have a 1/4 acre block, the population is just two large, So no matter what happens some one has to miss out and move into high density,
> 
> ...




Except that every decade or two, 'capitalist systems' have major shakeouts (or recessions), and those who took on too much debt end up the ones who miss out for the rest of their lives. 

Property Investors love to talk about their Gross Yields. 

However, if we view property as any other business, we see how misleading this ratio can me.

In the UK, one can buy Lloyds shares with a dividend yield of 7.2% & p/e of 5, or property  which yields around 4-5% and has a p/e of around 17-22.

Why would anyone bother with the hassles and uncertainty of property, when you can get better yields and no less uncertainty as in the stock market (where we are not at historic highs)?

Its all about minimizing risk and there is simply too much risk about at the moment in buying property today.


----------



## xoa (6 July 2008)

Tysonboss1 said:


> Do you think the average person can afford to buy a house and land in Newyork, londan, paris, tokyo, or any other large capital city.... no the average person rents apartments.




Australia isn't one massive New York or Tokyo. There might be a case for unaffordability in central Sydney or Melbourne, but what about Adelaide, Newcastle, Cairns, Townsville or Launceston? Or the dozens of other smaller towns which are now considered severely unaffordable? What's fundamentally changed in the past few years to jack up prices, apart from the explosion of debt?



> XAO, are you saying that it should be possible that an average family should always be able to afford a house and land no matter what the population in the given area is.




The average family should be able to afford the average housing unit. In some densely populated nations, that means an apartment. In Australia as a whole, it's a house. In a few short years it's been catapulted out of reach. Even a tiny unit is becoming a stretch for the typical first home buyer. I wouldn't want to bet (or invest) on that becoming the status quo.


----------



## theasxgorilla (6 July 2008)

xoa said:


> The average family should be able to afford the average housing unit. In some densely populated nations, that means an apartment. In Australia as a whole, it's a house. In a few short years it's been catapulted out of reach. Even a tiny unit is becoming a stretch for the typical first home buyer. *I wouldn't want to bet (or invest) on that becoming the status quo.*




Not me either, but on the other hand, pathetically weak investment in infrastructure and very poor town planning means that I can't see it getting easier to find affordable living of standards many still expect to be normal, within a reasonable commute from their places of work.


----------



## Kimosabi (7 July 2008)

hhhhmmmm, where have I seen this before...

*Bonus $3000 Harvey Norman Voucher*

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105031853&emailsource=emailalert

Oh, that's right, I saw lots of incentives to buy houses in the US a year or two ago, soon it will be cars and holidays but unfortunately the houses still won't sell...


----------



## numbercruncher (7 July 2008)

Next penny to drop seems to be the Labour market ......




> Job advertisements fall across the board
> 
> Sunday July 6, 2008, 10:09 am
> 
> ...




http://au.biz.yahoo.com/080706/2/1tild.html


So many youngin's havnt lived through an economic downturn and show complete disrespect for these cycles ......... Which makes me laugh like a cat with a can opener


----------



## gfresh (7 July 2008)

No surprise if one looks at the ABS figures, but construction activity slowing.. 

http://business.theage.com.au/building-industry-woes-continue-20080707-32td.html



> ''The subsequent lower workloads resulting in a reduction in employment for a third consecutive month,'' the report, released today, said.




Construction makes up a large part of the economy. As this slows, the snowball becomes larger and larger. More laid off workers, aren't buying consumer items, struggle to service their debts. How many construction workers have squirreled away for the bad times? 



> 'The 2008/9 financial year will be a flat one at best for new residential construction and this situation will place further pressure on already very tight rental markets, among other negative impacts,'' Mr Dale said.




Personally I think rental accommodation may sort itself out in the coming 12+ months.. Homes can't be sold, investors will soon have two choices -  take a lower price on their investment, or rent them out and gather cashflow until things improve. Fresh new rental supply


----------



## pepperoni (7 July 2008)

Last week was another dismal week on the northern beaches and increasingly in mosman/cremorne/northbridge/castlecrag AT THE BOTTOM.  

Middle and top have deen dead for weeks Im told by the agent Im renting off, I just dont spend much time following the market for $3m-$10m properties  ha ha.

Having said that the house Im renting for $750 a week is for sale of $4.5m - $5m.  There has been one inspection in 2 months.



Interesting recent article ...

" AUSTRALIA'S residential property prices are among the highest in the world.

But most of us still think that prices can't fall. It's time to put that fallacy to the knife, according to Intelligent Investor research director Greg Hoffman .....

property prices in Japan have fallen uninterrupted for 15 straight years"

http://www.theaustralian.news.com.au/story/0,25197,23970724-5001942,00.html


----------



## gfresh (7 July 2008)

A recent chart from the US market via the US Census Bureau data.. even though US house prices have  come down, it is still a fair bit more than 3x times the average median family income, the average for the last 40 years. 

And what is our market now? 6x, 7x average family income?


----------



## KIWIKARLOS (7 July 2008)

Yeah but I'm betting that rather than massive deflation we will have large wage increases, police, truck driver, gov workers, qantas we are all fighting for between 3-5% and Im telling you now that it will happen. The NSW gov can say 2.9% cap as much as they want but when State rail strike during world youth day, cops walk out and the electricity sector grinds to a halt they will pay.

We will inflate away our problems which i think is much better because at least the pain is spread across the entire country not just us little guys who would otherwise take massive losses on our houses. 

Also in the US real wages have been decreasing for 40 years. In oz we have had wage growth of between 3-10% per year for at least 5-10 years. It will continue our balance of trade is improving and our aussie dollar is buying more. Sure we could come down 10% and many places have already had falls of 30% but I don't believe we will see across the board double digit drops from where we are now.

Imigration is increasing and we will have about 250,000 new people coming here every year. Rent prices will increase and the proposed developments for new housing particularily in Sydney are 3-5 years away before any real big amount of Dwellings go up. I work for the electrical industry and our network is stuffed now, even medium scale projects take 2-3 years to deliver and the big one 5+.


----------



## gfresh (7 July 2008)

Wages can rise to match inflation, but if house prices are going up even faster, capacity to pay is getting worse. If there is a tipping point, it's when people just can't afford to put out a higher share of their weekly income into a mortgage. Even rental is not much different as a share of wages (apparently many renters are suffering very much as well, many at the 30%+ of weekly wages on rent).

As you'd know, soon as you have large wage increases, these costs get passed on, you guessed it, as higher prices. Further inflation, further weekly costs on everything else, less capacity to spend on housing. 

We've also got the RBA meddling, who knows full-well a wage spiral will only lead to further inflation, and will do their darnedest to stop that happening under their current mandate. Rates will be raised further, and more will feel pain. 

The UK has, or is talked about a housing "shortage" for many years. Whatever the demand, beliefs, immigration stories, etc - it still hasn't prevented house prices coming down. This shortage may still even exist, but that doesn't alter the end result - house prices have come down.

As stated before, it's highly likely immigration will slow as times get harder, as people will be poorer in their own countries, making a move to Australia un-affordable. Immigration always rises during boom times as jobs are needed, people feel like a country is an opportunity "plenty of work in Australia", etc and can likewise slow, or people even leave as times get worse.


----------



## Pommiegranite (7 July 2008)

KIWIKARLOS said:


> Yeah but I'm betting that rather than massive deflation we will have large wage increases, police, truck driver, gov workers, qantas we are all fighting for between 3-5% and Im telling you now that it will happen. The NSW gov can say 2.9% cap as much as they want but when State rail strike during world youth day, cops walk out and the electricity sector grinds to a halt they will pay.
> 
> *We will inflate away our problems* which i think is much better because at least the pain is spread across the entire country not just us little guys who would otherwise take massive losses on our houses.
> 
> ...




Is that you Ben?


----------



## Go Nuke (7 July 2008)

> (apparently many renters are suffering very much as well, many at the 30%+ of weekly wages on rent).




Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.



> average worker wont be able to afford a can of coke will be written soon with the amount of spruiking coming out of the handout crew,
> 
> get a better job, promotion, work 2 jobs, save save save




Hmmm this sounds like a bit of an idiotic comment and one that i'm sure doesn't do your intelligence much justice Robot

And who will do the "lower paying jobs"??
Will we become like the U.K and employ the paki's to do them?
As Ive stated, we have a skills shortage and even I'm looking to get out of the trade...why..well like you suggested..looking for a better paying white collar job! Trades aren't quite cutting it anymore. But hey, I'm not whinging about it..I'm doing something about it. Skills shortage...who cares.

Let the house prices crash. i couldn't care. I'll be waiting with my deposit


----------



## Pommiegranite (7 July 2008)

Go Nuke said:


> *Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.*
> 
> 
> 
> ...




Why accuse others of idiotic comments, when you set the benchmark? Renters don't pay more when they're in a fixed term contract. So the landlord has to wait before he can increase the rent. Also due to an abundance of rental accomodation in many areas (I prefer to rely on my own eyes then the press), many landlords are reluctant to take the risk of increasing rents as it could lead to a longer vacant period.

..and before you go around accusing other off idiotic comments, I'll enlighten you about your bigotted comment. As early immigrants, many 'Pakis' are well set and tend to be self employed (taxi drivers or whatever). You obviously haven't been north of the equator.


----------



## Tysonboss1 (7 July 2008)

Pommiegranite said:


> Why accuse others of idiotic comments, when you set the benchmark? Renter don't pay more when they're in a fixed term contract. So the landlord has to wait before he can increase the rent. Also due to an abundance of rental accomodation in many areas (I prefer to rely on my own eyes then the press), many landlords are reluctant to take the risk of increasing rents as it could lead to a longer vacant period.
> 
> .




Excactly right, Interest rates have nothing to do with rental increases, it's supply and demand of the properties that decides the rent price.

The only time Interest rate increases may affect rental prices are where the property has been under rented for a while, and the land lord may have his payments go up so he looks at options to raise his cashflow and after some research finds is property is under the current market rate so at the next chance will probally raise the rent to match the market.... if he is asking more than market rent then he will quickly find his house vacant.


----------



## robots (7 July 2008)

Go Nuke said:


> Easlily! Everytime we have a rate rise the rent goes up to match.So other than a renter not having to pay rates, body corp etc they are just as bad off when prices increase.
> 
> 
> 
> ...




hello,

thats right, paki's, indians whoever and people will be racking them up on bunk beds in the rental, creaming it

already happening, as you know bloke in melb had 50 in his house, $100/wk a pop, very good,

most landlords will not renew a lease after the initail term now as it gives the landlord the freedom to jack'em up high regularly, surely one has to get the best possible outcome on his investment

thankyou

robots


----------



## Go Nuke (7 July 2008)

> As early immigrants, many 'Pakis' are well set and tend to be self employed (taxi drivers or whatever). You obviously haven't been north of the equator.



Actually I have been north of the equator.
Ive Been to the U.K and i hear all about the Paki's over there.
Find me some poms that have something nice to say about them?



> I'll enlighten you about your bigotted comment.




Is it...awww Gee even Robots agree with my termanology on that one  lol.



> already happening, as you know bloke in melb had 50 in his house, $100/wk a pop, very good,



Is that good Robots? Sounds borderline like "exploitation" to me.

Someone in QLD was doing the same. Oh thats right,it was some asian people living on the Southside packing the students in like sardines. They came unstuck because there was insufficient toilets for that many people to live in one dwelling.



> Excactly right, Interest rates have nothing to do with rental increases



I'm sorry but as a landlord myself I can't agree with that comment.
As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.


----------



## pepperoni (7 July 2008)

Article confirming what ive been seeing .... although I think blind freddy could see it.


http://www.domain.com.au/Public/Art...head south, north and east&s_rid=smh:Homepage


----------



## Tysonboss1 (7 July 2008)

Go Nuke said:


> I'm sorry but as a landlord myself I can't agree with that comment.
> As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.




As I said this can only happen if you have been under renting your property in the first place, then get a shock and raise the rents back to market rent, 

If you try to rent it higher than market rent without any added incentives then it will become vacant, or attract troublesome tenants who only accept the above market rent because no one else will rent them a house.


----------



## wayneL (7 July 2008)

Tysonboss1 said:


> As I said this can only happen if you have been under renting your property in the first place, then get a shock and raise the rents back to market rent,
> 
> If you try to rent it higher than market rent without any added incentives then it will become vacant, or attract troublesome tenants who only accept the above market rent because no one else will rent them a house.




Yes,

As the UK market collapses around our ears, some interesting things are happening.

Mortgage rates are increasing.

In a small minority of areas, parts of London mainly, rents are rising as rental demand increases relative to supply and LLs try to cover costs.

In the vast majority of the UK however, rents are stagnant or falling. LL's attempted to raise rents earlier this year in response to interest rate rises, only to be laughed at by tenants. In most of the UK, there is a massive increase in supply as folks unable to sell their overpriced pile of crap put it up for rent.

Some try to put them on at rates that will cover their mortgage, but these of course just sit there... until the muppet realizes how markets function.

In my IP area, rents have been stagnant for quite some time. Where I am living (Cheltenham) rents are falling.


----------



## robots (8 July 2008)

hello,

no its not expoiltation, it may be all they can afford so the landlord is offering affordable accommodation for society,

not to dissimilar to when you buy a house, you buy what you can afford and just that, 

for several years now everybody thinks a Toorak or Point Piper mansion should be the same price as a 1-bed flat in Liverpool or Werribee

and with manipulative use of charity organisations individuals have used the media to spruik the "afforability" crisis to line the executive(?) pocket, and as such brainwashed the poverty pack

thankyou

robots


----------



## wayneL (8 July 2008)

robots said:


> hello,
> 
> no its not expoiltation, it may be all they can afford so the landlord is offering affordable accommodation for society,
> 
> ...



Nonsense,

Nobody could possibly that asinine, surely you must be trolling. Nobody is that stupid.


----------



## motion (8 July 2008)

Something has to give, I have been attending auctions for the past 6 weeks looking at the market and most places are not being passed in or going into talks about with the highest bidder at the end.

I think people are still buying but are looking for a bargain. The places I'm referring to are all with a 10km limit of the city so it's interesting times ahead. 

I think if you are buying your family home then you can never go wrong in a market like this but as an investment you might have some issues if the market runs the other way which is down... it's all a little unknown at the moment... 


Great thread guys... Just my food for thought !


----------



## Temjin (8 July 2008)

Go Nuke said:


> I'm sorry but as a landlord myself I can't agree with that comment.
> As interest rates increase, landlords do put the rent up to cover the increase in their morgage repayments.




Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.  

Note that the "real cost of rent" is used below, not NOMINAL rent. 






(Source: RBA, APM June newsletter, Abelson 2004, ABS)


----------



## Pommiegranite (8 July 2008)

Temjin said:


> Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.




Yes, but there are many landlords like the one you are replying to, who are not only woefully lacking in an understanding of basic economics, but are also stubborn too boot. 

These landlords will be the first to feel the pain, followed by a lot of head scratching and questions to themselves asking "what went wrong?". 

This will be quickly followed by feeble attempts of finding someone else to blame i.e Kevin Rudd, renters, the RBA, the Chinese, REAs etc etc.

It really is laughable.


----------



## pepperoni (8 July 2008)

motion said:


> Something has to give, I have been attending auctions for the past 6 weeks looking at the market and most places are not being passed in or going into talks about with the highest bidder at the end.
> 
> I think people are still buying but are looking for a bargain. The places I'm referring to are all with a 10km limit of the city so it's interesting times ahead.
> 
> ...




+1.


----------



## pepperoni (8 July 2008)

Temjin said:


> Sorry, it's a myth that rent goes up along with interest rate rises. A picture speaks a thousand words, but here is a couple of charts that would probably make a thesis out of it.
> 
> Note that the "real cost of rent" is used below, not NOMINAL rent.
> 
> ...





Great charts ... I get tired of the old "Ill just jack up my rents" BS round here .. there is sufficient supply and a limit to what people will pay.

Update on rents in mosman/cremorne ... I saw a 2 bedder on cremorne point with parking for $340 last week ... and heaps of rentals available ... its like rents are falling back below that spike this year if anything.


----------



## Temjin (8 July 2008)

Pommiegranite said:


> Yes, but there are many landlords like the one you are replying to, who are not only woefully lacking in an understanding of basic economics, but are also stubborn too boot.
> 
> These landlords will be the first to feel the pain, followed by a lot of head scratching and questions to themselves asking "what went wrong?".
> 
> ...




Agree.

It's understandable because they are in the business and it is in their best interest, both financially and psychologically, to have a biase for anything that can affirm their believes and the decisions they have made so far.

It is fairly difficult for anyone to openly admit they have made a WRONG DECISION after commiting so much time and money into a particular task that they truly believed in it. I can relate to them personally on some other stuff that i have done. One would need a big ego to go through all that, especially for full grown adults. 

It's also human nature to blame someone else for their own mistakes. It's a flaw that I bet everyone is guilty of having done it at least once before. 

And yes, criticism and pointing out one's error is one of the worst communication roadblock anyone could make to another person. 

Sorry for all the psychological babbling. 

As for the renting situation, there are just far too many "8 rooms in one house" style rental properties near around where I live. Most of the landlords are Asians and the properties were simply "renovated" (if you could call that!) to cater for oversea students. Loads of advertisment on them lately, with prices dropping as there are simply too much supply around.


----------



## gfresh (8 July 2008)

I'd be interested to see a breakdown of property Investors, and when entered first entered the investment market, if it's available anywhere?

Established landlords (owning a decade or more) may well have gone through these periods before, they'll adjust, they'll know what to do to ensure they keep their places tenanted, not over charge rent, be prepared to sell if they think the market may go against them.  

The rest... well, being the last in line during any boom is never a good position to be in.


----------



## Tysonboss1 (8 July 2008)

A land lord can expect to do annual rent increases inline with inflation, but the rental increases are not directly related to the interest rates.

houses within 20kms of a large capital city will probally expect to average rent increases of cpi + 1%. the extra one pecent relates to the diminishing avaiablilty over time of house and land within the capital cities, 

Apartments where there is no extra selling piont suchas parking or veiws will only increase with inflation in the longterm,.... offcoarse there will be years where the rent increases faster but there will also be years where it doesn't increase so over all it will rise pretty much with inflation.


----------



## Tysonboss1 (8 July 2008)

gfresh said:


> I'd be interested to see a breakdown of property Investors, and when entered first entered the investment market, if it's available anywhere?
> 
> Established landlords (owning a decade or more) may well have gone through these periods before, they'll adjust, they'll know what to do to ensure they keep their places tenanted, not over charge rent, be prepared to sell if they think the market may go against them.
> 
> The rest... well, being the last in line during any boom is never a good position to be in.





I think most Investors who use property in there portfoilio would have pretty low gearing having properties they purchaed years ago increase in value so much and have probaly paid down alot of their loan. 

you'll probally find most investors who know the market won't be phased by a down turn, they will just keep collecting rent and paying down debt till the market bottoms out and starts to swing slowly the other way, then they will probally look at using the equity they have built up for further investments.

If they do decide to sell, they won't be selling everything probally just one of the marginal deals.


----------



## Go Nuke (8 July 2008)

Very interesting chart Temjin thank you.

Looks like i stand corrected.
I'm proud enough to admit when i have something wrong.
I am young after all and don't proclaim to know everything!



> Yes, but there are many landlords like the one you are replying to, who are not only woefully lacking in an understanding of basic economics, but are also stubborn too boot.
> 
> These landlords will be the first to feel the pain, followed by a lot of head scratching and questions to themselves asking "what went wrong?".
> 
> ...



Pommie, i'm not going to lower myself to a verbal,insulting slanging match with you.
Ive done quite well out of my investment house.
I was only able to save the money for it as an apprentice becasue I lived at home with parents longer than my mates.
As far as I'm concerned I have a foot in the real estate door and am charging rent accordinly with the locality of my property.
Perhaps you don't have kids, or were born well off..I don't..nor do i really care.
But obviously you sound pretty ticked off by your narrow minded responses.

I appreciate a good debate, but I think you are lowering the bar by getting a little personal.

Yes real estate prices are high and affordability is at an all time low.
As that great link said, in the U.S income to house prices is 3:1..in OZ is 6:1.


----------



## Pommiegranite (8 July 2008)

Go Nuke said:


> Very interesting chart Temjin thank you.
> 
> Looks like i stand corrected.
> I'm proud enough to admit when i have something wrong.
> ...




No Nuke, I was merely showing you that you shouldn't be accusing people off idiotic comments, when your own are so off the mark. Glasshouses...throwing stones etc.


----------



## Go Nuke (8 July 2008)

Well I'm sorry but I do think says "Just go and get a better,higher paying job" is a silly thing to say.

And i guess Ive taken offence to it.
I work very hard for my money like most of the working class families
It just sounds a little...I dunno..judgemental or something or derogertory towards lower income earners.

As Ive said. i'm not happy as a tradesman because the pay is well _below average_ but i am happy to be out looking to get off the tools But off my own bat. not being told I should.

Housing affordabilty is just one of those touchy subject imo.


----------



## robots (8 July 2008)

hello,

like how long do you think negative gearing has been around?

at least 20yrs, yes 20yrs so all "specufestors" back in 1988, 1990's? and it wasnt positive geared, school friend bought in Frankston at this time and it wasnt positive,

sure you kick in half and would be there, a premium has always been around for buying than renting and   then   things     slowly     change      as Tyson has indicated,

the only "main" difference I feel was everything was P&I but the differential was still there,

yes i believe in what i write

thankyou

robots


----------



## robots (8 July 2008)

hello,

whats wrong with getting a better paying job, working two, saving more here and there man?

i find it offensive when low income and no-income individuals want a handout all the time, yet you see many puffing on a rollie struting down the street

yeah man, get three or four living in a house party time, pulling in the benefit, selling a couple of caps, concessional PTC, concessional pharmaceuticals, concessional energy bills, rates, rego on and on and on

thankyou

robots


----------



## Warren Buffet II (8 July 2008)

Shortage, what shortage??

Is there really a shortage of housing? Let us turn our attention to the census data at the Australian Bureau of Statistics (ABS):
  2001 2006 Growth 
Number of Total Private Dwellings 7,790,079 8,426,559 8.17% 
Number of Unoccupied Dwellings 717,877 830,376 15.67% 
Number of Households 6,744,795 7,144,097 5.92% 
Population 18,769,249 19,855,288 5.78% 
Number of Dwelling/Household 1.15 1.18 2.60% 

As we can see, from 2001 to 2006, the growth in the number of dwellings far exceeded the growth in the number of households. In addition, the growth in the number of dwellings also far exceeded th population growth. As the average number of persons per household in both the 2001 and 2006 census is 2.78 (i.e. remained the same) this could not be explained by the decrease in the size of households. This hardly looks to be a shortage situation! 

Quoted from http://cij.inspiriting.com/?p=314


----------



## Pommiegranite (8 July 2008)

robots said:


> hello,
> 
> *whats wrong with getting a better paying job, working two, saving more here and there man?*
> 
> ...




You're having a laugh mate. 

If it weren't for your types who through taking on excess debt, negative gearing and jacking up their rents, people wouldn't be having this buying/renting affordability problem.

These people that you talk about are resigning to the fact that they can never afford a home.

Some consolation is that you will learn a harsh lesson from the upcoming storm.


----------



## robots (8 July 2008)

hello,

just another "opinion", but I would soon fill a double decker bus in 10 mins with fellow men or women,

thats it throw your hands up in the air oh this is all too hard getting a place,

go nukes: are you in board plaster?

thankyou

robots


----------



## wayneL (8 July 2008)

Pommiegranite said:


> You're having a laugh mate.
> 
> If it weren't for your types who through taking on excess debt, negative gearing and jacking up their rents, people wouldn't be having this buying/renting affordability problem.
> 
> ...




In robot's world, there are only:

1/ People who earn (by whatever means) >$100,000

2/ Students or immigrants stacked 15 high per room

3/ Dope smoking, long haired bludgers who believe they should be able to buy a Toorak mansion with dole money.

However robot's world only exists in his limited imagination and does not reflect the real world at all.


----------



## gfresh (8 July 2008)

Pft, robots doesn't even go outside, he's too busy spending every cent paying off all his lovely properties 



			
				Warren Buffett II said:
			
		

> Is there really a shortage of housing?




Maybe, maybe not  I'm of the "not" camp, but even if there was - hasn't stopped the UK plunging head first into falling property prices and now serious talk of recession. 

http://www.economist.com/world/britain/displaystory.cfm?story_id=11671702

Same old in their papers too leading up to their deflation, regarding lack of supply... 

http://www.24dash.com/news/Housing/2007-07-19-UK-property-shortage-speeding-up-price-growth


----------



## pepperoni (8 July 2008)

robots said:


> hello,
> 
> you may be able to answer my question number, the others today couldnt
> 
> ...




Speaking of robots, why dont the mods ever seem to do something about him ... he is at best incoherent and at worst a huge troll.

"who has bought a front row block for 50k" ... typical robots mix of incoherence and blatant trolling for reaction.


----------



## Tysonboss1 (9 July 2008)

robots said:


> hello,
> 
> whats wrong with getting a better paying job, working two, saving more here and there man?




Agreed,...

Also what we call low incomes in Australia are actually quite large incomes by world standards, especially when you factor 9% super, 5 sick days, 20 days holiday, various public holidays, workers compensation, the extrmely low tax bracket and family payments.

not to mention australias average working week is only 38 hours... and there are masive penalty rates if your boss offers you more work... thats somthing I don't get,.. why should i have a penalty for offering staff more work,...

when you think about it,... no wonder we can't compete with over seas labour,..... the labour unions have priced them selves out of the market


----------



## doogie_goes_off (9 July 2008)

Protectionism is a culture. See, believe, recieve. In regard to house prices, wages are a distraction, the house prices are linked to tightness of labor market, wages are two steps behind.


----------



## theasxgorilla (9 July 2008)

Tysonboss1 said:


> not to mention australias average working week is only 38 hours... and there are masive penalty rates if your boss offers you more work... thats somthing I don't get,.. *why should i have a penalty for offering staff more work,...*
> 
> when you think about it,... no wonder we can't compete with over seas labour,..... the labour unions have priced them selves out of the market




I don't know where to begin on this one.  As best as I can put it, because on the other side of the capitalism equation is real people with values beyond money.


----------



## robots (9 July 2008)

hello,

its amazing the emotion attached to property issues, i find its classic robin hood tale

you dont seem to get the same comments in a stock or commodity thread wanting something to be totally smashed day in and day out,

the property threads are full of troll's but at least ASF plays a great role in moderating the thread and i think many appreciate the honest discussion

have a great day

thankyou

robots


----------



## explod (9 July 2008)

robots said:


> hello,
> 
> you dont seem to get the same comments in a stock or commodity thread wanting something to be totally smashed day in and day out,
> 
> robots




No one wants to smash the property thread or property.   And yes there are such veheement arguments on many of the other threads.

Property is in fact trashing itself because it became over priced and the bubble has burst and all the good clearance rates in the world cannot stop that fact.    Markets (and basically property is a market) go down and markets go up, that is the nature of markets.


----------



## professor_frink (9 July 2008)

pepperoni said:


> Speaking of robots, why dont the mods ever seem to do something about him ... he is at best incoherent and at worst a huge troll.
> 
> "who has bought a front row block for 50k" ... typical robots mix of incoherence and blatant trolling for reaction.




what us mods do, and what you think we do may not be the same thing. How about next time you want to question the way we run this site you do it privately.


----------



## kingbrown (9 July 2008)

Tysonboss1 said:


> Agreed,...
> 
> Also what we call low incomes in Australia are actually quite large incomes by world standards, especially when you factor 9% super, 5 sick days, 20 days holiday, various public holidays, workers compensation, the extrmely low tax bracket and family payments.
> 
> ...




I actually dont know what planet you are on mate ?  
And i hate people that winge about Australia 
min pay and conditions are here for a very good reason  
This is why we have a great country  

Sounds like you should pack it in and move to China
Would you would more happy with worker conditions and rights there ? 
Maybe you could pay them with rice ?

Otherwise be smarter or get out !


----------



## wayneL (9 July 2008)

...and for a bit of light relief:

Paul Fry and Hugh Laurie(Dr House) - Estate agents on the loose

(from the last property crash)


----------



## Tysonboss1 (9 July 2008)

kingbrown said:


> I actually dont know what planet you are on mate ?
> And i hate people that winge about Australia
> min pay and conditions are here for a very good reason
> This is why we have a great country
> ...




I hate people wingeing about Australia too,.... people that winge they have it hard here

I am not wingeing, I am just saying that australian workers are on a really good package when you look at how much they earn compared to the hours they have to work. A worker on $15 an hour is really costing over $20 an hour for each hour of work done when you factor in an the other stuff.

What I am saying though is that it doesn't really make sense that I can't offer my staff extra hours with out a penalty, I have staff that are always asking me for more work, but the are capped at 38 hours because I am not going to pay over time.


----------



## xoa (9 July 2008)

So you think wages should be slashed?

Will that be good for house prices?


----------



## Tysonboss1 (9 July 2008)

theasxgorilla said:


> I don't know where to begin on this one.  As best as I can put it, because on the other side of the capitalism equation is real people with values beyond money.




I understand alot of other people value other things over money, and I aggree if I try and force staff to work over time I should have to pay a penalty, 

But if I have a staff member come to me and ask for extra hours each week because they want to buy a car, boat ,house or what ever why should I have to pay penalty rates, I am doing them a favour and getting kicked in the teeth for it.


----------



## Tysonboss1 (9 July 2008)

xoa said:


> So you think wages should be slashed?
> 
> Will that be good for house prices?




No, not one of my workers is on minimum wage,

I just don't think people should complain when they actually have it pretty good.


----------



## gfresh (9 July 2008)

I think he's just saying, why should he have to pay a premium (on top of the hourly rate), simply if the workers choose to work further hours than the 40. That's probably fair enough from an employers perspective. 

New Housing financing figures just out.... down massively over even just the last month. Cliff jump almost. 

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument

This is exactly what happened in the UK before the prices went south, financing plunged. The canary is flapping wildly, with a look of terror on it's face.  I don't think there should be any doubt that hard times are ahead for many areas of the property industry. If people aren't financing, they're not buying (or building). 

If we look at the summary trend.. the charts say it all - we're heading right for 5, and then probably 10 year lows. Nobody should be brushing off these figures. 

http://www.abs.gov.au/ausstats/abs@...mmary&prodno=5609.0&issue=May 2008&num=&view=


----------



## xoa (9 July 2008)

Tysonboss1 said:


> No, not one of my workers is on minimum wage,
> 
> I just don't think people should complain when they actually have it pretty good.




Our minimum wage is higher than in the United States, but so are our prices for food, housing, and utilities.

$7.25/hr will get you further in America than $13.50/hr in Australia.


----------



## Tysonboss1 (9 July 2008)

xoa said:


> Our minimum wage is higher than in the United States, but so are our prices for food, housing, and utilities.
> 
> .




thats because wages are a massive part of the cost base, of food and housing.

wages take about 35% of the revenue of business directly so an increase in workers pay or conditions directly affects the cost of products and services.

and it's just not the pay / hour but all the conditions, such as the lowering of the work week to 38hours from 40, added payed breaks, the progression towards employers having to pay out sick days if they aren't used (sick days are ment to be a safe guard to protect the worker if they get sick but more and more people see them as a right), leave loading (what is leave loading anyway, I already give the person a 4 week payed break why do i have to increase there pay by 17% "leave loading" just because they are on holiday etc etc,...... and now they are talking about payed maternity leave,..

There is a general move of the work force getting paid more $$$ for less real hours of work, this can only mean people will end up with less in the end through higher prices,


----------



## pepperoni (9 July 2008)

gfresh said:


> I think he's just saying, why should he have to pay a premium (on top of the hourly rate), simply if the workers choose to work further hours than the 40. That's probably fair enough from an employers perspective.
> 
> New Housing financing figures just out.... down massively over even just the last month. Cliff jump almost.
> 
> ...





I read this on SMH .. "shock fall" they say but the only real shock was that they went up so much!

Who want to be a wage slave for a bank for 30 years ... all of a sudden everyone woke up and decided they were gonna be the next gordon gecko and max debt was the key...  hurry up and bring back the tune in and dropout drop out hippies I say ha ha. 

Bank interest being payable in after tax dollars has always seemd to me like  locking in almost a -20% return every year and hoping rents and capital gains will do better than that ... god help you if there are capital losses!

When i had mortgages I put every cent into them as I felt needed to make 15 -20% to get a better return.  My friends scoffed that I wasnt wheeling and dealing like them ... but I paid off both 30 year mortgages in 3-4 years and they now have nooses around their necks.

One budding tycoon lost everything on one deal ... slow and steady still wins the race I say.

Anyway I think the RBA screwed this country by not hiking rates ON DAY ONE.  Yes they were constrained by low US rates but IMO this country has been ruined by housing affordabilty.

So much so I think a move to abu dhabi may be in order until this is sorted out. Yes rents are high but no tax and 40c/l fuel more than makes up for it.

Sorry ... Rant over ... but this state of affairs is a joke 

*gets hit on **** by door on way out*


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> Who want to be a wage slave for a bank for 30 years ... all of a sudden everyone woke up and decided they were gonna be the next gordon gecko and max debt was the key...  hurry up and bring back the tune in and dropout drop out hippies I say ha ha.
> 
> Bank interest being payable in after tax dollars has always seemd to me like  locking in almost a -20% return every year and hoping rents and capital gains will do better than that ... god help you if there are capital losses!
> 
> *




I would rather be a slave to the bank than a slave to the land lord,.... the bank interest kgets less and less as you pay offf the loan and they end up giving you the deed to the house,

rent is also paid out of after tax dollars,...


----------



## Mofra (9 July 2008)

Warren Buffet II said:


> Shortage, what shortage??
> 
> Is there really a shortage of housing? Let us turn our attention to the census data at the Australian Bureau of Statistics (ABS):
> 2001 2006 Growth
> ...



WBII, nice work with the quantitative analysis however I can't subscribe to what amounts to a "single property market" theory (I think everyone except robots agrees that mortgage belt properties are in decline and it appears anecdotally that there are a reasonable number of properties available for rent in these areas). 

Unfortunately qualitative figures appear to be much harder to obtain.
Vacant properties that are closer to major population centres that have access to readily serviced public transport do seem to be extremely difficult to find - especially those within the means of an average household budget.


----------



## pepperoni (9 July 2008)

Tysonboss1 said:


> I would rather be a slave to the bank than a slave to the land lord,.... the bank interest kgets less and less as you pay offf the loan and they end up giving you the deed to the house,
> 
> rent is also paid out of after tax dollars,...





Rents are also as low as 2% of property price whereas mortgages are 10%.

With the 8% I save I can have compounding for me, whereas the 10% mortgage compounds against me.

And whilst Im no expert Im told I should respect compound interest. 

"Depending on the source, Albert Einstein referred to compound interest as the eighth wonder of the world, the human race's greatest invention, or the most powerful force of the universe. "

(http://en.wikipedia.org/wiki/Compound_interest)


----------



## pepperoni (9 July 2008)

Whilst I agree that there is no single property market in Aus, a potential issue for Aus is that its not the only property market in the world.

At these prices some will be forced to look elsewhere (eg me).

Immigrants wont bother coming here, unless they are the 2 bob kind that like the amazing welfare and safety nets in aus ... that jokers like us end up paying for


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> Rents are also as low as 2% of property price whereas mortgages are 10%.
> 
> With the 8% I save I can have compounding for me, whereas the 10% mortgage compounds against me.
> 
> ...




As a home owner pays off there loan it works like compound interest in reverse meaning every payment has a higher and higher amount of priciple and less interest,.... so the compounding side of things is still working for them,...

not to mention that rents may be low but they will increase over the years so that difference between loan payments and rent dicreases pretty quickly over a few years when you factor in the actual interest component of the loan is decreasing and the rents you would other wise pay is increasing.

and remember with inflation your property price has a good chance of compounding too,..... and the one thing better than compounded growth is tax free compounded growth which your own home is.


----------



## pepperoni (9 July 2008)

I guess thats the way my struggling friends saw it when they committed. But when they do the numbers and their $500k house costs them millions over 30 years. 

I think its a zero sum game at best with property prices stretched as they are now.  Sort of like rushing to buying as many shares as possible after the stock market PE is 40 or something.

I see it in simpler terms when borrowing ie I budget for 10% interest, and would want around 10% CG each year to make it worthwhile, which I personally would never expect over 30 years.

Someone calculated it here before but I think it would mean the average aussie house will be about 3 trillion dollars in 10 years haha.


----------



## Pommiegranite (9 July 2008)

A sign of things to come over here?

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/08/cmmortgage108.xml


----------



## pepperoni (9 July 2008)

Pommiegranite said:


> A sign of things to come over here?




I hope so ... or even better no interest only loans ha ha.  They are great for bank profits but life long mortgage slaves are not in the interests of society.

Better lending standards should be set for the people out there that need to be protected from themselves.

Less borrowing = lower prices = people becoming debt free sooner = more money and energy to spend on kids, education, having a life.


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> I see it in simpler terms when borrowing ie I budget for 10% interest, and would want around 10% CG each year to make it worthwhile, which I personally would never expect over 30 years.
> 
> Someone calculated it here before but I think it would mean the average aussie house will be about 3 trillion dollars in 10 years haha.




you miss a couple of points with this statment,...

Firstly you haven't factored in the rent the you would collect if it were an investment or the rent you would have had to pay if it were your home... so you wouldn't have to have CG of 10%,... you might only have to have 6% growth t make it worth while and if you think that prices will average atleast growth with inflation thats 4% staight away and the rent you are saving each year is also growing with inflation.


you also haven't counted on the compounding affect of your interest repayments getting smaller and smaller as you clear down the loan.

I think you are making the mistake of over simplifying your calculations and you are missing some giant factors....


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> Someone calculated it here before but I think it would mean the average aussie house will be about 3 trillion dollars in 10 years haha.




one of the calculations that I have seen used on this thread was by Number crucher who basically said.

sydney property 100 years ago was worth about $2000 for the median house and if $2000 increase at 10% for 100years then the median has price should be about $50,000,000,.... so he stated that it was clearly impossible for this to happen because sydney's median house price was only $450,000

If you look a bit deeper though and say that a 10% return was made up of 4% rental and 6% capital growth,... then it is entirely possible that this properies that were valued at $2000 100years ago have maintained a return of over 10%,.... because the buildings that are built in the areas where the median homes were 100years ago are valued up to $600,000,000 and have land values in the 10's of millions.


----------



## pepperoni (9 July 2008)

Tysonboss1 said:


> you miss a couple of points with this statment,...
> 
> Firstly you haven't factored in the rent the you would collect if it were an investment or the rent you would have had to pay if it were your home... so you wouldn't have to have CG of 10%,... you might only have to have 6% growth t make it worth while and if you think that prices will average atleast growth with inflation thats 4% staight away and the rent you are saving each year is also growing with inflation.
> 
> ...




I dont think simplifying is a mistake ... they KISS principle is a way of suggesting over complicating leads to judgment errors (debt and property bubble anyone).

I also think the idea of compounding interest working for borrowers is 100% wrong ... id just rather not burden the thread with it.


----------



## pepperoni (9 July 2008)

Tysonboss1 said:


> one of the calculations that I have seen used on this thread was by Number crucher who basically said.
> 
> sydney property 100 years ago was worth about $2000 for the median house and if $2000 increase at 10% for 100years then the median has price should be about $50,000,000,.... so he stated that it was clearly impossible for this to happen because sydney's median house price was only $450,000
> 
> If you look a bit deeper though and say that a 10% return was made up of 4% rental and 6% capital growth,... then it is entirely possible that this properies that were valued at $2000 100years ago have maintained a return of over 10%,.... because the buildings that are built in the areas where the median homes were 100years ago are valued up to $600,000,000 and have land values in the 10's of millions.




I think if we look any deeper we may find ourselves in beijing if not fairy land ... there is nowhere near the mythical 10% return in the past or future no matter how its split or whats added to it and there sure as hell wont be anytime soon with affordability at all time lows and recession looking likely.

In effect I agree to disagree on your points.

Dont mean to be abrupt just dont want do dissapear into tiny if not imagined recesses of an otherwise very big issue.


----------



## Go Nuke (9 July 2008)

robots said:


> hello,
> 
> just another "opinion", but I would soon fill a double decker bus in 10 mins with fellow men or women,
> 
> ...




I'm sorry Robots whats a board plaster?
Not sure if that is something or if you have poor English?



> In robot's world, there are only:
> 
> 1/ People who earn (by whatever means) >$100,000
> 
> ...



ROFL
Glad to hear someone agrees with me



> I have staff that are always asking me for more work, but the are capped at 38 hours because I am not going to pay over time.



Sucks to be you.
Not to get into politics but I'm going to guess you were a supporter of John Howards AWA's too?
Thank god I helped vote him and that stupid idea out

Though I will agree with you on the leaving loading. I'm not sure why an employer should have to pay that either.


----------



## robots (9 July 2008)

hello,

go nuke i thought you were in the building industry?

surprised Numbercruncher hasnt popped his head in today he is probably one of the best troll's going around, we all love him, 

its all about breaking down barriers, open communication, realising people have different opinions,

we can all do what we want in this fine country (investment)

i have openly admitted my suburb is down 1.2% as indicated on Q1 results and will see what happens coming up

thankyou

robots


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> I dont think simplifying is a mistake ... they KISS principle is a way of suggesting over complicating leads to judgment errors (debt and property bubble anyone).
> 
> I also think the idea of compounding interest working for borrowers is 100% wrong ... id just rather not burden the thread with it.




it is when by over simplfying you miss giant pieces of infomation and cut out vital pieces of the return calculation.

also when i talk of (reverse) compounding interest working for borrowers i am talking about how when a loan is paid down the interest is portion of the loan is getting less and less and the priciple is getting more and more,.... so the last $10,000 of the loan is paid of 10times faster than the first $10,000 so it's like compound interest in reverse.... I was not suggesting that people let the interst on their loans compound.

for example in year 1 a $300 loan repayment might be $280 Interest and $20 priciple,.... year 5 $200 interest $100 priciple,.... year 30 $20 interest $280 priciple,...


----------



## Tysonboss1 (9 July 2008)

Go Nuke said:


> I'm
> 
> Sucks to be you.




not really sure why you said that.

on the AWA topic, I think it was a good thing as it would have let myself and my workers put together an arrangement that worked better for us then the current blanket rules.

However i think there is to much room for people to be bullied into unfair AWAs so i don't really know if they were for the greater good... but i think we need somthing better than what we have.


----------



## robots (9 July 2008)

hello,

great news for owners with the cost of bricks going up, superb

i have friend who has four students living with him in Richmond, VIC 

it is fantastic for him having previously been on his own, and has plan in for rear bungalow which he wants to proceed with over the coming years,

a great community service like most landlords

thankyou

robots


----------



## pepperoni (9 July 2008)

robots said:


> hello,
> 
> surprised Numbercruncher hasnt popped his head in today he is probably one of the best troll's going around, we all love him,




 

And the building industry 

I dont get it ... Im told reliably that robots is in the building industry.

I have no interest in PM a mod, nor do I know who they are apart from one ... but this whole thing is a bit


----------



## pepperoni (9 July 2008)

Tysonboss1 said:


> it is when by over simplfying you miss giant pieces of infomation and cut out vital pieces of the return calculation.
> 
> also when i talk of (reverse) compounding interest working for borrowers i am talking about how when a loan is paid down the interest is portion of the loan is getting less and less and the priciple is getting more and more,.... so the last $10,000 of the loan is paid of 10times faster than the first $10,000 so it's like compound interest in reverse.... I was not suggesting that people let the interst on their loans compound.
> 
> for example in year 1 a $300 loan repayment might be $280 Interest and $20 priciple,.... year 5 $200 interest $100 priciple,.... year 30 $20 interest $280 priciple,...




Translated into simple terms - compound interest is working against you but the amount you get raped by is most excruciating in year 1.

Its not compounding and there is - simply - no such thing as 



Tysonboss1 said:


> (reverse) compounding interest working for borrowers




And the only giant piece of information in the equation is the lack of CG and the size of property losses now and in coming years. Spin it into a novel but its still bad business.

Even robots is admitting falls. Not a good thing when you are paying 10% compounded on the mortgage.  

Simple enough for someone as stupid as me.


----------



## wayneL (9 July 2008)

Deja Vu!!

This is exactly..... *exactly* like reading UK property threads 4 months ago.

* Bears smell blood and circling, looking for the kill.

* Bulls in denial

* Bulls invoking fancy mathematics and dodgy accounting principles to justify recent purchases

* Bulls protesting that *THEIR *market won't fall. 



Even Dr House couldn't save this bull.


----------



## Beej (9 July 2008)

Tysonboss1 said:


> it is when by over simplfying you miss giant pieces of information and cut out vital pieces of the return calculation.
> 
> also when i talk of (reverse) compounding interest working for borrowers i am talking about how when a loan is paid down the interest is portion of the loan is getting less and less and the priciple is getting more and more,.... so the last $10,000 of the loan is paid of 10times faster than the first $10,000 so it's like compound interest in reverse.... I was not suggesting that people let the interst on their loans compound.
> 
> for example in year 1 a $300 loan repayment might be $280 Interest and $20 priciple,.... year 5 $200 interest $100 priciple,.... year 30 $20 interest $280 priciple,...




You are spot on and I think people are missing a key point. Imagine you own and live in a 100 year old house located on the lower north shore of Sydney. Let's say that house cost $2000 100 years ago (which may well be correct, although in fact it may even have been less than that!). This house is currently worth somewhere north of $1M (assuming it's value is not just about to half like some people on here would like to fantasize). 6.5% compounding increase in value of 100 years takes it from $2k -> about $1.1M - spot on! Plus a practical rental value (or return) in the order of say 4%, gives an annualized compound return of 10.5% pa on average EVERY year for the past 100 years.

So bottom line is it would have been worth paying an average 10% mortgage rate, as once you payed off the mortgage, you then get that 10.5% annual value for free (and 100% tax free), and then you can start to get way ahead.

Cheers,

Beej

PS: 75% of the people who own houses on the lower north shore of Sydney don't even have a mortgage, so don't be looking for a fire sale around there 

PPS: Many people on here seem to think this is the first time Australia has seen a boom period followed by a soft period in the housing market! Maybe it's the first time YOU have seen one, but believe me, we have all seen this before, just like the bear stock market is nothing new to people who experienced and invested through the last 3 or 4  Nothing has *fundamentally* changed.


----------



## robots (9 July 2008)

wayneL said:


> Deja Vu!!
> 
> This is exactly..... *exactly* like reading UK property threads 4 months ago.
> 
> ...




hello,

has been going on for almost 3yrs here at ASF, with the anniversary i think on the 12th September 2005 of the infamous thread,

man we miles ahead of the UK

thankyou

robots


----------



## wayneL (9 July 2008)

robots said:


> hello,
> 
> has been going on for almost 3yrs here at ASF, with the anniversary i think on the 12th September 2005 of the infamous thread,
> 
> ...



Bears always admitted to there needing to be a trigger.

We now have the trigger.

Boom-Boom


----------



## xoa (9 July 2008)

Beej said:


> You are spot on and I think people are missing a key point. Imagine you own and live in a 100 year old house located on the lower north shore of Sydney. Let's say that house cost $2000 100 years ago (which may well be correct, although in fact it may even have been less than that!). This house is currently worth somewhere north of $1M (assuming it's value is not just about to half like some people on here would like to fantasize). 6.5% compounding increase in value of 100 years takes it from $2k -> about $1.1M - spot on! Plus a practical rental value (or return) in the order of say 4%, gives an annualized compound return of 10.5% pa on average EVERY year for the past 100 years.
> 
> So bottom line is it would have been worth paying an average 10% mortgage rate, as once you payed off the mortgage, you then get that 10.5% annual value for free (and 100% tax free), and then you can start to get way ahead.
> 
> ...




That's a nice idea in theory. Unfortunately it's a pipe dream.

In reality the hypothetical 100 year old house would be a pile of rotting wood, and the property would sell at land value, unless you invested hundreds of thousands of dollars in its upkeep.

There'd need to be ongoing repairs and maintenance, taxes, and council rates. If you were hoping to rent it in 2008, you'd need to spend extra on  renovations to install modern conveniences such as indoor plumbing, electronics, and electrical wiring.

New "investors" tend not to think about that kind of thing. Maybe they want to flip their property after a year or two anyway.


----------



## wayneL (9 July 2008)

xoa said:


> That's a nice idea in theory. Unfortunately it's a pipe dream.
> 
> In reality the house would be a pile of rotting wood, and the property would sell at land value, unless you invested hundreds of thousands of dollars in its upkeep.
> 
> ...




Ah yes, harks me back to this quote:



			
				Tysonboss said:
			
		

> ...by over simplfying you miss giant pieces of infomation and cut out vital pieces of the return calculation.




Indeed.


----------



## dhukka (9 July 2008)

Some interesting data out today from the ABS on loan commitments for housing. The number of loans for owner occupied houses are now *-27.1%* from the peak in June 2007 and the value of loan commitments is now off *-28.8%* from the peak. 

The chart below tell the story. There is some severe mean reversion taking place. We're just getting warmed up here folks, following the US and more recently the UK into the real estate abyss.


----------



## Tysonboss1 (9 July 2008)

xoa said:


> That's a nice idea in theory. Unfortunately it's a pipe dream.
> 
> In reality the hypothetical 100 year old house would be a pile of rotting wood, and the property would sell at land value, unless you invested hundreds of thousands of dollars in its upkeep.
> 
> ...




the expenses you mentioned would be a small part of the collected rent, and any big property improvements pay for them selves through increased rental return,

not to mention that some of those blocks would near the cbd would be worth    >$30M so it's a bit more than a pipe dream.


----------



## xoa (9 July 2008)

Tysonboss1 said:


> not to mention that some of those blocks would near the cbd would be worth    >$30M so it's a bit more than a pipe dream.




Yeah. If that house was on an acre's block next to the Sydney Opera House.


----------



## Beej (9 July 2008)

xoa said:


> That's a nice idea in theory. Unfortunately it's a pipe dream.
> 
> In reality the hypothetical 100 year old house would be a pile of rotting wood, and the property would sell at land value, unless you invested hundreds of thousands of dollars in its upkeep.
> 
> There'd need to be ongoing repairs and maintenance, taxes, and council rates. If you were hoping to rent it in 2008, you'd need to spend extra on  renovations to install modern conveniences such as indoor plumbing, electronics, and electrical wiring.




Crap - the reason I know is I own and live in a 100 year old house so it's not so hypothetical to me . Back then they built houses out of double brick. 1000s of them all still standing around here today. Yes, some $ have to go into the housing stock over the years to keep it up-to-date, but nowhere as much as you are suggesting above. Take maybe 1% p.a of that 4% rental return/value and you should cover all those ongoing maintenance and renewal costs easily (including the big ones like electrics/modern plumbing etc - those things get done once every 50 years). - plus the added value of much of that work get's to keep compounding on into the future as a part of the asset value growth long term anyway. Let's also say that the savings during the periods of low interest rates (ie < 10%, like the entire past 10 years) probably covers those costs nicely anyway, pretty much evening everything out.

Seriously what do you guys think? Do you think you are going to be picking up a 5 bedroom/3 bathroom federation on the Balmoral slopes for $500k anytime soon?? Even for $1.5M?? Honestly?

The property market is a whole lot of different markets that all relate to each other at some level, but each is also driven by it's own financial factors. Just because someone over-stretched for a fibro shack in the boring outer suburbs of Brisbane that resulted in a mortagee sale at a low price, doesn't automatically mean that mansions are going at fire sale prices in Mosman! 

Sure, prices in good area's may still pull back a bit (because they go up soooo much when times are good!), but believe me, you will ALWAYS need serious cash to buy into those area's, far more so than you did 100 years ago or at any other time in the past for that matter as well, as the desirability of good areas only goes up while the relative number of people that get to live in them can only go down. Ergo, on average each year you have to be wealthier than the last to afford to live there (if you are not already "in").

Real-estate in good area's of Sydney has been flat pretty much since 2004/05 anyway, so really all this talk of bubbles bursting etc doesn't apply here, it's already happened! The rest of the country might well have got a bit ahead of itself, and the current interest rates are putting that under some pressure, but I would still only be counting on a slight pull-back followed by a period of plateauing for a few years if you are thinking of entering the market - forget the idea of across the board fire-sales and big falls in the "good" areas, that's a fantasy!

Cheers,

Beej


----------



## Tysonboss1 (9 July 2008)

pepperoni said:


> Its not compounding and there is - simply - no such thing as




The term compounded interest refers to interest on an amount of money accumulating there by earning more interest so you are getting intrest on interest,.... So home owners do are having compounded interest work against them because they pay the interest off each month so they are never charged interest on interest,... So you are wrong about that.

Secondly the term reverse compound interest is a term I use (and also Noel Whittaker uses in his book "Golden rules of wealth") to describe how as you make extra payments off a priciple and interest loan each payment you make saves you interest for the rest of the loan term, and as it saves you interest this month it also saves you further interest the next month,.... so the amount of interest it saves is getting bigger and bigger each month,.... so the rate that you are clearing the loan gets faster and faster as the years go by


----------



## Tysonboss1 (9 July 2008)

xoa said:


> Yeah. If that house was on an acre's block next to the Sydney Opera House.




well around the cbd and the north sydney area is where alot of the median houses were over a 100years ago


----------



## Beej (9 July 2008)

dhukka said:


> Some interesting data out today from the ABS on loan commitments for housing. The number of loans for owner occupied houses are now *-27.1%* from the peak in June 2007 and the value of loan commitments is now off *-28.8%* from the peak.
> 
> The chart below tell the story. There is some severe mean reversion taking place. We're just getting warmed up here folks, following the US and more recently the UK into the real estate abyss.




Hang on a second - but I see AT LEAST 5 more troughs in that graph from the past at similar levels?? So what's your point? What happened to the property market during/after each of those past troughs?? In fact I bought my first house back in 1991 just as one of those past troughs was turning around - did pretty well out of that one 

Cheers,

Beej


----------



## ghotib (9 July 2008)

Hey Wayne, Which trigger do you mean?

This is all a very practical question to me at the moment. My house cost 700 pounds in about 1920 and it's now for sale. 

We've been on the market for 2 weeks with quite a lot of inquiry but fewer inspections than "normal" and no offers. We're currently reconsidering the price (we decided against auction). 

If someone could come up with a bit of good economic news I'd be grateful. 

Ghoti


----------



## Temjin (9 July 2008)

robots said:


> surprised Numbercruncher hasnt popped his head in today he is probably one of the best troll's going around, we all love him,
> 
> its all about breaking down barriers, open communication, realising people have different opinions,




I'm going to have to come in and defend Numbercruncher because he has been presenting factual information with evidences.

Like I said, criticising someone is the biggest communication roadblock. By calling someone a troll, you aren't really faciliating an open discussion here and creating more hostility. So I suggest you apologise for it.  

Yes, you are right that everyone is entitled to their opinions. However, while I have seen honest and constructive discussion amoung most of the bears/bulls around here, you are the only one who is giving me the impression that you tend to ignore anything that you don't want to hear. 

Of course, I'm sure most of us have given up trying to show you the facts, and we wouldn't even consider trying to change your opinion. 



And yes, the discussion on a "hypothetical 100 year investment property" is stupid. How could you make a consistent assumption for THAT long a period? Anything could happen or change. You would have geological, political or environmental issues coming into play before you even consider the economic aspect of the investment!


----------



## dhukka (9 July 2008)

Beej said:


> Hang on a second - but I see AT LEAST 5 more troughs in that graph from the past at similar levels?? So what's your point? What happened to the property market during/after each of those past troughs?? In fact I bought my first house back in 1991 just as one of those past troughs was turning around - did pretty well out of that one
> 
> Cheers,
> 
> Beej




1991 was indeed a great time to buy. The Australian economy was going into recession and as usual housing led the way. Housing had started to turn up about a year before the recession began so your timing was pretty good. The mistake is to believe the current decline on that graph represents a trough. As I said previously, we are just getting started. Expect at least a decline of the magnitude of the late 1980's.


----------



## Tysonboss1 (9 July 2008)

wayneL said:


> Deja Vu!!
> 
> This is exactly..... *exactly* like reading UK property threads 4 months ago.
> 
> ...




I am the first one to admit that property prices will weaken in certain areas,... And I am also the first one to say that property speculating and over extending yourself for short term gain is not really the best stratergy to use in property investing,... but choosing a good longterm investment stratergy that includes some form of property is a good idea, Even if that is only owning your own house and focusing the rest of your investing in other areas.

I only hold about 50% of my invsted capital in property the rest is in my businesses and equities,... and my property portfolio is probally only about 50% leveraged,


----------



## wayneL (9 July 2008)

Beej, straw man builder,

I don't think you'll get many bears suggesting what you are suggesting that they are suggesting.

So far in the UK, the _creme de la creme_ London properties have been pretty resilient. But we are talking properties experiencing demand from British aristocracy, Arab oil billionaires, Russian oligarchs, and the like. They get favourable tax treatment by our.... ahem, Labour gu'mint. I'm talking the dark blue properties on the monopoly board.

Elsewhere, premium properties are falling. How far, we do not know until this plays out in it's entirety. 

Don't get too smug yet though. If in five years your property has held up, be smug then, you will have good reason. But at the present point in time, the bears are smelling blood... and never forget, prices are set at the margins.

Good luck


----------



## Temjin (9 July 2008)

Beej said:


> Hang on a second - but I see AT LEAST 5 more troughs in that graph from the past at similar levels?? So what's your point? What happened to the property market during/after each of those past troughs?? In fact I bought my first house back in 1991 just as one of those past troughs was turning around - did pretty well out of that one
> 
> Cheers,
> 
> Beej




Just wondering Beej, have you seen this chart?

https://www.aussiestockforums.com/forums/showpost.php?p=309534&postcount=1831

Don't want to spam this thread with too much charts, so just referencing back an older post. 

You see how WAY OFF THE CHART real prices of house are right now in comparison to the last 80 odd years before the 1990s? 



			
				dhukka said:
			
		

> 1991 was indeed a great time to buy. The Australian economy was going into recession and as usual housing led the way. Housing had started to turn up about a year before the recession began so your timing was pretty good. The mistake is to believe the current decline on that graph represents a trough. As I said previously, we are just getting started. Expect at least a decline of the magnitude of the late 1980's.




Hell, I wouldn't be surprised if the decline will takes us back near to the average index level. (from that previous chart) Still a long way to go.


----------



## wayneL (9 July 2008)

ghotib said:


> Hey Wayne, Which trigger do you mean?



The credit crunch. 

This is not the reason, it is a symptom of a larger malaise. But nevertheless it is the trigger.


----------



## Beej (9 July 2008)

dhukka said:


> 1991 was indeed a great time to buy. The Australian economy was going into recession and as usual housing led the way. Housing had started to turn up about a year before the recession began so your timing was pretty good. The mistake is to believe the current decline on that graph represents a trough. As I said previously, we are just getting started. Expect at least a decline of the magnitude of the late 1980's.




I don't think so - look at the growth in loan number and values through 1987 - that was also a year in which residential property values in went up by 150% in 18 months! I am not kidding, that was the growth; now *that* was insane, and we haven't seen anything like that since, even with the general growth in consumer credit due to de-regulation and low interest rates.

By the way the 90's recession actually occurred during 1990, by 1991 the recovery had already started. House prices pulled back in 1988/89 by about 20-25%, which meant they were now only 100% higher than they had been 3 years earlier instead of 150% , then they plateaued through 1990/91, then they slowly started to grow again, before really getting up a head of steam again by the mid-90s.

Because prices have not ballooned to anywhere near the extent as in 88/89, plus the growth in lending as shown by your graph also backs this up, I don't see any expectation of a pull back anywhere near as "severe" as in the late 80s, but even if it was that bad, well - I'd be buying at that point because I think predictions of 40-50% price reductions in desirable area's are pure fantasy!

Cheers,

Beej


----------



## Tysonboss1 (9 July 2008)

Temjin said:


> And yes, the discussion on a "hypothetical 100 year investment property" is stupid. How could you make a consistent assumption for THAT long a period? Anything could happen or change. You would have geological, political or environmental issues coming into play before you even consider the economic aspect of the investment!




I made the coments I made just to point out that the figures are not as out of wack as what people say,... Bears give the 100years numbers to try and proove it is impossible to average 10% returns, I just showed that the numbers are not that out of wack as the bears would like to think


----------



## wayneL (9 July 2008)

Tysonboss1 said:


> and my property portfolio is probally only about 50% leveraged,



I also hold IP at low LVR.

The conservative will be fine. I've lost about £100k in "valuation" since this started. But I have always viewed those peak valuations as fantasyland.

I prefer to value property at intrinsic value rather than current price, using long term vectors. Their current value is still well above intrinsic value.

fwiw


----------



## dhukka (9 July 2008)

Temjin said:


> Hell, I wouldn't be surprised if the decline will takes us back near to the average index level. (from that previous chart) Still a long way to go.




Nor would I. On the chart I posted I would expect the late 1980's lows to be surpassed. 

btw did anyone notice Australian consumer sentiment hitting a fresh 16 year low today? We've hit recession like sentiment and the economic malaise is only just beginning. Buckle up folks.


----------



## noirua (9 July 2008)

Looking very bad now.  Options in the States are increasingly, torch the property or sell on the basis of buy two properties and get one free. 
Keep lots of cash and earn high rates of interest, some good stock market bargains amongst the falling knives.


----------



## xoa (9 July 2008)

Beej said:


> Crap - the reason I know is I own and live in a 100 year old house so it's not so hypothetical to me . Back then they built houses out of double brick. 1000s of them all still standing around here today. Yes, some $ have to go into the housing stock over the years to keep it up-to-date, but nowhere as much as you are suggesting above. Take maybe 1% p.a of that 4% rental return/value and you should cover all those ongoing maintenance and renewal costs easily (including the big ones like electrics/modern plumbing etc - those things get done once every 50 years).




You should look at some data regarding net rental yield (accounting for expenses and plant depreciation) in 2005 (begins page 71):

Long term housing prices in Australia and some economic perspectives


----------



## Beej (9 July 2008)

Temjin said:


> Just wondering Beej, have you seen this chart?
> 
> https://www.aussiestockforums.com/forums/showpost.php?p=309534&postcount=1831
> 
> ...




Hi - yea I saw that chart. To be honest, something looks not quite right about that to me, and I'd like to dig deeper. I don't see how real house prices have on average nearly tripled since 1985? Since that time the actual prices have gone up by about 4-5x, but there has been a LOT of inflation, and real wages growth since that time as well? For example, my parents sold a house (Sydney suburbs) in 1985 for $110k - that same house today would cost around $550k - that's ~7% compound price growth over 23 years - inflation alone over that time would have been roughly 4-5% pa, so I just can't see where a 2.5+ times real price growth (as shown in that chart) comes from???

Maybe the problem is that ultimately you have to factor real wages and disposable income plus general average wealth to guage where "fair value" for house prices *should* be? I mean our living standards, both purely financially and in terms of quality of housing (size, amenities) etc have all increased dramatically since 1890 haven't they? But using the example of my parents house above, I think there is something fishy with that chart anyway....

Cheers,

Beej


----------



## theasxgorilla (9 July 2008)

robots said:


> hello,
> 
> has been going on for almost 3yrs here at ASF, with the anniversary i think on the 12th September 2005 of the infamous thread,
> 
> ...





Actually, we're vastly different to the UK, just like we're different to Japan at the end of the 80's, which is IMO why the whole bear argument fails to be convincing.


----------



## dhukka (9 July 2008)

Beej said:


> I don't think so - look at the growth in loan number and values through 1987 - that was also a year in which residential property values in went up by 150% in 18 months! I am not kidding, that was the growth; now *that* was insane, and we haven't seen anything like that since, even with the general growth in consumer credit due to de-regulation and low interest rates.
> 
> By the way the 90's recession actually occurred during 1990, by 1991 the recovery had already started. House prices pulled back in 1988/89 by about 20-25%, which meant they were now only 100% higher than they had been 3 years earlier instead of 150% , then they plateaued through 1990/91, then they slowly started to grow again, before really getting up a head of steam again by the mid-90s.
> 
> ...




Yes you're right the recession began in mid 1990 but didn't trough until August 1991. You also didn't have the explosion in easy credit that you have had in recent years nor were households as up to their eyeballs in debt. 

Time will tell if we see the 1980's lows again. I will be interesting to see an updated chart in 6 months to a years time. Predictions of 40-50% price declines in desirable areas seem over the top to me too. I'll be a buyer as well if that's the case.


----------



## Beej (9 July 2008)

dhukka said:


> Yes you're right the recession began in mid 1990 but didn't trough until August 1991. You also didn't have the explosion in easy credit that you have had in recent years nor were households as up to their eyeballs in debt.
> 
> Time will tell if we see the 1980's lows again. I will be interesting to see an updated chart in 6 months to a years time. Predictions of 40-50% price declines in desirable areas seem over the top to me too. I'll be a buyer as well if that's the case.




Ahh - some common ground! 

Cheers,

Beej


----------



## xoa (9 July 2008)

Tysonboss1 said:


> well around the cbd and the north sydney area is where alot of the median houses were over a 100years ago




Then why do we see restored federation cottages selling for around $1 million each, and not $30 million?


----------



## Temjin (9 July 2008)

Beej said:


> Hi - yea I saw that chart. To be honest, something looks not quite right about that to me, and I'd like to dig deeper. I don't see how real house prices have on average nearly tripled since 1985? Since that time the actual prices have gone up by about 4-5x, but there has been a LOT of inflation, and real wages growth since that time as well? For example, my parents sold a house (Sydney suburbs) in 1985 for $110k - that same house today would cost around $550k - that's ~7% compound price growth over 23 years - inflation alone over that time would have been roughly 4-5% pa, so I just can't see where a 2.5+ times real price growth (as shown in that chart) comes from???
> 
> Maybe the problem is that ultimately you have to factor real wages and disposable income plus general average wealth to guage where "fair value" for house prices *should* be? I mean our living standards, both purely financially and in terms of quality of housing (size, amenities) etc have all increased dramatically since 1890 haven't they? But using the example of my parents house above, I think there is something fishy with that chart anyway....
> 
> ...




If you wish to dig deeper, take a read at Nigel Stapledon's PDH thesis, titled "Long term housing prices in Australia and some economic perspectives". It does get fairly technical though. It should give you a better explanation on how he comes with the data. 

http://www.library.unsw.edu.au/~thesis/adt-NUN/public/adt-NUN20071210.120652/index.html

Some additional charts with explanations from Steve Keen. 

http://www.debtdeflation.com/blogs/2008/06/30/debtwatch-no-24-july-2008/

Remember though, you can't just use your parents' house as a basis for the entire property market. 

Another statistic you can use is the average mortgage repayment to average income ratio. It's fairly known and highly promoted by the media. It's a fact that this ratio has increased by a fair amount over the last several years.


----------



## Tysonboss1 (9 July 2008)

noirua said:


> some good stock market bargains amongst the falling knives.




I have been trying to catch some of these falling knives,... One imparticle has gone straight through my hand and in stuck in my foot.

Crazy times we are in but I can't help but feel the ones who sit out for to long are going to miss some great opportuniites,


----------



## Tysonboss1 (9 July 2008)

xoa said:


> Then why do we see restored federation cottages selling for around $1 million each, and not $30 million?




because the land that is now worth >$30 million has $600M office and apartment buildings sitting on it.


----------



## gfresh (9 July 2008)

Core factors are the same for property markets o/s - excessive debt, and reduced/more expensive credit. The results could play out differently, but take a similar set of circumstances, and you're likely to have a similar result. And it has been playing out quietly similar across major markets, either in the last year, or in periods before that, no matter how different their markets are. 



			
				beej said:
			
		

> Seriously what do you guys think? Do you think you are going to be picking up a 5 bedroom/3 bathroom federation on the Balmoral slopes for $500k anytime soon?? Even for $1.5M?? Honestly?




I don't think anybody is seriously expecting 50%+ losses across the board, but 20-30% in a large number of the mortgage-belt areas seems more likely than not.  This after all, only 1 or 2 years of gains, the froth at the top. And I think most know that prices will come back eventually - all it is, is an excellent buying opportunity... a once in 20 year one, maybe more. 

There has been a tripling of houses listed for sale in Brisbane, compared to this time last year and the financing figures today clearly shows people are not financing to buy. If it's all about demand and supply, there clearly is little demand, increased supply, and price is set where the two meet - simple economics. Obviously  equations can be quite different for each area, but overall, people talk  in average terms here.


----------



## xoa (9 July 2008)

Tysonboss1 said:


> because the land that is now worth >$30 million has $600M office and apartment buildings sitting on it.




And the majority of that land probably wasn't low density residential, but rather prime commercial real estate, even back then.

That's not to say that land valuations haven't increased nicely since 1908. The city's population has grown 10 times in the last century. There's not going to be anywhere near that level of growth again.


----------



## Tysonboss1 (9 July 2008)

xoa said:


> And the majority of that land probably wasn't low density residential, but rather prime commercial real estate, even back then.




I don't think so,... a 6 story aprtment building was purchased for over $20M about 10 km's from the sydney CBD and has been demolished because the land is worth more than the building,.... now this area would have been semi rural 100years ago.

I am leaving this discussion now,.... i don't really care about real estate from 100years ago I only bought it up to proove a point in reponse to another comment,..I have to go on focus on making money, not just talking about it.


----------



## xoa (9 July 2008)

Tysonboss1 said:


> I don't think so,... a 6 story aprtment building was purchased for over $20M about 10 km's from the sydney CBD and has been demolished because the land is worth more than the building,.... now this area would have been semi rural 100years ago.




Is this land on the Bondi beach waterfront by any chance?


----------



## ghotib (10 July 2008)

wayneL said:


> The credit crunch.
> 
> This is not the reason, it is a symptom of a larger malaise. But nevertheless it is the trigger.



Thank you.

That fits with what we're hearing from several agents, in Sydney and in the bush. Their story is that bank valuations are getting extremely conservative. That also fits with the downturn in home loans. 

Which all looks like a vicious circle doesn't it, and I guess we'll be adding to the viciousness because we really want to sell. OTOH, people need a roof and this is a very good one: well located, sitting on solid walls in a much-loved garden that likes kids. 

We found our perfect tree-change property in May. Pity we weren't ready to sell right then. We spent 6 weeks cleaning up and clearing out, and then someone else turned up and stole ... I mean bought... our perfect place: they exchanged contracts yesterday. We knew there was another buyer but we decided against buying before we had at least an offer for this place. 

I gotta say, real estate deals are much more stressful than stocks and shares, as well as much slower <sigh>


----------



## ghotib (10 July 2008)

xoa said:


> And the majority of that land probably wasn't low density residential, but rather prime commercial real estate, even back then.
> 
> That's not to say that land valuations haven't increased nicely since 1908. The city's population has grown 10 times in the last century. There's not going to be anywhere near that level of growth again.



100 years ago there was no Harbour Bridge. North Sydney didn't really become prime commercial real estate until the 50s.  

Fundies rule in real estate


----------



## xoa (10 July 2008)

ghotib said:


> 100 years ago there was no Harbour Bridge. North Sydney didn't really become prime commercial real estate until the 50s.
> 
> Fundies rule in real estate




Well, I wasn't talking about north Sydney in that context, rather the CBD, which was well and truly developed at federation.

Talking specifically about north Sydney, there is no "median" house plot worth $30 million. Not even on Bondi beach. Unless you join a dozen or more house plots, and that's cheating. 

Fundamentals definitely do count. I'd invest in north Sydney property, if the city's mothers were still popping out 6.5 kids each, net rental yields were still 7%, and the city's population was going to increase another 10 fold this century. Unfortunately, that's not going to happen again. Ever. Instead, the fundamentals are screaming "bubble!".


----------



## robots (10 July 2008)

hello,

great night folks plenty hitting the thread,

lots of opinions out there,

is being called a troll like the darkest moment for a forum user is it?

anybody been to the bank recently to get a loan for a house?

http://www.theage.com.au/national/thousands-give-up-on-home-ownership-dream-20080709-3cl9.html

craig james says we in situation never seen before in aus, nothing wrong with renting looks more and more likely the day or racking and stacking is upon us

thankyou

robots


----------



## wayneL (10 July 2008)

robots said:


> anybody been to the bank recently to get a loan for a house?



It's not hard to get a loan... providing you fulfill more old fashioned qualifications.

That's why more old fashioned valuations will eventually apply.

Easy really.


----------



## Tysonboss1 (10 July 2008)

xoa said:


> Is this land on the Bondi beach waterfront by any chance?




no, north of sydney, on the train line.


----------



## Pommiegranite (10 July 2008)

theasxgorilla said:


> Actually, we're vastly different to the UK, just like we're different to Japan at the end of the 80's, which is IMO why the whole bear argument fails to be convincing.




It doesn't matter who we are like, or not like.

The facts are that inflation is hitting the businesses hard. Job losses are inevitable, with a contraction in the economy. Real estate does NOT reside outside of this conundrum. Reduced lending is just a massive spanner in the works.


----------



## pepperoni (10 July 2008)

Pommiegranite said:


> It doesn't matter who we are like, or not like.
> 
> The facts are that inflation is hitting the businesses hard. Job losses are inevitable, with a contraction in the economy. Real estate does NOT reside outside of this conundrum. Reduced lending is just a massive spanner in the works.




Indeed.

To summarise, there are two schools of thought on this thread:

1. those that realise the Aussie real estate prices do not exist in a vacuum; and

2. those that live in fairly land.


----------



## robots (10 July 2008)

hello,

wow look at that unemploment went down to 4.2%, great news for the community

looks like one of the BEARS arguments has just been wiped out,

thankyou

robots


----------



## theasxgorilla (10 July 2008)

Pommiegranite said:


> It doesn't matter who we are like, or not like.
> 
> The facts are that inflation is hitting the businesses hard. Job losses are inevitable, with a contraction in the economy. Real estate does NOT reside outside of this conundrum. Reduced lending is just a massive spanner in the works.




You might be right about the economic factors you mention in your second paragraph...but the doesnt change the idea for me that bears who drop phrases like "look at what happened in Japan" or "look at inflation in post WW1 Germany" are making weak arguements.

Its 2008, it's Australia, and the future is always different.  Try playing a different game with yourself which might stop you from being blindsided by a reality that goes against what you're expecting...try to answer the question in serveral different ways, "how could house prices keep rising for years"?


----------



## Pommiegranite (10 July 2008)

theasxgorilla said:


> You might be right about the economic factors you mention in your second paragraph...but the doesnt change the idea for me that *bears who drop phrases like "look at what happened in Japan" or "look at inflation in post WW1 Germany" are making weak arguements.*
> 
> Its 2008, it's Australia, and the future is always different. Try playing a different game with yourself which might stop you from being blindsided by a reality that goes against what you're expecting...try to answer the question in serveral different ways, "how could house prices keep rising for years"?




Agreed. 

I think I mentioned this before that Japan's bubble was extreme to say the least. Apparently the value of real estate in Japan, at the bubble's peak, was 4x that of the whole of the US!!

No way are we near this. However, spec in Japan's RE market was funded by large savings by the Japanese and a appetite for speculation. The current global bubbles are funded by debt. Time will tell what the full effect will be once the rug is pulled out from under borrowers' feet.


----------



## wayneL (10 July 2008)

theasxgorilla said:


> "how could house prices keep rising for years"?




Easy. 

Banks continue a fast and loose credit credit regime that so far has nearly bankrupted them; or, they use up the remaining oil running the printing presses at MachII and inflation gallops off into the sunset.

Of course we must again reference the time frame involved. Looooong term, prices will keep rising. Meanwhile, the question is: Is now a good time to buy to capitalize on that?

I say no.


----------



## noirua (10 July 2008)

House prices in the UK dropped by 2% in June.  This follows a 2.5% drop in May.
Prices for the last 12 months have now dropped by 6.5%, reversing a double figure climb in the 12 months before that.
Some now forecast a drop of 30% in Northern Ireland from the peak and 20% for the rest of the UK.
Parts of London are still seeing increases, so figures for May indicated.


----------



## Mofra (10 July 2008)

wayneL said:


> Of course we must again reference the time frame involved. Looooong term, prices will keep rising. Meanwhile, the question is: Is now a good time to buy to capitalize on that?



Sshhhhh - you're going to spoil all the fun!

The extremes of "the sky is falling, beachfront property for 2x average wages" vs the "mortgage belt properties in outer suburban areas to rise in the short term" have made this one of the classic threads on ASF.


----------



## theasxgorilla (10 July 2008)

wayneL said:


> Of course we must again reference the time frame involved. Looooong term, prices will keep rising. Meanwhile, the question is: *Is now a good time to buy to capitalize on that?
> 
> I say no.*




I agree.  Aside from owning a house on this side of the world I'm an observer in this whole thing.  But I am ever conscious of my tendency toward being a contrarian and try to find reasons why things won't turn out as bad as so many are suggesting is inevitable.

It's still entirely possible that the neo-serfs of the world are going to have to get used to paying a higher proportion of their disposable income toward the cost of putting a roof over their heads.


----------



## nunthewiser (10 July 2008)

the R word been mentioned on this thread yet ...... yanno the "recession " word ?. all about cycles . maybe we should all learn to ride a bike and wait for them property bubbles to correct the axis a little , gawd bless capitalism , do feel for the mortgage belt strugglers and those caught in the ozzie dream of paying whatever the price for a roof but hey the world keeps turning and the patient return to pick up the bones , callous ? hell yeah but hey aint we here to make a quid ?, lol sorry guys if my post not applicable to this thread but i thought i would add  something instead of the normal "go XYZ"


----------



## pepperoni (11 July 2008)

wayneL said:


> Of course we must again reference the time frame involved. Looooong term, prices will keep rising.




Of course they will in the loooooong term, but will they rise in real terms?

Given that we have in a few short years:

- taken up all slack in prices and then some; AND 
- overextended a large number of new borrowers; AND
- made it near impossible for people to enter the market,

I say NO WAY.  

In fact I think historically prices have not increased faster the inflation rate over the long term.

And I expect we are entering along period of very high inflation whereas property prices simply can not do better than 5% in the VERY long term.

Add to that the fact that the transaction and holding costs are prohibitive and its generally a pain in the ass compared to any other "investment". 

YES its tax free, but should we have this distortion in the market which to some degree has caused the affordability crisis ... NO.

To sumarise

- is being a slum lord a good investment NO
- is it a nice way to invest NO
- do people that answer yes to either of the above suck YES
- should people buy houses to live in ABSOLUTELY - but at the odd reasonabel price popping up now and not at the nonsense prices brought about by "property investors".


----------



## wayneL (11 July 2008)

Oooooommph!!!!



> *Slide in house prices is the worst since the Great Depression*
> 
> By Edmund Conway
> Last Updated: 1:36am BST 11/07/2008
> ...




http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cnhousing111.xml


----------



## pepperoni (11 July 2008)

... and just as property investors have gotten back on top of their finances after selling the car and buying a moped or bicycle.....

http://business.smh.com.au/cba-raises-rates-20080711-3dh4.html

These seem to get less press than the RBA hikes but IMO the trend is more worrying for borrowers.

If only they could raise rents every second week to pass these through 

I also see dubai has moved to cap rent increases ... dubai of all places.

I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ...  as is rental affordablity.  

Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me. 

Even debt bubbles are a social/moral issue ... without even considering usury ... 
http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm

Anyway its the rudd govts problem now Im sure although property investors will have nowhere to go if rental affordability ever became an issue (although at .5 - 2% for a houses its still the bargain of the century).


----------



## robots (11 July 2008)

pepperoni said:


> *I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ...  as is rental affordablity.
> *
> 
> Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.
> ...




hello,

rubbish, you want a house you can get one, you want to rent you can get one

nothing more than the usual handout crew commentary,

here have a house for bludging, yes great stuff 

thankyou

robots


----------



## YELNATS (11 July 2008)

pepperoni said:


> ...
> I also see dubai has moved to cap rent increases ... dubai of all places.
> 
> I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ...  as is rental affordablity.
> ...






pepperoni said:


> I also see dubai has moved to cap rent increases ... dubai of all places.
> 
> I can see that sort of thing being a possiblity here as housing (unlike shares and other real investments) is a social issue ...  as is rental affordablity.




Utter piffle.

If it's a social issue for renters, it's also a social issue for borrowers/investors. 

As an owner of a residential property rented out, my interest rate expenses have gone up by 37% in 12 months (6.39% to 8.77%) and it hurts me a lot. 

Interest costs are about 90% of the outgoings for my property. 

The lease expires soon and unfortunately I'll be needing to ask for a similar % increase in rent in order to survive financially.


----------



## theasxgorilla (11 July 2008)

pepperoni said:


> Why the tax system so strongly encourages greedy housing investment and thereby debt slavery with no PPOR CGT and negative gearing is beyond me.
> 
> Even debt bubbles are a social/moral issue ... without even considering usury ...
> http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm




I hear what you're saying, but I do wonder about the mentality of calling it 'debt slavery'.  If its a social issue then the way to deal with it is to say you only need your house from when you reach maturity (get married, leave home) until you die or can no longer live in it due to health reasons.  Once you're gone, give it back to the society.  So whether you're renting the property or renting the money to hold the property, at the end you give it up.  Are you a slave?  No, you're a member of society.  That's the true social(ist) way.


----------



## pepperoni (11 July 2008)

I said debt bubbles are a social issue ... like rents

In australia property speculators can try to put up rents as much as they  want. Go for it. Its just that if lots of people get away with it its highly inflationary ... which leads to more rate hikes. Double ouch.

Which is why dubai is capping rent increases.

So the poor property speculator is most likely to cop it hard, cop it first, and cop it multiple times.

And anyone that invests in 3-5% income on 80% leverage with 6-10% interest is a speculator.  And judging from the talk of taking action against oil speculators it seems that speculating on social necessities is not a good look.

Life is hard ... buy some kleenex.

Or live in the poppycock land of denial.


----------



## robots (11 July 2008)

hello,

"most likely"

do you have anything that has actually occurred yet?

i will have the poppycock land of denial anyday, 

the poverty pack can have whatever other option you want to post

thankyou

robots


----------



## pepperoni (11 July 2008)

theasxgorilla said:


> I hear what you're saying, but I do wonder about the mentality of calling it 'debt slavery'.  If its a social issue then the way to deal with it is to say you only need your house from when you reach maturity (get married, leave home) until you die or can no longer live in it due to health reasons.  Once you're gone, give it back to the society.  So whether you're renting the property or renting the money to hold the property, at the end you give it up.  Are you a slave?  No, you're a member of society.  That's the true social(ist) way.





Im just saying the govt shouldnt encourage property speculation and should have acted earlier with rate hikes ... lest they end up with dubai like inflation  and have to take the unwanted step of capping rents.

They have had the throttle wide open for a decade and now its a case of "**** is there enough space to stop before the end of the road"?

Other countries with more history (eg france) protect renters more in recognition that housing speculation and volatility is not desirable.

Other countries seem to accept concepts of $/sqm for residential property.  In aus its $/wow factor and million dollar views.


----------



## pepperoni (11 July 2008)

robots said:


> i will have the poppycock land of denial anyday,




Yes .... over 100 pages of it now 

But as warren buffet said about the debt bubble, in this initial period the fools that make stupid decisions will suffer, but that in later stages people that have made no such errors also suffer as a consequence.


----------



## gfresh (11 July 2008)

Housing affordability is a social issue for everybody, it doesn't matter which side of the fence you sit on. 

I don't know where you get off on handouts Robots, as you're clearly collecting plenty of it from the government in terms of deductions for interest repayments, depreciation of buildings, and everything else you receive, in return for providing rental accommodation to your "poor" tenants. If it's on offer, silly not to take it, but it's still a discount for you to invest in housing.

Anyhow, away from housing somewhat, and looking at external factors on household budgets..  as *petrol* in the next 5 years looks like it will become the next largest weekly cost for any family, next to their mortgage repayments .. oh, and the fact that any car that uses more than 8L/100km will soon be worthless. Best case scenario nearly all are going to have to take out a loan to buy a new efficient vehicle - another couple of hundred into the weekly budget. I know even if petrol goes to $4.00 (half the CSIRO's figure), that's going to cost me nearly $200/wk in fuel with my current car 

I don't think house prices are going up anywhere too fast, while the world adapts to this big change. It'll be expensive business. Maybe inflation will be a decade cycle, and the current high interest rate environment will be a long one. It's going to be real battle of attrition for mortgage holders or renters, of who can take the most before cracking. I don't think anybody can really predict the ultimate outcome of whether we'll get through it with or without serious problems. 

Housing doesn't exist in it's own private vacuum, many factors out there.


----------



## Snakey (11 July 2008)

pepperoni said:


> .
> property investors will have nowhere to go if rental affordability ever became an issue (although at .5 - 2% for a houses its still the bargain of the century).




Agree with you .
I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week. I share with two beautiful and very nice girls that pay me $125 a week each. So I end up paying $155 a week rent. 
If I bought it I would be paying $1300 a week receiving $250 then have to come up with $1050 a week.

Greedy pig property speculators who have borrowed money and arrived late boarding the gravy train will be slaughtered IMO. Their credit rating will be destroyed and they will be forced to pay rent. Then they will have to save another more substantial deposit to to buy a house.
Isn't it funny how the creator of the problem then becomes a victim of their own doing.
I guess thats Carma at work. 
Good luck Robot and others like him because your gonna need it


----------



## Tysonboss1 (11 July 2008)

Snakey said:


> Agree with you .
> I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week.




some how i don't believe you are telling the truth


----------



## nioka (11 July 2008)

Tysonboss1 said:


> some how i don't believe you are telling the truth



 I don't doubt the facts BUT. I've been looking to shift to a canalfront block at the Gold coast and there are some at the price mentioned that are tennanted also at the price mentioned. The tennants are temporary and are really house sitting while a sale is made. I had a unit in a complex there with a 40ft pontoon in the broadwater valued at $650,000 which took a year to sell. While we were waiting for a sale we rented it for $300 week which was a lousy return after paying around $100 week in rates, body corp fees and seabed rental for the pontoon. The tennant was only there on a 30day notice arrangement. Rent would have been higher if permanent.
Then again there are places with a $i.2m tag that will take a lot of selling. Some canals are that far inland and with a 4knot speed limit it takes all day to get to sea. Then there are those along Oxley Drive that have a traffic problem with noise and fumes. A lot of those are tennanted. 

I agree there are places to rent that seem a bargain but in years to come a renter ends up with nothing, owners have paid off their place and inflation makes them rich (richer).


----------



## Macquack (11 July 2008)

pepperoni said:


> Other countries seem to accept concepts of $/sqm for residential property.  In aus its $/wow factor and million dollar views.




It appears Sydney's Northern Beaches real estate has not crashed as much as you would have liked.

Being a "token multi-millionaire" does not buy you much on the "insular peninsula".


----------



## Tysonboss1 (11 July 2008)

nioka said:


> I agree there are places to rent that seem a bargain but in years to come a renter ends up with nothing, owners have paid off their place and inflation makes them rich (richer).




thats right,... rent starts low and increases forever, the interest charge on the loan starts high and decreases  till it is completely gone.


----------



## pepperoni (11 July 2008)

Snakey said:


> Agree with you .
> I rent a house on the Gold Coast worth 1.2 million on very wide water front with a boat ramp out the back for my boat and a jetty for fishing, Remote DLUG heaps of room for my two Samoyed dogs and i pay $405 per week. I share with two beautiful and very nice girls that pay me $125 a week each. So I end up paying $155 a week rent.
> If I bought it I would be paying $1300 a week receiving $250 then have to come up with $1050 a week.
> 
> ...




Nice work .. Im renting a $5m house on one of the best streets on balmoral slopes. 300m to beach, 4 bend, 2 car remote garage, big island kitchen, floor boards, lawnmowing and 3m ceilings for 750 a week.

My missus chucks in 250 a week so she can lay claim to 90% of the house ha ha.

I shake my head ... the property is free falling and the capital could be invested for almost $8k a week interest.

Im no expert but it doesnt add up ... Not my problem though ... Ill happily live in australias most exy real estate for chickenfeed at 37.


----------



## theasxgorilla (11 July 2008)

pepperoni said:


> They have had the throttle wide open for a decade and now its a case of "**** is there enough space to stop before the end of the road"?
> 
> Other countries with more history (eg france) protect renters more in recognition that housing speculation and volatility is not desirable.
> 
> Other countries seem to accept concepts of $/sqm for residential property.  In aus its $/wow factor and million dollar views.




Well, with all due respect it made you wealthy...and has put me in a not too bad position either.  Much of the country wanted it this way.

I must admit though, the coutries with more socialised housing policies like the Netherlands, Sweden and France have been a real eye opener to me.  If you tell people you've bought a property their initial response is either, "you're moving" or "a summer holiday house"?  If you tell them you've bought a block of 4 apartments they ask, "what should you do with the other 3, you can only live in 1?".


----------



## pepperoni (11 July 2008)

Macquack said:


> It appears Sydney's Northern Beaches real estate has not crashed as much as you would have liked.
> 
> Being a "token multi-millionaire" does not buy you much on the "insular peninsula".




Bah .. a waterfront on "yachtsmans paradise" passed in a few weeks back ad was listed for 1.85m.  With over 2m real money (ie cash) and normal borrowing levels I could buy the whole peninsular ... if I wanted to spend 2 hours each day battling to and from casa paradiso on balmoral slopes.

Speaking of multi millions, ill bet them all that mac quack refers to the pet duck out the back of you maquarie fields home and has nothing to do with PHDs or mac bank haha. 

Sorry but with that level of polish if you work at mac bank robots is the ceo.


----------



## Temjin (11 July 2008)

nioka said:


> I agree there are places to rent that seem a bargain but in years to come a renter ends up with nothing, owners have paid off their place and inflation makes them rich (richer).




Sorry, but I am JUST amazed when you put out the claim that "inflation makes them richer". 

There is one exception though, you can try asking the poor billionaires in Zimbabwe.  Inflation does not make anyone rich, it is a hidden tax from the government and everyone will become worst off. 

While house prices do increase nominally over the "very" long term, it only ever traces with average inflation/wage growth. If your definition that inflation would make them richer, then you better pray that we should experience a hyperinflation and make everyone own a trillion dollar house.


----------



## pepperoni (11 July 2008)

theasxgorilla said:


> Well, with all due respect it made you wealthy...and has put me in a not too bad position either.  Much of the country wanted it this way.
> 
> I must admit though, the coutries with more socialised housing policies like the Netherlands, Sweden and France have been a real eye opener to me.  If you tell people you've bought a property their initial response is either, "you're moving" or "a summer holiday house"?  If you tell them you've bought a block of 4 apartments they ask, "what should you do with the other 3, you can only live in 1?".




Agree ... but id rather be doing just ok in a country with a healthy stable property market. As it stands im looking to leave for saner shores.

Interesting about the countries you mention .... other end of the spectrum from aus but much healthier imo.


----------



## pepperoni (11 July 2008)

Temjin said:


> Sorry, but I am JUST amazed when you put out the claim that "inflation makes them richer".
> 
> There is one exception though, you can try asking the poor billionaires in Zimbabwe.  Inflation does not make anyone rich, it is a hidden tax from the government and everyone will become worst off.
> 
> While house prices do increase nominally over the "very" long term, it only ever traces with average inflation/wage growth. If your definition that inflation would make them richer, then you better pray that we should experience a hyperinflation and make everyone own a trillion dollar house.




Well said ... We could end the thread here if the denialists understood this.


----------



## theasxgorilla (11 July 2008)

pepperoni said:


> Interesting about the countries you mention .... other end of the spectrum from aus *but much healthier imo*.




Tell me about it.  Research article from Danske Bank this week about the Swedish housing market suggests its bound for the same territory as the US/UK, Spain, Ireland.  I was suprised to see them quote a stat claiming that mortgage costs for new mortgages as a percentage of disposable income had _surged_ in the last two years.  It was estimated to now be around 13%, up from 7.9% in 2006.

What do they let you finance yourself up to now in Aust, 40%???


----------



## robots (12 July 2008)

Temjin said:


> Sorry, but I am JUST amazed when you put out the claim that "inflation makes them richer".
> 
> There is one exception though, you can try asking the poor billionaires in Zimbabwe.  Inflation does not make anyone rich, it is a hidden tax from the government and everyone will become worst off.
> 
> While house prices do increase nominally over the "very" long term, it only ever traces with average inflation/wage growth. If your definition that inflation would make them richer, then you better pray that we should experience a hyperinflation and make everyone own a trillion dollar house.




hello,

dont buy then, simple and invest/spend whatever you like,

like pepperoni who wants to end the thread we could end it on this as well,

if cant afford or dont want to buy then dont you have the choice

rent a 1-bed, rent a mansion, rent a bus whatever

but we all know its not truely about this thou, its all about the little guy, the battler, the poverty pack and how they can take from the rich (or the system)

thankyou

robots


----------



## wayneL (12 July 2008)

Astonishingly, politicians talking sense on housing. Hell, even the Liebour pollie (the woman) admits house prices are out of control, even now.

Watch....



Hat tip to http://thecrownblogspot.blogspot.com


----------



## noirua (12 July 2008)

wayneL said:


> Astonishingly, politicians talking sense on housing. Hell, even the Liebour pollie (the woman) admits house prices are out of control, even now.
> Watch....
> Hat tip to http://thecrownblogspot.blogspot.com




Wasn't the guy on the right nearly Prime Minister once? Seems to talk very sensibly for a politician and due to his relaxed demeanour I doubt he's one anymore?


----------



## wayneL (12 July 2008)

noirua said:


> Wasn't the guy on the right nearly Prime Minister once? Seems to talk very sensibly for a politician and due to his relaxed demeanour I doubt he's one anymore?



Yes, Michael Portillo. Was shadow Chancellor and challenged Hague for the Tory leadership. Did not stand at the last election.

He's still involved with the Tories, but not as MP.


----------



## Sean K (12 July 2008)

Is there a problem with the volume on that, or am I supposed to read their lips?

Or is my computer kaput?


----------



## wayneL (12 July 2008)

kennas said:


> Is there a problem with the volume on that, or am I supposed to read their lips?
> 
> Or is my computer kaput?



No volume is fine...must be your end... ummm you know, your computer.

Sorry.


----------



## Pommiegranite (12 July 2008)

From yesterday's WA business news. Isn't WA the recession proof state? Enjoy:

*Perth houses prices drop $30,000 - 11 Jul, 06:45am
*
*The median house price in Perth has fallen $30,000 down to around $446,000 in the past six months and the rental vacancy has returned to normal for the first time in several years, according to the data released today by the Real Estate Institute of WA.
*
Data released today by the Real Estate Institute of Western Australia show that the Perth median
house price has dropped a further $14,000 since March, while the rental vacancy rate has returned
to normal for the first time in several years.

REIWA's preliminary results for the June quarter show a 3 per cent fall in median price, pulling the
metropolitan median down from $460,000 in March to around $446,000.

This follows the median price having peaked at the end of last year at $475,000.
REIWA President Rob Druitt said the post-boom market was still correcting but had now been hit by
the weaker consumer confidence in the overall economy, interest rate uncertainty and petrol
prices.

"Perth has experienced an overall slump of almost $30,000 in the median price since the beginning
of this year, and the June quarter shows that this slump is found right across the metropolitan area
and also that the regions have gone backwards a little too," Mr Druitt said.
REIWA data for June show that Mandurah dropped by 7 per cent, Greater Bunbury by 7 per cent,
Geraldton-Greenough by 9 per cent and Kalgoorlie by around 5 per cent.

Mr Druitt said the large number of properties for sale punctured the myth of a housing shortage.
"In WA we have a situation of oversupply - not a problem with undersupply, and this is due to the
strength of building activity between 2001 and 2007," he said.

There were 17,200 properties on the market in June (down 2 per cent on March), including 2,450
blocks of land.

Mr Druitt said the once tight vacancy rate for tenants had now returned to normal, with REIWA
recording a comfortable 3 per cent vacancy rate, illustrating many new properties had flooded into
the rental system as investor/owners now found it a difficult time to sell.
"For the first time in several years tenants should now find it much easier to find a suitable home.

There is much more stock available and much more competition amongst owners to secure good
tenants.

"However, rents did increase a little in the June quarter, lifting by $10 per week for houses to a
median of $350 per week, while units rose by $10 per week to a median of $320 per week," Mr
Druitt said.

"Given the large number of properties now being passed over into the rental system, it is
reasonable to expect that rental price growth will ease in the latter part of the year.

"Landlords need to be mindful of the changing conditions and not to price themselves out of the
market," Mr Druitt said.

The oversupply of housing is not restricted to the Perth market with both Mandurah and Bunbury
recording high stocks of listings along with healthy vacancy rates which have contributed to no
movement in rents in these regions during June.


----------



## Sean K (12 July 2008)

wayneL said:


> No volume is fine...must be your end... ummm you know, your computer.
> 
> Sorry.



Aaaaaah, there's a volume control on the Youtube. You goose...


----------



## Macquack (12 July 2008)

pepperoni said:


> With over 2m real money (ie cash) and normal borrowing levels *I could buy the whole peninsular *




Your a legend in your own mind, pizza boy.


----------



## xoa (12 July 2008)

Interesting.. prices are plummeting in Perth, and rental vacancies soar from less than 1% to more than 3%. 

That's not supposed to happen. What happened to the housing shortage?


----------



## noirua (12 July 2008)

Stay clear of any lender who is involved in buy to let. Bradford and Bingley, UK Bank, is on its knees now. Many more associated companies are likely to follow. What's happening in Perth is the same as the UK not all that long ago, it will almost certainly suddenly reverse.


----------



## gfresh (12 July 2008)

xao: exactly.. what I was saying a couple of pages back. Investors have two choices right now with very few buying - sell at a lower price, or rent it out. There's going to be thousands of further rental properties magically coming up in most areas. This is going to completely take off any upward pressure on rents.

The talked about 30% rent increase across the board in the next 3 years is just hype. It'll increase at maybe slightly above the rate of inflation, so around 15%. As the chart a couple of pages back indicates - real adjusted rent has stayed remarkably flat for 30 years.

I think it's already starting to happen on the gold coast, having a look, and lots more suitable options than even 12 months ago. All good


----------



## gfresh (12 July 2008)

One for the speculators, some common sense: http://www.smartcompany.com.au/Free-Articles/The-Briefing/20080221-Take-your-portfolios-pulse-.html


----------



## Beej (12 July 2008)

pepperoni said:


> Nice work .. Im renting a $5m house on one of the best streets on balmoral slopes. 300m to beach, 4 bend, 2 car remote garage, big island kitchen, floor boards, lawnmowing and 3m ceilings for 750 a week.
> 
> My missus chucks in 250 a week so she can lay claim to 90% of the house ha ha.
> 
> ...




What? So is that your uncles house or something????? Or maybe a very short term lease/house sitting type arrangement? $750/week in the regular market would barely get you a 3 bedroom flat or a maybe an un-renovated 3 bed semi anywhere else in Mosman or around the lower north shore. A $5M Balmoral slopes house on a long term lease should pulling $2k-$3k/week and would be snapped up easily in the corporate/executive rental market. Eg: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=5752848 or http://www.domain.com.au/Public/PropertyDetails.aspx?adid=5759222 as a starting point.

I think there is more to that situation than you are letting on.....

Cheers,

Beej


----------



## nioka (12 July 2008)

Temjin said:


> Sorry, but I am JUST amazed when you put out the claim that "inflation makes them richer".
> 
> There is one exception though, you can try asking the poor billionaires in Zimbabwe.  Inflation does not make anyone rich, it is a hidden tax from the government and everyone will become worst off.
> 
> While house prices do increase nominally over the "very" long term, it only ever traces with average inflation/wage growth. If your definition that inflation would make them richer, then you better pray that we should experience a hyperinflation and make everyone own a trillion dollar house.



I've done OK by USING inflation over the years. If you can't fight it join it and use it. Inflation is helping pay off a home loan. It doesn't help pay the rent, it increases the rent.


----------



## SM Junkie (12 July 2008)

I'm trying to get a bit of perspective on the Melbourne market at the moment.  It is being touted by a real estate company doing a road show over in the West, that Melbourne will expect in the next 2 years:


The highest population growth in Australia, and will double by 2050?
Employment is the highest in Australia
Demand for housing to be the highest in Australia
Expect a current capital growth of 25.2% by 2007
Rental demand currently at .3%

I guess my question is why? 

What is or will be happening in Melbourne to expect this sort of increase? Sounds a little to good to me and I have not read anything on this thread that supports these claims.
Appreciate your comments


----------



## robots (12 July 2008)

hello,

look things are rolling along nicely in Melb, 

Mofra has spoken about them recently on this thread and Brumby is doing a very good job,

please check before you buy

thankyou

robots


----------



## pepperoni (12 July 2008)

Beej said:


> What? So is that your uncles house or something????? Or maybe a very short term lease/house sitting type arrangement? $750/week in the regular market would barely get you a 3 bedroom flat or a maybe an un-renovated 3 bed semi anywhere else in Mosman or around the lower north shore. A $5M Balmoral slopes house on a long term lease should pulling $2k-$3k/week and would be snapped up easily in the corporate/executive rental market. Eg: http://www.domain.com.au/Public/PropertyDetails.aspx?adid=5752848 or http://www.domain.com.au/Public/PropertyDetails.aspx?adid=5759222 as a starting point.
> 
> I think there is more to that situation than you are letting on.....
> 
> ...




Agree with everything you say, but im here now with my 27m frontage on a 6 month lease through a local agent. I have no connections to swing a deal here.

Ill verify with links when I no longer live here.  This money is small bickies to the owner as it is to most owners round here ... and there are not that many people with 2k a week to spend on these joints, there are heaps available here and in the east and nobody wants to leave them empty for 3 months ... there are some of the craziest rental bargains out there it would surprise you. 

And Im sure there are crazier bargains in every other rental market in aus.


----------



## pepperoni (12 July 2008)

Pommiegranite said:


> From yesterday's WA business news. Isn't WA the recession proof state? Enjoy:
> 
> *Perth houses prices drop $30,000 - 11 Jul, 06:45am
> *
> ...




OH - MY - GOD.

And this is the only market with fundementals to back up increases (mining).

God help the rest of us ... except melbourne that brilliantly erected that force field against the world economy.  With its steady 10% annual compounding growth soon melbourne units will cost more than a whole street in the rest of the world.


----------



## pepperoni (12 July 2008)

Chinese govt ... at least TRYING to bring about sustainable growth ...

http://www.bangkokpost.com/120708_Business/12Jul2008_biz35.php

Fricken boom bust aussie and us govts.


----------



## Warren Buffet II (12 July 2008)

pepperoni said:


> OH - MY - GOD.
> 
> And this is the only market with fundementals to back up increases (mining).
> 
> God help the rest of us ... except melbourne that brilliantly erected that force field against the world economy.  With its steady 10% annual compounding growth soon melbourne units will cost more than a whole street in the rest of the world.




You forgot Brisbane where there is so much demand and no enough properties available. Brisbane will compound at 15% year after year. Yeah right....
I am feeling it, it ´s coming, it is becoming an eye sore all those sale signs (2 or 3 per street now). Sell now if you can or sell to robots for a great deal with ANZ.

WBII


----------



## robots (12 July 2008)

hello,

keep them coming, fantastic

thankyou

robots


----------



## theasxgorilla (12 July 2008)

SM Junkie said:


> I'm trying to get a bit of perspective on the Melbourne market at the moment.  It is being touted by a real estate company doing a road show over in the West, that Melbourne will expect in the next 2 years:
> 
> 
> The highest population growth in Australia, and will double by 2050?
> ...




Firstly, if it's being _spruiked_ it probably is too good.

But in answer to your question, it has everything except warm water.


----------



## wayneL (12 July 2008)

theasxgorilla said:


> Firstly, if it's being _spruiked_ it probably is too good.
> 
> But in answer to your question, it has everything except warm water.



If I was forced into going back to Oz, it would be Melbourne...

...but not if the population is going to double. Imagine the South East Carpark with 6 million people.

Fuggedit!


----------



## theasxgorilla (12 July 2008)

wayneL said:


> If I was forced into going back to Oz, it would be Melbourne...
> 
> ...but not if the population is going to double. Imagine the South East Carpark with 6 million people.




Unfortunately, a all good things eventually seem to, the inner city affordability ship has said.  There is already a generation just starting to reach their 40's who benefited from low inner city real estate prices coupled with redundancy payouts, coupled with privatisation and demutualisation once-off windfalls, coupled with a recovering then booming economy etc. who are now part of the established inner city 'elite'.  To aspire to something similar today from within Melbourne can't be easy.  I reckon you need at least two high incomes in the household, plus be comfortable with 90+% LVR.

If you think that its an option to live further out then be prepared for the future to make your life hell.  The infrastructure barely supports commuting from the middle 'burbs to work today in less than a hour.  As density increases this will get worse and worse.

The only thing that will save this situation is if the whole 'transit city' idea succeeds  and it becomes possible to earn 100k+ a year working in Ringwood.  In fact I think that this idea being successful, coupled with an upgrade of the train system would 'fix' Melbourne for the next 50 or so years.


----------



## theasxgorilla (12 July 2008)

wayneL said:


> If I was forced into going back to Oz, it would be Melbourne...




Like me it sounds like you're a long way from wilfully contemplating the idea.


----------



## Mofra (12 July 2008)

SM Junkie said:


> I'm trying to get a bit of perspective on the Melbourne market at the moment.  It is being *touted by a real estate company* doing a road show over in the West, that Melbourne will expect in the next 2 years:



eeek 1: If you are thinking of doing any business with a spruking company, first find out how _they_ make their money. Due diligence isn't just for purchase of tradeable commodities 



SM Junkie said:


> The highest population growth in Australia, and will double by 2050?
> Employment is the highest in Australia
> Demand for housing to be the highest in Australia
> Expect a current capital growth of *25.2% by 2007*
> Rental demand currently at .3%



Not sure where they got this figure (or how they are planning on travelling back in time); even the AMP permabulls predicting the ASX to get to 6500 in the next 12 months aren't this optimistic. Preditions for the _whole_ market are useless anyway (as if anyone actually assumes the entire market rises & falls at the same rate ).



SM Junkie said:


> I guess my question is why?
> 
> What is or will be happening in Melbourne to expect this sort of increase? *Sounds a little to good to me *and I have not read anything on this thread that supports these claims.
> Appreciate your comments



Sounds far fetched to me - I'm expecting _most_ areas to fall in real terms in the short term, as the urban sprawl in many areas has outpaced the infrastructure to such a large degree massive swarthes of the city are at the mercy of higher transportation costs. In land area alone Melbourne is one of the biggest cities in the world, and such a low density populace makes infrastructure investment far more expensive.


----------



## noirua (12 July 2008)

The property situation is now moving towards crash and burn. Anyone who has investments in funds holding large percentages of properties should think carefully as some UK and US funds have now stopped withdrawals or require 12 months notice to sell shares or units.


----------



## wayneL (13 July 2008)

Well I'll be!

Crash Gordon's "No more boom and bust" just happens to be....

boom....  and bust!!!!



> *Flint admits to an unsustainable boom
> *
> *Gordon Brown promised 'no return to boom and bust'. Did anyone tell his housing minister?*
> All comments (42)
> ...


----------



## Pommiegranite (13 July 2008)

Oh dear..oh dear! Hey Robots..why buy an IP now...when you can buy one for 10% off (or probably more) in 12 months?


http://www.skynews.com.au/business/article.aspx?id=248833






*Aus house price fall*
Updated: 19:06, Saturday July 12, 2008
A new report shows Australian house prices fell in every capital city last month.
It's the first time it's happened since the Great Depression, and *housing experts say we'd better get used to further falls in the market.*
To get buyers to part with cash and sign contacts is becoming very hard due to mortgage stress.
It's *estimated the typical house around Australia will fall by around 5- 10 per cent over the next 12 months.*
The big increase in rental prices are also affecting tenants have already eroded the latest tax cuts. Experts say those people who are selling homes should price them correctly to move it quickly.


----------



## robots (13 July 2008)

hello,

another great day on the cards,

auction rate cleared to 62% yesterday, business as usual by the looks of it

plenty of fun and games with many negotiations behind closed doors,

any chance you can get some figures from the SRO on a sale which shows it dropped by 10%?maybe a house or unit that sold last year and sold again this year, goodluck with it

thankyou

robots


----------



## Warren Buffet II (13 July 2008)

It is coming, one-in-a-100-year event.....

http://www.news.com.au/story/0,23599,24012370-2,00.html

WBII


----------



## Pommiegranite (13 July 2008)

robots said:


> hello,
> 
> another great day on the cards,
> 
> ...




I heard it was a sickly 54%. I also heard that there were hardly any negotiations on passed in properties.

Got a link to your figures Robots?


----------



## wayneL (13 July 2008)

robots said:


> hello,
> 
> another great day on the cards,
> 
> ...




Whenever robots posts, I think of The Black Knight in Monty Python & the Quest for the Holy Grail.

"It's only a flesh wound"

LOL


----------



## Sean K (13 July 2008)

robots said:


> hello,
> 
> another great day on the cards,
> 
> ...



robots, I'd be interested to know what good and bad auction rates are. Since you are quoting this as 'great', what is the market considered good to bad scale, and maybe a reference? Thanks.

In other news:



> *Property values plummet across Australia*
> July 13, 2008 - 8:09AM
> 
> Plummeting property values have prompted warnings Australia is heading for a one in a 100 year slump.
> ...


----------



## Pommiegranite (13 July 2008)

Warren Buffet II said:


> It is coming, one-in-a-100-year event.....
> 
> http://www.news.com.au/story/0,23599,24012370-2,00.html
> 
> WBII




Yes..its getting sick isn't it WBII? I can almost hear the sqeals of those highly leveraged 'investors'.

*Property nearing once-in-100-year slump*

By Fiona Gilles
July 13, 2008 09:20am
Article from: 


</IMG>
Font size: + -
Send this article: Print Email 



Half of all houses lost value last month
Last time that happened was before the Depression
Property: news and tips to beat the slump

*PLUMMETING property values have prompted warnings Australia is heading for a one-in-a-100-year real estate slump.* 
New figures from property analyst Residex showed house and unit prices in nearly every city and country centre fell last month.  *The last time all states fell at the same time was just before the Great Depression*. 

*More than 50 per cent of all homes across the nation lost value in June.  The slump is affecting the top end of the market as well as the lower end.* 

Residex chief executive John Edwards is warning of tough times ahead.  "It looks like we're moving into a one-in-100-year event," Mr Edwards said. 

"It points to a situation where unless the Government and Reserve Bank take action Australia could move into a recession. 

"The only other times this has ever occurred are before we have moved into severe recessions." 

The Residex statistics come at the end of a gloomy week for the Australian economy.  Official figures released last week showed *housing construction declined for a fourth consecutive month and demand for loans fell 23 per cent in the four months to the end of May. 
*
Higher petrol prices and interest rates, and the share market slump also saw *consumer confidence drop 51 per cent to its lowest level since 1992*, when the economy was recovering from recession. 

Mr Edwards said housing markets in different states usually rose and fell at different times. 

"To see an adjustment going on a wholesale basis across the whole of the nation is incredibly unusual," he said.  "*Never in my lifetime have I seen so many converging negative events." 
*
Residex reports the current* median house value in Sydney is $573,000, down 1.05 per cent in June *compared with 1.81 per cent for three months to the end of June. 

RP Data's director of property research Tim Lawless said what happened in the coming months would depend on inflation. 

He showed some optimism, although he said values would probably fall further this year. 

"Coming into 2009, it's likely - and it depends on what happens with interest rates - we will start to see some value improvements return to the market, albeit relatively small," he said.


----------



## robots (13 July 2008)

hello,

i like the one with rents increasing in syd by 15.49%, fantastic

would be similar across aus,

my advice to landlords is not to renew lease, keep things on a month by month to ensure you can react quickly to market conditions,

for eg, if you get a rise in you're rates and insurance whack it straight onto the rent, or if the rba bangs them up lift it again

if the "user" of the investment complains to the tribunal then take all the information to the tribunal, and explain you not running a charity service and the price charging is market rent and the "user" can prove otherwise

stand up for your rights

thankyou

robots


----------



## Pommiegranite (13 July 2008)

wayneL said:


> Whenever robots posts, I think of The Black Knight in Monty Python & the Quest for the Holy Grail.
> 
> "It's only a flesh wound"
> 
> LOL




"Come back here. I'll bite your legs off !"

LOL


----------



## Sean K (13 July 2008)

kennas said:


> robots, I'd be interested to know what good and bad auction rates are. Since you are quoting this as 'great', what is the market considered good to bad scale, and maybe a reference? Thanks.



robots, you need to seriously answer this question, or your argument is not even moot, but pointless.


----------



## robots (13 July 2008)

hello,

kennas, normal market conditions are between 65-70% (and i highlighted this when you previously asked it)

when things were hot last year it went to around 80%, when things were cold recently it went under 60% on a couple of occasions,

the auction process is the most transparent way

thankyou

robots


----------



## Sean K (13 July 2008)

robots said:


> hello,
> 
> kennas, normal market conditions are between 65-70% (and i highlighted this when you previously asked it)
> 
> ...



And thanks for the reference. Next time I'm asked about action rates I will cite you. Cheers, kennas


----------



## wayneL (13 July 2008)

kennas said:


> And thanks for the reference. Next time I'm asked about action rates I will cite you. Cheers, kennas



It seems a fairly opaque stat... try finding it on the net.

hmmmmmm why is that?


----------



## Pommiegranite (13 July 2008)

robots said:


> hello,
> 
> kennas, normal market conditions are between 65-70% (and i highlighted this when you previously asked it)
> 
> ...




Auction clearance rates are, at best, a very weak indicator of house prices. 

They need to be taken in context, and the context is very grim.


----------



## wayneL (13 July 2008)

kennas said:


> And thanks for the reference. Next time I'm asked about action rates I will cite you. Cheers, kennas




In a stunning feat of Internet sleuthing, I found them:

http://www.reiv.com.au/home/inside.asp?ID=142



> Saturday 12 July 2009
> 
> Unexpected increases in interest rates by a number of major banks in the last three days cooled buyers enthusiasm at auctions today with the clearance rate of 62 per cent being recorded, down slightly from 66 per cent last weekend. Overall there were 370 auctions today, of which 229 sold, 141 were passed in, 102 being on a vendors bid.
> 
> ...


----------



## Sean K (13 July 2008)

wayneL said:


> In a stunning feat of Internet sleuthing, I found them:
> 
> http://www.reiv.com.au/home/inside.asp?ID=142



Nice sleuthing Wayne! 

So, down from the previous week. 

Sounds 'great' to me. 

And, a good indicator that prices will keep rising for years. 

I'm searching for some figures on auction rate variances myself, but no luck so far. I'm not a very good sleuth.


----------



## explod (13 July 2008)

robots said:


> hello,
> 
> kennas, normal market conditions are between 65-70%
> 
> ...




The only transparent way is to collate the total sales for the week against the total properties offerred.   Clearance rates only give the percentage of those sold at auction.  The REIV are very selective in the release of figues and push the clearance rate as the holy grail almost to the point of deception.  

Clearance rates were the same in 1997 down here on the peninsula when it was difficult to sell homes.   Houses sold then for $120,000 that sold for $500,000 in 2005. 

Clearance rates have no statistical value for what is really happening out there in real estate.

Yes they will vary between 60 and 80% but only reflect the market tug of war between buyers and sellers.   At the moment there has been an increase in clearance rates which is a reflection of vendors being more realistic and some being desperate to off load the mortgage they can no longer manage.  And a suggestion by the REIV during the week that vendors need to be more realistic in expectations if they want to sell.   Of course the agents only want turnover and the newsmedia the fat classified section.


----------



## robots (13 July 2008)

hello,

check out:

http://www.rba.gov.au/MonetaryPolicy/RBABoardMinutes/2008/rba_board_min_06052008.html

and read comment from RBA that syd and melb are at more stable market prices

wow, how's that even the RBA likes the auction clearance rates

thankyou

robots


----------



## explod (13 July 2008)

robots said:


> hello,
> 
> check out:
> 
> ...




I think its worth getting the interpretation of the article correct dear Robots:-



> Turning to the housing sector, members observed that the level of new building activity was running well below estimates of underlying demand. The early signs of a pick-up in building approvals late in 2007 had since faded.
> 
> Other indicators, such as auction clearance rates, house prices and housing finance, pointed to activity in the established housing market also softening.
> 
> ...




The other aspect is that this report is now 2 months old and the March quarter refers to the first three months of the year.  A great deal has changed since then.   However the overall sound of the RBA report above indicates an ominous outlook anyway. IMVHO


----------



## Sean K (13 July 2008)

robots said:


> hello,
> 
> check out:
> 
> ...



robots, it might help if you provided a reference that supported your argument.



> Turning to the housing sector, members observed that the level of new building activity was running *well below estimates *of underlying demand. The early signs of a pick-up in building approvals late in 2007 had since *faded*.
> 
> Other indicators, such as auction clearance rates, house prices and housing finance, pointed to activity in the established housing market also *softening*.
> 
> ...




The 'stable' house prices comment in there doesn't seem to sit well amongst the other comments that suggest softening and falling prices. 

I found this document from AMP (May 08) interesting, and summary:



> *Key points*
> Rising interest rates and a rise in mortgage stress to record levels have led to a *deterioration in the outlook for house prices*. This comes at a time when Australian housing remains *very overvalued*, affordability is *terrible *and low rental yields are making housing *less attractive *for investors.
> 
> While the housing shortage and the low likelihood of a recession should prevent sharp falls in Australian house prices, modest *falls are now likely *over the year ahead.


----------



## robots (13 July 2008)

hello,

people can question what the auction clearance rate's mean but it is evident that the head honcho's look at clearance rates, 

"in more recent weeks clearance rates have fallen to more stable conditions"

the clearance rates have been around 60-70% for many many months now which the RBA states as more stable conditions, okay

which supports my claim that it is going along nicely,

people please remember I wouldnt have a clue what is going to happen and have NEVER said things are going to rise by 25%/pa, find it if you think I have

i support the occurrence that housing still remains for many people their biggest "investment", and the benefit in senior years are astonishing

thankyou

robots


----------



## Aussiejeff (13 July 2008)

robots said:


> hello,
> 
> people can question what the auction clearance rate's mean but *it is evident that the head honcho's look at clearance rates*,
> 
> ...




Robots, 

Errr. aren't a lot of so-called "honchos" now becoming the severed heads of failed companies and institutions.....???

And generally speaking, the benefit in senior years from owning a property only holds up if an individual has managed to purchase a property under favourable buying circumstances (low interest loans, low market prices) and subsequently they are able to dispose of that property at a good profit (less inflation) - again, under favourable selling circumstances ( high market prices) prior to them moving permanently into some sort of aged accomodation to see out their final years. _Market position and timing_ (which often means a HUGE amount of luck is involved - being born in the right year and place in society etc) is crucial to this.  

Right now, I personally would not be trying to give anyone the impression that it is a great time to invest in property.....

Methinks 8%+ interest on bank accounts is looking better every day in the short term....

Chiz,



AJ


----------



## pepperoni (13 July 2008)

Looks like the bears have been right so far ... and as has been said no area is immune.

From this story http://www.news.com.au/dailytelegraph/story/0,22049,24010820-5001021,00.html

"While Plumpton, near Mount Druitt, was the worst-performing suburb, with negative capital growth of 5.74 per cent in the three months to June and 1.96 per cent in June, Whale Beach came in as the third-worst performer, with negative growth of 3.73 per cent and 1.14 per cent, respectively."


A year of that would see a further 12-24% drop.


----------



## Snakey (13 July 2008)

pepperoni said:


> Nice work .. Im renting a $5m house on one of the best streets on balmoral slopes. 300m to beach, 4 bend, 2 car remote garage, big island kitchen, floor boards, lawnmowing and 3m ceilings for 750 a week.
> 
> My missus chucks in 250 a week so she can lay claim to 90% of the house ha ha.
> 
> ...




Nice work pepperoni. Oh yes I forgot to mention that includes lawn and garden trimming. Not all land lords bought in late and squeeze every last dollar out of their tenants.
My land lord was given this house and 5 others from a dieing gay who had no one to leave it to. So no need to squeeze the tenant and add stress from an empty house. 
While Robots rides a bike only to have capital losses im living the good life:


----------



## Snakey (13 July 2008)

Tysonboss1 said:


> some how i don't believe you are telling the truth




Drop around and see me one day:


----------



## Beej (13 July 2008)

pepperoni said:


> Looks like the bears have been right so far ... and as has been said no area is immune.
> 
> From this story http://www.news.com.au/dailytelegraph/story/0,22049,24010820-5001021,00.html
> 
> ...




So I just read this actual story in the *printed* version of the Sunday Telegraph - makes a good read and has a graphic that doesn't seem to have made it into the online version. And guess what it shows??

Best preforming suburbs based on median house price sales, last 3 months:

Cremorne Point: +7.83% 
Cremorne:         +7.47% 
Tamarama:        +6.34%
Watsons Bay:    +6.23%
Mosman:           +6.17%  (that's where you are renting right Pepperoni???)
South Coogee:   +6.03%

and so on......  14 suburbs listed showing growth in the past 3 months with the lowest being 5.44% (there must be dozens and dozens more with 0.x up to 5% as well). This is quite funny considering the article starts with the headline "Housing Market Worst in a Century", and uses the line "Property values in Sydney and across Australia have plummeted", but then goes on to demonstrate that in fact, while SOME area's (mainly "less desirable ones"), have seen declines of 1-5% over the last 3 months, many other "desirable" area's have continued to grow. In fact with the exception of a few anomolies (such as Clontarf, Whale Beach and Palm Beach), nearly all the suburbs shown as having negative growth have the lowest median prices you will find in Sydney - most well under $500k, most in the $300k-$400k range and the lowest being $272k!

Personally what I think is going to happen is the more mortgage stressed area's - ie Western Sydney and many area's in other capital cities such as Brisbane and Perth are going to be the hardest hit - because of the financial stress of the current occupants, coupled with the general unwillingness of many potential first home buyers to consider buying into such areas (they will just keep renting in a "good" suburb waiting forever for the prices to fall into their affordable range!). The market will find it's equilibrium point again soon enough (within 6-12 months I reckon), and then stabalise. Again, If anyone who is not currently in the property market with a lot of equity thinks they will be picking up bargains in Balmoral or Bronte etc anytime soon, well then I think you are dreaming.....

Cheers,

Beej


----------



## explod (13 July 2008)

Beej said:


> 14 suburbs listed showing growth in the past 3 months with the lowest being 5.44%. This is quite funny considering the article starts with the headline "Housing Market Worst in a Century", and uses the line "Property values in Sydney and across Australia have plummeted", but then goes on to demonstrate that in fact, while SOME area's (mainly "less desirable ones"), have seen declines of 1-5% over the last 3 months, many other "desirable" area's have continued to grow.
> 
> Personally what I think is going to happen is the more mortgage stressed area's - ie Western Sydney and many area's in other capital cities such as Brisbane and Perth are going to be the hardest hit -
> 
> ...





An anomoly that often missleads is that when they talk of the last three months they are describing the ABS (Australian Bearau of Statistics).  The last three months was that ending in March of 08.   The real correction downwards only began at the end of that period and will not be reflected in ABS figures properly till those for the end of June which in fact are not published for several months after that, say October.

Having worked professionally in the area of demographics for many years in which we utilised ABS stats it is worth pointing out the one needs to meditate a bit on the figures to get a true picture.


----------



## Beej (13 July 2008)

explod said:


> An anomoly that often missleads is that when they talk of the last three months they are describing the ABS (Australian Bearau of Statistics).  The last three months was that ending in March of 08.   The real correction downwards only began at the end of that period and will not be reflected in ABS figures properly till those for the end of June which in fact are not published for several months after that, say October.
> 
> Having worked professionally in the area of demographics for many years in which we utilised ABS stats it is worth pointing out the one needs to meditate a bit on the figures to get a true picture.




Nope - not the case here. The article in question clearly states it uses median house price figures to the end of JUNE 08, compiled by Residex. These are very up-to-date figures.

Beej


----------



## overlap (13 July 2008)

robots said:


> hello,
> 
> people can question what the auction clearance rate's mean but it is evident that the head honcho's look at clearance rates,
> 
> ...




The last statement is often correct because for some people it happens to be the best investment medium and for others because it's a form of enforced savings where they wouldn't save enough otherwise. And some folks just get lucky.

I won't go into the fallacy of depending on simplistic clearance rate numbers, except to say even if it was true that assumes the world is going to continue as it has been in the past. I wouldn't be too sure about that.

On the subject of the RBA statement. The RBA is speaking a language called Central Banker. Central Banker sounds like English (or whatever language applies), but it's not. It's one of a careful ongoing stream of messages directed at multiple audiences. Central Bankers know that many of their audiences are like flocks of sheep (pollies included); the direct approach is rarely the best and a series of carefully crafted noises and movements does the trick - hopefully.

If you thought the RBA statement supported your assertion on clearance rates, it doesn't. Best go learn some Central Banker. Not that the RBA has too much experience anyway in anything out of the historical square.

Greenspan was the master.
http://www.nationmultimedia.com/2007/04/03/opinion/opinion_30030945.php


----------



## robots (13 July 2008)

Aussiejeff said:


> Robots,
> 
> Errr. aren't a lot of so-called "honchos" now becoming the severed heads of failed companies and institutions.....???
> 
> ...




hello,

goodluck to all those on the pension and the miniscule super balances in the rental market, 

so around 60 with another 20yrs left to live and the things arent looking too good,

you dont have to sell, goodluck

thankyou

robots


----------



## pepperoni (13 July 2008)

Beej said:


> So I just read this actual story in the *printed* version of the Sunday Telegraph - makes a good read and has a graphic that doesn't seem to have made it into the online version. And guess what it shows??
> 
> Best preforming suburbs based on median house price sales, last 3 months:
> 
> ...




I dont think whale beach is exactly mortgage stressed. And there is a bank sale  at balmoral NOW that was withdrawn over a month ago for lack of interest and now relisted.  There is one for the books.

And as Im looking to buy In mosman/cremorne I know every HOUSE listed and virtually none have sold ... and the ones that did were considered good buying by all.  There isnt much you can tell me about the health of this market and its sick .. like a double brick house with pool and views on 850sqm passing in and selling under $2m weeks later.  I dont think each suburbs figures are a true indications but across the board the trend is not good.  Maybe someone sold their 10m house for 7m which might give a good result on zero volume??

I have seen one GOOD price in northbridge in the quarter, one shockingly bad price, and virtually everything else passed in.

Anyway lets not get too excited ... you sound like a property bull beej. So does robots. Im a confessed bear with the conviction to put almost all my money in cash earning .000000001% real after tax.  Only time will tell where things end up.

But to say the fundamentals and indicators are turning against the bulls is an understatement.


----------



## Beej (13 July 2008)

pepperoni said:


> I dont think whale beach is exactly mortgage stressed. And there is a bank sale  at balmoral NOW that was withdrawn over a month ago for lack of interest and now relisted.  There is one for the books.
> 
> And as Im looking to buy In mosman/cremorne I know every HOUSE listed and virtually none have sold ... and the ones that did were considered good buying by all.  There isn't much you can tell me about the health of this market and its sick .. like a double brick house with pool and views on 850sqm passing in and selling under $2m weeks later.  I dont think each suburbs figures are a true indications but across the board the trend is not good.  Maybe someone sold their 10m house for 7m which might give a good result on zero volume??
> 
> ...




I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!

But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.

And yet the internet version of that article that people here LOVE to post links to, "conveniently" left that information out. You see right now it sells papers and generates online activity (= advertising $$$) etc to spruik the negative, as people are currently fearful about everything, just like at other times in the past the positive news has sold well.

Good luck with your strategy! The real question you have to ask is how much do you need prices to fall before you would move?? Is that a realistic expectation or not?? If not, then at what point do you re-adjust your bearish view, because if you get it wrong, you could miss out on the best entry point into the market for the next 20 years....

Cheers,

Beej


----------



## michael_selway (13 July 2008)

Beej said:


> I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!
> 
> But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.
> 
> ...




Hm is property m,arket ins australia goign up or down in the next few years?

http://www.abc.net.au/lateline/content/2008/s2301788.htm



> Stephen Long offers market insights
> Print Email
> Australian Broadcasting Corporation
> 
> ...




http://www.abc.net.au/reslib/200807/r270718_1137813.asx

thx

MS


----------



## pepperoni (13 July 2008)

Beej said:


> I'm a long term property bull yes, and unlike you I have a large proportion of my net worth committed to property (however I have been in the game for quite some time). However, I also have no problem with the reality that property prices can and do fall sometimes in the short term, bu I'm not going to sell as you still need somewhere to live!
> 
> But what I find amazing at the moment is that an article like the one being discussed above takes such a negative line, and you guys all jump on that, but then when I actually read the PRINT version of the article it pointed out a long list of Sydney suburbs that saw SIGNIFICANT PRICE GROWTH over the past 3 months! The growth numbers in % terms were far greater than than the reported contractions! Re Whale beach and mortgage stress, read what I wrote carefully - with the exception of 3 anomalies singled out by the internet version of that article, MOST of the suburbs registering falls are low median price ($200k, $300k, $400k range), lower socio-economic suburbs - it's there staring at you in the face if you read the print version of the article.
> 
> ...




Ill buy tomorrow if I find the right property. But I dont see any need to rush in this market nor are there many rushed punters left out there.

In fairness to that article, Residex chief executive John Edwards, probably the only more bullish aussie than robots, said  "Never in my lifetime have I seen so many converging negative events."

And in fairness to him, with rates and fuel spiking , loan applications crashing, the signs cant be much worse. Fuel alone jut hit another record and the csiro is talking $8/l fuel within years.

On top of that, ON AVERAGE Residex reports the current median house value in Sydney is down 1.05 per cent in June.  If it continues it will be 12% annual fall.

Yes some areas may still be doing well, or there may be some anomalies in the short term numbers in small markets, but I wouldnt say the article is over the top as there isnt much good news for the bull right now.


----------



## singlefished (13 July 2008)

First time poster in this thread.... long time lurker however.

I thought this article from news.com might be quite appropriate in this discussion.

*Posh pad owners too ashamed to advertise*

Homeowner's don't want neighbours to know they have to sell 
Agents instructed to advertise homes "on the quiet" 
Embarrassing home sale "may affect owner's work image"

PEOPLE struggling with huge mortgages in wealthy suburbs are selling their multi-million-dollar properties on the quiet so business associates and neighbours don't know they are in financial strife.

http://www.news.com.au/business/money/story/0,25479,24009975-14327,00.html

Cheers,
Scotty....


----------



## Aussiejeff (14 July 2008)

singlefished said:


> First time poster in this thread.... long time lurker however.
> 
> I thought this article from news.com might be quite appropriate in this discussion.
> 
> ...




WOT???!!! A *silent* Private Selling Epidemic by The Posh to save us the embarrassment of seeing their acute embarrassment?

How embarrassing!


AJ


----------



## white_goodman (14 July 2008)

singlefished said:


> First time poster in this thread.... long time lurker however.
> 
> I thought this article from news.com might be quite appropriate in this discussion.
> 
> ...




why the hell would you get a multi-million dollar mortgage


----------



## Tysonboss1 (15 July 2008)

white_goodman said:


> why the hell would you get a multi-million dollar mortgage




because your not good at managing money and you would rather over extend your self an have the apperance of wealth, instead of living simplier and actually be wealthly...

High income earners are some of the least wealthly people in our society.


----------



## Mofra (15 July 2008)

Tysonboss1 said:


> High income earners are some of the least wealthly people in our society.



True. One measure of wealth is to see how long you would last if you lost your job/company tomorrow. The balance sheet of many higher income earners shows a surprising lack of restraint when it comes to personal effects.


----------



## numbercruncher (15 July 2008)

Seems residex is publishing Bearish data ! wtf is that all about ! 




> Property nearing once-in-100-year slump
> 
> Half of all houses lost value last month
> Last time that happened was before the Depression
> ...




http://www.news.com.au/heraldsun/story/0,21985,24012370-5015810,00.html


Yup yup , screw the fundamentals, hell even throw commonsense right out the window ..... " House prices to keep rising for years "


----------



## robots (16 July 2008)

hello,

great news with Glenn Stevens from RBA having a few words today,

life is just great, the day of easy credit "maybe" back in town many will cry

thankyou

robots


----------



## WaySolid (16 July 2008)

robots said:


> hello,
> 
> great news with Glenn Stevens from RBA having a few words today,
> 
> ...



This was an interesting data point. He might not be any better an interpreting the future, but he does have some say over how the crystall balls are constructed!

I'm still of the view that the IR cycle is near peak, but who really knows?


----------



## robots (16 July 2008)

WaySolid said:


> This was an interesting data point. He might not be any better an interpreting the future, but he does have some say over how the crystall balls are constructed!
> 
> I'm still of the view that the IR cycle is near peak, but who really knows?




hello,

yeah spot on waysolid, 

diversification i guess

thankyou

robots


----------



## chops_a_must (16 July 2008)

Let me get this straight.

With banks going bust, people are honestly expecting the cost of lending to go down?

Pass the bong please.


----------



## nunthewiser (16 July 2008)

LOL agrees with chops , yeah pass it here so we can view the journey to 12.5% plus with a lil humour at least ........


----------



## Pommiegranite (16 July 2008)

robots said:


> hello,
> 
> great news with Glenn Stevens from RBA having a few words today,
> 
> ...




I wouldn't bet on it Robots.

http://www.dailyreckoning.com.au/the-asian-banks/2008/07/16/

*The Asian Banks Have Finally Been Heard From*

By Dan Denning • July 16th, 2008 



The Asian banks have finally been heard from. So far, all the woe and wailing from the credit crisis has come from Europe and North America. But there are some pretty big banks in Japan, too. And yesterday, three of them confessed that they owned a combined $45 billion in debt securities issued by Fannie Mae and Freddie Mac.

Mitsubishi UFJ, Mizuho Financial, and Sumitomo Mitsui Financial all fell by about five percent in Tokyo trading as investors digested the unwelcome news. Japan’s Nikkei newspaper reported that Mitsubishi has nearly US$31 billion in GSE bonds, while Mizuho has US$11.3 in exposure and Mitsui US$1.9 billion.
*Still no word from the Aussie banks...or the managed funds...or the hedge funds...or the pension plans...or the insurance companies...on whether or how much GSE debt they may own. Tick...tick...tick.*
“We need to be more cautious in examining this matter,” said Yoshimi Watanabe, head of Japan’s Financial Services Agency. That would be a good idea. Japanese investors, like so many other investors around the planet, have treated GSE debt as de-facto sovereign debt. And we all know that sovereign debt (debt sold by governments) never defaults, right?
Well, it shouldn’t default. After all, governments collect their revenues at gunpoint. You can go to jail if you don’t pay your taxes. So in theory, it should always be possible for a government to pay interest on its bonds. In theory.
In practice, irresponsible management of a nation’s finances happens a lot more often than you might think. When the Russian government defaulted on its sovereign debt in 1998, it caught out poor John Meriwether and his team of Nobel-prize winning economists at Long-Term Capital Management.
LTCM’s model predicted that interest rate spreads between long-term and short-term debt would converge. The model did not include a contingency for the default of sovereign bonds. The model blew up and Alan Greenspan arranged a bailout of US$3.5 billion, which seems like a quaint amount in light of the GSE debt outstanding (US$6 trillion).
Incidentally, Bear Stearns refused to participate in the Greenspan plan and demanded its money back from LTCM, earning it the enmity of its partners on the Street...who probably took a little pleasure in Bear’s March demise. Bear refused to help out a brother, and got very little help when its fortunes changed.
Is it rumour mongering to suggest the GSE’s could default? Well, it depends on who you ask. The U.S. Securities and Exchange Commission has moved to halt naked short selling of Fannie and Freddie. An analyst named David Trone, who says the financials are now victims of unscrupulous speculators and rumors, approves.
Trone says, “Since it's impossible to police false rumours, the next best option for protecting fragile financial institutions is to halt short-selling for a time being.” Trone also said that poor old Lehman Brothers is also a victim of false and nasty rumours and that its CEO Richard Fuld should take the bank private to protect it from speculators. Maybe someone should quit spreading rumours that Lehman, Fannie, and Freddie are adequately capitalised.
You have to love the audacity of saying that the current financial crisis is due to rumours and speculation. It proves that lying is not so hard after all. You just have to do it with conviction.
You have to be either an imbecile or a liar to suggest that Lehman’s troubles stem from rumour mongering. Where do Lehman’s troubles come from? Poor risk management, enormous Level Three assets, and its willingness to take risks with shareholder equity and bet on the subprime market.
You didn’t hear anyone on Wall Street complaining about shareholders when their incentive programs included generous stock options. Now that the market is holding them accountable for what they’ve done with shareholder capital, the drawbacks of being public clearly outweigh the benefits. Plus, when a stock is crashing, what good are stock options anyway? Now that there is shareholder profit to plunder, the people running the company seem a lot less willing to have shareholders.
Investment banks exist to make investment bankers rich. Let us not forget that Wall Street is in the business of selling you new investment products. The more the better.


----------



## robots (16 July 2008)

hello,

i'll take the tabs instead if possible chops

thankyou

robots


----------



## michael_selway (16 July 2008)

nunthewiser said:


> LOL agrees with chops , yeah pass it here so we can view the journey to 12.5% plus with a lil humour at least ........




Hey how about buying into US properties?

http://finance.yahoo.com/real-estate/article/105400/Top-U.S.-Real-Estate-Markets-for-Investment



> Rahul Reddy, a dentist from Perth, Australia, has been investing in commercial properties in Western Australia for the last two years. Now, with the Australian dollar growing in strength and the American housing market strained, he's got his eye on residential and commercial properties in Florida and California, areas he believes will recover over the long term.
> 
> He's not alone. Encouraged by a weak dollar and a belief in the resiliency of the U.S. economy, individuals like Reddy, along with institutional investors such as pension funds and private equity groups, are seeking investment properties and development opportunities in the United States.
> 
> ...


----------



## chops_a_must (16 July 2008)

robots said:


> hello,
> 
> i'll take the tabs instead if possible chops
> 
> ...




How about some Robot?

It's that time of the year, and no house is complete without some.


----------



## gfresh (16 July 2008)

Why I could buy 3 US homes for the price of one average Australian home..  Maybe California, or New York, that's nice and cheap. Cheaper than Sydney.


----------



## nunthewiser (16 July 2008)

Thankyou for that . have actually looked into the US markets a little already but shyed away as prefer to have my investments/assets closer to hand , give it another 2 to 5 years anyways and the austaralian property market will start to look attractive again , again thanks , food for thought for those with intrests/contacts and comfortable with investing in the good ole usa


----------



## theasxgorilla (16 July 2008)

Pommiegranite said:


> http://www.dailyreckoning.com.au/the-asian-banks/2008/07/16/
> 
> *The Asian Banks Have Finally Been Heard From*
> 
> By Dan Denning • July 16th, 2008




The Daily Reckoning...hmmm...why am I not surprised...like the boy calling wolf that lot.


----------



## wayneL (16 July 2008)

theasxgorilla said:


> The Daily Reckoning...hmmm...why am I not surprised...like the boy calling wolf that lot.




The wolf was always there, everyone was just too busy partying to notice.


----------



## chops_a_must (16 July 2008)

theasxgorilla said:


> The Daily Reckoning...hmmm...why am I not surprised...like the boy calling wolf that lot.




Who's filling my cone?

You are?


----------



## theasxgorilla (17 July 2008)

chops_a_must said:


> Who's filling my cone?
> 
> You are?




 I missed that one.


----------



## robots (17 July 2008)

hello,

http://business.theage.com.au/business/household-riches-at-record-levels-20080716-3gdr.html

like the second last sentence, 

"held up by robust property prices", 

thankyou

robots


----------



## explod (17 July 2008)

robots said:


> hello,
> 
> http://business.theage.com.au/business/household-riches-at-record-levels-20080716-3gdr.html
> 
> ...




Now you are feeding us on advertisements.  It is nothing more than a property ramp.   In fact it only talks figures till the end of March.  We all know that the turn in property did not start to bite till after that point and will not be reflected till the next quarter figures come for the period ending June 08.

I have grown to like you old pal for your sheer dogged persistance and determination.  But it is clear that you in some way represent the real estate industry.

In my view all who have enjoyed this thread in the past desist from posting anymore which is only feeding self interest and is missleading in my view to the extreme from some quarters.


----------



## Pommiegranite (17 July 2008)

theasxgorilla said:


> The Daily Reckoning...hmmm...why am I not surprised...like the boy calling wolf that lot.




I wouldn't be so dismissive of them.

Addison Wiggin of the Daily Reckoning wrote a book in 2005 called "The demise of the dollar".

The book is very interesting in that he predicted the credit crunch (and subsequent fallout), which started only a year later.


----------



## Temjin (17 July 2008)

theasxgorilla said:


> The Daily Reckoning...hmmm...why am I not surprised...like the boy calling wolf that lot.




A little bit off topic, but just wondering theasxgorilla, have you subscribed to their daily newsletter? They are all interesting read and I wouldn't dismiss them so quickly. They may sound all gloom and doom, but it sound all economic realism to me. 



			
				explod said:
			
		

> ow you are feeding us on advertisements. It is nothing more than a property ramp. In fact it only talks figures till the end of March. We all know that the turn in property did not start to bite till after that point and will not be reflected till the next quarter figures come for the period ending June 08.
> 
> I have grown to like you old pal for your sheer dogged persistance and determination. But it is clear that you in some way represent the real estate industry.
> 
> In my view all who have enjoyed this thread in the past desist from posting anymore which is only feeding self interest and is missleading in my view to the extreme from some quarters.




Forget it Explod, I've given up already.  I'm starting to admire his persistance and determination to ignore the facts and stick to his believes. Human psychological bias at its limit. Amazing stuff really.


----------



## robots (17 July 2008)

hello,

http://www.theage.com.au/news/people/don-comes-up-trumps/2008/07/17/1216163014155.html

wow, what happened to "prestige" getting walloped or all of US being walloped,

41m into 100m, man you talk about me giving it up, 

more great news

thankyou

robots


----------



## robots (17 July 2008)

hello,

now lets see:

mass unemployment, wrong jobless rate down

all prop smashed, wrong see Donald Trump

thankyou

robots


----------



## Temjin (17 July 2008)

robots said:


> hello,
> 
> http://www.theage.com.au/news/people/don-comes-up-trumps/2008/07/17/1216163014155.html
> 
> ...




GREAT use of an example there! 

A prestige mansion owned by a famous US politican now selling it for a profit of 59 million! WOOT! The bull market is still in, everyone buy now! I need to earn my $59 million too! 

sigh.....................


----------



## robots (18 July 2008)

hello,

i know great example Temjin, fantastic

another tick in the box for the guys putting in the hard yards at ASF, giving everyone the word 

thankyou

robots


----------



## theasxgorilla (18 July 2008)

Temjin said:


> A little bit off topic, but just wondering theasxgorilla, have you subscribed to their daily newsletter? They are all interesting read and I wouldn't dismiss them so quickly. They may sound all gloom and doom, but it sound all economic realism to me.




Dude I've been reading them for years.  The problem is that economic reality *isn't*, period.  The reality of the economic and financial world is a long way away from classical economic sensibility.  They're trying to apply such things to a reality made up of smoke, and mirrors, and derivatives and other such financial alchemy.


----------



## theasxgorilla (18 July 2008)

explod said:


> Now you are feeding us on advertisements.




I wonder what newspapers and their articles are a vehicle for in the end?  There has been more than a fair share of bearish articles dumped into this thread.


----------



## Mofra (18 July 2008)

Rents rising...

http://www.news.com.au/business/money/story/0,25479,24031735-5013951,00.html


----------



## WaySolid (21 July 2008)

Getting some valuations in Brisbane back at the moment.

One suburb + 19% growth in 12 months to July 08, another should be in a similar range, rents will be going up 10% at a minimum as well.

Talking to the valuer there is selective tightening in areas, depends where and how well you bought as well I think. You don't buy the median house you just buy 'a house', and I have done ok with my purchases it seems.

I'm still waiting for this period of extended stagnation, which I have been predicting, though am more impressed by my lack of ability to forecast as time goes on.


----------



## robots (21 July 2008)

WaySolid said:


> Getting some valuations in Brisbane back at the moment.
> 
> One suburb + 19% growth in 12 months to July 08, another should be in a similar range, rents will be going up 10% at a minimum as well.
> 
> ...




hello,

well done g,

still plenty of great results out there, friend got letter for increase in rent

i find most people are accepting them as "cost" of moving both emotionally and financially is nothing compared to most increases,

thankyou
robots


----------



## gfresh (24 July 2008)

Here you go property moguls 

http://www.abc.net.au/news/stories/2008/07/24/2312726.htm

Not sure how long people will take 10% year on year increases however.


----------



## Mofra (24 July 2008)

gfresh said:


> Here you go property moguls
> 
> http://www.abc.net.au/news/stories/2008/07/24/2312726.htm
> 
> Not sure how long people will take 10% year on year increases however.



Depends which areas. Thank you lack of public transport infrastructure


----------



## robots (24 July 2008)

hello,

was interesting to see Tanya Pilbaraseek spruik the NRAS today,

will banks or funds (super or other) get into it?

will the property trusts get into it?

thankyou
robots


----------



## robots (26 July 2008)

hello,

good morning all, another great day on the cards

http://www.theage.com.au/national/home-sales-dip-20km-from-city-20080725-3l3h.html

couldnt see a 30 or 40% drop in there, great news and shows the strength of RE unlike these dodgy share market ventures,

still a great time for buyers

thankyou
robots


----------



## Aussiejeff (26 July 2008)

robots said:


> hello,
> 
> good morning all, another great day on the cards
> 
> ...




Hahaha! I will say one thing that is very much in RE's favour Robots. Proponents here can  *RAMP* the hell out of it till the cows come home, yet will never be rapped over the knuckles for it, nor instructed to declare what interest they may have in doing so. 

Whereas if it is shares related - well, that's *VOODOO* and time to talk to your lawyer....  

Cheers,

AJ


----------



## explod (26 July 2008)

Aussiejeff said:


> Hahaha! I will say one thing that is very much in RE's favour Robots. Proponents here can  *RAMP* the hell out of it till the cows come home, yet will never be rapped over the knuckles for it, nor instructed to declare what interest they may have in doing so.
> 
> Whereas if it is shares related - well, that's *VOODOO* and time to talk to your lawyer....
> 
> ...




And in academia qualification is also required.   I realise general discussion needs to flow and still would if a clampdown occurred.  Not only that it would be educational to all participants.   Learning to qualify a statement makes one think more about it.


----------



## Aussiejeff (26 July 2008)

Interestingly, just heard on ABC radio's morning Property Talk program a chap called up and said he owned his own house outright and a few years back had got an investment loan off Westpac for a few $100,000 to build two investment properties which were recently  independently valued at $250,000 each. However, he has just gone back to Westpac and tried to get a small loan to install solar power on his residential home and was stunned to be knocked back this time. 

As part reasons for the knockback, he found out that the bank only valued his two investment properties at $200,000 each and they now claimed his self employment status was too risky (but apparently not so for the first loans!!!) The ABC RE commentator told the caller that the reason is simply the banks have no more money to lend and are coming up with all sorts of excuses NOT to lend (a far cry from 2 years back, eh?), not unless you can now satisfy a whole raft of non-risky requirements.

So it ain't all beer and skittles out there....


AJ
(Disclaimer: Non-homeowner, non-property holder, renting)


----------



## robots (26 July 2008)

hello,

i have a bachelor of applied science degree, 

thankyou
robots


----------



## gfresh (26 July 2008)

Me too.. woopdie  



> "A lot of people are playing, what I would call, musical chairs with their properties, swapping from agent to agent, there are properties in the area, which have been through three agents already and some looking at a fourth ”” pretty much because the owner is still holding on to their price target.




Ain't that the truth. How long can it go on for? Share owners are good at taking a loss  property owners...well it's their pride and joy. Accept a much lower price than they have placed against the property in their heart? How long do they want to put up with the stress? maybe just rent it out...


----------



## explod (26 July 2008)

robots said:


> hello,
> 
> i have a bachelor of applied science degree,
> 
> ...




So in fact you are a Spin Doctor running us on a break.  That your word is a fact.

It would appear that there was no component of social science in amongst that.


----------



## robots (27 July 2008)

hello,

great result yesterday with auction results being 63%, fantastic news again

things plodding along nicely, some great buys around town

enjoy the day

thankyou

robots


----------



## wayneL (27 July 2008)

robots said:


> hello,
> 
> great result yesterday with auction results being 63%, fantastic news again
> 
> ...




It’s Saturday and it’s auction day
The agents are wielding the gable
Taking bids from dogs and trees and posts
And engaging in unintelligible babble

As to the houses they sell and the ones they don’t
It all comes down to a percent 
And whether it’s seventy or whether it’s one
It’s always regarded as magnificent

When it all boils down to the winners and bums
Mr Hooker knows that’s not the mission
The goal of the agent, and to find out who won
Is to be the one with the commissions

Sorry, it's not me; my body has been taken over.


----------



## robots (27 July 2008)

hello,

anybody seen Numbercruncher?

the second quarter was going to reveal all many had us believing, 

love this one "those who read it all at ASF 12mths ago would be prepared"

thankyou
robots


----------



## pepperoni (27 July 2008)

robots said:


> hello,
> 
> i have a bachelor of applied science degree,
> 
> ...




I thought that might be the case, I just got distracted by the strange posting style.

And of course the stranger ideas on property prices and auction clearance relevance ha ha


----------



## robots (27 July 2008)

hello,

perhaps I better report Number to the missing persons unit at ASF?

thankyou

robots


----------



## pepperoni (27 July 2008)

robots said:


> hello,
> 
> anybody seen Numbercruncher?
> 
> ...




Dont recall his post but second quarter showed falls indicating 12% annual fall was possible.

If you are in the market long term who cares about fluctuations.  And even if you are not lower prices means it will be easier to upgrade one day which most people want to do.

High property prices are in nobodys interest except by to lets types.


----------



## gfresh (27 July 2008)

http://www.news.com.au/story/0,23599,24072813-663,00.html



> A WOMAN shot herself shortly after faxing a letter to her mortgage company saying by the time they foreclosed on her house that day she'd be dead.
> 
> Police said 53-year-old mother Carlene Balderrama used her husband's high-powered rifle to kill herself shortly after faxing the letter yesterday.
> 
> ...


----------



## kyme (27 July 2008)

House prices in Adelaide been performing well compared to a lot of Australia last year or so. Might be about to tank though. Artcle in Sunday Mail today states prices fell in more than 60 Adelaide suburbs last 6 months, albeit some well off suburbs still did OK. Whats probaly more signifcant is that auction sales plummetted to under 28% last weekend compared to 83% same time last year People with high debt/committments at risk of getting crushed I'm afraid.


----------



## robots (27 July 2008)

pepperoni said:


> Dont recall his post but second quarter showed falls indicating 12% annual fall was possible.
> 
> If you are in the market long term who cares about fluctuations.  And even if you are not lower prices means it will be easier to upgrade one day which most people want to do.
> 
> High property prices are in nobodys interest except by to lets types.




hello,

what are you doing here pepperoni?

bears are to stick on that thread with 2500 views

thankyou
robots


----------



## WaySolid (27 July 2008)

pepperoni said:


> Dont recall his post but second quarter showed falls indicating 12% annual fall was possible.
> 
> If you are in the market long term who cares about fluctuations.  And even if you are not lower prices means it will be easier to upgrade one day which most people want to do.
> 
> High property prices are in nobodys interest except by to lets types.



If you have a look at the composition of home ownership in Australia I think you can disprove your own statement. Investors (buy to let being a subset of that group) are not the largest part of the total market by some distance.


----------



## wayneL (28 July 2008)

I was awoken this morning by the sound of hysteria. At first I thought it was wailing, perhaps the queen had died? As I rubbed the sleep from my eyes I determined that it was laughter emitting from virtually every household, but with the loudest concentration just up the road at the newsagent.

Intrigued, I rushed down to buy a paper. I was greeted with the scenes of people in convulsions of laughter, writing on the ground and holding their sides... obviously laughing so hard, it hurt.

There was another group there, a much smaller group who where not laughing, but were grinning inanely. They all had cheap shiny suits and slicked back hair.

I rushed in and placed my 50p on the counter (The shop owner couldn't take my money, he was on the floor in fits) to be faced with this:




I too, was totally consumed with amusement! Nice one Daily Express!

LOL


----------



## robots (28 July 2008)

wayneL said:


> *There was another group there, a much smaller group who where not laughing, but were grinning inanely. They all had cheap shiny suits and slicked back hair.*
> 
> I rushed in and placed my 50p on the counter (The shop owner couldn't take my money, he was on the floor in fits) to be faced with this:
> 
> ...




Hello,

any chance of a picture of this group?

thankyou
robots


----------



## wayneL (28 July 2008)

robots said:


> Hello,
> 
> any chance of a picture of this group?
> 
> ...



No need,

Walk into any estate agency. They're all sitting at their desks playing computer solitaire 'cause they have nothing else to do.

Else you might find some in the dole queue. Two firms have shut up shop in Cheltenham already.


----------



## wayneL (28 July 2008)

Back to reality


----------



## chops_a_must (28 July 2008)

What's so funny about Myleene?

She looks great there.


----------



## subaru69 (28 July 2008)

chops_a_must said:


> What's so funny about Myleene?
> 
> She looks great there.




I've been reading this thread today and only just realised it was on something other than Myleene. :

Very successful:
http://en.wikipedia.org/wiki/Myleene_Klass

Classy site too:
http://www.myleeneklass.co.uk/

Photographs well (check Google for less family friendly ones ):


----------



## SBH (29 July 2008)

robots said:


> hello,
> 
> well done g,
> 
> ...





Ive got to call you out on that one champ. I had a rent increase 2 months ago which was a nice little 10% slap from a landlord I know is not paying off a loan. That has really annoyed me, especially as we have been great long term tenants. Anyway Ive bailed, have found a cheaper place (yes there are a LOT of rentals out there in inner sydney!) and enjoyed immensely the phone call to the real estate agent telling them Im outta there. What Ive learnt is that tenants arent all 'robots' they will think their way out of being smashed with rent increases, and the rental crisis is way overblown, talked up by guess who, the real estate industry. There are still a lot of spare bedrooms out there that will take the excess tenants... people will save on rent, save and buy in when property prices plunge to somewhere near reasonable.


----------



## YChromozome (29 July 2008)

I'm with you SBH. I moved two weeks ago. My new place is better and 10% cheaper.

If any of you are pounding the pavements (Robot Speak), you will see lots of rentals which are empty and available now. The price on these places are negotiable. Last year you may have had to offer a bit more, now you get a chance to offer a bit less than asking price.

[edit: I was reading my tenancies agreement a couple of weeks ago and laughed about the continuing clause - "At the end of the term the tenant can stay in the residential premises at the same rent (or at an increased rent if the rent is increased in accordance with the Residential Tenancies Act 1987) but otherwise under the same terms unless or until the agreement is ended in accordance with the Residential Tenancies Act 1987" There was no provisions in the standard agreement about a fall in rent. I might have to write to the Real Estate Institute of New South Wales who wrote the standard agreement]


----------



## robots (29 July 2008)

hello,

yeah man, in my area i see "leased" going up on the board within days and at amazing prices,

but everyone is entitled to do as they please, you dont wanna buy then rent no big deal chromo,

not sure why you are interested in housing prices at all actually,

people can join the public housing list, rent, buy, get a mobile home, live in a tent on the foreshore, a humpy whatever

thankyou
robots


----------



## kingbrown (30 July 2008)

*Re house price outlook*

A sober thought for the day makes interesting reading 

Re article from Candada using the IMF report on world housing ?
I know we all here in Australia like to compare things with Canada 
Re mining boom Demographics etc 

*May give us some ideas where Australian property is headed ???*

Has graphs etc 
See link below 

Canada’s Real Estate Market – An International Perspective
John Pasalis in Toronto Real Estate News

A few months ago I did a live online Q&A on globeandmail.com where I had the opportunity to answer questions about Toronto’s real estate market.  One question I have been meaning to elaborate on came from a reader in the United Kingdom who asked:
*In what way is Canada unique and special in the world and able to transcend global forces much bigger than one country? I just think the housing market will crash because credit is drying up everywhere, and most Toronto houses are not worth it.*

To answer this question, I turned to a recent International Monetary Fund (IMF) report which provided a cross-country analysis of housing markets.  The report had two salient conclusions for Canadians.  



http://www.movesmartly.com/2008/07/canadas-real-es.html


----------



## dubiousinfo (31 July 2008)

Part of a recent article in The Age.....



> Australian house prices fell in a majority of capital cities in the June quarter as high interest rates brought about the weakest housing market in four years, a report says.
> 
> And national house and unit prices could dive by 10 per cent next year as a prolonged real estate slowdown sets in, says online real estate data group Australian Property Monitors (APM).
> 
> ...


----------



## So_Cynical (4 August 2008)

robots said:


> hello,
> 
> well done g,
> 
> ...




I got slapped with a 17% rent increase last week...id like to give the solicitor landlord a slap.


----------



## YChromozome (4 August 2008)

YChromozome said:


> I'm with you SBH. I moved two weeks ago. My new place is better and 10% cheaper.




Three weeks now. Went past the old place today - still empty. Blinds open where I left them last.

I thought renters were suppose to be climbing over each other to get a foot in the door?


----------



## robots (4 August 2008)

hello,

great advice for So Cynical, everybody can do as they please

a great feature of this country we live in, 

i thought prices got smashed too?

thankyou
robots


----------



## WaySolid (5 August 2008)

YChromozome said:


> Three weeks now. Went past the old place today - still empty. Blinds open where I left them last.
> 
> I thought renters were suppose to be climbing over each other to get a foot in the door?



Probably better to look at data regarding vacancy rates rather than an individual property.

http://www.oesr.qld.gov.au/queensla.../rental-housing-vacancy-rates-qld/index.shtml

Hmm not sure how to imbed that link in text with this BB software, don't see the URL button?!

Shows Brisbane vacancy rates are tight by historical standards. Though I still think rents are 'cheap' imo and subject to further upwards pressure, I'm raising mine wherever I can, and for healthy increases.

With values I see an interesting Mexican standoff developing in Brisbane, sales volumes have fallen a lot but not yet prices... so how that battle resolves itself will be interesting, could well be the fall many have been waiting for. We will see.


----------



## gfresh (5 August 2008)

Shrug, the vacancy rate actually the highest it's been in those stats for the June quarter in the last 4 years.. although not much in it. 

June 2005 - inner brisbane was 1.5%
June 2006 - inner brisbane was 1.3%
June 2007 - inner brisbane was 1.4%
*June 2008 - inner brisbane is 1.6%*


"Remainder Brisbane"  also showing highest June vacancy rate for years at 2.2%. In fact the only one higher was June last year at 2.3%

Goldcoast shows plenty available @ 3.9% - highest since December 2006 (which says it may be subject to error), otherwise mid 2005. 

Doesn't really stack up with a severe lack of rentals.. looks same as it always has, if not higher vacancies.


----------



## WaySolid (6 August 2008)

Gfresh I suspect like an affordability crisis it's a creation largely of the media, though it's all a matter of definition. In my suburb which is 10k from the Brisbane CBD, there are houses on decent chunks of land going for under 300k still, and that is for a house that you can live in straight away even if it's not going to suit most Gen Y's expectations, units I'm sure you can find some much cheaper deals if you look hard enough.

Knowing family who grew up under the Soviet system you are less likely to throw out the C word for anything we experience in this country, not even close, we are spoilt to even be able to mention that word. Good for us.

I expect you are never going to get 0% vacancy rates, though I don't know the methodology used. My burbs are still a landlords market when it comes to setting rents, but the rates do appear to be higher than they have been in the previous few years.


----------



## wayneL (6 August 2008)

WaySolid said:


> Gfresh I suspect like an affordability crisis it's a creation largely of the media, though it's all a matter of definition. In my suburb which is 10k from the Brisbane CBD, there are houses on decent chunks of land going for under 300k still, and that is for a house that you can live in straight away even if it's not going to suit most Gen Y's expectations, units I'm sure you can find some much cheaper deals if you look hard enough.




Recency bias.

Do the relative value sums for the strata of society expected to live in such an area will show that to be very expensive (in affordability terms).


----------



## robots (6 August 2008)

wayneL said:


> Recency bias.
> 
> Do the relative value sums for the strata of society expected to live in such an area will show that to be very expensive (in affordability terms).




hello,

household on 80-100k/yr, young couple, easy

if not move  a suburb out, work a second job, why should every joe blow get that place anyway, 

thankyou
robots


----------



## wayneL (6 August 2008)

robots said:


> hello,
> 
> household on 80-100k/yr, young couple, easy
> 
> ...



I am losing the will to live. 

Please somebody, where can I buy a spaceship?


----------



## Julia (6 August 2008)

There now, Wayne, just remember your recent vow to ignore all this stressful stuff.
Just open some caviar and crack the Krug.


----------



## theasxgorilla (6 August 2008)

wayneL said:


> *Recency bias.
> *
> Do the relative value sums for the strata of society expected to live in such an area will show that to be very expensive (in affordability terms).




Totally, but recency is all you've got if you're an expanding family and raising a couple of kids in a flat isn't going to cut it.

I ran some sums yesterday on relative cost of holding real estate in Aust vrs Sweden.  My conclusions were that relative cost or should we say "expensiveness" of a property in Australia has a lot to do with how established you already are on the property ladder, or put another way, how much equity you have.  It stands to reason that the more equity you have the less 10% interest rates and once offs like stampduty are going to bite.

Thanks to tax cuts and wage increases over the last decade, if you can managed a 25% deposit then you'll have about the same amount of money left over each month after paying the mortgage.  Key difference is that in Aust that mortgage will cost you $2,500 AUD per person to hold (I'm taking about an 800k property, employed couple).  In Sweden it'll cost a little over $1,000 AUD, per person.

My conclusion was that wage increases and income tax rate reductions in Australia have largely been negated by higher interest rates and property prices.  When you've paid for that out of your higher wages, the bit left over, which is also proportionately higher, is negated by inflation.

I think that there are a lot of bitter 1st home buyers and renters out there who don't realise that a lot of people who they perceive to be winners aren't actually doing it that much easier.  And a lot of winners who pretend they are haven't really had a close enough look at the numbers to realise where things are really at.

You're a winner if you got on the property ladder early and resisted the urge to make excessive equity drawdowns for consumption.

You're a winner if you locked rates for say 5 or 10 years at anytime during the last 10 years.

You're a winner if you managed to sell after exposure in a high cap gain area and moved to an area yet to take off.

The big losers are people trying to get on the ladder, as once you're on it, on the sum of things, no one is that much better or worse off.  

The bitterest pill to swallow for most is that they're earning more (wage increases), keeping more (tax deductions), worth more (house price increases), but on the sum of things they're not that much better off (unless they go on an overseas holiday or order something off Ebay from the US).


----------



## wayneL (7 August 2008)

Julia said:


> There now, Wayne, just remember your recent vow to ignore all this stressful stuff.
> Just open some caviar and crack the Krug.




Yes...

Quite right....

Now, where did I leave that open bottle?


----------



## BentRod (7 August 2008)

Give em a bell chap.:bier:





PS:
     Don't use Willy Nilly. 
For emergencies only, eg; taking troll bait


----------



## Knobby22 (7 August 2008)

Robots.

You are too young to remember 1989.
I know one property investor who lost everything.

I don't think the crunch will occur yet. But when it does...

Thankyou.


----------



## robots (7 August 2008)

hello,

hope everybody is having a great day,

http://www.news.com.au/heraldsun/story/0,21985,24142978-661,00.html

looks as though the MASS unemployment theories are being seriously questioned,

second lot of data out since many claimed the world was going to end, things looking bright

thankyou
robots


----------



## WaySolid (7 August 2008)

wayneL said:


> Recency bias.
> 
> Do the relative value sums for the strata of society expected to live in such an area will show that to be very expensive (in affordability terms).



How is what I said displaying recency bias? 

That same house for under 300k was even more affordable by probably all measures 8 years ago and for a lot of the past, not less affordable. 

Suburbs have life cycles, mine is gentrifying and people with more money are moving in and pushing up relevant multiples, so the relative value sums for the people expected to live here would be an interesting measure, not quite sure how to measure it best, but I doubt it is becoming less affordable. In a sense this shows that you buy a 'property' not the median price when you invest in real estate, mine is doing well as the suburb is redeveloping and repricing itself, all very good for me


----------



## WaySolid (7 August 2008)

robots said:


> hello,
> 
> hope everybody is having a great day,
> 
> ...



I bet 100% of my net worth that the world isn't going to end 

Doesn't mean we won't see a significant correction in property, or... an extended stagnation even (time to reboot that thread maybe??).

It's not about being right for me. It's about making some money and reacting to what situations happen. Predictors can predict.

Part of the fascination with these threads for me is that people can be so certain, on either side of the crash non crash divide. Better to adopt a bit of humility and recognize that maybe you don't know what's going to happen exactly I reckon.


----------



## WaySolid (7 August 2008)

robots said:


> hello,
> 
> household on 80-100k/yr, young couple, easy
> 
> ...



I'm not an expert on the subject, Matusik has done some research I think is pretty compelling however.

http://www.matusik.com.au/Default.aspx?tabid=114

There are some well though out arguments about affordability in those dox I think. All depends how you define 'affordable' and other terms as well.


----------



## wayneL (7 August 2008)

WaySolid said:


> How is what I said displaying recency bias?
> 
> That same house for under 300k was even more affordable by probably all measures 8 years ago and for a lot of the past, not less affordable.
> 
> Suburbs have life cycles, mine is gentrifying and people with more money are moving in and pushing up relevant multiples, so the relative value sums for the people expected to live here would be an interesting measure, not quite sure how to measure it best, but I doubt it is becoming less affordable. In a sense this shows that you buy a 'property' not the median price when you invest in real estate, mine is doing well as the suburb is redeveloping and repricing itself, all very good for me




The recency bias is already explained.

But if your suburb is gentrifying, that's certainly a positive over the long term.


----------



## robots (14 August 2008)

hello,

http://www.theaustralian.news.com.au/story/0,25197,24180830-36418,00.html

some good rises in there, should keep things plodding along,

10% for miners
7.7% for construction workers (wat the?)

with "new" housing in the doldrums and supposedley "housing" a no go zone its interesting they pull a 7.7% rise,

might start shopping at Aldi to bump it up a bit more, pep you know where one is in melbourne?

thankyou
robots


----------



## robots (15 August 2008)

hello,

good evening brothers, 

http://www.domain.com.au/Public/Art...at to bricks and mortar&s_rid=theage:Homepage

a bit of a laugh for you, have a great weekend

thankyou
robots


----------



## robots (17 August 2008)

hello,

WOW. the clearance rate yesterday went ballistic, up 6% in a week

its rollin' on brothers

thankyou
robots


----------



## Sean K (17 August 2008)

robots said:


> hello,
> 
> WOW. the clearance rate yesterday went ballistic, up 6% in a week
> 
> ...



What was the % price rise in the houses sold for the month?

Has more relevance to:

"House prices to keep rising for years"

thread topic.

Prices may have actually gone down robots, which explains the increased sales.....


----------



## lioness (17 August 2008)

I have been following this thread for 6 months now and never posted.

I have also readmany articles on why house prices should collapse such as highest debt levels in the worl, % rates rising, negative savings etc etc etc.

Now answer me this everyone on fundamentals HOW can house prices collapse when we have strong employment, housing and rental shortage and an interest rate cycle about to come down 1% over the next year and a country obsessed with home ownership.

I see it flat to negative 5% at the worst and so what if that happens, they have gone up 600% anyway.


----------



## motion (17 August 2008)

Well I think the market has turned.. again been to lots of auctions over the last 5 months.. and the last 4 weeks I have see an increase in bidders and prices going above what you would have thought it would go for.. 

I think a lot of First home buyers are getting into the market and more investors are coming back... I really think we have hit bottom... but they just my thoughts for the Sydney Market..


----------



## xoa (17 August 2008)

lioness said:


> I have been following this thread for 6 months now and never posted.
> 
> I have also readmany articles on why house prices should collapse such as highest debt levels in the worl, % rates rising, negative savings etc etc etc.
> 
> ...




How could UK house prices collapse? How could Irish house prices collapse? How could NZ house prices collapse? How could South Korean house prices collapse? I'd speculate (no pun intended!) that the bubble was caused in equal measure by greed, foolishness, and arrogance. Who would have thought that a 600% spike was unsustainable?

Now that Australian house prices have statistically started to fall, I'm sure the permabulls will try to convince everybody that the bottom has been reached on a monthly basis for the next 36 or so months.


----------



## YChromozome (17 August 2008)

robots said:


> WOW. the clearance rate yesterday went ballistic, up 6% in a week




Ballistic in Canberra too :

"Home buyers were thin on the ground in Canberra over the weekend with *all* 21 properties on offer at local auctions reportedly being *passed in*."

That's a 0 (Zero) percent clearance rate.

http://au.biz.yahoo.com/080817/31/1wa2o.html


----------



## robots (17 August 2008)

hello,

oh no, we are all doomed

join all the crew down at centrelink, the army, salvo's, anglicare, soup bus etc

thankyou
robots


----------



## So_Cynical (17 August 2008)

robots said:


> hello,
> 
> WOW. the clearance rate yesterday went ballistic, up 6% in a week
> 
> ...






YChromozome said:


> Ballistic in Canberra too :
> 
> "Home buyers were thin on the ground in Canberra over the weekend with *all* 21 properties on offer at local auctions reportedly being *passed in*."
> 
> ...




Beat that Robots.


----------



## wayneL (17 August 2008)

lioness said:


> Now answer me this everyone on fundamentals HOW can house prices collapse when we have strong employment, housing and rental shortage and an interest rate cycle about to come down 1% over the next year and a country obsessed with home ownership.
> 
> I see it flat to negative 5% at the worst and so what if that happens, they have gone up 600% anyway.



Look to the motherland.

The only fundamental is credit.


----------



## subaru69 (17 August 2008)

I just googled 'permabull' and found this a few pages in...

It was posted on 26th Sept, 2006.  The book is written by David Lereah.  I wonder if that's Robots real name? 

http://bigpicture.typepad.com/comments/2006/09/are_you_missing.html


----------



## robots (17 August 2008)

hello,

great work subaru69, 

kimosabi is good at pulling up some parodies of myself, I especially liked the dancing one,

but low and behold havent heard from Kimosabi for a while now, I guess still "looking" at WA property

thankyou
robots


----------



## numbercruncher (18 August 2008)

wayneL said:


> Look to the motherland.
> 
> The only fundamental is credit.






Amazes me how few people understand this very simple concept .....


Should be posted at the top of every page in realestate threads ...


----------



## gfresh (18 August 2008)

How many homes would be purchased if we all had to pay cash upfront? What would the price of a home be? That's a silly question, but could be an interesting answer. 

According to "fundamentals" why isn't every house $1M+ ? After all, everybody needs a roof over their heads, wages always go up, population is always growing, there is always demand... What sets prices? It's a lot more complex than simply supply and demand.


----------



## pepperoni (18 August 2008)

Hate to say it but a few good sales at fair prices in syds north last 2 weeks.

Places not selling are being taken off market too so not much around now.


----------



## jonojpsg (18 August 2008)

gfresh said:


> How many homes would be purchased if we all had to pay cash upfront? What would the price of a home be? That's a silly question, but could be an interesting answer.
> 
> According to "fundamentals" why isn't every house $1M+ ? After all, everybody needs a roof over their heads, wages always go up, population is always growing, there is always demand... What sets prices? It's a lot more complex than simply supply and demand.




Come on, a bit of basic economics called rate of return is the most significant factor in setting prices.  Only have to look at Tassie 2002-03, prior to that could get net rental return (8%+) that allowed positive gearing which is why prices jumped 60% in 6 months coz mainlanders realised that and had oodles of equity available in their homes which had also boomed over previous 2 years.  Equity flowed to highest rates of return, until it came down to more realistic 5%.  

Of course this probably only holds for the bottom 70% of properties, as top 30% are not bought for potential returns.  Some may also argue that most properties aren't bought for rental returns so why would that set prices, but investors are a big proportion of the market now, which means they play their part in the price setting.

Just my


----------



## Beej (18 August 2008)

gfresh said:


> How many homes would be purchased if we all had to pay cash upfront? What would the price of a home be? That's a silly question, but could be an interesting answer.
> 
> According to "fundamentals" why isn't every house $1M+ ? After all, everybody needs a roof over their heads, wages always go up, population is always growing, there is always demand... What sets prices? It's a lot more complex than simply supply and demand.




Yes well, you are forgetting the COST of actually BUILDING a house. That is a VERY important factor in the value of improved property generally. As is the rental return as already pointed out. Then there is the demand side, which will input into prices based on the desirability of the location (land).

Ie, even if there was no credit (which will never happen), do you think people would expect to pay the same for a house (all other things being equal) that was 5 kms from the CBD, or say Coogee beach etc, than one that was 30kms away? Markets work this stuff out!

Let's imagine there was never any credit, and assume (as is the case) that land supply is limited. All that would happen is some people at sometime will have saved and acquired an asset (some land) and built a house on it (also with saved $$$). The people that get all the land and build the houses first would be the people who can save the most money the fastest. The best of these would get the best located land and build the biggest/best/higher quality houses. Then, of course very very few of these people would EVER sell for less than that land/house is "worth" to them - which is what they paid for the land + what the house cost to build, plus the "hassle" factor accounting for the fact all the hard work has now been done. Then of course the demand factor comes in - Ie other people who have saved more money than other people would bid up the prices of the best houses in the most desirable locations. 

You would ultimately end up with a very similar situation to what we have, except there would be a lot less turn-over of property, and most of it would be owned by the richest members of society. Remember even if land was given away, a very basic house still costs $150k-$200k minimum to build - how many people would ever be capable of saving that much money in a reasonable time? Not many. But even so - if you paid $200k to build a house, would you sell it to anyone for any less? Especially after a few years when the cost to build a house might now be $300k?

Of course what the above demonstrates is why we do have, and will always have credit in a functioning capitalist, market based economy. Credit enables us to acquire the asset based on capacity to save into the future, and get the house now when we need it, rather than having to wait until we retire before being able to afford a house to raise a family in etc. The system should/could exclude people with no hope of ever being able to save enough into the future to pay for their asset - they will be perma-renters, and thus in their own way help sustain the value of property as an asset by providing the market with a baseline of renters and thus set the expected rate of return from property. Add to this all the people who rent by choice for various reasons (the young, the transient etc).

And before everyone jumps in and starts whining that houses are too expensive and no-one can afford them now etc etc - that's BS! There are plenty of affordable houses in all major Aussie cities. Even Sydney has loads of houses in the mid $200k range, which is barely above to actual cost of building a house. What we have in Australia is a housing expectation crisis - many who want a house want one that they can't actually afford, but are unwilling to compromise their expectations down to what they can afford. But that's fine, they will by choice add themselves to the rental market, there-by continuing to support the existing "high" prices (especially in the desirable areas in which they want to live) by confirming and increasing the rate of return on property! 

And so the cycle continues....

Cheers,

Beej


----------



## robots (18 August 2008)

hello,

great post Beej, all RE threads should commence with words like those, fantastic

plenty around that is affordable in all capital cities

thankyou
robots


----------



## Beej (18 August 2008)

Oh yea and that reminds me of my other "whinge" about the "house price whingers". Everyone focuses so much on how high the MEDIAN house price is. Fair enough statistically speaking, but who ever said that ALL FIRST HOME BUYERS should expect to get a median house easily? The median house the one in the middle when you line up all house prices. If you presume that most people will "trade up" at least once or twice in their lifetimes, then the median house is really the SECOND house purchase for most buyers. Unless you earn higher income than the average by a fair margin - in which case go for your life and start as high up the ladder as you can!

So first home buyers on average incomes should be looking at houses priced well below the median to determine their affordability.... Ie, no-one expects that an average income earning single wage family should be able to buy a $500k median house - they should be looking at the houses in the $250k-$300k range, hopefully after saving a good deposit. This represents a house at 4-5 times their wages (single average wage of ~$60k). For a typical "working family" on $80k (earnings including some part time work for the spouse), that's 3-4 times wages, which sounds extremely affordable to me..... 

...... and also hence why the market is happily bobbing along at the current levels.

Cheers,

Beej


----------



## wayneL (18 August 2008)

Beej,

The very same arguments as yours were put forth six months ago here.


----------



## Beej (18 August 2008)

wayneL said:


> Beej,
> 
> The very same arguments as yours were put forth six months ago here.




 So? Where have they fallen from? Are houses in London cheap? House prices have fallen 5% in the last few months here in Sydney too - but they went up by 10% (unexpectedly) the year before. The thing is, that's all that's going to happen IMO. This is a temporary situation - the market has been here before many times before. From here expect a plateau for a while (property has had a good run for a few good years).

PS I can remember several times in the past as well (early 90s for example) when people I knew who had moved from the UK described how horrible the house market was over there and how much it had fallen - in Oz our market does not historically seem to get hit as hard as the UK in downturns.

Time will tell! 

Cheers,

Beej


----------



## gfresh (18 August 2008)

BeeJ, my question wasn't an attack on affordability (re-reading, maybe it seemed that way), but more a rhetorical question as to what really defines house prices, and people's thoughts as to why they are valued as they are. You've provided some good answers 

I will agree somewhat with house prices being more affordable than some whinge about.. plenty of $300k properties in both Brisbane, Goldcoast and Melbourne. Sure they are not large, but they are livable, and usually within good distance to transport or major roads. In fact Melbourne has quite a few places within 20km of Melbourne where you can still buy a 3br house for under $350k if you are not too fussy on the area. People want everything these days. 

To be fair though Wayne, there has not been the massive rationing of credit here yet, as it seems in the UK - with institutions with much higher US exposure, **** scared of losing further money off their books. Not sure it will happen here either, as long as the exposure our banks are telling us is minimal.


----------



## Mofra (18 August 2008)

http://au.biz.yahoo.com/080812/19/1vsad.html



> Philip Lowe, Assistant Governor at the Reserve Bank of Australia (RBA), also gave a clean bill of health to the country's banking system and shot down calls for official help for the home loan market.
> 
> In a speech to a retail finance conference, Lowe noted that just over 0.4 percent of Australian banks' mortgages were more than 90 days in arrears, while arrears on loans that had been securitised were at 0.55 percent.
> 
> ...




2.2% is abyssmal, fortunately our (less mature) credit market compared to the US is _substantially_ different (as has been pointed out many times before, without any irrefutable evidence to the contrary).


----------



## xoa (19 August 2008)

Beej said:


> Ie, no-one expects that an average income earning single wage family should be able to buy a $500k median house - they should be looking at the houses in the $250k-$300k range, hopefully after saving a good deposit. This represents a house at 4-5 times their wages (single average wage of ~$60k). For a typical "working family" on $80k (earnings including some part time work for the spouse), that's 3-4 times wages, which sounds extremely affordable to me.....
> Beej




So the average household should only be able to afford a house which costs 30-40% below the average. Interesting..


----------



## Beej (19 August 2008)

xoa said:


> So the average household should only be able to afford a house which costs 30-40% below the average. Interesting..




As a FIRST home yes - that's the way it's always been. Who do you think should be buying the cheaper houses or units?? Minimum wage earners? People on welfare? That's how you end up with a US style sub-prime problem (which we don't have!). After building up some equity over time people move up the property ladder....

Cheers,

Beej


----------



## finnsk (19 August 2008)

Beej said:


> As a FIRST home yes - that's the way it's always been. After building up some equity over time people move up the property ladder....
> 
> Cheers,
> 
> Beej



This is the part I have the problem with, every time you buy and sell you have cost, real estate, lawyers, bigger mortgage ect. where is the advantage for mums and dads to keep on upgrading there family home.


----------



## Mofra (19 August 2008)

finnsk said:


> This is the part I have the problem with, every time you buy and sell you have cost, real estate, lawyers, bigger mortgage ect. where is the advantage for mums and dads to keep on upgrading there family home.



Mums & Dads updating their family home is as much an emotional & lifestyle issue as an investment decision.


----------



## xoa (19 August 2008)

Beej said:


> As a FIRST home yes - that's the way it's always been. Who do you think should be buying the cheaper houses or units?? Minimum wage earners? People on welfare? That's how you end up with a US style sub-prime problem (which we don't have!). After building up some equity over time people move up the property ladder....
> 
> Cheers,
> 
> Beej




But first home buyers typically earn significantly less than the "average" wage. You were trying to infer that typical first home buyers take home $80k per year. Try halving that. The median household income is about $58k, before tax.


----------



## Beej (19 August 2008)

xoa said:


> But first home buyers typically earn significantly less than the "average" wage. You were trying to infer that typical first home buyers take home $80k per year. Try halving that. The median household income is about $58k, before tax.




Re average wage/household income figures, no. Just under $60k is the national average full time wage (ordinary earnings), excluding super and overtime/bonuses. See http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0?OpenDocument for the May stats. Average household income stats (as opposed to average full time earnings) quoted are usually across the board and include pensioners, the unemployed, student households etc etc. It's average full-time earnings you have to look at re buying houses, as I don't think anyone honestly expects that you should be able to afford to buy a house without at least having a decent job!

The $80k figure is Wayne Swans typical "working family" number that presumes one full time average wage earner and a spouse earning another $20k or so from part time work.

And in Sydney in particular there are a LOT of people/families that earn a LOT more than this. Hundreds of thousands of them.

As for first home buyer incomes - sure they may well be less, but affordability is always quoted as the multiple of average earnings needed to buy the median house. All I am saying is that the lower priced houses are actually affordable - which makes sense as that's why they sell at those prices and that's how people are able to buy them! 

Cheers,

Beej


----------



## robots (28 August 2008)

hello,

here we go, here we go

anz dropping fixed rates again, fantastic news

those fixed interest fanatics will be in a panic soon

thankyou
robots


----------



## numbercruncher (29 August 2008)

> those fixed interest fanatics will be in a panic soon





Yes seems plenty of panic around in anything RE related ....


----------



## robots (29 August 2008)

hello,

number you back from the dead bro,

oh yeah its all a panic like last quarter, but low and behold the holy bible showed things are amazingly strong for RE, 

the cries will come, next quarter will show it, or the next or maybe next year?

tall poppy syndrome

thankyou
robots


----------



## numbercruncher (29 August 2008)

Hey Robi !

Yes seem in officialdom we can only be backwards looking ......

Not quite an Investment style that I relate to .....

Im looking at forsale signs .... its going mental out there !


I see the RBA is starting to fret to boot ...


----------



## robots (29 August 2008)

numbercruncher said:


> Hey Robi !
> 
> Yes seem in officialdom we can only be backwards looking ......
> 
> ...




hello,

same stuff you gave us after march NC, boards everywhere, the crisis has hit yet the bible came out with fantastic results

going to enjoy it immensely though waiting for each Quarter to come out

things are pretty good out there, houses are selling everywhere

thankyou
robots


----------



## robots (31 August 2008)

hello,

great news,

http://www.news.com.au/heraldsun/story/0,21985,24268451-661,00.html

cant wait for them to get down to 5 or 6%, will be awesome

I havent been in this game to long, do rents drop as well or stay at the current rates?

thankyou
robots


----------



## robots (1 September 2008)

hello,

waky waky Explod, where are you? 

its getting one-sided around here, many expecting 2 yrs of cuts now what fantastic news,

many survived this just recently, what a bonanza for mortgage holders and another major blow for the poverty pack (as supported by ABS of course)

thankyou
robots


----------



## kingbrown (1 September 2008)

*Housing Boom to Bust ?*

*House sales tumble as slump bites*
 August 31, 2008 


*MELBOURNE'S property market has slumped dramatically over the past three months - and by a staggering 44 per cent over the past year.*
Figures compiled by The Sunday Age reveal property sales have dropped from 2032 in the first four weeks of August 2007 to 1131 for the comparable period this year.

Hopes that the prospect of a rate cut on Tuesday would boost the market yesterday proved unfounded, with the clearance rate falling below 60 per cent for the first time this year.

Despite reports that buyers are returning to the market, the clearance rate fell 3 percentage points to 59 per cent.

The Real Estate Institute of Victoria's chief executive, Enzo Raimondo, said yesterday's auction results showed that buyers were holding off until the Reserve Bank decided to drop official interest rates.

''Confidence in the market has not been forthcoming yet,'' he said. ''People are still waiting for an interest rate cut.''

Mr Raimondo said the downturn may even put some real estate agents out of business.

The Sunday Age figures, compiled from REIV data, reveal the true extent of Melbourne's real estate slump. Sales were at least 30 per cent down year-on-year for the three months June to August. The slump was especially marked in July, when only 1100 properties were sold,  compared with 1721 the previous year.

The results are the latest in a number of economic indicators which show Victoria is suffering from a severe property slowdown. On Friday it was announced sales of newly built homes had dropped 7.2 per cent this month, while on the same day the Reserve Bank of Australia released figures showing finance for housing rose just 0.5 per cent in July, the smallestmonthly gain since 1989.

http://www.theage.com.au/national/house-sales-tumble-as-slump-bites-20080830-465v.html?page=-1


Any armchair property experts care to comment ?


----------



## pepperoni (1 September 2008)

*Re: Housing Boom to Bust ?*



kingbrown said:


> *House sales tumble as slump bites*
> August 31, 2008
> 
> 
> ...




Yes ... property returns will continue to be pretty poor on average for the foreseeable future.

Definitely way below 5% on average and nowhere near the 9.5% property fanboys (and girls) are paying.

This summer may be OK as the last few highly emotional property fanboys think a .25% rate drop = instant property riches.


----------



## awg (1 September 2008)

a question for the property experts:

re Spain and England.

do these countries have population growth, and an undersupply of new construction?

my opinion property prices in Australia are held up by the two above factors.

if they were not present, we would be looking at much lower prices

obviously this is a simplification of the many issues.

regards tony


----------



## robots (1 September 2008)

hello,

and whats it to you pepperoni if people buy RE? nothing

if you happy renting then stay out of it, and to others do the same if you think renting is the go, simple

you keep telling us its a bargain in the rental game then why the interest in RE? TALL POPPY SYNDROME,

troll

thankyou
robots


----------



## robots (1 September 2008)

hello,

yes yes:

http://business.theage.com.au/business/st-george-cuts-fixed-rates-20080901-470w.html

thankyou very much, 

what happened to get on gold inflation is going to get us, everyone's dropping dropping them like punters at a rave

thankyou

robots


----------



## pepperoni (1 September 2008)

robots said:


> hello,
> 
> and whats it to you pepperoni if people buy RE? nothing




Just a little thing called recession brought about by crack heads and meth users borrowing 99% to buy 5x10m "houses" then defaulting.

These people are not tall nor are they poppies.


----------



## robots (7 September 2008)

hello,

hope everybody having a great day,

some great news with auction clearance going ballistic yesterday, jumping a huge 7% i believe, 59% to 66% this week,

have a laugh, dont take things to seriously and go Hawthorn

thankyou
robots


----------



## robots (11 September 2008)

hello,

here we go here we go,

http://business.theage.com.au/business/anz-cuts-rates-again-20080911-4efz.html

another one dropping rates so the disheartening "facts" continue to roll in,

high unemployment? disappeared see report today

high interest rates? disappeared with everybody dropping them

this is like being in utopia, another great weekend on the cards,

thankyou
robots


----------



## Aussiejeff (11 September 2008)

robots said:


> hello,
> 
> here we go here we go,
> 
> ...





Unless you live in Cranbourne....

"Hundreds of residents evacuated from a Cranbourne housing estate after a dangerous leak may be unable to return to their homes for  years - and there are fears that thousands more may be affected."

http://www.theage.com.au/national/explosive-methane-scare-could-hit-thousands-20080911-4eaf.html

I don't like these peoples chances of living in Utopia anytime soon.

Is that a suburb you live in, Robuts?


----------



## robots (11 September 2008)

hello,

its a bit like the Insight show, lets lump everything on the property scene

i have a broken yo-yo, must be a property issue, cat has got a sore paw must be a property issue, lost my job must be a property issue, smackhead out the front of coles wants a dollar must be a property issue

no man, I'm down in sunny St Kilda

thankyou
robots


----------



## Bronte (13 September 2008)

Todays 'The West Australian' reports another property boom in 2010:
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=97537


----------



## robots (14 September 2008)

hello,

hello hello, great day yesterday with clearance rate going to 68%

clearly indicates the resilience of property,

have a great day to all those putting in the hard yards

thankyou
robots


----------



## blogs (14 September 2008)

I have a question-without a dramitic increase in wages (inflationary..) how can there be any more scope for significant growth in R.E without a considerable increase in the level of debt, a level that already far out strips the rest of the world?


----------



## robots (14 September 2008)

hello,

not everybody on a pittance blogs, 

i wouldnt be to concerned about inflation its a given and really means jack in australia

most of the debt is in the hands of renters with 10+ credit cards, this is mainly due to such low rents, 

this is slowly changing as rents increase and credit card debt is slowly reduced,

thankyou
robots


----------



## YChromozome (14 September 2008)

Blogs, your spot on and this is why housing markets are collapsing around the world. The average owner can no longer service the debt at those prices.



robots said:


> most of the debt is in the hands of renters with 10+ credit cards, this is mainly due to such low rents,




What Robots is really trying to say here is at Jun 08;

Owner Occupier's have an aggregate of $664.7 billion in debt,
Housing Investors have $304.4 billion in debt, and 
Other personal is $153.8 billion.

The other personal includes margin lending, personal, credit card (revolving credit etc).

Credit cards make up $43.64 billion; balances actually increased 1.4% for the year so again I don't know where Robots is getting his information about it slowly going down. If anything, maybe renters are putting their rent on Credit Cards to make ends meet?

So in summary where robots say "most of the debt" is in the hands credit card holders, he actually only means 3.8%, not anywhere near 50% plus. However do not that revolving credit does attract higher interest rates and hence is more expensive to service.


----------



## Beej (14 September 2008)

blogs said:


> I have a question-without a dramitic increase in wages (inflationary..) how can there be any more scope for significant growth in R.E without a considerable increase in the level of debt, a level that already far out strips the rest of the world?




This might effect/limit achievable growth for AVERAGE prices across an entire region/country, but it won't stop price growth for well located property in area's where there can be little/no new supply - property prices will continue to grow faster than infaltion in such area's due to ever increasing demand + no new supply. Ie more and more high income earners/wealthy people as the population and the economy grows. It's not rocket science.

In addition, there is a thing called saving as well! When you go through periods of flat or even falling average/median prices, plus a soft market where not many people are buying/selling - what do you think all the POTENTIAL buyers are doing? They are saving more and more $$$ is what they are doing. Eventually that demand (and all that money) comes back into the market.

Oh and PS: Wages CAN and do increase dramatically in real-terms (= NON inflationary) due to increased/improved productivity in an economy, plus a focus/shift of investment to the most profitable industries over time. Long term that will also underpin growth in the average property prices.

Cheers,

Beej


----------



## robots (14 September 2008)

hello,

i thought renting is the best thing going around, why would they use credit cards to survive?

and its still strange the ABS reports owners are still some 6x wealthier than renters, awesome results

surely this stat must be changing with all the renters around who are gun specuvestors on the trading markets

yes around the world but not AUstralia, 

thankyou
robots


----------



## Beej (14 September 2008)

Oh and FYI - a house in the area I live in Sydney just sold for a RECORD price for the street it is on last weekend at Auction. 9 bidders going for it - beat the reserve price by +$170k! And the reserve price was at the higher end of what was expected in this current market.

Yesterday's Sydney auction clearance rate (inclusive of any withdrawals) 59% - not a bad result at all. Volumes still not high though - 101 sold, median price $659k. Figures from: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej


----------



## YChromozome (14 September 2008)

Beej said:


> In addition, there is a thing called saving as well! When you go through periods of flat or even falling average/median prices, plus a soft market where not many people are buying/selling - what do you think all the POTENTIAL buyers are doing?




Are you sure they save rather than retail theory?

The idea of saving went out in the 90's. 




We now spend more than we earn, year in, year out. but don't worry, it's all quite sustainable!


----------



## Beej (14 September 2008)

YChromozome said:


> Are you sure they save rather than retail theory?
> 
> The idea of saving went out in the 90's.
> 
> We now spend more than we earn, year in, year out. but don't worry, it's all quite sustainable!




I think you will find that people looking to buy a house save quite a bit of their $$$! Remember at any point in time there are only so many people as a proportion of the population looking to buy a house (maybe 5%? Even less?). The rest of your data comes from:

a) No hopers who will never accumulate any real wealth or assets in their lives (maybe 20-25% of AU population??)

b) People who already have assets and use all their cash to pay down mortgages, invest in superannuation etc, rather than put cash in the bank, which gives the worst after tax return than anything else you could do bar flushing your money down the toilet!

Remember those figures you posted to not include superannuation savings/investments right??  Lies, damn lies, and statistics.....

I know I personally have zero savings that would show up in those stats, and every month I have a decent CC bill showing up as "debt". So I add to the negative net savings picture there. And yet, I spend far less than I earn, own growth assets of various classes, never pay any interest on my CC, or non tax deductible interest on any other loan, and have a high degree of financial independence to boot - strange isn't it??

Cheers,

Beej


----------



## Macquack (14 September 2008)

Beej said:


> Oh and PS: Wages CAN and do increase dramatically in real-terms (= NON inflationary) due to increased/improved productivity in an economy, plus a focus/shift of investment to the most profitable industries over time. Long term that will also underpin growth in the average property prices.
> Cheers,
> Beej




You could get a job with the Reserve Bank with spin like that.


----------



## Beej (14 September 2008)

Macquack said:


> You could get a job with the Reserve Bank with spin like that.




Seriously, why do you see my statement as spin?? It's the basic fundamental fact behind the vast improvements in livings standards in the whole western world since the beginning of the industrial revolution?????

Beej


----------



## robots (15 September 2008)

hello,

http://www.theage.com.au/national/auction-clearances-surge-20080914-4gb0.html

wow, huge weekend

so much for thousands of properties for sale, 

thankyou
robots


----------



## Junior (15 September 2008)

robots said:


> hello,
> 
> i thought renting is the best thing going around, why would they use credit cards to survive?
> 
> ...




I don't even know where to start.  Firstly, where are these stats that show 'renters have 10+ credit cards'?  You have pulled this from thin air.  Secondly home owners are wealthier than renters BECAUSE THEY ARE OLDER, and most have experienced a low interest rate, credit expansion fuelled housing boom.  Thirdly, 'renters are gun specuvestors on the trading markets'....I won't even bother with this one.


----------



## robots (15 September 2008)

hello,

look out look out, here we go here we go,

http://www.news.com.au/business/story/0,23636,24347522-14334,00.html

another one drops the rate again, all of a sudden that debt is looking very cheap to maintain, 

any info out on rents dropping like rates?

more great news out with building starts dropping, the HIA guy from Insight is looking a bit brighter than Mr Keen now i believe, but hey he (HIA guy) doesnt have a blog so anything from him is questionable i guess

thankyou
robots


----------



## pepperoni (15 September 2008)

robots said:


> more great news out with building starts dropping, the HIA guy from Insight is looking a bit brighter than Mr Keen now i believe, but hey he (HIA guy) doesnt have a blog so anything from him is questionable i guess




The stupidity of these posts is becoming a forum disgrace.

And on roll the not so subtle personal attacks on other far more polite and knowledgable forum members.

Im boycotting this thread until robots' unending nosense is sorted out as happened on somersoft ... ill be on the other thread when there is something of substance to discuss.


----------



## robots (15 September 2008)

hello,

no worries pepp's, actually over at Somersoft i receive a positive private comment for most of my postings,

i have seen them come and go there too,

goodluck bro, we all walk out as friends

thankyou
robots


----------



## robots (15 September 2008)

hello,

good evening,

http://compareshares.com.au/show_news.php?id=S-515054

more rate cuts on the way, and as total annihilation whips through the world and all the "fake" companies on the exchange's, we all know what is left standing down the road?

you got it brothers, bricks & mortar

thankyou
robots


----------



## Beej (15 September 2008)

An interesting quote from the article above posted by robots:



> JP Morgan chief economist Stephen Walters said dwelling starts of around 153,000 a year based on Monday's figures was well below the 173,000 needed to satisfy demand.
> 
> This 'underbuild' helps to explain why house prices have held up, despite poor affordability, and why residential rents have been rising at the fastest pace for two decades," he said.




This is exactly what many have of us have been pointing out on this and the other house price thread. There opposing fundamentals here stopping the market *currently* from moving too strongly either up or down.

Cheers,

Beej


----------



## SBH (15 September 2008)

Ahhh must be great  to have statistics from ABS and others reassuring you that everything is going to be allllllllllright. In the real world noone is hiring right now and rents are falling. Also in approx 1/2hr the US financial system will fall off the cliff. The house of cards (housing boom) built on cheap money from the likes of lehmann brothers doesnt have a hope of surviving this. 

One other thing, how long can housing remain stationary when fewer and fewer people believe it can rise further? Think about it! Why risk money on housing for no conceivable gain? Thats the position housing is in today. Tomorrow you have to deal with an even greater cost for new lending and a certain economic recession in the US, surely this equals a slump?


----------



## xoa (15 September 2008)

Beej said:


> This is exactly what many have of us have been pointing out on this and the other house price thread. There opposing fundamentals here stopping the market *currently* from moving too strongly either up or down.




I see. So when approvals fall, that's good for house prices. And when they rise, that's good for house prices too. Everything's good for house prices if you're a permabull I guess.


----------



## Gspot (16 September 2008)

Maybe it will all come down to where you live.
Here in West Oz, it's different from US, UK and even Sydney. Because we have $96 Billion worth of projects  signed, with another $90 billion on the table. Now thats hands on work, meaning alot more labour needed in an already stretched market. So that equals immigration, which equals more homes for these families arriving each week.
Perth has dropped, due to world climate, however rents are still high, and with a couple more cuts to interest rates, (thanks to the almighty building industry)things will change for the better in the the Mighty West Coast(Eagles). IMO


----------



## singlefished (16 September 2008)

_Hello,

Great news everybody - Lehman Brothers, one of the world oldest investment banks, has filed for bankruptcy!!!! Whoop, Whoop, It's all good!!!

Australian housing still going to boom though regardless of the global financial turmoil!!! Yes it is!!! Really!!! It's all going to be great and rents will keep rising to boot!!!

Don't worry about the tight global financial system leading to less borrowing and less spending.... don't worry about the impending global slowdown which will hardly be noticed by our resiliant resource fuelled economy.... Don't worry if the Chinese start cutting back on iron ore consumption... don't worry if unemployment rises and things do start winding back... don't worry that the back-side has fell off the Aussie $$$ in the last few weeks..._

I fail to see why some people just can't look beyond the limits of their own garden fence to see what the neighbours are doing. Asia (which DOES include China) is starting to look very average, Europe and the US are waaaaaay more than half way down the tubes.... Who's left that's in a position to help support our booming economy? Ourselves? The oil rich Arabs? The eskimos?

Do people really believe that the Australian economy will be left unscathed whilst everybody else is doing their best to sort out their own troubles by reigning in borrowing and spending? And if the Australian economy does start to teeter as a consequence, would house prices be able to remain at their current levels or would they be expected to fall????

What happens to all the "Immigration supporting the housing sector" when the majority of immigrants are here on temporary 457 visas and are now taking a hit on their take home pay (take home pay being what they send out the country - at 15% premium than what they were sending it a few short weeks ago when our dollar was a lot stronger) A lot of these immigrants WILL dissapear if it no longer becomes financially attractive to stay here when a downturn occurs.... A lot of people are only here for the $$$$ and living the great Aussie dream is not really on the radar for them.


----------



## Gspot (16 September 2008)

I'm sure RIO and BHP have done their homework, and believe they wouldn't be spending billions upgrading their Iron Ore projects if prices were diving. 
China and India are 35% of the world population, China is building for their own people, not US. And if the world does go into a recession, cheap china made products will be all Americans can afford.


----------



## Beej (18 September 2008)

Well well, apart from the record price of $47M for a harbour front mansion, this article also contains a reference to a record price for a Surry Hills terrace, and a Summer Hill house:

http://www.smh.com.au/news/national/crisis-what-crisis/2008/09/17/1221330929879.html



> Even away from the harbour, records are being set, with Surry Hills and Summer Hill showing spring selling season momentum.
> 
> On Bourke Street, Surry Hills, a terrace has been sold for a record $2.34 million.
> 
> ...




This mirrors my experience at a couple of auctions I have attended in the last few weekends as well. All the action there seemed to be in the ~$1M range though, rather than the $2M+ range where there is simply a lack of property for sale on the north shore.

I must say I am surprised people are prepared to bid prices up like that in a market like this - but there you go, in some area's it IS happening.... It could be the effect of tightening supply due to house owners reading forums like this pulling their heads in a bit, coupled with the pent up buyer demand buoyed by the recent interest rate cut?

Cheers,

Beej


----------



## pepperoni (18 September 2008)

Beej said:


> Well well, apart from the record price of $47M for a harbour front mansion, this article also contains a reference to a record price for a Surry Hills terrace, and a Summer Hill house:
> 
> http://www.smh.com.au/news/national/crisis-what-crisis/2008/09/17/1221330929879.html
> 
> ...




If you find a reported price genuinely surprising and you havent witnessed the fall of the hammer then there is a *chance* its bogus.

Alot of desparate RE guys out there with alot of time on their hands trying to concoct some good news.

I have seen at least 1 "$5m+" sale reported this year that strangely didnt go through.  The house still has the sign up and the original owner still lives there.

I saw a sale a week back reported on edgecliff Bvd Collaroy for $2m over market value of any record price in the area.  No evidence of an actual sale yet though.

I pretty much ignore it and focus on fundamentals and verified sales


----------



## robots (18 September 2008)

hello Beej,

isnt it amazing, 

if it comes from someone with a blog (debtwatch, whocrashedtheeconomy etc etc) its gospel, 

if it comes out of the RE industry its all lies and lies,

keep up the work beej, i know i am happy with a "few" percentage points decrease this year compared with the shock exchange at 30%,

and when the interest rates start coming down in a couple of weeks it will propel us into utopia again and the specuvestor renter's will be sipping soup again

thankyou
robots


----------



## wayneL (18 September 2008)

robots said:


> hello Beej,
> 
> isnt it amazing,
> 
> ...



Why are you posting on a stock site then?


----------



## robots (18 September 2008)

hello,

who is Neil Jenman?

thankyou
robots


----------



## pepperoni (18 September 2008)

God this is like watching a  man soil himself over and over. Im starting to wonder why we bother.

Or are robots' substanceless troll posts really what people want from this thread.


----------



## robots (18 September 2008)

hello,

of course people want it token multimillionaire, look at the number of views bro,

massive, they come for the fun, the honesty, the truth

a man of the people, the people's poet

thankyou very much
robots


----------



## wayneL (18 September 2008)

robots said:


> hello,
> 
> of course people want it token multimillionaire, look at the number of views bro,
> 
> ...



Poet? 

Poets usually know something about capitalization and punctuation. 

Court jester maybe.


----------



## robots (18 September 2008)

hello,

i have been helping you out token multimillionaire on you're other little baby as well, pumping the views up to almost 20k

not long ago it was around 5k, 

i will bring the people

thankyou
robots


----------



## wayneL (18 September 2008)

robots said:


> hello,
> 
> i have been helping you out token multimillionaire on you're other little baby as well, pumping the views up to almost 20k
> 
> ...




Ever thought about building a baseball diamond in a corn field in the middle of nowhere?


----------



## singlefished (18 September 2008)

robots said:


> hello,
> 
> of course people want it token multimillionaire, look at the number of views bro,
> 
> ...




I'd rather not read it....

I come to this thread and enjoy posts from the likes of Beej who articulate their arguments well and constructively debate the issues arising from the current market conditions. A little bit of thought before posting goes a long way and encourages active participation regardless where you stand on the issue.

I find it irritating to read posts proclaming that *it's all going to boom because interest rates are on the way down*. Many of these posts appear to be unsubstantiated opinion without the clarity of justification.

I'd like to see a bit more maturity and discussion on this thread rather than the *"told you so.... nah-nah-nah-na-na-nahhhhh"* style one liners. This is what I expect from my 8 year old, not the active participants of a property prices discussion thread.

And, on a final note.... caught this article at lunchtime on news.com

http://www.news.com.au/business/money/story/0,25479,24360232-5013951,00.html

Cheers,
Scotty....


----------



## pepperoni (18 September 2008)

Very good video - reinforces the main view of this thread.

http://www.chrismartenson.com/bubbles


----------



## robots (19 September 2008)

hello,

but lads, this has been going on for 3 yrs now,

the great writings at "house prices to stagnate for years" i believe has even just celebrated its 3rd anniversary, yes third anniversary

no access on that one because its just too embarrassing, and once again the views where enormous,

i would like to thank the hard working contributors of our time:

beej, kathmandu, robots, tech and special word out to a few colorful characters numbercruncher, kimosabi, realist, token multimillioniare

have a great day

thankyou
robots


----------



## dubiousinfo (26 September 2008)

News article out yesterday.



> AUSTRALIA'S residential market continues to be sluggish with high interest rates and a lack of properties contributing to a fall in new homes sales in August, a survey has found.
> 
> The Housing Industry Association (HIA) survey found new home sales fell 1.3 per cent in August, following a 7.2 per cent decline the previous month.
> 
> Sales of detached houses fell 2.4 per cent in August, the seventh monthly fall in a row.


----------



## robots (26 September 2008)

hello,

yes dubious this is fantastic news, we in an era where not much is going to be "built" and this probably continue for some time,

its clear by this forum that "investors" dont want investment property so why would someone build one, 

this may be one reason why the IMF (yes thats right the IMF) has come out and said prices "may" drop by 5-10%, thats right 5-10%

mr keen once again not looking too bright, the contributers here at ASF once again coming up trumps well done and thanks to beej, kathmandu, asx gorilla, robots, technotronic, 

http://au.news.yahoo.com/a/-/latest/5042757/australian-govt-pump-billion-mortgage-market

looks as though rudd747 is going to help out as well

3 years going on strong brother

thankyou
robots


----------



## robots (26 September 2008)

hello,

apologies to TysonBoss1, you in for the cause

thankyou
robots


----------



## numbercruncher (5 December 2008)

Kathmandu said:


> Or those that purchased houses they could ill afford using Div's as part of the servicability equation.
> 
> Share market takes a hammering, sevicability say bye bye's
> 
> Dave





This is a funny thread to browse through ...... so many of the old permabulls have vanished .....

Nearly reunion time, what happened to them all ? Global economic crisis (gec) or Retired to the Bahamas (rttb) ?


----------



## ROE (5 December 2008)

I heard they all retire rich and no longer need to work like normal people...they capitalise their interest and living off their equity


----------



## explod (5 December 2008)

ROE said:


> I heard they all retire rich and no longer need to work like normal people...they capitalise their interest and living off their equity





Not sure, but down this way they have been trying to sell their holiday mansions on the coast from Mornington to Portsea but nothing doing so now they are selling their primary residences back in the city at up to 20% lower than anticipated.   Sumptin about margin calls I heard.

Just thought I would follow you over from that doom property thread.


----------



## robots (5 December 2008)

hello,

yeah good move explod, post here with the kings man

http://www.theage.com.au/national/melbourne-defies-new-homes-crash-20081204-6rpe.html

all this supply and St Kilda still pumping 14.7% for Sept08,

yeah yeah, i know it takes times and I have to wait it always goes down after shonk market issues (over 3yrs strong now man)

what a day here in Melbourne, 30 degrees, chapel st pumping 

thankyou
robots


----------



## numbercruncher (5 December 2008)

> +14.7% Sept08 for St Kilda





I think I worked out what this means !


Its the increase in crime in St Kilda this quarter , prostituion , drug deals, shooting etc ? So much "underbelly" action down your way Robi .... next youll need to carry a 9mm just to get a coffee !


----------



## arco (5 December 2008)

I picked this up somewhere recently, but I've lost the link

_These are the private debt figures from the RBA
$670 Billion in Owner occupied Housing debt
$310 Billion in Investor property debt._


----------



## robots (5 December 2008)

numbercruncher said:


> This is a funny thread to browse through ...... *so many of the old permabulls have vanished *.....
> 
> Nearly reunion time, what happened to them all ? Global economic crisis (gec) or Retired to the Bahamas (rttb) ?




hello,

yeah remember Realist who owned every blue chip share known to mankind and continually spoke of the virtue's of shares over property,

gone along with all those funds in the blue chips

what a day

thankyou
robots


----------



## robots (5 December 2008)

hello,

http://news.theage.com.au/national/banks-told-to-save-construction-jobs-20081205-6scr.html

even after 9 mths of falls for construction sector we still have the humble builder worker in the top 10 of most in-demand professions,

you might have to come out of retirement Explod, fill up those tins again down at Mornington there

i have friend still going strong at 71 in the building industry, how old's Rupert Murdoch?

thankyou
robots


----------



## joeyr46 (5 December 2008)

pepperoni said:


> Very good video - reinforces the main view of this thread.
> 
> http://www.chrismartenson.com/bubbles




That was worth watching explains things very well
Thanks for that


----------



## Beej (5 December 2008)

joeyr46 said:


> That was worth watching explains things very well
> Thanks for that




Some cautionary tales in there for sure, but by no means gospel - there are plenty of counter examples and the "bubble patterns" do not always play out as described in the examples used.......and the whole no increase in "real" incomes in inflation adjusted terms argument - well that might the case in the US? but in AU there have been SIGNIFICANT increases in real family incomes over the past 8 years (both single average earnings and combined family earnings), so maybe that's why we are different to them??  Also, we haven't got the massive "mis-allocation" of capital into over-building etc that the presentation suggests occurred in the US.

Cheers,

Beej


----------



## numbercruncher (6 December 2008)

robots said:


> hello,
> 
> http://news.theage.com.au/national/banks-told-to-save-construction-jobs-20081205-6scr.html
> 
> ...





That article was about your industry grovelling for mercy ...... recession giving you guys a walloping already and its going to get worse for sure ..... should see how many projects are getting cancelled in sunny queensland, unreal ....



> According to the Australian Bureau of Statistics, building and construction sector employs around one million people or nine per cent of the workforce.




wow talk about oversupply bubble! Might get my dunny fixed for less than 200 bucks an hour ?


----------



## YChromozome (6 December 2008)

*Rents tumble in inner Sydney*

Looks like rents in some parts of the lower north shore are down 15.9% in only three months. Plenty of double digit falls in other parts.

Hope Robots can continue to up the rent and he doesn't price himself out of the market.


----------



## Beej (6 December 2008)

Record price paid ($20M) for park-side penthouse apartment in Sydney:

http://www.smh.com.au/news/national/penthouse-goes-for-20m/2008/12/05/1228257317754.html

Cheers,

Beej


----------



## wayneL (6 December 2008)

Beej said:


> Some cautionary tales in there for sure, but by no means gospel - there are plenty of counter examples and the "bubble patterns" do not always play out as described in the examples used.......and the whole no increase in "real" incomes in inflation adjusted terms argument - well that might the case in the US? but in AU there have been SIGNIFICANT increases in real family incomes over the past 8 years (both single average earnings and combined family earnings), so maybe that's why we are different to them??  Also, we haven't got the massive "mis-allocation" of capital into over-building etc that the presentation suggests occurred in the US.
> 
> Cheers,
> 
> Beej




Those videos are straight out of the Austrian School book of Common Prayer, as the only economic model capable of prediction, it is gospel.

Australian mis-allocation of capital is in slightly different sectors that the US, but no less mis-allocated. 

Classic Austrian mal-investment.


----------



## numbercruncher (6 December 2008)

Beej said:


> Record price paid ($20M) for park-side penthouse apartment in Sydney:
> 
> http://www.smh.com.au/news/national/penthouse-goes-for-20m/2008/12/05/1228257317754.html
> 
> ...





sniff .... sniff .... sniff ....

yup that smells like desperation ...


----------



## Dowdy (6 December 2008)

pepperoni said:


> Very good video - reinforces the main view of this thread.
> 
> http://www.chrismartenson.com/bubbles




That was a great video. Too bad the housing bulls choose to ignore it


----------



## ROE (6 December 2008)

Dowdy said:


> That was a great video. Too bad the housing bulls choose to ignore it




This time it's different though  buy now before you are price out FOREVER


----------



## Beej (6 December 2008)

ROE said:


> This time it's different though




Somewhat ironically, it's actually YOU and your ilk that are arguing that "this time it's different". "Peak oil!!!" "Peak debt!!!" "Fiat monetary system is a sham!!!" "The sky is falling!!!!" etc etc blah blah.

The rest of us are merely predicting a normal housing cycle downturn (as has hapenned many times before - early 70s, late 80s, and even as recently as 2001), followed by a normal recovery.

Beej


----------



## ROE (6 December 2008)

Beej said:


> Somewhat ironically, it's actually YOU and your ilk that are arguing that "this time it's different". "Peak oil!!!" "Peak debt!!!" "Fiat monetary system is a sham!!!" "The sky is falling!!!!" etc etc blah blah.
> 
> The rest of us are merely predicting a normal housing cycle downturn (as has hapenned many times before - early 70s, late 80s, and even as recently as 2001), followed by a normal recovery.
> 
> Beej




so we move from house price not crashing to cycle down turn now  
this time it's definitely different 
what is a cycle down turn? 5% ? 20% 50% ?

There is a stock market crash but no stock market down turn right ?


----------



## Beej (6 December 2008)

ROE said:


> so we move from house price not crashing to cycle down turn now
> this time it's definitely different
> what is a cycle down turn? 5% ? 20% 50% ?
> 
> There is a stock market crash but no stock market down turn right ?




Yeah whatever -keep back pedalling and building those straw men! My views and outlook for the market have been clearly explained numerous times in this and the other thread and have been consistent.


----------



## lioness (6 December 2008)

Don't underestimate that if %rates are dropped low enough, then it will create a new mini boom in property leading to a bigger crash in the end.


----------



## nunthewiser (6 December 2008)

A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?

thankyou in advance

ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive


----------



## Passive (6 December 2008)

nunthewiser said:


> A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?
> 
> thankyou in advance
> 
> ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive




Yes you still have to pay the penalty - often called economic cost to the bank - based on their cost of funds at the time you fixed your rate.


----------



## Passive (6 December 2008)

nunthewiser said:


> A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?
> 
> thankyou in advance
> 
> ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive





By the way , if you are not aware, the converse is that if your fixed rate is invariable lower than the prevailing rate it will go a lot easier on you - may be a standard fee payable for the breking of contract but economic cost usually does not enter into equation. Do your own research though.


----------



## nunthewiser (6 December 2008)

Passive said:


> Yes you still have to pay the penalty - often called economic cost to the bank - based on their cost of funds at the time you fixed your rate.




thankyou.

so by this , it is only really viable in entering a fixed rate loan IF one has the intention of holding the property longer than the fixed term , ie locking in for 10 years and selling after 7 is a very costly exercise if rates fall further at time of sale ?


----------



## Passive (6 December 2008)

Beej said:


> Yeah whatever -keep back pedalling and building those straw men! My views and outlook for the market have been clearly explained numerous times in this and the other thread and have been consistent.




Beej

Typical scenario - all the signs are there for  a recovery in real estate. Yes, this time is very different but so is the stimulus in place. Like it or not rents are on the up, rates massively down, huge stimuli in market place, concessions to homebuyers massive, interest rates low and going lower, fuel prices plunging, unemployment low- -I have been a property investor through many cycles and this one is so different. Compare to 90s this is a walk in the park and the parameters are all in place for a massive resurgence in real estate. Even govt is ensuring all stops are pulled out to keep prices stable. People need to see this for what it is - a golden , yes golden opportunity to look to entering into the market. We will look back on this time and wonder why most could just not read the very obvious signals. Everything is going in favour of real estate big time!


----------



## Passive (6 December 2008)

nunthewiser said:


> thankyou.
> 
> so by this , it is only really viable in entering a fixed rate loan IF one has the intention of holding the property longer than the fixed term , ie locking in for 10 years and selling after 7 is a very costly exercise if rates fall further at time of sale ?




Agreed

Best used as a budgetary tool if buying and wanting to lock in costs. However if rates are down to 3/4% it is a low risk gamble to fix . I don't like to fix for more than 3 years personally - but if they go very low I am in and will take the risk of breaking contract cost if I sell. In the past the bank has not penalised me if I break early and fixed rates have risen as they save money and don't want to run the risk of losing my business.


----------



## chops_a_must (6 December 2008)

Beej said:


> Somewhat ironically, it's actually YOU and your ilk that are arguing that "this time it's different". "Peak oil!!!" "Peak debt!!!" "Fiat monetary system is a sham!!!" "The sky is falling!!!!" etc etc blah blah.
> 
> The rest of us are merely predicting a normal housing cycle downturn (as has hapenned many times before - early 70s, late 80s, and even as recently as 2001), followed by a normal recovery.
> 
> Beej




This time it's not different though.

You are just doing it wrong.

Check the 30s as to what happened in widespread deflation...


----------



## nunthewiser (6 December 2008)

no worries , thankyou for your time , i only ask as i have my eye on a "distressed" listing at present and i know the circumstances ...... kinda being a bit insensitive to there plight  but its all about the cash at end of day .... just tossing around  options as "cheap money" can be good money if one uses it wisely


----------



## wayneL (6 December 2008)

chops_a_must said:


> This time it's not different though.
> 
> You are just doing it wrong.
> 
> Check the 30s as to what happened in widespread deflation...




'zackley


----------



## juddy (6 December 2008)

Who dug this thread up? More importantly, who in their right mind thinks we are going to see a short or medium term increase in house prices?


----------



## juddy (6 December 2008)

Passive said:


> Compare to 90s this is a walk in the park and the parameters are all in place for a massive resurgence in real estate.




A walk in the park, how the heck do you work that out? The trouble hasn't even started yet. We'll see how you are feeling at the end of next year when it is just starting to kick in.

Boy, some people well and truly have their heads stuck in the sand.

You watch WA real estate, it is going to be walloped once all those 'new' investors start realising that property investing is actually a hard slog and not the 'dream' it has been in the last few years. They'll be undercutting each other just to get out with some type of profit.


----------



## lioness (6 December 2008)

chops_a_must said:


> This time it's not different though.
> 
> You are just doing it wrong.
> 
> Check the 30s as to what happened in widespread deflation...




Good point chops. Can you provide a link or direct to me where I can get deflation information such as the 1930's and what happened to asset prices.


----------



## lioness (6 December 2008)

Passive said:


> Agreed
> 
> Best used as a budgetary tool if buying and wanting to lock in costs. However if rates are down to 3/4% it is a low risk gamble to fix . I don't like to fix for more than 3 years personally - but if they go very low I am in and will take the risk of breaking contract cost if I sell. In the past the bank has not penalised me if I break early and fixed rates have risen as they save money and don't want to run the risk of losing my business.




Passive, at what interest rate do you think it is worth fixing for 5 years??

I am looking at the same thing. My thoughts are 4.5% or lower will be worth it. What is your opinion please?


----------



## robots (6 December 2008)

YChromozome said:


> *Rents tumble in inner Sydney*
> 
> Looks like rents in some parts of the lower north shore are down 15.9% in only three months. Plenty of double digit falls in other parts.
> 
> *Hope Robots can continue to up the rent and he doesn't price himself out of the market.*




hello,

sure will, i will get an extra set of bunk beds from Harvey's joint and cram a few more from the sub-continent, utopia for me and my tenants

doing my bit for society, cook them up some rice, fridge in each room so no dust-ups over the food in the fridge

lot of good landlords out there helping students etc

thankyou
robots


----------



## IFocus (6 December 2008)

nunthewiser said:


> A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?
> 
> thankyou in advance
> 
> ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive




NC as per passive's comments I have used fix loans over the years, I haven't done it to save money or to beat the banks but just to lock in costs as a risk management tool, lets me sleep at night. 

Haven't broken one yet but if I do its just the cost of doing business.

In a falling rate environment I wouldn't hurry but in a rising rate environment its good insurance. It can be a little like the market you are never going to pick the bottom when fixing.

Good luck


----------



## Passive (6 December 2008)

lioness said:


> Passive, at what interest rate do you think it is worth fixing for 5 years??
> 
> I am looking at the same thing. My thoughts are 4.5% or lower will be worth it. What is your opinion please?




Would look at the prevailing economic conditions to decide. There will be time to decide as this economy has to show signs of improving before rates stabilise let alone rise. Until then variable. I reckon your estimate seems right though.


----------



## Passive (6 December 2008)

juddy said:


> A walk in the park, how the heck do you work that out? The trouble hasn't even started yet. We'll see how you are feeling at the end of next year when it is just starting to kick in.
> 
> Boy, some people well and truly have their heads stuck in the sand.
> 
> You watch WA real estate, it is going to be walloped once all those 'new' investors start realising that property investing is actually a hard slog and not the 'dream' it has been in the last few years. They'll be undercutting each other just to get out with some type of profit.




Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem? We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference. Now is the time to start looking.Ben Bernancke is an expert on the Depression and is doing what it takes. Somewhere along the line it will change
and with lower interest rates most property investors are moving to strongly positively geared real estate. On one of my IPs alone I am $600 better off per month as a result of drop in rates. That is net income and most investors who are holders are discovering a new income stream!. All starting to look very attractive. 

90s were high int, high unempl, etc etc. We have low rates, lowering further an IPs are becoming damn attractive to holders. One Einstein in the 90s , when some of us were buying - was predicting property would never rise by more than 1% pa - what a joke. Homes are to be lived in and soon it will be cheaper to buy and the banks and govt are doing everything to boost things. This will lead to another boom, then bust - I am not happy with this, would prefer a modest rise but as long as central bankers control fiscal policy as they do - nothing much will change. I have experience and profit on my side - that presupposes a positive attitude - I will not allow fear to scare me senseless! And I am WA based and do not share your view.

Look at todays AFR and look at the chart of property prices in the world - still up by a large majority - compare that to the share market - hail property!


----------



## explod (6 December 2008)

Passive said:


> Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem?




Ben Benanke has been bailing out and relieving the banks of bad debt and lumping it onto the US tax payers.   They are now starting to follow the same principals here.   And some time next year when they realise that pouring more fuel on the fire does not work the banks will raise rates at a huge rate.  Read a few books by some reputable independant economist.  Most bank economists started out as bank tellers and just got promoted to move them out of their previous incompetence.

Maybe your head is not in the sand but you are only taking in what suits your financial direction.   Wish you luck but it often does not work.


----------



## juddy (6 December 2008)

Passive said:


> When in human history have you seen such a concerted and co-ordinated effort to lick the problem? We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference. Now is the time to start looking.Ben Bernancke is an expert on the Depression and is doing what it takes. Somewhere along the line it will change
> and with lower interest rates most property investors are moving to strongly positively geared real estate. On one of my IPs alone I am $600 better off per month as a result of drop in rates. That is net income and most investors who are holders are discovering a new income stream!. All starting to look very attractive.
> 
> 90s were high int, high unempl, etc etc. We have low rates, lowering further an IPs are becoming damn attractive to holders. One Einstein in the 90s , when some of us were buying - was predicting property would never rise by more than 1% pa - what a joke. Homes are to be lived in and soon it will be cheaper to buy and the banks and govt are doing everything to boost things. This will lead to another boom, then bust - I am not happy with this, would prefer a modest rise but as long as central bankers control fiscal policy as they do - nothing much will change. I have experience and profit on my side - that presupposes a positive attitude - I will not allow fear to scare me senseless! And I am WA based and do not share your view.
> ...




Have you ever asked yourself why there has never been such an attempt in history to rectify such a problem? 

The government and RBA are throwing darts in the dark, just hoping to score.  Really, how long can they really afford to prop up house prices? They have made it absolutely clear this is their biggest fear.

I can certainly see why you are defensive of house prices (you don't seem to have posted on any other thread since joining) as you are invested in the state most susceptible to a large decline. 

You may be well ahead in your RE investments, doing it for years and therefore positioned to take advantage of what is happening, but don't kid yourself that everybody is (or has the desire to stay in for the long haul). Investing or even buying a first home in WA in the next 2 years (and in the last 2 years with no cap. growth) is/was an extremely risky move.


----------



## numbercruncher (6 December 2008)

> Ben Bernancke is an expert on the Depression and is doing what it takes





The permabulls crack me up, one minute they dismiss the goings on in the US, " because its different here " , next minute the US is the basis for continued price growth.


----------



## Beej (6 December 2008)

Passive said:


> We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference.




Great quote and oh so true!!

PS: Sydney auction clearance rate 52% for today with 174 wise souls buying while the buying is good and the interest is cheap  http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej


----------



## chops_a_must (6 December 2008)

Passive said:


> Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem?



About 1932 young whipper snapper.


----------



## robots (6 December 2008)

hello,

here we go, the world is going to end

cant see lines in the street at soup kitchens, 30% unemployment dont see that,

go and get some fresh air

i know i know i have to wait it takes time, 6mths, 12 mths its not instant

thankyou
robots


----------



## juddy (6 December 2008)

robots said:


> hello,
> 
> here we go, the world is going to end
> 
> ...




2 months into the Aussie leg of the crisis and they think it's all over.


----------



## lioness (6 December 2008)

explod said:


> Ben Benanke has been bailing out and relieving the banks of bad debt and lumping it onto the US tax payers.   They are now starting to follow the same principals here.   And some time next year when they realise that pouring more fuel on the fire does not work the banks will raise rates at a huge rate.  Read a few books by some reputable independant economist.  Most bank economists started out as bank tellers and just got promoted to move them out of their previous incompetence.
> 
> Maybe your head is not in the sand but you are only taking in what suits your financial direction.   Wish you luck but it often does not work.




Explod,

If you knew anything about economic cycles, you would know we will not see double digit % rates for decades. If inflation comes later, it will only take a few 1% hikes to kill it. Given the unemployment mounting every day if read the basic newspapers, you would have worked out quickly we will not see high % rates for a decade or longer.


----------



## explod (6 December 2008)

lioness said:


> Explod,
> 
> If you knew anything about economic cycles, you would know we will not see double digit % rates for decades. If inflation comes later, it will only take a few 1% hikes to kill it. Given the unemployment mounting every day if read the basic newspapers, you would have worked out quickly we will not see high % rates for a decade or longer.






> It has been reported this week that the crash dive in commodity prices which began in July 2008 is now considerably worse both in its magnitude and its swiftness than the fall during the entire 1929-1933 economic and financial collapse. In the US, retail sales in November had their biggest one month fall in 35 years and the acceleration of the collapse is unprecedented. With Gold now down a "whopping" 10.3 percent in US Dollar terms this year, Oil is down over 72 percent since July 2008 and most other basic commodities have had falls of a similar magnitude. The CRB index has fallen 47 percent since July. Official US unemployment has reached 6.7 percent as 533,000 jobs were lost in November. That's 28 percent of the total for the year in one month. When factoring in people looking for work (not counted officially) and part-time workers looking for full-time work (not counted officially), the REAL US unemployment rate is now estimated (unofficially) at 12.5 percent.




Courtesy the Privateer Newsletter.  A sound independant economist

Follow the waves as you wish, but if you really became cognisant of the real economic fundamentals you would s...t yourself


----------



## shaunQ (6 December 2008)

Why would anyone have any faith or confidence in the political system being able to fix anything, let alone a major crisis. Since when has any international effort actually succeeded in the long term? 99% of the time they screw it all up and make it worse.

Why would this be any different? The US Oligarchy will look after itself and thats it.

Personally I think we will see a short-term boost - so we'll see some figures soon that the 'sand heads' will trump as it all being over, yet when it truly sinks in it will hit hard. This is the denial stage...

Someone say rates are low? The paper today says Gold Coast council is aiming to raise rates 20%, after a 8.5% increase last year, after the mayor was elected on the promise of a rates freeze.


----------



## Beej (6 December 2008)

explod said:


> Courtesy the Privateer Newsletter.  A sound independant economist
> 
> Follow the waves as you wish, but if you really became cognisant of the real economic fundamentals you would s...t yourself




That's simply alarmist BS, and exactly the type of thing Passive was referring to when he wrote 







> We live in an information age where you guys scare each other to death and [into] economic impotency with every indicator



. 

Commodoties have "crashed" many many times before. in the early 70s, in the early 80s, in the early 90s etc etc etc. This time they had a huge run up due to unprecedented demand from heavily populated developing countires, hence a long way to fall on the collapse of the cycle. By the way this demand WILL return in the not too distant future!

The demand and prices for nearly all commododities is so clearly cyclical it's not funny. As for unemployment - you are making such a big deal about 6.7% unemployment in the US??? It's been higher than that plenty of times! They have been in recession for a year now remember. Sometime (probably) next year things will start to recover there, unemployment will peak and stabalise, the housing market there will bottom/stabalise, and the rest of the world will enter a recovery phase as well. THE WORLD IS NOT GOING TO END! You should lighten up, really! Most people will still go to work every week and perform productive activities, and will continue to do so!

If we are lucky here our economic downturn will be shorter and shallower as we have certainly had some insulation up to this point, and a little more monetary/fiscal insulation left to play out yet. I don't buy this Australia is N months/years behind the US/Uk argument- it's a global economy, a global crisis - it hit us at the same time as it hit's them. We have weathered it better - it's still going yes but when things recover our recovery here will begin at the same time, so therefore it will be a shorter downturn here (this has already been proven by how well AU has weathered so far) = (hopefully) less unemployment and damage to living standards and the economy. To get back on topic, that INCLUDES house prices. 

Cheers,

Beej


----------



## chops_a_must (6 December 2008)

Beej said:


> That's simply alarmist BS, and exactly the type of thing Passive was refering to when he wrote .
> 
> Commodoties have "crashed" many many times before. in the early 70s, in the early 80s, in the early 90s etc etc etc. This time they had a huge run up due to unprecedented demand from heavily populated developing countires, hence a long way to fall on the collapse of the cycle. By the way this demand WILL return in the not too distant future!



You need to seperate debt, leverage and demand and then re-write that post. Because undoubtedly it is based on that faulty premise - and not worth reading until it's on the correct footing.


----------



## numbercruncher (6 December 2008)

> This time they had a huge run up due to unprecedented demand from heavily populated developing countires, hence a long way to fall on the collapse of the cycle. By the way this demand WILL return in the not too distant future!


----------



## inenigma (6 December 2008)

juddy said:


> 2 months into the Aussie leg of the crisis and they think it's all over.




Sorry....  I hadn't realised that it had started already...  Oh my, I am late.....

Must Run....


----------



## So_Cynical (6 December 2008)

1 Bedroom house in Ashfield 350K

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007455799

Its not big money is it.


----------



## explod (6 December 2008)

None of us want this dredful scenario playing out and we contribute as best we can to help each other.   Things may in fact pan out different to what anybody thinks.    The more we can inform each other the better.

bed for me now.  enjoy the barter

cheers explod


----------



## numbercruncher (6 December 2008)

So_Cynical said:


> 1 Bedroom house in Ashfield 350K
> 
> http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007455799
> 
> Its not big money is it.





Do you city folks actually live in dog boxes like that ?


----------



## Julia (6 December 2008)

So_Cynical said:


> 1 Bedroom house in Ashfield 350K
> 
> http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007455799
> 
> Its not big money is it.



Good Lord, what a horrid litle dogbox.
Can't believe anyone would pay $350K for that!

I looked at a house today (potential IP), three bedrooms, two bathrooms, two large living rooms, big kitchen, large block with dozens of fruit trees, in a good area, bus stop at door, and would have no trouble getting it for $300K.

This is in a fast growing tourist-oriented Qld town (pop. 55,000), three hours by road fromBrisbane.


----------



## IFocus (6 December 2008)

Passive said:


> Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem? We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference. Now is the time to start looking.Ben Bernancke is an expert on the Depression and is doing what it takes. Somewhere along the line it will change
> and with lower interest rates most property investors are moving to strongly positively geared real estate. On one of my IPs alone I am $600 better off per month as a result of drop in rates. That is net income and most investors who are holders are discovering a new income stream!. All starting to look very attractive.
> 
> 90s were high int, high unempl, etc etc. We have low rates, lowering further an IPs are becoming damn attractive to holders. One Einstein in the 90s , when some of us were buying - was predicting property would never rise by more than 1% pa - what a joke. Homes are to be lived in and soon it will be cheaper to buy and the banks and govt are doing everything to boost things. This will lead to another boom, then bust - I am not happy with this, would prefer a modest rise but as long as central bankers control fiscal policy as they do - nothing much will change. I have experience and profit on my side - that presupposes a positive attitude - I will not allow fear to scare me senseless! And I am WA based and do not share your view.
> ...




I have been looking at WA property prices since the early 80's this recent run up has been extreme, no precedent that I am aware of  and as is the case of most things prices will balance back to the mean.

I don't know how that will happen but it will its a simple concept.

To build a rise in housing prices you will need another credit expansion of some sort, currently there is a credit contraction that will take some time to unwind.

Prices will fall, here in Mandurah stock is rising and there are few buyers with rising unemployment confidence will fall further.

Cash is king there will be opportunity for those that can keep their jobs. I note jobs being culled by the resources industry here in WA on a scale never seen before.

Another thing I think about is thanks to history we are well aware of what happened after 1929 but what the down side is to the current government reactions around the world will be is still to be a surprise.

As for comparing the stock markets performance with property I think its a little early, property really is an elephant but once started hard to stop either way. 

As always I guess we will have to wait and see....... here is to the trend turning up sooner.


----------



## numbercruncher (6 December 2008)

Julia said:


> Good Lord, what a horrid litle dogbox.
> Can't believe anyone would pay $350K for that!
> 
> I looked at a house today (potential IP), three bedrooms, two bathrooms, two large living rooms, big kitchen, large block with dozens of fruit trees, in a good area, bus stop at door, and would have no trouble getting it for $300K.
> ...




Heya Julia ,


has Realestate in the Wide bay region pulled back in price much through this year ?


----------



## shaunQ (6 December 2008)

Julia said:


> This is in a fast growing tourist-oriented Qld town (pop. 55,000), three hours by road fromBrisbane.




Let me guess, Hervey Bayish. I was looking at a property around there, 400M from the beach, 298K.

3 hours from Brisi is pretty far though IMHO, and not much other corporate work anywhere up there. So too far for me at the moment. Beautiful though.


----------



## Julia (6 December 2008)

shaunQ said:


> Let me guess, Hervey Bayish. I was looking at a property around there, 400M from the beach, 298K.



Exactly right, Shaun.



> 3 hours from Brisi is pretty far though IMHO, and not much other corporate work anywhere up there. So too far for me at the moment. Beautiful though.



You're quite right about the work situation.   Focus is almost entirely on tourism and servicing the local population.
An aviation training school was proposed for the Maryborough Region but the proposers withdrew last week citing (in polite terms) utter incompetence and stuffing about by the local Regional Council.   They are a hopeless bunch.

NC, glad to know you're making such good progress in the recovery stakes.
Seems you've got off more lightly than could have been the case.

I think property prices in this area are down about 5%.  Plenty for sale.
Those in the $1M and over are sticking.
Excessive development of multi story very upmarket apartment buildings on the seafront.  Suspect too many of these have been approved and they will be struggling for occupancy.


----------



## So_Cynical (6 December 2008)

Julia said:


> Good Lord, what a horrid litle dogbox.
> Can't believe anyone would pay $350K for that!
> 
> I looked at a house today (potential IP), three bedrooms, two bathrooms, two large living rooms, big kitchen, large block with dozens of fruit trees, in a good area, bus stop at door, and would have no trouble getting it for $300K.
> ...




Julia this is Ashfield...the inner west of Sydney...not 56 sandfly street, West Hervey Bay


----------



## Passive (7 December 2008)

juddy said:


> Have you ever asked yourself why there has never been such an attempt in history to rectify such a problem?
> 
> The government and RBA are throwing darts in the dark, just hoping to score.  Really, how long can they really afford to prop up house prices? They have made it absolutely clear this is their biggest fear.
> 
> ...




The reason for this effort is because they have learnt from doing nothing in the depression years. Additionally Mahatir , with the Asian crisis adopted similar methods succesfully. Trouble with economic theory claptrap is that every negative commentator has to have his/her say and is given airtime when they in fact had no idea this was coming. Additionally I have yet to find one commentator that predicted a boom correctly before the event. Patterns like this defy logic and history will prove you wrong yet again. Booms overshoot the mark as do downturns. WA has a low rate of unemployment and has a hell of a way to go to be as bad as you describe it.

The seeds of opportunity are there - seize them or loose out. The Sharemarket is a basket case and property in Australia is a massive survivor and performer. If the ASX corrects then property will benefit anyway and enough is being done to place a level underneath real estate. Because a house loses 10 - 20% in value the homeowner is not lokely to sell and therein lies its value - its a home first and more and more properties are becoming positively geared and money from the ASX will flow there again soon as the finance industry has proven its reliability and competence - not!

Additionally any property owner with equity will be able to use this resource to invest in the ASX when it improves. You are right I have not posted elsewhere for the rest is a definite waste of time and money at the moment. Don't want to catch a falling knife - when the time is right I will re-invest in the ASX but lost enough on my super to steer clear and the only asset class with any credence at present is r/e.


----------



## chops_a_must (7 December 2008)

Passive said:


> The reason for this effort is because they have learnt from doing nothing in the depression years.



Yes, the new deal certainly was nothing.



Passive said:


> Additionally Mahatir , with the Asian crisis adopted similar methods succesfully.



Mahatir pegged the ringgit, Bernanke can't.

Stiglitz has pointed out why certain Asian economies like Malaysia did not collapse, and it certainly isn't because of conventional economic theory, which is why he recanted his previous knowledge, but it is certainly not the path the US is taking. They are going down a conventional economic theory path which is completely different to what Malaysia did and what Stiglitz points out as what worked and why.



Passive said:


> Trouble with economic theory claptrap is that every negative commentator has to have his/her say and is given airtime when they in fact had no idea this was coming.



Complete and utter bull****. 

Maybe you should look at some youtube videos of Peter Schiff for instance.



Passive said:


> Additionally I have yet to find one commentator that predicted a boom correctly before the event.



Peter Newman and his department for one, on oil, the rise of Nuclear, and the rise of China. But they aint economists.




Passive said:


> Patterns like this defy logic and history will prove you wrong yet again.



No they don't. They are proven incredibly logical in retrospect.



Passive said:


> Booms overshoot the mark as do downturns.



Contradiction within the space of 2 sentences. Well done.



Passive said:


> WA has a low rate of unemployment and has a hell of a way to go to be as bad as you describe it.



You either aren't living here, or aren't living in the real world.




Passive said:


> The seeds of opportunity are there - seize them or loose out. The Sharemarket is a basket case and property in Australia is a massive survivor and performer. If the ASX corrects then property will benefit anyway and enough is being done to place a level underneath real estate.



This is just pure stupidity.

Why on Earth would people buy property when they can buy shares safely that are returning > 8% yields compared to property that may never provide even a positive return?




Passive said:


> Additionally any property owner with equity will be able to use this resource to invest in the ASX when it improves.




Lol.

And that hasn't happened and wont continue to force sales on people's homes?

I look forward to you doing just that.


And here sir, is your **** back. :walker:


----------



## Pager (7 December 2008)

To be honest were i live in Sydney house prices haven't changed that much over the past 12 months if anything they have edged up a bit.

The interest rate cuts have also helped and to be honest from talking to  friends, most are "over" the financial crisis, they are numb to the daily doom and gloom in the papers etc, particualy as none have been affected, as a friend said to me yesterday, he and his family stopped spending when it first blew up but more recently having seen no effect on there lives they used the rate cut saving to buy a boat.

I think we will see a pick up in house prices in the short term, further out i haven't a clue but maybe my friend is right don't believe what you read in the papers or see on the news, bad news sells, good doesnt.


----------



## juddy (7 December 2008)

Passive said:


> The seeds of opportunity are there - seize them or loose out. The Sharemarket is a basket case and property in Australia is a massive survivor and performer.




In general, Aussie shares have outperformed property over the last 2 decades. 

"Local shares returned 16.2% after tax versus 13.4% for residential property at the lowest marginal rate.

Shares returned 13.9% compared to 12% on property at the highest marginal tax rate."

http://business.theage.com.au/business/shares-beat-property-report-20080519-2fxa.html

At this stage shares, again, look the better option.


----------



## numbercruncher (7 December 2008)

Pager said:


> To be honest were i live in Sydney house prices haven't changed that much over the past 12 months if anything they have edged up a bit.





Which suburb do you live in ?


----------



## Beej (7 December 2008)

chops_a_must said:


> Why on Earth would people buy property when they can buy shares safely that are returning > 8% yields compared to property that may never provide even a positive return?




2 very good reasons:

1) Leverage - you can leverage 80/90% - even 100% easily into property (if you want to and hopefully the cash-flow numbers stack up, but that's another discussion), making the actual return on your money far greater. Only the bravest would ever leverage to this extent into shares. PS - there is a lot of property out there RIGHT NOW that can provide positive return from day 1 - you just have to remove your blinkers and actually go and check the market out!

2) Risk - I am laughing my head off at your statement re "8% yield from shares SAFELY"!! All the guys like you here are predicting economic collapse, doom and gloom, and a share market that could fall much further yet as it did in the GD!! The risk is still far greater. And what's more you argue shares are a better investment? Yet your reasons for a house price collapse require such economic upheavel that it would also have to result in further share market collapses as well? Hoisted on your own pertard there!



			
				juddy said:
			
		

> In general, Aussie shares have outperformed property over the last 2 decades.
> 
> "Local shares returned 16.2% after tax versus 13.4% for residential property at the lowest marginal rate.
> 
> ...




See above points.

Cheers,

Beej


----------



## juddy (7 December 2008)

Beej said:


> See above points.
> 
> Cheers,
> 
> Beej




See above *facts*.

Cheers


----------



## wayneL (7 December 2008)

Beej said:


> 2 very good reasons:
> 
> 1) Leverage - you can leverage 80/90% - even 100% easily into property (if you want to and hopefully the cash-flow numbers stack up, but that's another discussion), making the actual return on your money far greater. Only the bravest would ever leverage to this extent into shares. PS - there is a lot of property out there RIGHT NOW that can provide positive return from day 1 - you just have to remove your blinkers and actually go and check the market out!
> 
> ...



To save me typing out a treatise completely demolishing your points, just read the option threads. 

Cheers


----------



## numbercruncher (7 December 2008)

I see Brisbane is going Mental @@ Beej you in on 100pc financing on this fall ?

See the spruikers can only HIDE the truth for so long !




> Unrest hits property prices
> Georgia Waters | December 7, 2008 - 6:14AM
> 
> MEDIAN house prices in Brisbane have dropped nearly *30 per cent over the past three months*, but the Real Estate Institute of Queensland has told homeowners _not to panic_.




hahaha, dont panic its only 30pc you leveraged gamblers ! 



> Median house prices fell in Northgate by 27.6 per cent; in Sandgate by 23.5 per cent; and in Alderley by 23.4 per cent




http://www.brisbanetimes.com.au/news/queen...8584616261.html

Seems "liabilities" that return 3pc p/a are going out of flavour !??


----------



## explod (7 December 2008)

Beej said:


> 2 very good reasons:
> 
> 1) Leverage - you can leverage 80/90% - even 100% easily into property (if you want to and hopefully the cash-flow numbers stack up, but that's another discussion), making the actual return on your money far greater. Only the bravest would ever leverage to this extent into shares. PS - there is a lot of property out there RIGHT NOW that can provide positive return from day 1 - you just have to remove your blinkers and actually go and check the market out!
> 
> ...




Woolworths shares have dropped a great deal but their business model based on food is sound.   So the price to yield is excellent value in my humble opinion.  And there are many other good examples.  Property is a great investment at certain times and so are shares.  Usually people have a prime focus or bias on one or the other.   That is a shame.  

Due to some tough experiences I have learned to pay close attention to all sides of investment.  In the last two years I have had a number of short term ASX stock trades in which I have exceeded 100% gains, in fact SBM a little more than that collected in March this year.   In the last financial year my share portfolio grew by 60% overall and as it was in my super fund capital gain only 15%.  Shares comprise 40% of my super fund.  Diversification is protection.

Property:   in 2003 I purchased two blocks of land and sold one 9 months later and the other a little over 12 months later with a gain after taxes of 50%.  Both blocks more than doubled.   And I will return to property speculation again one day.  Now is not the time IMO.   I am watching the rental market as there will come a time when the fundamentals of this could be worth a look.  But at the moment there is too much doubt to be bullish or positive about anything at the moment.

IMVHO batten down the hatches we are in the PERFECT financial STORM; unfortunately.


----------



## Glen48 (7 December 2008)

I wonder how the Real Estate Stats. people  do their maths? Do they just average every thing out or take in Bank fee's, entry & exit fees, repairs were share are easier to work out and a bit more precise. 
After 30 yrs of buying and selling RE I have only made a profit of 3.5K on 2 houses and large profit on another due to the credit boom I assume the RE increase would only be a few % a yr. otherwise.


----------



## Passive (7 December 2008)

chops_a_must said:


> Yes, the new deal certainly was nothing.
> 
> 
> Mahatir pegged the ringgit, Bernanke can't.
> ...




You obviously enjoy wallowing in your well researched misery. Pulling apart my points sentence by sentence must make you feel a little smug. However most your retorts, like the one I made about predicting booms, more specifically what we speak about on this thread is about real estate. And sure in hindsight everyone knows - that was my point exactly.

Try and make sense of what is being said rather than trying to be a clever richard.

I live in WA and it is far from being on the skids as you suggest. You may need to toughen up a little as things don't always run smoothly but that does not mean the end is nigh!

Get out there and be proactive and learn from the xperienced players therein lies the essence of humility and growth. Practice makes perfect not just theory.


----------



## ROE (7 December 2008)

Beej said:


> 2 very good reasons:
> 
> 1) Leverage - you can leverage 80/90% - even 100% easily into property (if you want to and hopefully the cash-flow numbers stack up, but that's another discussion), making the actual return on your money far greater. Only the bravest would ever leverage to this extent into shares. PS - there is a lot of property out there RIGHT NOW that can provide positive return from day 1 - you just have to remove your blinkers and actually go and check the market out!
> 
> ...




Yeah there is no money in stock market, don't buy them, they are risky as hell, stock like ABS, Allco, Centro all gone bankrupt stay away...people like Kerr Neilson, Warren Buffett, Charlie Munger, Walter Schloss, Bill Ruane and million more must be pretty stupid to invest in those damn stock markets.

property double every 7 years I tell you...much safer bet ... stock is a gamble dont risk it


----------



## numbercruncher (7 December 2008)

I see Sydney property gamblers are getting destroyed ! (along with Brisbane)




> December 07, 2008 12:00am
> 
> SYDNEY'S mid-range and prestige property market has ground to a halt.
> 
> ...







> Experts say conditions are tougher than the slump of the early 1990s and predict more pain with 15-20 per cent falls in prices expected in 2009.
> 
> Auctioneers are struggling to solicit opening bids and most properties are being passed in.
> 
> ...




......

http://www.news.com.au/dailytelegraph/stor...5006009,00.html


----------



## explod (7 December 2008)

ROE said:


> Yeah there is no money in stock market, don't buy them, they are risky as hell, stock like ABS, Allco, Centro all gone bankrupt stay away...people like Kerr Neilson, Warren Buffett, Charlie Munger, Walter Schloss, Bill Ruane and million more must be pretty stupid to invest in those damn stock markets.
> 
> property double every 7 years I tell you...much safer bet ... stock is a gamble dont risk it




And to elaborate in support Roe

Actually there are many examples, but Babcock and Brown is a good example because it is current.   With not very much charting/trend following experience it was not hard to see that this was a stock in trouble in august 07. there was a rally but certainly by the start of this year when it hit $20 you would be out.   

Now this is done by not listening to anyone else but following a few simple chart rules and following the trend on a chart.   For share trading such tools are plentiful, well laid out and cost nothing more than your good internet connection.   

Wish I had known these tricks 20 or 30 years ago.  But they are not tricks, just a practical approach.


----------



## numbercruncher (7 December 2008)

Property bears tend to attract bad news, I see our Taswegian cousins are getting their second heads DECAPITATED !!



> HOBART'S residential property bubble has burst, with prices falling more than in any other state capital in Australia..




http://www.themercury.com.au/article/2008/12/07/42871_todays-news.html


I hear the natives will be OK - but leveraged up speculators are going to be royally rooted ? maybe just a rumour ??


----------



## ROE (7 December 2008)

Glen48 said:


> I wonder how the Real Estate Stats. people  do their maths? Do they just average every thing out or take in Bank fee's, entry & exit fees, repairs were share are easier to work out and a bit more precise.
> After 30 yrs of buying and selling RE I have only made a profit of 3.5K on 2 houses and large profit on another due to the credit boom I assume the RE increase would only be a few % a yr. otherwise.




No man pro RE investors thinks share investors are a bunch of fools who has no idea about money and the logic of money.

Shares investors don't own properties  they just a bunch of bear scare mongering moob.

The logic of negative gear/negative equity even though you lose money each month but still you not losing money that the sort of logic we have to work with.


----------



## Beej (7 December 2008)

numbercruncher said:


> I see Sydney property gamblers are getting destroyed ! (along with Brisbane)




Meanwhile, back in the real world Sydney auction clearance rate was ACTUALLY 52% on good volume this weekend (see previous post https://www.aussiestockforums.com/forums/showpost.php?p=369785&postcount=2362)

I sold a $1M property in Sydney just 4 weeks ago - 80 people inspected it, several interested buyers and obviously at least one who put their money down. Plenty of buyers still around - defintely not as strong as last year, but nowhere near as bad as the picture you are trying to paint. 

I also have a shortlist of properties for sale on domain.com.au that I built up while looking around over the past few months. Not looking now (as bought again), so not adding to that list. These are all places well in the 7 figures. Of 70 properties that are on that list (the majority of which I inspected), 45 have sold, and 25 are still on the market. I know the price each sold property sold for and they all sold for around the expectation - nice stable market in fact. The unsold properties are all either too highly priced for the market or are compromised properties in some way (which is kind of the same thing). So I KNOW that this segment of the market, whilst nowhere near boom time, is still ticking over quite nicely and there are many great opportunities to secure premium property at predicable, stable prices without too much buyer competition.

As for Brisbane median down 30%???? - Bull crap! Please point to the median property statistics that show that??? You are just making things up now....

Oh and PS - like your arguments, the link you posted is broken 



ROE said:


> The logic of negative gear/negative equity even though you lose money each month but still you not losing money that the sort of logic we have to work with.




Can you read? Noone here is talking about negatively geared property at the moment. That is the beauty of the current market - if you open your eyes (and your mind).

By the way - many of us with a more positive outlook on property actually own shares as well you know - but with your binary thought patterns and inane postings I wouldn't think that would matter to you!

Beej


----------



## numbercruncher (7 December 2008)

m8 just reporting it as its released, if you have better info you should take it up with these guys ?




> MEDIAN house prices in Brisbane have *dropped nearly 30 per cent *over the past three months, but the Real Estate Institute of Queensland has told homeowners not to panic




http://www.brisbanetimes.com.au/articles/2008/12/07/1228584616261.html?s_rid=smh:top5


Never know might be fabricated to stir you up ? give em a call ?


----------



## Beej (7 December 2008)

Glen48 said:


> I wonder how the Real Estate Stats. people  do their maths? Do they just average every thing out or take in Bank fee's, entry & exit fees, repairs were share are easier to work out and a bit more precise.
> After 30 yrs of buying and selling RE I have only made a profit of 3.5K on 2 houses and large profit on another due to the credit boom I assume the RE increase would only be a few % a yr. otherwise.




No wonder you don't like Real Estate! Sounds like you made some pretty poor investments! maybe you buy/sell to quickly?? You can't trade property like shares - it's a long term investment to see solid returns.

Beej


----------



## numbercruncher (7 December 2008)

> I sold a $1M property in Sydney just 4 weeks ago




So the media and RE institutes are making it all up ?

I find it odd that a permabull like yourself would sell and lock in a capital gain, not into tax free lines of credit ?


----------



## Beej (7 December 2008)

numbercruncher said:


> m8 just reporting it as its released, if you have better info you should take it up with these guys ?
> 
> 
> 
> ...




Ah I see - so the next bit after the one you quoted is:







> "Figures for the September quarter revealed median property prices fell dramatically in some northern Brisbane suburbs, including a 27.6 per cent drop at Northgate. REIQ chairman Peter McGrath said substantially more sales in the lower end of the market in those suburbs had skewed the figures to make the situation appear worse than it actually was.
> 
> ''In this quarter, there was a dramatic shift in volumes of sales and a dramatic shift to the lower end of the market,'' he said. ``We saw a dramatic slowdown in the $500,000-plus end.
> 
> ...




So actually what the article is saying is that for ONE SUBURB, QUARTERLY figures show a drop of NEARLY 30%! But a load of alarmist bull crap you post (and you know it). One suburbs figures for one quarter mean nothing - how many houses actually sold in that quarter? Porbably very low volume, and not representative of the suburb median as a whole. As I know you know, you have to look at aggregate stats to get any sort of accurate picture. What you have done is stated the equivelant of "Aussie share market down 98% in Oct!!" Due to say Babcock & Brown stock price alone....

So nice try, but we can see right through such a lame attempt at mis-representing the picture.

What is the actual year-over-year current Birsbane median house price change? 

Cheers,

Beej


----------



## Beej (7 December 2008)

numbercruncher said:


> So the media and RE institutes are making it all up ?
> 
> I find it odd that a permabull like yourself would sell and lock in a capital gain, not into tax free lines of credit ?




I sold so I could upgrade my PPOR, which I have done, and done VERY nicely thanks very much! No capital gains tax to pay for me either thanks very much (on that transaction anyway).

Beej


----------



## numbercruncher (7 December 2008)

Your waffling, just read the article, the head of the REIQ reckons its the most difficult market hes ever seen, but then again like you hes a **** talker.


----------



## Beej (7 December 2008)

numbercruncher said:


> So the media and RE institutes are making it all up ?
> 
> I find it odd that a permabull like yourself would sell and lock in a capital gain, not into tax free lines of credit ?




I thought the mainstream media was all a load of rubbish and we should read only kooky net blogs of "independent" people etc to get real information??? 

You like to quote the mainstream media when it suits though don't you?? unfortuneatly I haven't been able to read the article you refer to as your link didn't work, so can't comment further on it.

Beej


----------



## numbercruncher (7 December 2008)

Beej said:


> I sold so I could upgrade my PPOR, which I have done, and done VERY nicely thanks very much! No capital gains tax to pay for me either thanks very much (on that transaction anyway).
> 
> Beej





Oh so your one of those spruikers talking it up and selling at the same time @!

Is your last name Rivkin ? .....


----------



## numbercruncher (7 December 2008)

Beej said:


> I thought the mainstream media was all a load of rubbish and we should read only kooky net blogs of "independent" people etc to get real information???
> 
> You like to quote the mainstream media when it suits though don't you?? unfortuneatly I haven't been able to read the article you refer to as your link didn't work, so can't comment further on it.
> 
> Beej





Odd they must of changed the addy ....


http://www.brisbanetimes.com.au/articles/2008/12/07/1228584616261.html?s_rid=smh:top5



> MEDIAN house prices in Brisbane have dropped nearly 30 per cent over the past three months, but the Real Estate Institute of Queensland has told homeowners not to panic.


----------



## Beej (7 December 2008)

According to article in the Brisbane times, Brisbane median property values have increased by up to a MASSIVE 45% in the Sept quarter!!!!!:



> In contrast, values rose sharply in Brisbane's east over the last quarter, with Lota recording a rise of 44.4 per cent and Balmoral of 37.2 per cent.




Source: http://www.brisbanetimes.com.au/articles/2008/12/07/1228584616261.html?s_rid=smh:top5

Cheers,

Beej


----------



## Beej (7 December 2008)

numbercruncher said:


> Odd they must of changed the addy ....
> 
> 
> http://www.brisbanetimes.com.au/articles/2008/12/07/1228584616261.html?s_rid=smh:top5




No I could read that one - the Telegraph one about Sydney didn't work.

Beej


----------



## numbercruncher (7 December 2008)

Beej said:


> No I could read that one - the Telegraph one about Sydney didn't work.
> 
> Beej




http://www.news.com.au/dailytelegraph/story/0,27574,24762233-5006009,00.html


Seemss you have timed perfectly the sale of your Million dollar house Beej, which suburb was it?


----------



## explod (7 December 2008)

Beej said:


> According to article in the Brisbane times, Brisbane median property values have increased by up to a MASSIVE 45% in the Sept quarter!!!!!:
> 
> 
> 
> ...




Love to know the occupation of the person who wrote that.

There are variations abounding at the moment.  Interesting, papers here in Vic. focus only on small part of top end and some bottom end.  Keep away from those parts looking crook.    

At least we can all surely say, it was not like this, this time last year and I believe it will not be like now this time this year.   But just opinion and hunch based on current trend from my view.


----------



## Beej (7 December 2008)

explod said:


> Love to know the occupation of the person who wrote that.
> 
> There are variations abounding at the moment.  Interesting, papers here in Vic. focus only on small part of top end and some bottom end.  Keep away from those parts looking crook.
> 
> At least we can all surely say, it was not like this, this time last year and I believe it will not be like now this time this year.   But just opinion and hunch based on current trend from my view.




Explod - that post was very tongue in cheek  A few posts back the EXACT same article was posted by Numbercruncher highlighting this quote "MEDIAN house prices in Brisbane have dropped nearly 30 per cent over the past three months". I was just trying to show how that quote was being shamefully mis-represented and given out of context.

Cheers,

Beej


----------



## numbercruncher (7 December 2008)

Does seem it may of been a little misleading ..... youve still got the head of the REIQ in that article saying hes never seen anything like it ..... usual blah blah I guess ...


Certain suburbs ...... If the top end collapses (seems it is) it could drag the Median down rather rapidly ...


----------



## chops_a_must (7 December 2008)

Beej said:


> 2 very good reasons:
> 
> 1) Leverage - you can leverage 80/90% - even 100% easily into property (if you want to and hopefully the cash-flow numbers stack up, but that's another discussion), making the actual return on your money far greater. Only the bravest would ever leverage to this extent into shares. PS - there is a lot of property out there RIGHT NOW that can provide positive return from day 1 - you just have to remove your blinkers and actually go and check the market out!



You really aren't that bright are you?

I can leverage my shares 70%+ in my margin loan account if I want. I can buy CFD's on 95%+ margin. Why would I do that? I wouldn't leverage _anything_ like that. I can also leverage options at more than 100% by the way...

I am yet to see any property in Perth that is able to provide a positive return from day one at this stage. And it will be like that for some time as far as I can tell.



Beej said:


> 2) Risk - I am laughing my head off at your statement re "8% yield from shares SAFELY"!! All the guys like you here are predicting economic collapse, doom and gloom, and a share market that could fall much further yet as it did in the GD!! The risk is still far greater. And what's more you argue shares are a better investment? Yet your reasons for a house price collapse require such economic upheavel that it would also have to result in further share market collapses as well? Hoisted on your own pertard there!



And this is why you aren't that bright.

That comment was not directed and said in regards to stocks being safe. Passive said that a recovering stock market was good for property. The point I made was that shares yielding >8% in a recovering market were well and truly more safe than property, which in general, is making a negative yield at the moment, and a better investment.

Nowhere did I say that stocks were safer than property AT THIS TIME.

But... MTS... you know... close to 6% yield, selling staple goods, increasing margins and market share, would be far far far better and safer than property right now for anyone really. And because you property bears are so addicted to it, you can add leverage as well.


----------



## chops_a_must (7 December 2008)

Passive said:


> You obviously enjoy wallowing in your *well researched misery*.



Yes, those "educated idiots" will get you everytime.

And also, thanks for cracking me up, and other posters with that sentence.



Passive said:


> Pulling apart my points sentence by sentence must make you feel a little smug.



Asking questions and pulling apart arguments is just what I do for fun, and what I'm good at.



Passive said:


> Try and make sense of what is being said rather than trying to be a clever richard.



Oh the irony.

Please stick to facts, it's what I have done. And if you can't argue with them, then you need to change your argument, and not get defensive. Oh yeah, and I'm not sure how calling me a dick after you just got pantsed in this debate, really helps your cause.



Passive said:


> I live in WA and it is far from being on the skids as you suggest. You may need to toughen up a little as things don't always run smoothly but that does not mean the end is nigh!



It's not what I hear and am experiencing.

Personally, I am not renewing a lease on my workplace. The last 3 months have been close to the worst on record for me since I started working for myself.

I speak to people in civil construction, oil and gas engineering and real estate on a very regular basis.

The dad also audits mine sites and divisions of the mining industry for a living, so I am able to find out a lot of stuff that happens before the public knows. It's how I knew MGX and FMG were tearing up contracts left right and centre, before it was announced.

The oil and gas sector has basically ceased ALL design work, and early next year, we will start to see an enormous amount of pain from this sector.



Passive said:


> Get out there and be proactive and learn from the xperienced players therein lies the essence of humility and growth. Practice makes perfect not just theory.



I'm not sure it's me that needs to get out there.

I pick the brains of all the experienced "players" I come across, and what I am hearing is shocking. But you shouldn't need me to tell you that. The record house price falls in WA should have already done that for you. But if you can't get the message from that, you are just deluded.

Better than being proactive, I am ahead of the curve. Perhaps you should try it some time.


----------



## Passive (7 December 2008)

Hey Beej

Somehow someone comments prices have plunged in real estate. So one or two people selling in distress make a market. I would challenge most bears to go out and hunt for a house and see if it is that much a bargain territory. The reality is that to gauge property like you do shares discounts size of home, quality of home , appeal, maintained condition - if houses drop in price I am sure everyone in the street will run out and sell. Then what? Really out of touch with reality. Also most experienced property investors buy at the low, and like many of us have been shedding into the boom - this all or nothing dumbing down of property investors is both startling and naiive.

Comment was made earlier on  - as a by thought - that Bernancke can't peg the US currency - he has done just that - it should be worthless but de facto he is achieving some startling results. Dollar is actually worthless in peoples perception and its mind blowing how its held its own.


----------



## chops_a_must (7 December 2008)

Passive said:


> Comment was made earlier on  - as a by thought - that Bernancke can't peg the US currency - he has done just that - it should be worthless but de facto he is achieving some startling results. Dollar is actually worthless in peoples perception and its mind blowing how its held its own.



O RLY!!!

Care to post a chart of the dollar index and the gold chart by any chance?


----------



## Pager (7 December 2008)

numbercruncher said:


> Which suburb do you live in ?




Eastwood in Sydney, don't know what the official figures say about prices in this area but so far this year 3 houses in the street i live in have come up for sale, all sold quickly, the most recent which was very similar to my own home was in November and according to the agent not far off the asking price which was higher than what i had my home valued at about 18 months ago.

I don't invest in property but does seem to me that many whom took a cautious stance when this credit crisis blew up may well be coming off the fence with the interest rate cuts, it also looks to me that many people have become numb to the daily newspaper headlines of financial crisis as in there everyday lives they arnt seeing it, if anything they have more money in there pockets thanks to the cuts, again i can only comment from observation and from talking to people i know.

 Maybe rates should have been left higher as a little pain may have been a better medicine than huge rate cuts, if the doomsayers are right then maybe a whole load of people who are now starting to think "What Criss" will be severely burnt in the next few years, although again from observation the experts are no better than 50/50 with what will actually happen.


----------



## Wysiwyg (7 December 2008)

Pager said:


> Maybe rates should have been left higher as a little pain may have been a better medicine than huge rate cuts, if the doomsayers are right then maybe a whole load of people who are now starting to think "*What **Crisis*" will be severely burnt in the next few years, although again from observation the experts are no better than 50/50 with what will actually happen.




Very good, the investment opportunities are jumping out of the trees everywhere.Listed company share prices decimated and lowering bank interest rates.Job security being the most worrisome aspect.

Cant help but thinking dollar cost averaging would be a potent investment strategy from now on.


----------



## gfresh (7 December 2008)

Pager said:


> if the doomsayers are right then maybe a whole load of people who are now starting to think "What Criss" will be severely burnt in the next few years, although again from observation the experts are no better than 50/50 with what will actually happen.




:bunny: That is exactly what I think is going to happen..  The Australian "she'll be right mate" will come back to bite many. Rudd and Co really are pulling out all the rabbits out of their hat, but at the end of the day, they know 2009 is going to be a very nasty year for Australians. They even bloody look stressed and worried, it's not an act either.  

We're still running on the end of our la-de-da current account surplus when coal/iron ore was shipping in record volumes, and at record prices. Renegotiation time is going to be the totally opposite story, which means at the end of the day, Australia is really going to start to feel it in 09. Companies still debating whether to keep people on will finally start to throw in the towel in the first quarter. ANZ, or any of the other large names aren't letting go of 800 workers just for "fun", they need to cut costs fast, as the capacity to build profits will be much harder for the foreseeable future. 

Anybody can dismiss the sharemarket but it should be very valuable leading indicator for any property investors also.


----------



## Julia (7 December 2008)

Pager said:


> ............. huge rate cuts, if the doomsayers are right then maybe a whole load of people who are now starting to think "What Criss" will be severely burnt in the next few years



Yep, many will take out loans having done their calculations at 3% or whatever and failed to allow for the time when inevitably rates will rise again.
Especially in a climate of rising unemployment.


----------



## gav (7 December 2008)

what is the longest period you can "lock in" a housing loan interest rate for?


----------



## numbercruncher (7 December 2008)

Ive seen 10 years advertised .....

Could be the game plan after the next rate cut, seems inflation is the ultimate plan of the central banks ....


----------



## BradK (7 December 2008)

I am locking in for seven years around March next year. Because after that, interest rates are going to rise again... and they will rise and rise and rise until 19%! (Well, dipping into the barrell of hyperbole there I admit). 

But, this is a suckers trap for anyone thinking the good times have returned. 

I think printing this much money and bailouts is bound to let the inflation genie well and truly out of the bottle. 

A lock of around 6% for 7 years will do me very well thank you very much - even if it gets to 5 or even 4% for that kind of length of time- well... 6% for long term is a great price given that this is the calm before the STTTTOOOORRRRMMMMMMMMMM 

Brad


----------



## Indie (7 December 2008)

numbercruncher said:


> Ive seen 10 years advertised .....
> 
> Could be the game plan after the next rate cut, seems inflation is the ultimate plan of the central banks ....





Inflation may be the plan but deflation is the reality. 

The surge in bonds and the USD tells the story. Even gold is going down. There is nothing central banks have done thus far that has altered the course of this, and there is nothing they can do. The longer the consumer waits in vain for a market revival, the deeper the damage to consumer confidence will be. The result will be a huge fall in demand for debt regardless of how low interest rates fall. The western world will experience years of negative GDP growth as inventories and unemployment skyrocket. I wouldn't take on any debt for RE or stocks right now or after the next rate cut.


----------



## robots (7 December 2008)

hello,

its good to see the options thread is opened, 

fairly evident loans are still being written in the UK, short holiday

remember its discussion and debate brothers no big deal really 

thankyou
robots


----------



## robots (7 December 2008)

hello,

Brisconnections vs Property, now how's that going

the shonk exchange, fantastic

thankyou
robots


----------



## Passive (7 December 2008)

chops_a_must said:


> Yes, those "educated idiots" will get you everytime.
> 
> And also, thanks for cracking me up, and other posters with that sentence.
> 
> ...




Guess it all comes down to how intelligently you a have positioned yourself.
We are currently setting records - albeit that is not common across the board I grant you.
Speak to sales people in new housing - the better ones - selling well although not at boom levels - money is there and folk are waiting - i mix intensely with a variety of people as well and have a different take on things. The mining industry is not actually the only industry. Farming sector is in bonanza territory - thanks also to the dollar. The stimulus packages and rate cuts will gain traction sometime and as always the affordable homes along second tier coastal properties from Duncraig up to Heathridge are selling well as an example. 

We have been through mining downturns before - immigrants still coming in - the easy times are gone but I do not agree its all doom and gloom.

Good luck with your decision and I hope it works for you.


----------



## Passive (7 December 2008)

chops_a_must said:


> You really aren't that bright are you?
> 
> I can leverage my shares 70%+ in my margin loan account if I want. I can buy CFD's on 95%+ margin. Why would I do that? I wouldn't leverage _anything_ like that. I can also leverage options at more than 100% by the way...
> 
> ...




Nice touch there - you obviously have an inflated opinion of your opinion. You don't really pants anyone - all I read is someone who has a lot to learn. The time in Perth for postive cashflow is rushing in quickly if you include the depreciation allowance.  Also returns on a leveraged property is not gauged on cost. Most property investors bought years back and are now making massive returns which may cause them to withdraw their props from market.
On 10K 7 years ago a property worth 200k is now still valued at 500k , even with a slump, so what is my yield worked on really sunshine - on the 10k or on the 500k? You only learn the benefits of leverage when you do it.


----------



## robots (7 December 2008)

hello,

yeah good luck and all the best

the past 12mths have been the best going around for me, things are pumping and forward orders are just sensational

thankyou
robots


----------



## juddy (7 December 2008)

Passive said:


> Most property investors bought years back...




I reckon that is way off the mark in WA. The majority of mum and dad investors would have bought during that final frenzy in 2006 (scared of being locked out) before the peak of the boom.

...and therein lies the problem. Amateurs afraid of losing profits. I've seen 2 examples of it already over here.


----------



## ROE (7 December 2008)

robots said:


> hello,
> 
> Brisconnections vs Property, now how's that going
> 
> ...




Yeah you forget Centro, ABS, Allco, Babcock Brown 
but if you stack against

CBA, CSL, COH, WOW, TRS, JB hi-fi and hundred more the picture is a little weird, they paid you many times over and even at 40% off the market they have bag most investors 5-20 folds and in between the dividend also paid for the the cost of the stock and now you get freebie
dividends and freebie capital growth.

shonky exchange, such harsh treatment for some stocks and a gold mine for other .... oh wait i own some of those stocks stupid me.


----------



## Passive (7 December 2008)

juddy said:


> I reckon that is way off the mark in WA. The majority of mum and dad investors would have bought during that final frenzy in 2006 (scared of being locked out) before the peak of the boom.
> 
> ...and therein lies the problem. Amateurs afraid of losing profits. I've seen 2 examples of it already over here.




You could not be more wrong on that . Was a huge sport well before the peak. Admittedly many were caught at the top - but a massive amount bought early to have pots of equity.


----------



## numbercruncher (7 December 2008)

ROE said:


> Yeah you forget Centro, ABS, Allco, Babcock Brown
> but if you stack against
> 
> CBA, CSL, COH, WOW, TRS, JB hi-fi and hundred more the picture is a little weird, they paid you many times over and even at 40% off the market they have bag most investors 5-20 folds and in between the dividend also paid for the the cost of the stock and now you get freebie
> ...





I think Robi is being a wise guy ......

brisconnections (BCSCA) is something everyone will hear about soon I thinks ..... They are trading at like .001c or something but speculators buying them and dont realise one thing and that they are installment warrants !

You buy like 2k worth of these toxic time bombs and you have Million$ in liabilities ..... people will go broke, the underwriters are going to get a smashing - If the Gov has any cash left itll probably be a bailout. 

Hopefully for these careless individuals a solution might be found before D-Day ( maybe a good samaritan will open a company especially to mop em up ? ) < that would make for angry underwriters? >

Probably a good thread on its own ....


----------



## Indie (7 December 2008)

Passive said:


> You could not be more wrong on that . Was a huge sport well before the peak. Admittedly many were caught at the top - but a massive amount bought early to have pots of equity.




Surely you jest? What do you mean "before the peak"? What do you mean "caught at the top"? This isn't the top or the peak. Read the heading of this thread again: House prices to keep rising for years. i.e The good times just keep coming.


----------



## juddy (7 December 2008)

Passive said:


> You could not be more wrong on that .




Well unless you bring some figures out, I'll stick to my opinion...



Passive said:


> . Admittedly many were caught at the top - but a massive amount bought early to have pots of equity.




Yep, and its the ones who bought just before and at the top that will cause the problems. It hasn't been o/o's that have started the ball rolling, it has been amateur investor/speculators who (as I said previously) never had any intention of being in it for the long run. I know 2 (and that is just in my circle of friends and acquaintances) who were quite happy knocking off 10-15% so they could get a sale and get into cash. Their sole purpose for purchasing in that 2005-2006 period was for capital growth. They were quick off the mark, the slow ones are still coming.


----------



## Passive (7 December 2008)

juddy said:


> Well unless you bring some figures out, I'll stick to my opinion...
> 
> 
> 
> Yep, and its the ones who bought just before and at the top that will cause the problems. It hasn't been o/o's that have started the ball rolling, it has been amateur investor/speculators who (as I said previously) never had any intention of being in it for the long run. I know 2 (and that is just in my circle of friends and acquaintances) who were quite happy knocking off 10-15% so they could get a sale and get into cash. Their sole purpose for purchasing in that 2005-2006 period was for capital growth. They were quick off the mark, the slow ones are still coming.




What you fail to realise is that the interest rates coming down is drastically reducing cost of holding, plus with predictions of up to 20% rise in rentals - you are oversimplifying things. If some of these investors are on fixed rates it means they can afford to hold by and large. Majority of property investors (holders = the longer they have held the better)are the beneficiaries of current conditions, and it is only getting better for the experienced punters.
I know - I can't believe the benefits of 3% drop and more to come. Less pressure to sell for  all holders.


----------



## juddy (8 December 2008)

Passive said:


> What you fail to realise is that the interest rates coming down is drastically reducing cost of holding, plus with predictions of up to 20% rise in rentals - you are oversimplifying things. If some of these investors are on fixed rates it means they can afford to hold by and large. Majority of property investors (holders = the longer they have held the better)are the beneficiaries of current conditions, and it is only getting better for the experienced punters.
> I know - I can't believe the benefits of 3% drop and more to come. Less pressure to sell for  all holders.




They never had any intention of holding. Speculators never do.

Predictions of 20% rise in rentals has been made by guess who?...a property investment management group. Can't remember their name, but it was some 100 word piece in the *advertising *section of Sat's West RE section a couple of weeks ago. Even the biggest bull Rob 'no-conflict-of-interest-here' Druitt reckons rents have stabilised.


----------



## chops_a_must (8 December 2008)

Passive said:


> What you fail to realise is that the interest rates coming down is drastically reducing cost of holding, plus with predictions of up to 20% rise in rentals - you are oversimplifying things. If some of these investors are on fixed rates it means they can afford to hold by and large. Majority of property investors (holders = the longer they have held the better)are the beneficiaries of current conditions, and it is only getting better for the experienced punters.
> I know - I can't believe the benefits of 3% drop and more to come. Less pressure to sell for  all holders.




What you fail to realise is job losses. 

It's irrelevant what you bought at, as if you have anything owing and you default, it's more or less irrelevant. You just default. What matters is if you owe and have to declare bankruptcy, or can get out and not. End result is still likely the same. You aren't left with anything really.

Oh yeah, and good luck with raising rents. That's pure fantasy.


----------



## Passive (8 December 2008)

juddy said:


> They never had any intention of holding. Speculators never do.
> 
> Predictions of 20% rise in rentals has been made by guess who?...a property investment management group. Can't remember their name, but it was some 100 word piece in the *advertising *section of Sat's West RE section a couple of weeks ago. Even the biggest bull Rob 'no-conflict-of-interest-here' Druitt reckons rents have stabilised.





Speculators in any asset class take what their timing gives them. Just as another perspective though quality stuff in Perth in the mid tier coastal stuff is still quite a surprise - have a look at Reiwa site, Padbury - number under offer or sold, Craigie not as much but fewer listings, North Duncraig , Heathridge etc - like in the 90s its a matter of doing your own research, selecting the right suburb now will pay dividends - be it first home buyer/investor. Needless to say whether you agree or not I won't loose any sleep but its not all dead in the water and many are ready to buy in the forseeable future -just another perspective that seems to be supported by the action.

Even if rents have stabilised - which I don't believe - rates have not thus improving cash flow position. All the ducks are lining up for property. Immigration is still high, expats returning is a factor, people leaving the regional areas - time will tell but I see no empty homes.


----------



## juddy (8 December 2008)

Passive said:


> have a look at Reiwa site, Padbury - number under offer or sold




Oldest trick in the book, leaving old listings visible to give the impression of market movement. Not saying that is the case in this case, but it is a tactic widely employed.

In this case, I believe there is renewed interest in the lower price range. Naive youngsters with stars in their eyes and an extra $7k burning a hole in their back pocket wanting to 'get in before they are priced out'. I wonder how many of them worked out that it'll only take a further fall of less than 2% before that $7k is eaten away?


----------



## Beej (8 December 2008)

chops_a_must said:


> What you fail to realise is job losses.
> 
> It's irrelevant what you bought at, as if you have anything owing and you default, it's more or less irrelevant. You just default. What matters is if you owe and have to declare bankruptcy, or can get out and not. End result is still likely the same. You aren't left with anything really.
> 
> Oh yeah, and good luck with raising rents. That's pure fantasy.




So what were the residential mortgage default rates during 1991-1992 when unemployment climbed to 10%? And what happened to median house prices during this same period?

Beej


----------



## explod (8 December 2008)

Beej said:


> So what were the residential mortgage default rates during 1991-1992 when unemployment climbed to 10%? And what happened to median house prices during this same period?
> 
> Beej




Hate to be boringly general all the time, but anyway there is plenty of good and authentic news copy out there to back it up.      

1991 - 1992 was mild compared to what the signs are saying now.  The current deflation taking place across the globe is the worst ever recorded.   The deflation of the last three months took 4 years during the great depression.   

This is not doom and gloom, unfortunately this is fact.   The repercussions of the last three months have only effected the big corporates at this stage, the ripple down is going to be diabolical.


----------



## grace (8 December 2008)

Passive said:


> Guess it all comes down to how intelligently you a have positioned yourself.
> Farming sector is in bonanza territory - thanks also to the dollar.
> .




Yeh, right.

Farmers who just harvested were lucky to get $250 tonne for their wheat (down from the spuculative traders push of $500 tonne).

Once upon a time, we could employ a person (for a week) for what we could get for a tonne of wheat, now we need 4 tonnes of wheat to do the same.

Farming is not bonanzas territory - far from it.

When interest rates rise again, watch what happens in farming.  Farming land has experienced the biggest bubble around!  It is already starting to pop.


----------



## Beej (8 December 2008)

More evidence of increased FHB activity (although it is from a mortgage broker so taken with a grain of salt). However, there are other stats that back this up.



> First home buyers storming into property market, says mortgage broker
> 
> HAVING steered clear of the property market for most of the year, first home buyers are storming back, Australian mortgage broker AFG says.
> 
> ...




Source: http://www.news.com.au/business/money/story/0,28323,24766556-5013951,00.html

Beej


----------



## MrBurns (8 December 2008)

From Crikey today - Always suspected this but never could be bothered to do the sums.



> The data provided to The Sunday Age are supplied by the Real Estate Institute of Victoria (which is, in effect, the Real Estate Agents union). However, a Crikey study reveals that the figures claimed by the REIV and reported by The Sunday Age are misleading. Crikey has calculated that the actual auction clearance rate last weekend (based on a sample size of 332 auctions) was approximately 43% -- well below the 55% figure claimed by the REIV.
> 
> Last weekend, Crikey attended three separate auctions in Melbourne's South Melbourne (which could loosely be compared to Sydney's Paddington or Woollahra). In each of the auctions, not one single bid was submitted. However, in reviewing the auction results the following day, only one of the three 'passed-in' properties appeared to be counted in the determination of the clearance rate. That means either agents aren't reporting passed-in properties, or the REIV is ignoring data relating to passed-in properties to boost the reported clearance rate.
> 
> ...


----------



## Adam A (8 December 2008)

What youve also got to remember also, is that the reiv as well as the nsw group are not representitve of the whole industry

approx 50% of agents in both states are not members 

Think of that next time their publishing stats


----------



## numbercruncher (8 December 2008)

Beej said:


> More evidence of increased FHB activity (although it is from a mortgage broker so taken with a grain of salt). However, there are other stats that back this up.
> 
> 
> 
> ...





Not only that people held off for the higher Government grant !


----------



## basilio (8 December 2008)

Real question about what will have the most effect on housing prices.

It's undeniable that the economic situation is far more threatening than 91-92. I think you would have look at 74-75 minimum for a comparison but unfortunately the 1890's look the most comparable.

But how about the impact of immigration on housing demand? As far as I can see there will be a continuing influx of migrants who will almost all have decent savings. Will this group counter the decline in local capacity to purchase homes ?

One last point. As interest rates fall there will be some relief for current home buyers. . I saw Westpac offering 5.19 % fixed for 3 years which is very attractive compared to only a few months ago. Perhaps these falls will be sufficient to support the market.


----------



## juddy (8 December 2008)

basilio said:


> But how about the impact of immigration on housing demand? As far as I can see there will be a continuing influx of migrants who will almost all have decent savings. Will this group counter the decline in local capacity to purchase homes ?




Immigration cuts won't be too far down the line. Already calls for a 25% cut minimum.


----------



## Adam A (8 December 2008)

Becarefull regarding immigration,if things get tough here rudd will drop it like a stone 
It will be a hard policy to sell if hundreds of thousands of aussies are unemployed
Also if things do get tough here why would people want to come here?


----------



## robots (8 December 2008)

Adam A said:


> Becarefull regarding immigration,if things get tough here rudd will drop it like a stone
> It will be a hard policy to sell if hundreds of thousands of aussies are unemployed
> Also if things do get tough here why would people want to come here?




hello,

immigration will increase heaps, it wont be cut

people want to come here man because this is the place to be

thankyou
robots


----------



## numbercruncher (8 December 2008)

robots said:


> hello,
> 
> immigration will increase heaps, it wont be cut
> 
> ...





Yes all construction industry immigrants destroying bogans wages I heard ?


----------



## Adam A (8 December 2008)

Seeing you put it that way

Youre probably right


----------



## robots (8 December 2008)

hello,

no chance Number, they all want to work at cafe's and 7-eleven's

thats why building professions are still going strong in the Top 10 most wanted,

St Kilda up 14.7%, building workers in Top 10 man if this the credit crisis its not doing too much is it,

utopia brothers,

I know I know i have to wait, it takes time 6mths, 12mths it always follows the shonk exchange crash

thankyou
robots


----------



## Wysiwyg (8 December 2008)

robots said:


> hello,
> 
> immigration will increase heaps, it wont be cut
> 
> ...




Yes, come to Australia and if you don`t get a job we have an excellent financial support network with occasional generous handouts.

p.s. the beer is cold and the women colder. esok:


----------



## homes4aussies (8 December 2008)

MrBurns said:


> From Crikey today - Always suspected this but never could be bothered to do the sums.




Try this on for size! There were very misleading data published in the Courier Mail at the weekend - I assume the error was by the REIQ - which no doubt has deceived many people.

They published the house price data to the September quarter for Queensland. However, unlike for all other regions, the Brisbane "change over year" compares Median 12 months June 08 with June 07 - not Median 12 months September 08 with September 07. This leaves the impression that house prices have risen more over the year than they actually have - in fact, the September QTR median price for many suburbs is only very slightly above the Median 12 months June 07 figure, and for a few suburbs it is below.

For example: Belmont - median Sep QTR 08 $439,000 - Median 12 months Jun 07 $507,000, Change over 1 yr 8.9% (note the September QTR 08 figure is actually 14% below the Median 12 months Jun 07 figure)

Either the headings for the "Brisbane" columns are incorrect, or the columns are correct in which case the table consists of two columns of September data and 3 of June data.

I suspect it is the latter because the data do not make sense otherwise. (Since the September QTR 07 was still in the midst of the second wave of Brisbane's bubble, and according to this release prices declined 4.3% in September QTR 08, the annual figures could be expected to be significantly lower than the annual June figures - probably negative for some suburbs.)

Obviously, the fact that this is the first set of figures that really show that the Brisbane market is falling rapidly suggests that the REIQ would be extremely sensitive about releasing these data. So it's hard to understand how this error was not detected - either by the REIQ or The Courier Mail (and Brisbane Times also quotes the erroneous data) - prior to release and publication.

More reason to conduct a review into the functioning of the realestate industry!


----------



## IFocus (8 December 2008)

Passive said:


> Speculators in any asset class take what their timing gives them. Just as another perspective though quality stuff in Perth in the mid tier coastal stuff is still quite a surprise - have a look at Reiwa site, Padbury - number under offer or sold, Craigie not as much but fewer listings, North Duncraig , Heathridge etc - like in the 90s its a matter of doing your own research, selecting the right suburb now will pay dividends - be it first home buyer/investor. Needless to say whether you agree or not I won't loose any sleep but its not all dead in the water and many are ready to buy in the forseeable future -just another perspective that seems to be supported by the action.
> 
> Even if rents have stabilised - which I don't believe - rates have not thus improving cash flow position. All the ducks are lining up for property. Immigration is still high, expats returning is a factor, people leaving the regional areas - time will tell but I see no empty homes.




Passive, Chops point of rising unemployment is some thing that worry's me, as yet we don't know how far that will go, we do know commodities across the board have been hammered and there is more to come.

The state has been driven by the commodity boom so the fall out in 2009 / 2010 is still to come here in WA.

Another duck that's turned into a black swan is the rate of fall in the 30 day cash rate. I suspect its unprecedented, the market thinks we are in for a flogging. 

And there is credit contraction............the indicators for me are still in a down trend....anyone for catching falling knives?


----------



## juddy (8 December 2008)

robots said:


> hello,
> 
> immigration will increase heaps, it wont be cut
> 
> ...




Increased heaps in times of rising unemployment? You really don't have much idea do you?


----------



## chops_a_must (8 December 2008)

Passive said:


> The mining industry is not actually the only industry.



Like I said, oil and gas in WA is in for some real pain starting next year.

Much like the Santos project now delayed indefinitely, these projects will be publicly announced as cancelled/ delayed en masse rather soon. Which is consistent with the noises I'm hearing from people in the industry.

And of course, once all these engineers who are earning massive 6 figure salaries become aware of the precariousness of their jobs in this field, they aint going to buy, that is for sure. Why would they?


----------



## chops_a_must (8 December 2008)

Beej said:


> So what were the residential mortgage default rates during 1991-1992 when unemployment climbed to 10%? And what happened to median house prices during this same period?
> 
> Beej




Wouldn't have a clue about what happened outside of Perth at that time, but between 87-92 a hell of a lot of people went bankrupt in property, a whole heap was available for a long time below replacement cost, and the value was diminished due to massive inflation.

Property was completely rooted in the **** for about 10-15 years in general here because of it.

But the dynamics are hugely different. The world economy is having its biggest spasm since WWII, we have deflation, not inlation. So comparing this to 91-92 is 7 different days full of stupid.


----------



## juddy (8 December 2008)

IFocus said:


> Passive, Chops point of rising unemployment is some thing that worry's me, as yet we don't know how far that will go,




Yes we do. When they try to bring interest rates down to the point that you can pay the average mortgage with the dole, you know we are in trouble.


----------



## robots (9 December 2008)

juddy said:


> Increased heaps in times of rising unemployment? You really don't have much idea do you?




hello,

lets just see what happens Juddy

past performance is no indicator of future performance is that how it goes

thankyou
robots


----------



## nomore4s (9 December 2008)

robots said:


> hello,
> 
> lets just see what happens Juddy
> 
> ...




rotflmao, except when it comes to property right? Because doesn't property always go up, never a bad time to by real estate?


----------



## Temjin (9 December 2008)

nomore4s said:


> rotflmao, except when it comes to property right? Because doesn't property always go up, never a bad time to by real estate?




lol He mentioned it twice already. It's funny when he contradict himself with statements like that.

Of course he meant that property is AN exception to that rule. Past performance is always an indicator of future performance cos properties has never fall in prices, so it shouldn't in the future.


----------



## robots (9 December 2008)

hello,

you should go and re-read my posts, 

find a post where i said property goes up for ever and ever at 10, 20, 30 or 100% pa?

*for the 21st time I have said, I wouldnt have a clue what will happen,* 

get it through your thick skulls

thankyou
robots


----------



## numbercruncher (9 December 2008)

robots said:


> hello,
> 
> you should go and re-read my posts,
> 
> ...




Hello Robi,


Did we get up on wrong side of bed today ?


Thank-you


----------



## robots (9 December 2008)

hello,

its the mood swings from the bipolar depression that I have, 

thankyou
robots


----------



## numbercruncher (9 December 2008)

robots said:


> hello,
> 
> its the mood swings from the bipolar depression that I have,
> 
> ...





Living in St Kilda you should be able to get a tablet for that ?


----------



## robots (9 December 2008)

numbercruncher said:


> Living in St Kilda you should be able to get a tablet for that ?




hello,

yes I go to a doctor at the cnr of carlisle st and greeves st in St Kilda,

he gave me a bottle of tabs with Viagra written on it, although it doesnt seem to be working to well for the depression

thankyou
robots


----------



## numbercruncher (9 December 2008)

Shifty little bugger on TV (channel nine) as I type offering 3.99pc home loans, cant get a customer.......

Whats up with that I wonder ? 

Need 20pc deposit @@! is what .....


Realestate to boom forever ....


----------



## So_Cynical (9 December 2008)

numbercruncher said:


> Living in St Kilda you should be able to get a tablet for that ?




LOL im sure he can get lots of relief for that in St kilda.:


----------



## Beej (10 December 2008)

"Rising home loans could tip recovery":



> THE number of home loans rose 1.3 per cent in October, to the highest level all year, and economists say it could signal the start of a recovery.
> 
> The number home loans for owner-occupied housing rose 1.3 per cent in October, to 48,299, according to Australian Bureau of Statistics data.
> 
> ...




http://www.news.com.au/business/money/story/0,28323,24779423-5013951,00.html

This data is quite interesting as there are posts earlier on this thread and the other thread tracking the number/value of residential home-loans over time, and predicting that the down trend would continue, thus following the same pattern as seen in the US and the UK that preceded the worse of the house price falls in those countries.

However, if in fact the decline in personal housing finance has bottomed and remains stable or grows slowly from here, then that could well be an indication our market here has in fact hit bottom already. The timing of the start of our relatively small house price decline compared to our interest rate cycle (spurred by the GFA), may well be the factor that differentiates our markets from the US/UK situation. 

Couple this with the upwards trend for the proportion of FHBs entering the  market, and things certainly start to look like they may be improving, or at the very least stabalising, as opposed to continuing to decline.

Cheers,

Beej


----------



## numbercruncher (10 December 2008)

Beej,


I love how the permabulls focus on year on year when it suits then month on month figures when it suits ......

Lets look at MoM and YoY to see how bad it really is ....

I suspect youve just had a temporary spike in finace figures from " pent up demand " FHBs using the new grANT ....




> Falling home loans could tip destruction
> 
> ....MoM............Yoy
> NSW -2.24%  -26.12%
> ...





Cheers


----------



## gfresh (10 December 2008)

One month of more positive data and it's a "recovery"  according to Westpac..  Nobody in their right mind would call that a change of trend so early on, yet clearly they think so...

Of course lower rates are going to draw a few people into the market that have previously held off, plus a large number of refinancing too to take advantage of lower rates I'm sure. Rather weak really considering those two factors coming together, maybe the start of some FHB's in Oct as well. 

BeeJ... might want to have a look at the Seasonally adjusted NSW figures .. -2.2%, and the overall trend series is still down -1% in October. 

Plenty of upward blips in there (NSW shown), but the trend is still down until proven otherwise.  

Jan-2007	1.7
Feb-2007	-0.9
Mar-2007	0.9
Apr-2007	7.7
May-2007	-4.4
Jun-2007	1.1
Jul-2007	-2.6
Aug-2007	0.4
Sep-2007	-3.2
Oct-2007	3.4
Nov-2007	2.3
Dec-2007	-0.3
Jan-2008	3.7
Feb-2008	-6.3
Mar-2008	-4.9
Apr-2008	-6.1
May-2008	-6.1
Jun-2008	-4.0
Jul-2008	-1.2
Aug-2008	-1.6
Sep-2008	-2.7
Oct-2008	-2.2


----------



## robots (10 December 2008)

hello,

those figures are fantastic g,

and as Numbercruncher indicates people need 20% deposit and since they dont have this deposit as many have no cash $, yes no money no crew

this is awesome, where's all the cash gone like with rents so cheap?

thankyou
robots


----------



## Beej (10 December 2008)

"Rate cuts, lower petrol prices boost consumer confidence"

Seems that as expected, all most Aussies care about are petrol prices and interest rates 

Some choice quotes:



> The Westpac-Melbourne Institute index of consumer sentiment rose by 7.5 per cent in December to 92.0 index points, from 85.5 points in November.
> 
> ...
> 
> ...




http://www.news.com.au/business/story/0,27753,24779204-462,00.html

Come on property bears tear this one down as well! Let no positive indicator go unpunished 

Cheers,

Beej


----------



## juddy (10 December 2008)

Beej said:


> Come on property bears tear this one down as well! Let no positive indicator go unpunished
> 
> Cheers,
> 
> Beej




*"Property prices are down in general between 10 per cent and 20 per cent and I believe they could fall a further 5 per cent," says chief executive of McGrath Estate Agents in Sydney, John McGrath.

"Those who are predicting a 40 per cent decline are out to sell headlines rather than provide a realistic view on the likely asset revaluation."

He does not know whether the clouds will lift in 2009 or 2010 but says a lot of smart investors have been hoarding cash for when they sense a stable bottom in share and property markets.

The chief economist at AMP Capital Investors, Shane Oliver, expects overvaluation, low rental yields (though growing) and rising unemployment to more than offset the positives of falling interest rates, increased first home owner grants and housing undersupply.

"On balance, we see average house prices falling another 10 to 15 per cent over the year ahead," Oliver says.

"Housing finance is continuing to fall, new home sales are falling and weekly auction rates are running 20 to 30 percentage points below a year ago."*

http://www.smh.com.au/news/business/money/property/how-low-can-they-go/2008/12/08/1228584741711.html


----------



## robots (10 December 2008)

hello,

some great opinions there Juddy

thankyou
robots


----------



## Beej (10 December 2008)

juddy said:


> *"Property prices are down in general between 10 per cent and 20 per cent and I believe they could fall a further 5 per cent," says chief executive of McGrath Estate Agents in Sydney, John McGrath.
> *



*

Oh yea but he's a property spruiking real estate agent - why would anyone listen to him??? 

Beej*


----------



## juddy (10 December 2008)

Beej said:


> Oh yea but he's a property spruiking real estate agent - why would anyone listen to him???
> 
> Beej




That was just added for comedy effect.

You may have missed the Shane Oliver comment. A month or so ago he was slightly bullish.


----------



## numbercruncher (10 December 2008)

> "Property prices are down in general between 10 per cent and 20 per cent and I believe they could fall a further 5 per cent," says chief executive of McGrath Estate Agents in Sydney, John McGrath.





So early in the crash too .....


----------



## Beej (10 December 2008)

numbercruncher said:


> So early in the crash too .....




Before you all get too excited, let's wait and see what the quarters median stats are actually like. McGrath tend to operate only in the more expensive suburbs and tend to have the prestige end of those (due to deliberate strategy and higher sales commissions). In other words, they don't see what's happening out in "ordinary" land. Also McGrath are really primarily a Sydney agency to boot.

Beej


----------



## numbercruncher (10 December 2008)

Beej said:


> Before you all get too excited, let's wait and see what the quarters median stats are actually like. McGrath tend to operate only in the more expensive suburbs and tend to have the prestige end of those (due to deliberate strategy and higher sales commissions). In other words, they don't see what's happening out in "ordinary" land. Also McGrath are really primarily a Sydney agency to boot.
> 
> Beej





So your prediction is the crash will only hit the affulent areas of Sydney ?


----------



## Beej (11 December 2008)

numbercruncher said:


> So your prediction is the crash will only hit the affulent areas of Sydney ?




What do I think? The affluent/prestige market always operates a little differently to the "general" property market. Currently the volume of sales in the $2M+ range are very low. Traditional buyers of premium property are those under the most pressure from the stock market crash and the uncertainty/job losses in the finance industry (which is obviously a large sector providing high income employment in Sydney). This is distorting the statistics in this segment of the market - Ie, although prices may well be "down by 10%-20%" in some expensive area's, this is on a very low volume and a distorted sales mix for those area's. Of course there are some apparent bargains around due to all this - this situation will not last for ever.....and long term you cannot go wrong buying into prestige Sydney property, as the prices are almost totally demand driven and linked very closely to the fortunes (good or bad) of the top end of town and the economy.

However, these "prestige" sales represent only a small proportion of the over-all Sydney market and thus will not reflect much (if any) change in the city median stats for Dec quarter IMO. The lower Sydney price ranges are ticking over quite nicely at the moment - they had their "crash" already back in 2004/05 brought on by high interest rates and CPI increases. 

Anyway we shall see in Jan when the stats come out.....

Beej


----------



## lioness (11 December 2008)

juddy said:


> *"Property prices are down in general between 10 per cent and 20 per cent and I believe they could fall a further 5 per cent," says chief executive of McGrath Estate Agents in Sydney, John McGrath.
> 
> "Those who are predicting a 40 per cent decline are out to sell headlines rather than provide a realistic view on the likely asset revaluation."
> 
> ...




What a desperado Juddy you are. How can you look at yourself in the mirror quoting Shane Oliver who is the THE worst forecaster ever. This is the guy who stated the Ords was going to 7500 when the market was topping at 6500. When it collapsed he changed it down to 6000 by year end, then 5500 and then 4500 and now just says nothing. HAHA

In case you have not learnt Juddy, when economists predict one thing, do the opposite and you will be a rich man. By the way, how are those ADY shares going these days?


----------



## Beej (11 December 2008)

juddy said:


> "Property prices are down in general between 10 per cent and 20 per cent and I believe they could fall a further 5 per cent," says chief executive of McGrath Estate Agents in Sydney, John McGrath.
> 
> "Those who are predicting a 40 per cent decline are out to sell headlines rather than provide a realistic view on the likely asset revaluation."
> 
> ...




Another quote from the same article that wasn't posted here in bold 



> The managing director of researcher BIS Shrapnel, Rob Mellor, is more optimistic. He thinks most of the price declines in Sydney and Melbourne have already occurred but both markets will remain soft into the first half of next year.
> 
> Mellor says median prices mask the difference in the performance of the markets within each city. The median prices have fallen because of the bigger falls in top-end prices.
> 
> ...




Lot's of different views out there, as here 

Cheers,

Beej


----------



## numbercruncher (11 December 2008)

Difference is mostly the article is opinion, except the RE agent whos seen actual price falls ....

Sure Aussie RE to boom while world economy tanks and job losses mount .....


----------



## juddy (11 December 2008)

lioness said:


> What a desperado Juddy you are. How can you look at yourself in the mirror quoting Shane Oliver who is the THE worst forecaster ever. This is the guy who stated the Ords was going to 7500 when the market was topping at 6500. When it collapsed he changed it down to 6000 by year end, then 5500 and then 4500 and now just says nothing. HAHA
> 
> In case you have not learnt Juddy, when economists predict one thing, do the opposite and you will be a rich man. By the way, how are those ADY shares going these days?




Ahhhh...you know they're under pressure when they resort to personal attacks.


----------



## robots (11 December 2008)

juddy said:


> Ahhhh...you know they're under pressure when they resort to personal attacks.




hello,

you not wrong there Juddy, 

hope everyone having a great day

thankyou
robots


----------



## robots (13 December 2008)

hello,

interesting article from this researcher, he writes all sorts:

http://www.theage.com.au/national/housing-to-survive-nations-tough-times-20081212-6xl1.html

what a day, tonnes of fun on these wet days

thankyou
robots


----------



## Passive (13 December 2008)

juddy said:


> Ahhhh...you know they're under pressure when they resort to personal attacks.




How come its personal when we touch the share holy grail? The sharemarket is running at losses between 40-60% in most cases and losses at 100% in some cases sadly. Why the constant harping on property coming down ?
Is that not personal to all holders is it? Maybe ADY was brought to your attention as a reality check!

Do you bears begrudge the resilience of real estate to long term holders?
It has not collapsed , even in good old Perth. I wonder why this obsession from a small minority to bag this investment class highly prized by the majority of Aussies, as a home firstly and secondly as an investment - by your landlord included.

Becoming cheaper to hold thanks to dropping rates plus has a real danger of stabilising in the meduim price range.

I would have thought the unititiated would learn from experience on these share chat sites, instead you choose to bag. Don't buy guys, rent for the rest of your lives and keep property investing to losers like us.


----------



## numbercruncher (13 December 2008)

> Don't buy guys, rent for the rest of your lives and keep property investing to losers like us.





Fitting advice for the moment but certainly not for life.

Is the continent of Australia still running out of Land ? Bananas ? Kangaroos are nearly extinct ? maybe rising sealevels are swallowing things up and lowering supply ?

http://news.ninemsn.com.au/article.aspx?id=696600


----------



## numbercruncher (13 December 2008)

Heres plenty more to add to the oversupply, convert all this empty space to residential 




> Commercial property sales *plummet* as credit market squeeze hits
> Friday, 12 December 2008
> Patrick Stafford
> 
> ...




http://www.smartcompany.com.au/Free-Articles/The-Briefing/20081212-Commercial-property-sales-plummet-as-credit-market-squeeze-hits.html

Plummet is what happens to nearly everything after a credit boom ends


----------



## juddy (13 December 2008)

Passive said:


> . Don't buy guys, rent for the rest of your lives and keep property investing to losers like us.




Ummm...I own my own house, two investment properties (cash flow pos. and I didn't have to rely on the recent interest rate drops for this to happen) and a 10 acre farmlet. What do they say? When you assume...

What I don't like is people who come on here telling how good and easy it is (and is going to be) when really it isn't.

Stop assuming everyone who thinks property is going to drop is a 'renter'. It is a very narrow minded and immature way of behaving.


----------



## Beej (13 December 2008)

juddy said:


> Ummm...I own my own house, two investment properties (cash flow pos. and I didn't have to rely on the recent interest rate drops for this to happen) and a 10 acre farmlet. What do they say? When you assume...
> 
> What I don't like is people who come on here telling how good and easy it is (and is going to be) when really it isn't.
> 
> Stop assuming everyone who thinks property is going to drop is a 'renter'. It is a very narrow minded and immature way of behaving.




Juddy - fair call and it sounds like you have your own situation fairly well sorted. The fact you haven't gone and immediately sold all your property including your PPOR in a panic shows that you are not actually in the same camp as many of the other bears here, who would advocate that's exactly what you should do. The rest of us, while holding onto our exisiting holdings, are trying to be both cautious, but also have eyes open for potential opportunities in the current market, based on a view that in the long run judiscious property ownership/investment is a good place to make some decent return on capital.

However, you have to admit that a significant portion (not all of course) of the whole "great house price crash brigade" are in fact people who have chosen not to take the plunge into home ownership in the past and are somewhat bitter about the outcome of that choice. They are now hoping and praying for a crash in fact in order to get the chance to rectify their past mistake!

Myself - I've taken advtage of the current market by selling a couple of properties and upgradinng my PPOR at what I consider to be a relatively and historically low cost given what I have gone from -> to.

All I say is that anyone with an interest in property either wrt to their PPOR or investment get out and research the market in their area of choice for themselves. They may be surprised at how things actually are vs what forums like this and various newspaper headlines etc might say.

Cheers,

Beej


----------



## Beej (13 December 2008)

Sydney auction clearance rate for the weekend 53% on reasonable volume (145/274) and many good prices achieved! Certainly no sign of the great crash as yet..... quite the opposite in fact.

http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej


----------



## juddy (13 December 2008)

Beej said:


> However, you have to admit that a significant portion (not all of course) of the whole "great house price crash brigade" are in fact people who have chosen not to take the plunge into home ownership in the past and are somewhat bitter about the outcome of that choice. They are now hoping and praying for a crash in fact in order to get the chance to rectify their past mistake!
> 
> Beej




Don't forget that not all were able to get into housing before the booms (6 year range east-west). So you will find a lot of these people hoping for prices to come down are in fact quite young. Through no fault of their own houses have become unaffordable. So again, generalising 'they missed the boat' is incorrect. I would say the majority were just too young.

I love the Aussie cricket team, I go to every match I can, but I still think SA will whip our butts.


----------



## juddy (13 December 2008)

Beej said:


> Sydney auction clearance rate for the weekend 53% on reasonable volume (145/274) and many good prices achieved! Certainly no sign of the great crash as yet..... quite the opposite in fact.
> 
> http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> ...




Brisbane 19%.


----------



## numbercruncher (13 December 2008)

> Myself - I've taken advtage of the current market by selling a couple of properties and upgradinng my PPOR at what I consider to be a relatively and historically low cost given what I have gone from -> to





What did you upgrade from/to Beeji ?


----------



## numbercruncher (13 December 2008)

Beej said:


> Sydney auction clearance rate for the weekend 53% on reasonable volume (145/274) and many good prices achieved! Certainly no sign of the great crash as yet..... quite the opposite in fact.
> 
> http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> ...





Besides the clearance rate did you just invent all the small talk ? sounds really spruikerish without evidence .....


----------



## robots (13 December 2008)

hello,

57% for Melbourne Beej, awesome result even on this wet day today

and Beej you need to link to a Blogger for it to be genuine man

thankyou
robots


----------



## chops_a_must (13 December 2008)

juddy said:


> Don't forget that not all were able to get into housing before the booms (6 year range east-west). So you will find a lot of these people hoping for prices to come down are in fact quite young. Through no fault of their own houses have become unaffordable. So again, generalising 'they missed the boat' is incorrect. I would say the majority were just too young.
> 
> I love the Aussie cricket team, I go to every match I can, but I still think SA will whip our butts.




Indeed. I am 24, and there is absolutely no way on earth I would buy property at current prices if they stay at around these levels, most likely ever, with incomes available to me in the future. Would be a completely different story if prices were what they were 4-5 years ago.

I would not buy property as an investment either in the current environment. The likely prospect of a Japan situation where you never, ever ever get a return on any new purchase is far too high.

Got nothing to do with bitterness for missing out Beej. Can't see how I could have bought property whilst working in the supermarket...


----------



## GumbyLearner (13 December 2008)

Agreed chops.

Much better buys out there 

ie. Canada 4-5 times yearly earnings
NZ no stamp duty, PPR exemptions plus no land tax regime.
USA, UK & Ireland huge drops in valuations

Australia 9 times earnings PASS!


----------



## Beej (13 December 2008)

GumbyLearner said:


> Agreed chops.
> 
> Much better buys out there
> 
> ...




Newsflash - AU national median house price = approx 7 x average full time SINGLE wage right now. NSW, zero stamp duty for purschases under $500k (similar concessions in other states), and nationally, $14k-$21k first home buyer grant available with no means test etc from the government. No land tax for PPOR in AU either thanks! 

As for US/UK etc, well they have their own problems that fortuneately we do not seem to be facing here to the same extent.



numbercruncher said:


> What did you upgrade from/to Beeji ?




Upgraded from lower north shore federation semi (which I bought and renovated a while ago) to slightly more upper north shore 4 bed/3 bath, fully renovated 20's built house on a good land in an excellent location with pool/spa etc etc and all the other little luxuries that my wife said she wanted 

EDIT: Oh and PS - don't forget: "Happy wife, happy life!" 

Cheers,

Beej


----------



## chops_a_must (13 December 2008)

Bollocks.

Tell that to that exorbitant amount of people trying to sell in Perth right now. It's crazy.


----------



## Beej (13 December 2008)

chops_a_must said:


> Indeed. I am 24, and there is absolutely no way on earth I would buy property at current prices if they stay at around these levels, most likely ever, with incomes available to me in the future. Would be a completely different story if prices were what they were 4-5 years ago.
> 
> I would not buy property as an investment either in the current environment. The likely prospect of a Japan situation where you never, ever ever get a return on any new purchase is far too high.
> 
> Got nothing to do with bitterness for missing out Beej. Can't see how I could have bought property whilst working in the supermarket...




Yes but that's all fine. You are young and have a long time to work a few things out - one of them being what it actually takes to own property but more importantly why you will eventually want to own your own house, despite your internet blog induced fears of some sort of Japan style meltdown (which is to a large extent an over exagerrated internet generated myth anyway - trust me I've done business in Japan and spent some time there in the past).
A question - regardless of the PRICE if you could invest in real estate such that it provided a significant cash-flow positive return on an investment based on say a 90% gearing level + some of your capital, would you consider it or would your bias still keep you out??

Beej


----------



## GumbyLearner (13 December 2008)

Beej said:


> No land tax for PPOR in AU either thanks!




Correct. Thats what I posted earlier. Im talking about any additional investment property you own that you dont live in doesnt attract land tax
in NZ.

And yes 9 times earnings you bet. Most over-inflated property prices in the OECD. Its akin to buying MQG when they were trading at $100 plus. Now theyre $30. 

Much better places for much better prices than Oz ATM! IMVHO


----------



## chops_a_must (13 December 2008)

Beej said:


> despite your internet blog induced fears of some sort of Japan style meltdown (which is to a large extent an over exagerrated internet generated myth anyway - trust me I've done business in Japan and spent some time there in the past).



Seriously? 

Baahahahahahahahahahahahaha!


Now please tell me you aren't joking?


Bahahahahahahhaahhaha....


----------



## Beej (13 December 2008)

GumbyLearner said:


> And yes 9 times earnings you bet.




Sorry but you are wrong. Average full time wage in Au right now = ~$60kpa. National median house price is floating around the ~$440k mark, = 7.3 x average full time wage (not 9).

Units of course are cheaper again 



> Much better places for much better prices than Oz ATM! IMVHO




Well that would be handy perhaps if you happened to live in and needed a house in one of those "other" countries 

Beej


----------



## Beej (13 December 2008)

chops_a_must said:


> Seriously?
> 
> Baahahahahahahahahahahahaha!
> 
> ...




Have you ever actually been there?


----------



## drsmith (13 December 2008)

7.3 x average full time wage is a lot.


----------



## GumbyLearner (13 December 2008)

Beej

Is there anywhere else in the developed world that has a higher wages to
median house price than Oz?

Maybe your right about 7.3 annual wages to purchase the average property at $440 AU but how do you think people will handle neqative equity and having to pay multiples of 4 or 5 back to the bank instead of say 3?

Australian property prices are unrealistic with a few exceptions.


----------



## singlefished (13 December 2008)

Beej said:


> However, you have to admit that a significant portion (not all of course) of the whole "great house price crash brigade" are in fact people who have chosen not to take the plunge into home ownership in the past and are somewhat bitter about the outcome of that choice. They are now hoping and praying for a crash in fact in order to get the chance to rectify their past mistake!




Beej, you're pretty consistant with these generalisations and assumptions and it does get rather frustrating when you use them to underpin your fundamentals ~ maybe it's time you did some research...

FYI, I didn't arrive in Australia on a permanent basis until 2005 and would have only been able to purchase early last year (at the very earliest!) straight after the permanent residency application had been approved...

More of your assumptions below :
https://www.aussiestockforums.com/forums/showpost.php?p=368574&postcount=2531


----------



## Beej (13 December 2008)

GumbyLearner said:


> Beej
> 
> Is there anywhere else in the developed world that has a higher wages to
> median house price than Oz?




This has been covered a few times before:

* AU is more urbanised than any other western country, which means our houses (or more precisely our LAND) cost more on average. Check out the wage/price multiples in the major CITIES of many comparable countries and you will get a shock at the prices - even the bear beloved US/UK cities where things are so bad right now, are still very expensive places to buy property relative to national average wages in those countries.

* The reality is that there are plenty of affordable/cheap houses around in all our cities, just not in the most desirable area's (and there are obvious demand driven reasons for this!)

* Culturally, home ownership is high up on the list of aspirations for most aussies. perhaps more-so than in many other countries (for whatever reason).



singlefished said:


> Beej, you're pretty consistant with these generalisations and assumptions and it does get rather frustrating when you use them to underpin your fundamentals ~ maybe it's time you did some research...
> 
> FYI, I didn't arrive in Australia on a permanent basis until 2005 and would have only been able to purchase early last year (at the very earliest!) straight after the permanent residency application had been approved...
> 
> ...




A fair point granted. I did say "some", not "all", and therefore I think should stand accused of a partial generalisation only.... Of course there are many different circumstances that people are in that can change ones perspective, plans and actions. But I do try to focus on what I believe the majority trends are based on my own research and observation of the market.

Cheers,

Beej


----------



## numbercruncher (13 December 2008)

More bollocks ....


When I purchased my first property in 01 there was plenty of Houses available for 3 to 4 times average income and interest rates similar to now, the FHB at only 7k provided a bigger % of the purchase price than it does now.


What subsequently happened was a temporary credit bubble that is now popping along with the worlds economy ..... you can talk up Aussie RE as much as you wish but you cant hide that prices have already fallen and you can be sure Aussie RE wont continue " to rise for years " while the worlds economy continues to contract along with our crashing resources industries.

Beej you maybe good at RE mumbo jumbo sales talk but you completely ignore our currently globalised economy - Im nearly convinced you work in the RE industry?.

Keep talking it up, its entertaining  The debate is " House prices to RISE for years " which clearly is not happening. 

Gen-Y have not been sucked into this ponzi scheme only 5pc of them have taken the mega gamble despite the Governments desperate ploys.

One way or another RE will return to its long turn average on a Price to Incomes ratio.


----------



## GumbyLearner (13 December 2008)

I agree with you NC. It is the next bubble to pop.

For those who dont know what a bubble is 

http://www.nicholsoncartoons.com.au... Housing bubble markets flatten a bit 530.JPG


----------



## chops_a_must (13 December 2008)

Beej said:


> Have you ever actually been there?




Are you for real?

If visiting leads me to the conclusion that Japanese property has been a fantastic long term investment and that global rates aren't going to 0, I'd rather stay at home thanks.


----------



## GumbyLearner (13 December 2008)

0.3% in Japan at present.

England lowest interest rates since 1694.

US cruising on 1%.

Its like an old western movie when the train runs out of coal they start to strip the fixtures from the train to keep the furnaces running. 

But this time Ben's using a helicopter


----------



## numbercruncher (14 December 2008)

I see young Kylie M is getting a bit of a touch up from the RE downturn/crash - dropping the asking price on her weekender 20 pc (200k ish)

http://www.news.com.au/entertainment/story/0,28383,24796675-5013560,00.html


----------



## GumbyLearner (14 December 2008)

Come on NC, its just plain rude to speculate!


----------



## robots (14 December 2008)

numbercruncher said:


> More bollocks ....
> 
> 
> When I purchased my first property in 01 there was plenty of Houses available for 3 to 4 times average income and interest rates similar to now, the FHB at only 7k provided a bigger % of the purchase price than it does now.
> ...




hello,

get down to St Kilda brother, 14.7% rise for Sept08 Q, along with a host of other suburbs across Melbourne

and how about Melton, houses for 220-250k, 40k from GPO

if people so hard done by in Aussie land then the planes are still leaving from all capital city airports, you got a choice

thankyou
robots


----------



## numbercruncher (14 December 2008)

Hello Robi,


Are you suggesting Australias youth who reject the pyramid scheme grab their surfboards and head to Bali or something ?


Maybe the REIV can employ the endless supply of Melbourne thugs into " talkin em into " buying ?


----------



## robots (14 December 2008)

hello,

sure are, look at the property threads going strong its a major issue

if you over the moon about house prices in the US or UK then go there, no big deal is it

look at the attitude in the savings thread, people are defeated already, weak

thankyou
robots


----------



## Beej (14 December 2008)

numbercruncher said:


> Hello Robi,
> 
> 
> Are you suggesting Australias youth who reject the pyramid scheme grab their surfboards and head to Bali or something ?
> ...




This is no different to the late 80s when my generation (Gen-Xers) were in the same position Gen-Y is now, and saying all the exact same things. No one will have to force them all though, over time as "real" prices fall back a bit, and their incomes increase, and their need for the stability of owning your own home increases (due to families etc etc), Gen-Y will start buying in greater numbers, "pyramid" scheme or not. In fact my bet is this is already starting to happen right now - future stats will show.

Houses are not like shares. I can decide anytime I want to sell all my shares and not buy anymore. Ie I could completely eliminate my direct exposure to the share market (as many people/institutions have in fact just done! Hence a crash.....). 

However, you can't just "decide" you don't need somewhere to live! You have to either rent, or own, or share (meaning someone else rents or owns). Unless you think Gen Y will happilly live on the street in cardboard boxes......

That's why the housing market is not in fact a pyramid scheme (that is such a lame "Gen-Y whinging" sounding line by the way!), as there is TRUE underlying value (and ongoing demand) in land and housing, both fundamentally (they provide something people need) and fiscally (they can provide a source of income/cash-flow into the future or eliminate the need for outgoing cash-flow into the future). 

The only real argument is exactly what is the inherent value (and fair MARKET price therefore) of any particular single piece of real estate at any particular point in time that someone is looking to acquire it. Remember also that median stats only provide a one dimensional view of a complex market (like the XAO does for the stock market). Hence we have a market, which despite the wishes of so many here, has not, as yet, shown any signs of some huge/major crash..... Although it is certainly presenting some great opportunities right now if you are canny, and keep an eye on the long term 

Cheers,

Beej


----------



## Glen48 (14 December 2008)

In NSW you can get up to 50K for your first home so why worry if you buy a house and later decide to bail out... just another bailout funded by the taxpayer to prop up housing.


----------



## robots (14 December 2008)

Glen48 said:


> In NSW you can get up to 50K for your first home so why worry if you buy a house and later decide to bail out... just another bailout funded by the taxpayer to prop up housing.




hello,

just like all the bailouts by taxpayers for farmers, motor industries, childcare etc to prop them up

thankyou
robots


----------



## numbercruncher (15 December 2008)

> Estate agents jobs to go as economy bites
> 
> Caroline James
> 
> ...





http://www.news.com.au/heraldsun/story/0,21985,24796417-661,00.html

Von Harvey might give em jobs flogging Plasmas and PS3s ?


----------



## Mofra (15 December 2008)

numbercruncher said:


> http://www.news.com.au/heraldsun/story/0,21985,24796417-661,00.html
> 
> Von Harvey might give em jobs flogging Plasmas and PS3s ?



Nah NC, you've convinced everyone that the world is about to crumble; I'm sure they'll make millions selling bomb shelters and long life food


----------



## robots (17 December 2008)

hello,

http://www.theage.com.au/national/housing-starts-hit-sevenyear-low-20081216-6zuj.html

look out Number, fantastic last paragraph there

the low starts is great news, the great divide is on and one

great work Beej and you raise some very valid points, if its all the same as in UK and US why havent we good BANG, why is it taking so long

if have been chucking all the $ in the Netsaver waiting for the crash

and with commodities making up like 7% of GDP its clear that has no linking,

its about being in Aussie Land, paradise, nirvana, utopia and life and times which surpasses anywhere in the world

you can walk the street, ride, drive, get food at the local shop, call your friends, use the internet, play sport, dance all night

and you dont have to *pack heat* to do these things, 

past performance is no indicator of future performance

thankyou
robots


----------



## ROE (17 December 2008)

Beej said:


> This is no different to the late 80s when my generation (Gen-Xers) were in the same position Gen-Y is now, and saying all the exact same things. No one will have to force them all though, over time as "real" prices fall back a bit, and their incomes increase, and their need for the stability of owning your own home increases (due to families etc etc), Gen-Y will start buying in greater numbers, "pyramid" scheme or not. In fact my bet is this is already starting to happen right now - future stats will show.
> 
> Houses are not like shares. I can decide anytime I want to sell all my shares and not buy anymore. Ie I could completely eliminate my direct exposure to the share market (as many people/institutions have in fact just done! Hence a crash.....).
> 
> ...




This is what REIV use to support un-justfied price..
if you use that sort of argument, you can always say people dont need to eat ? (shop at Woolies or Coles), people dont bank with one of the bank? poeple dont fill their cars with one at one of the petrol station? People dont book their holiday via flight center?

remember a bubble occurs when price run too far from what consider a sustainable growth...if it run too far either these 2 things happen in the long run...

1. price drop very very bad for RE because it's like leverage in shares and stock market going backward
you lose on both front, asset going backward plus you negative gear.

2. stay flat for many years until salary and wages catch up.

still bad because most people negative gear so you losing money each year.

so the only way they make money is for RE to go up and hence the talk up of RE...

People always need housing and people always need to eat and entertain, what important is you paying the right price at the right time.

I can exit shares but still shop at those places and the share holders benefits..

I can exit housing and rent at one of the place and the investors of those house benefits.


----------



## numbercruncher (17 December 2008)

The other thing permabulls dont take into account is Government intervenion, sure increased FHBG helped the permabull crew a little ..... but ....

This new initiative from the NSW Gov is set to drop prices of existing stock .....

Why buy second hand if you can get new cheaper ?



> THE Rees Government will slash developer levies by up to $64,000 a property in an attempt to boost the ailing NSW economy.





http://www.smh.com.au/news/national/developer-levies-dumped-to-boost-flagging-property-market/2008/12/16/1229189627802.html


----------



## Passive (19 December 2008)

Repeatedly we hear how serious things are, can only get worse, we are in for a tough time, watch property plunge, will wait until it drops etc etc

However it has been said this is different to many times before and in a negative sense it has been quite horrific!

But there is another perspective to consider and the huge difference is how as a world Central Bankers are throwing every measure , more than ever before, to turn this around. Rates are plunging, so is oil , so is inflation apparently - but could another perspective be that with this amount of stimulus, and maybe a crunch we had to have purging the system, we are seeing the beginnings of yet another bubble that will be future inflation fear driven that will favour real estate yet again. Remember that the sub prime devastated real estate in the US and there is talk of offering a stimulus to this industry in the US to kickstart it again. As soon as some positive signals emerge in this market it could be hell for leather yet again because of coming off such lows.

The next few years, and in real estate it has always to be seen long term, if you don't pick it and wait too long in the wings you will be shocked at what you miss out on. Wait for the traction of the stimuli - when that happens we will be in for the mother of all booms and blow your affordability theories as booms always defy logic. Hark the prophet has spoken and give me the cuedos 3/4 years time in the meantime I am too busy researching the market to be bothered by any negative put downs. As much as things change they remain the same - there is nothing new under the sun and I am looking forward to the dynamics of an incredibly strong turnaround that will catch the economists with their pant:s around their knees!


----------



## Glen48 (19 December 2008)

Those who want to get into Re go hard because all the FHO and buying with your money and a FED back Ponzi scheme.
The FHO are getting into housing because they are brained washed into thinking it will double every 7 yrs and they will get rich out of some thing that has never happened before and the Fed need Speculvestor to buy houses so they can be in debt all their lives and keep buy dust collectors for their "investment"
Once they realise their dream Mc Mansion is dropping in value they will walk and the good old ATO workers will pick up the tab. 
I see in USA a $30 M block of land got sold for $100 at auction.


----------



## singlefished (19 December 2008)

Passive said:


> Repeatedly we hear how serious things are, can only get worse, we are in for a tough time, watch property plunge, will wait until it drops etc etc
> 
> However it has been said this is different to many times before and in a negative sense it has been quite horrific!
> 
> ...




blah....blah....blah....

Nice to see you covering your bases by waiting 3 to 4 years for cuedos... Just in case eh!!!

Ofcourse in 3 to 4 years time the worst will* probably *be out the way, the global financial crisis will* probably *be history, and those "bears" that get in early after the recovery starts (_when it starts_) will be the greatest beneficiaries! Goes without saying really....

You should have posted this in the "...prices to fall for years" thread as your sentiment appears to indicate you are expecting substantial falls in the short term that will ultimately fuel the next cyclical upturn...


----------



## Dowdy (19 December 2008)

Just wondering what at the stats of the number of homes with 90-100% loan on them


----------



## Passive (20 December 2008)

singlefished said:


> blah....blah....blah....
> 
> Nice to see you covering your bases by waiting 3 to 4 years for cuedos... Just in case eh!!!
> 
> ...



Notice 3/4 years to get the cuedos - in other words you guys are slow learners and will wake up then - far too late as usual - - the astute are looking and ready to buy in a shorter time frame - and no I am not expecting more falls - moving to stability with some sectors ie Melb ready to RISE in the next 6-9 months. If you can't read a post correctly what chance have you of reading the market. In life I learn from the successful experienced players and benefit - seems a lot of you younger turks know it all so this is all new to you - open your eyes and ears and start to see the opportunities!


----------



## numbercruncher (20 December 2008)

> SHAPE OF THE MARKET
> 2007         2008
> 
> Clearance rate        82.5%        63%
> ...





Should this not have disclaimer * Does not include Robi's unit


----------



## robots (20 December 2008)

hello,

check this out:

http://business.theage.com.au/business/melbournes-return-to-real-estate-boom-time-20081219-72eq.html

look at the return, 4.5% over the past years

yet so many are interested in property? surely you guns are killing that return with your life savings (a money box rattles)

thankyou
robots


----------



## numbercruncher (20 December 2008)

> look at the return, 4.5% over the past years





Awesome man returns less than interest rates for 5 years and gloating about it ?


----------



## robots (20 December 2008)

robots said:


> hello,
> 
> look at the return, 4.5% over the past years
> 
> ...




hello,

and this part Number? oh the great divide

i hope g man can give us an update on his Melbourne tour

thankyou
robots


----------



## robots (20 December 2008)

hello,

when we getting these in AussieLand:

http://www.theage.com.au/world/zimbabwe-unveils-10-billion-dollar-note-20081220-72j1.html

happened in Zimbabwee so gotta happen here, doesnt it?

thankyou
robots


----------



## Knobby22 (20 December 2008)

I was a bit of a property bear but if interest rates drop again in February, I am sure the money will return to real estate. 

Finally the yield will be OK compared to price and interest to the loan and a lot of people with savings to invest will have sworn off the stock market.

The risk is if interest rates end up rising quickly when this thing is over.


----------



## tech/a (20 December 2008)

numbercruncher said:


> Awesome man returns less than interest rates for 5 years and gloating about it ?




*Numbers* "Sometimes it is better to remain silent and be thought of as a fool than to open ones mouth and remove all doubt!."

Lets say 5 yrs ago I bought a $300,000 property with 20% down and had 4.5% compounding growth.

So I put $60,000 down
$300,000 compounded 4.5% annually over 5 yrs is now $373,854.
So I have a $60,000 now worth $133,854 or a 123% increase (Less costs) on my initial $60,000.

You have a lot to learn!


----------



## Passive (20 December 2008)

robots said:


> hello,
> 
> when we getting these in AussieLand:
> 
> ...



Was a great little country until ideology and greed of a few wrecked it. Absolutely no parallel here and to try and superimpose trends on Australia based on their peculiarities ( trends in basket case countries overseas that is ) is far fetched to the extreme and totally oversimplistic. But then if you are skint and don't want to make the sacrifices the next best thing is hope it all collapses until it becomes affordable. Talk about believing in the tooth fairy!


----------



## robots (20 December 2008)

hello,

check check, we got robots on the mic,

http://www.reiv.com.au/home/inside.asp?ID=142&pnav=141

what an awesome day brothers, 71% clearance this is going BEZERK

the sun shining strong on those doing the yards again

dont know where g man has gone, the internet is working well in St Kilda

thankyou
robots


----------



## Passive (20 December 2008)

tech/a said:


> *Numbers* "Sometimes it is better to remain silent and be thought of as a fool than to open ones mouth and remove all doubt!."
> 
> Lets say 5 yrs ago I bought a $300,000 property with 20% down and had 4.5% compounding growth.
> 
> ...




Well put mate - not to say the opportunities the increased equity will create plus the return on your actual deposit as time goes on from a rental perspective etc.etc. Needless to say shares pale into oblivion and cash is dismal and will get worse and as inflation increases net effect on cash holdings will be negative and your debt will decrease in value as an added bonus. How little they comprehend - most of them are lost on base two!


----------



## Passive (20 December 2008)

robots said:


> hello,
> 
> check check, we got robots on the mic,
> 
> ...



Across the board sales good when looking at values. Somewhere along the line the realisation will sink in hard that rates are low and opportunity will be missed. Poor sad sacks waiting for further falls or the hope of emulating overhoused mature economies. Go Melbourne! Watch it catch on. What people forget is that with 4/5/ or even 6% out of work over 90% are still working and have not given up on life.


----------



## knocker (20 December 2008)

just read this:
http://www.theage.com.au/national/state-house-sales-slump-25-20081219-72e8.html
and this
http://au.youtube.com/watch?v=shYJ_KkbzWg
my brother in law just lost his job as a promising real estate guru.
At present I am in Algarve in Spain and lots of for sale signs here as English have no money with the pound falling.

Interesting times


----------



## numbercruncher (20 December 2008)

tech/a said:


> *Numbers* "Sometimes it is better to remain silent and be thought of as a fool than to open ones mouth and remove all doubt!."
> 
> Lets say 5 yrs ago I bought a $300,000 property with 20% down and had 4.5% compounding growth.
> 
> ...






Tech " Cant teach an Old Dawg new tricks "

Happy investing buddy.


----------



## numbercruncher (20 December 2008)

Passive said:


> Well put mate - not to say the opportunities the increased equity will create plus the return on your actual deposit as time goes on from a rental perspective etc.etc. Needless to say shares pale into oblivion and cash is dismal and will get worse and as inflation increases net effect on cash holdings will be negative and your debt will decrease in value as an added bonus. How little they comprehend - most of them are lost on base two!





Yes yes you property investors are the bomb - you should all get Nobel prizes for business acumen.

Up is the only way, Oz is short on land and Kangaroos and we all know it.


----------



## knocker (20 December 2008)

Anyone know how the bottom end of the market will fair? I mean will there be a demand for cheap rental properties say 100-150$ per week? at the end of the day people have to have a roof over there heads? maybe there is a market for bedsitters 1 bedrooms appartments etc. In third world countries they cram whole families into little units. Or maybe at the other extreme big house will be left empty for squatters?


----------



## juddy (20 December 2008)

Passive said:


> Poor sad sacks waiting for further falls or the hope of emulating overhoused mature economies. Go Melbourne! Watch it catch on.




yeah, big pity about Perth though. Smart money has already shifted interstate.


----------



## Julia (20 December 2008)

tech/a said:


> *Numbers* "Sometimes it is better to remain silent and be thought of as a fool than to open ones mouth and remove all doubt!."
> 
> Lets say 5 yrs ago I bought a $300,000 property with 20% down and had 4.5% compounding growth.
> 
> ...



A property I sold four years ago has come onto the market again now.
Sold then at $186,000.  Now asking price is $320,000.  Will sell for $300,000.
Rental return is pathetic, less than 3% on the basis of the $300K.
But the capital gain sure as hell offsets that low yield.

See NC?  Your comments are excluding the capital gain effect.


----------



## numbercruncher (20 December 2008)

Yes I appreciate what you are saying - I made money from RE during the credit boom as well. 

*What hope has the next buyer of that property got ?*

What was the real return the seller gets after interest rates 6 to 9pc over 4 years, rates/maintenance, stamp duty, re selling fee, capital gains tax etc. Alot gets zapped - this is the stuff permas omit. ( yes still a good return but not as good as first glance suggests, but going forward is my debate, the past is there for all to see)


----------



## knocker (20 December 2008)

Julia said:


> A property I sold four years ago has come onto the market again now.
> Sold then at $186,000.  Now asking price is $320,000.  Will sell for $300,000.
> Rental return is pathetic, less than 3% on the basis of the $300K.
> But the capital gain sure as hell offsets that low yield.
> ...




How do you know it will sell for 300k? Can you pleaqse provide a link to information about what price this, or any other house will sell for? Or do you base it on advertising spruike from agents?


----------



## agathos (20 December 2008)

Hi everyone,

Seems like lots of netizens here DESIRES for the price of homes to keep going up, up , up! Hmmmm. that might happen.
But the BIG question still is:

*WHAT IF...........................*

*What if *the WORLD goes into a prolonged, protracted, deep recession?
*What if *Canada, Japan, Korea, New Zealand, UK (price of units and condominiums have realistically dropped between 25% and 50%) and the big cohuna like USA AND China goes into proloooooooooooooooonged slow down?

Don't even mention the word recession 
Just let's say deep slow down

The WORLD has gone beserked
MAD people like *MAD*OFF can operate because the world runs on GREED
We desire the materiaf stuff so much, we become greedy till dollar ooozes out of our nose and mouth and ear orifice

Since we have the freedom of speech here in Australia, may I present a VERY different perspective to this forum, something which many of you would NEVER have heart of. Most of you won't have heard of it. Most of you would NOT believe it. I tried sharing it to you a chap who taught me the basics of investing in TAFE Western Australia, and he it was just too much for him. 

So, the caveat is  - read the following, only if you are OPEN minded. 
Ready, get set? Read on: 

Ok, here it is:

Because there is ONE who knows that human beings tend to operate in EXCESS and goes off either too leftist or too rightist in nature, HE has placed a very interesting principle , which seems very logical to me. (and I believe it is still in operation today). 

Allow me 2 sentences to share it , and then I shall attempt to localize it to how OZ would put it.

The principle I have in place is known as the* JUBILEE principle*.
In the old days, there is a rest pronounced upon the LAND every 7th year. 

It was not only designed to bring rest so that the land can yield bumper crops again, but it was also designed to restore ownership.(Leviticus 25:1-7 is the reference). 

Obviously, in today's economy, no one would be so foolish to surrender his real estate property to another after 7 years. So, in our enlightened mind that boast in knowledge and 21st century law, we may say, "hocus pocus again". But please read on and be patient with me for 45 seconds. 

But because the ONE who controls the Universe is still sovereign, HIS governance trascends the wisdom of human greed , etc.

Ever heard of the Chinese Saying - Wealth never last beyond 3 generations???
The first generation work hard and amass WEALTH$$$$
The second generation grows the WEALTH $$$ and exercise prudence
The 3rd generation, generally like the Prodigal Son, usually *blows it all away. *Sometimes very normally, sometimes very mysteriously. Sometimes beyond the human understanding.

That's where I would like to interject and says that I believe that *the 7 years jubilee principle is still @ work*, no matter how corrupted and greedy human has become. 

No matter how many ENRON, and MADOFF we breed in society
No many how many years of BOOOOOOOOOOOM we have

There will ALWAYS be [[COLOR="Red"]B]years of FAT & GROWTH [/B[/COLOR]]And there will be *years of LEAN and TRIM*Regardless whether we believe it or not - there is a somehow *JUBILEE principle at work*, in our health, in our economy, in our global affairs (who may or may not recognize that ONE Sovereign Being).

I didn't intend that you believe my words.
But *principles, like gravity, stands the test of time!*

To those of you who are waiting for an opportune time to buy a home, 
perhaps it's been a long wait
Brick layers, tradies, and other OZ mates, we've been waiting for a long time, mate!

Perhaps your Jubilee......and MY jubilee has come

Only time will tell. There is ONE who knows you and I have been waiting and like the Olden times, JUBILEE will come and allow others to catch up!

Beyond theories, ideas, opinions, and man's pride - let's see how things work out as times and seasons unfolds! 

And man will live FOREVER more (either here or elsewhere) , because of ONE Man!...............Blessed Xmas.........agathos. 2008.


----------



## knocker (20 December 2008)

Great stuff aga. Happy xmas to you also.


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## Passive (21 December 2008)

agathos said:


> Hi everyone,
> 
> Seems like lots of netizens here DESIRES for the price of homes to keep going up, up , up! Hmmmm. that might happen.
> But the BIG question still is:
> ...




Research will tell you that the Jubilee did not apply to land within walled cities in the Judaic system and unwalled land was to be returned to the hereditary owner. Was a form of usufruct but certainly not designed to give something to those to whom it was not entitled. Fail to see the relevance of this in any shape of form in a system not based or endorsed by the Judaic model.


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## Passive (21 December 2008)

juddy said:


> yeah, big pity about Perth though. Smart money has already shifted interstate.




Tell me Juddy = where will you buy in Perth with $450k - try and see what little you will get. Go out there and see what is available for this price - Perth has come off highs but is not nearly as bad as you portray.


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## michael_t_f (21 December 2008)

> So I put $60,000 down
> $300,000 compounded 4.5% annually over 5 yrs is now $373,854.
> So I have a $60,000 now worth $133,854 or a 123% increase (Less costs) on my initial $60,000.
> 
> You have a lot to learn!





Tech would you not pay the mortgage for 5 years?
This would equate to well over $100000. 

Buying a house is really just a way of compulsory saving which lowers your quality of life and gives you stress.

Before you say I'm just saying that because I'm renting, yes thats correct but I did buy a house in 2000 when I was 19 and they were throwing credit at people. There will be others like me who got easy credit who will lose there low paying unskilled jobs and they will have to sell. 

Only a fool would think housing prices will keep going up.


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## agathos (21 December 2008)

Thanks Passive & knocker,

*Both* positive & negative feedback welcomed. 
I don't meant to prolong debate on the archaic Judaism stuff, which to some of us may seem out of date, and completely irrelevant.

But let's have a final fair go, and take a final dig before I close this jubilee thing:

When babies were born in ancient times, before the availability of Injectable Vitamin K , circumcision was instructed to be performed only after the 7th day.

We now know that babies need a couple of days for the body to pump up their natural Vitamin K Levels. Ah! See. The ONE knows, before we do. 

Lots of things we don't understand too. 
If we understand everything, we will be enlightened beings and NOT a MADOFF or treate refugees like dirt (despite having some brilliant policies). 

Bear in mind, eternal principles are not just for Judaistic people. 

Isn't there a vocabulary in OZ language known as FAIR GO ??
Each person is entitled to chances, opportunities, respect, love, etc!

This was what the ONE Person tries to help the Judaism chaps to understand.
Doesn't mean they fail to grasp it , that the principle will fail to work!

JUBILEE was meant so that people could have a FAIR GO in everything. 

Cheers, mate! No worries. Let *time be the great determinator*!

When home prices go up, we CHEERS
When homes prices go down, we also CHEERS (for those who need to catch up)

Cheeeeeeeeeeeeers, mates. Tighten our seat belt, it's sure is interesting times ahead. agathos.


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## tech/a (21 December 2008)

michael_t_f said:


> Tech would you not pay the mortgage for 5 years?
> This would equate to well over $100000.
> 
> Buying a house is really just a way of compulsory saving which lowers your quality of life and gives you stress.
> ...





Michael.

*(1)*
Wealth in property comes from multiple holdings.
Your initial purchase only supplies you with a place to live.
Often at a cost greater than rent.
As you say though it will hold you in line with appreciation if there is any but only place you in a position to be able to afford a new home going forward.
I dont know what you did with your Y2000 home but it would be worth X more today. If you did sell it you would only be on par with comapable properties for replacement value.

*(2)*
If you had investment properties and you were astute in investment and ofcourse in a position to invest in Property,then you'd have positively geared the investment or got as close as possible to PG.
Your tennent would pay the interst.
You would have a tax deduction for any short fall. You have massive tax advantages. Any capital appreciation is surplus to your needs.
So the calculation Ive put up is one which applies to Investors NOT principal place of residence owners.


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## aleckara (21 December 2008)

tech/a said:


> Michael.
> 
> *(1)*
> Wealth in property comes from multiple holdings.
> ...




Arguably then property is overvalued for owners. The equations changes for investors due to tax breaks (assuming property doesn't rise). That's a lot of tax money going down the toilet. I can't help but think it would of been cheaper to put 4 years of these tax savings and use the money to build a lot of houses rather than allow negative gearing.


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## juddy (21 December 2008)

Passive said:


> Tell me Juddy = where will you buy in Perth with $450k - try and see what little you will get. Go out there and see what is available for this price - Perth has come off highs but is not nearly as bad as you portray.




Only a third of the way there Passive. Long way to go yet. You can almost see the flight of money out of Perth.


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## tech/a (21 December 2008)

juddy said:


> Only a third of the way there Passive. Long way to go yet. You can almost see the flight of money out of Perth.





Dont invest in property in Perth then.


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## wayneL (21 December 2008)

tech/a said:


> Dont invest in property in Perth then.




I don't think there will be a lot of places worthy of investment yet.

However, there are a small number of excellent deals popping up over here in the UK, if you are in the right place at the right time. In some cases back to documented 2000-2001 prices and less... if you can get finance.


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## tech/a (21 December 2008)

wayneL said:


> I don't think there will be a lot of places worthy of investment yet.
> 
> However, there are a small number of excellent deals popping up over here in the UK, if you are in the right place at the right time. In some cases back to documented 2000-2001 prices and less... if you can get finance.





Wayne is it possible to gear near positive yet over there?
With say 20% or do you need more base capital on a deal?


----------



## wayneL (21 December 2008)

tech/a said:


> Wayne is it possible to gear near positive yet over there?
> With say 20% or do you need more base capital on a deal?




Possible, but rare... repos at auction usually, and usually need a bit of TLC. But getting more possible all the time. I'm pretty convinced it will become common.


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## Julia (21 December 2008)

knocker said:


> How do you know it will sell for 300k? Can you pleaqse provide a link to information about what price this, or any other house will sell for? Or do you base it on advertising spruike from agents?



I know because I live in the area and am familiar with pricing.
No, I am not susceptible to R.E. advertising which in this case is as poor as the rental yield anyway.

Numbercruncher:  yes, very valid points about all the deductions from the profit off the CG.  Then there is always the way some tenants treat rental property.


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## IFocus (21 December 2008)

Passive said:


> Tell me Juddy = where will you buy in Perth with $450k - try and see what little you will get. Go out there and see what is available for this price - Perth has come off highs but is not nearly as bad as you portray.




My mother bought one in Hocking for 450K last week up on the hill 4/2 had a heap to choose from, wanted her to wait but she wanted to move now.


----------



## Passive (21 December 2008)

agathos said:


> Thanks Passive & knocker,
> 
> *Both* positive & negative feedback welcomed.
> I don't meant to prolong debate on the archaic Judaism stuff, which to some of us may seem out of date, and completely irrelevant.
> ...




Should really stick to the subject and research properly. The Jubilee had some preconditions and these need to be understood. That is not called knocking but correct interpretation. Medical aspects relate little to housing . Coagulation of blood has little to do with jubilee. Only correlation is the 7 day bizzo which is more coincidence than design - that aside does not change the positive side of ones faith but needs to be handled aright and not quoted totally out of context!


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## Passive (21 December 2008)

IFocus said:


> My mother bought one in Hocking for 450K last week up on the hill 4/2 had a heap to choose from, wanted her to wait but she wanted to move now.




Hocking is a new and outlying area which have many homes for sale and granted good ones. My point though is that for the equivalent in other states its often cheaper. That sort of dough will get you next to nothing in suburbs west of Marmion Ave for example. It still is not cheap here.Values are definitely not at bargain levels.


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## Passive (21 December 2008)

juddy said:


> Only a third of the way there Passive. Long way to go yet. You can almost see the flight of money out of Perth.




What absolute utter rot. Xmas shopping here may exceed expectations. We are still vibrant state with a positive growth. Can't believe this negative garbage. Rates coming down and watch stability arise due to low rates. Resources boom on hold for a while but its far from over in China, India and Tiger economies. Needless to say we will see smart money buy up the bargains when they arise but there will not be a massive downturn here. Many businesses doing very well thanks. Always look at the long term and not micro dimensions with real estate. Quite apparent a lot of bears can't get past the thought of moving away from lifestyle rented accomodation and that will be their undoing and in turn the making of the shrewd property investor from whom they rent.


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## IFocus (21 December 2008)

Passive said:


> Hocking is a new and outlying area which have many homes for sale and granted good ones. My point though is that for the equivalent in other states its often cheaper. That sort of dough will get you next to nothing in suburbs west of Marmion Ave for example. It still is not cheap here.Values are definitely not at bargain levels.




Agree about values when you can positive gear off rental returns then we will see value


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## chops_a_must (21 December 2008)

I can't work out whether this Passive guy is arguing for a fall... or the complete opposite.


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## 2BAD4U (21 December 2008)

As far as I can tell, *Passive & agathos* are talking in code and religious undertones that only they can understand.  When we all decipher that code we will be rich.


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## IFocus (21 December 2008)

Passive said:


> What absolute utter rot. Xmas shopping here may exceed expectations. We are still vibrant state with a positive growth. Can't believe this negative garbage. Rates coming down and watch stability arise due to low rates. Resources boom on hold for a while but its far from over in China, India and Tiger economies. Needless to say we will see smart money buy up the bargains when they arise but there will not be a massive downturn here. Many businesses doing very well thanks. Always look at the long term and not micro dimensions with real estate. Quite apparent a lot of bears can't get past the thought of moving away from lifestyle rented accomodation and that will be their undoing and in turn the making of the shrewd property investor from whom they rent.




Not a dooms dayer but I am alarmed in the rate of falls right across the  commodities markets, not just mining but soft commodities to. This is still to feed back fully into the local economy.

I wont be surprised if we will see some of the bigger retail company's pop, clearly they have geared their rapid expansions of big new shop  heavily.

Again to state the obvious the size of the credit contraction globally is on a massive scale anything can happen and the risk bias is to the down side.


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## Passive (21 December 2008)

chops_a_must said:


> I can't work out whether this Passive guy is arguing for a fall... or the complete opposite.





This Passive guy is saying that we will level out and will not suffer as greatly as has been suggested. In for a tentative year or two that is strongly favouring a resurgence of re in the West as the resources requirements will not diminish long term. Good time to be looking with good buying opportunities
more on a selected basis than large falls across the board.
Historically low rates will engender much needed disposable income amongst the  remaining 96% or so still with a job.


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## Passive (21 December 2008)

IFocus said:


> Not a dooms dayer but I am alarmed in the rate of falls right across the  commodities markets, not just mining but soft commodities to. This is still to feed back fully into the local economy.
> 
> I wont be surprised if we will see some of the bigger retail company's pop, clearly they have geared their rapid expansions of big new shop  heavily.
> 
> Again to state the obvious the size of the credit contraction globally is on a massive scale anything can happen and the risk bias is to the down side.




Valid comments however the degree of stimulus provided worldwide, the level of committment to combat this fall worldwide and the low rates are yet to see their benefits kick in and may take most by surprise.


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## knocker (21 December 2008)

Passive said:


> This Passive guy is saying that we will level out and will not suffer as greatly as has been suggested. In for a tentative year or two that is strongly favouring a resurgence of re in the West as the resources requirements will not diminish long term. Good time to be looking with good buying opportunities
> more on a selected basis than large falls across the board.
> Historically low rates will engender much needed disposable income amongst the  remaining 96% or so still with a job.




Historically the situation the world is in now has never been experienced before. Passive you as many other people have your head in the sand. Oh well good luck.


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## Lancelot (21 December 2008)

numbercruncher said:


> Awesome man returns less than interest rates for 5 years and gloating about it ?




Interest rates are getting lower by the day:

http://www.interest.com.au/Investing/Term Deposits/index2.htm

Enjoy


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## knocker (21 December 2008)

Lancelot said:


> Interest rates are getting lower by the day:
> 
> http://www.interest.com.au/Investing/Term Deposits/index2.htm
> 
> Enjoy




Hasn't helped Uk Us or EU has it :


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## Lancelot (21 December 2008)

tech/a said:


> *Numbers* "Sometimes it is better to remain silent and be thought of as a fool than to open ones mouth and remove all doubt!."
> 
> Lets say 5 yrs ago I bought a $300,000 property with 20% down and had 4.5% compounding growth.
> 
> ...





Times lots of places, yummy




> Numbers, You have a lot to learn!



:


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## Lancelot (21 December 2008)

knocker said:


> Hasn't helped Uk Us or EU has it :




Definitely hasn't helped the savers, but it has helped those with debt that aren't over leveraged, and those with tenants paying the bills are even better off


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## knocker (21 December 2008)

Lancelot said:


> Definitely hasn't helped the savers, but it has helped those with debt that aren't over leveraged, and those with tenants paying the bills are even better off




Yes true. how low do you reckon RBA will drop? Maybe 2%?


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## Lancelot (21 December 2008)

knocker said:


> Yes true. how low do you reckon RBA will drop? Maybe 2%?




Dont know, why?


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## Lancelot (24 December 2008)

Amazing stuff, well not really.

Just had notification from the bank that some Brisbane property I had re valued last week, has increased by on average 12% on the valuation 18 months ago and the extra funds, if I choose to use them, are there for the taking.

*Merry Xmas*

Dropping house prices and credit crunch?  Apparently only for some


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## numbercruncher (24 December 2008)

Spruik spam .......


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## noirua (24 December 2008)

Lancelot said:


> Amazing stuff, well not really.
> 
> Just had notification from the bank that some Brisbane property I had re valued last week, has increased by on average 12% on the valuation 18 months ago and the extra funds, if I choose to use them, are there for the taking.
> 
> ...



Hi, Do you have a link or some proof. Otherwise, it could be misleading at best. In other words, I doubt it.


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## knocker (24 December 2008)

Lancelot said:


> Amazing stuff, well not really.
> 
> Just had notification from the bank that some Brisbane property I had re valued last week, has increased by on average 12% on the valuation 18 months ago and the extra funds, if I choose to use them, are there for the taking.
> 
> ...




Fortunately the chimps brain is not as big as the gun it wields. good luck


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## Lancelot (24 December 2008)

numbercruncher said:


> Spruik spam .......




Denial and delusional NC?

clench your fists and stamp your feet and your HPC may come true, in your dreams at least


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## Lancelot (24 December 2008)

noirua said:


> Hi, Do you have a link or some proof. Otherwise it could be misleading at best. In other words, I doubt it.




Banks dont provide written details of the valuation, but the funds have been approved so a bit of backward numbercrunching was easy enough and my PB told me verbally what they were

Dont take my word on it what do I care, I have the funds and the increased val:


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## noirua (24 December 2008)

Lancelot said:


> Banks dont provide written details of the valuation, but the funds have been approved so a bit of backward numbercrunching was easy enough and my PB told me verbally what they were
> 
> Dont take my word on it what do I care, I have the funds and the increased val:



In other words, completely disregard post 2589 as it has no citing.


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## nomore4s (24 December 2008)

Lancelot said:


> Banks dont provide written details of the valuation, but the funds have been approved so a bit of backward numbercrunching was easy enough and my PB told me verbally what they were
> 
> Dont take my word on it what do I care, I have the funds and the increased val:




And the increased debt.

Now should be the time to be reducing leverage not increasing it imho but if it is working for you good luck.

Lancelot it looks like you have done well in property over the last X number of years but just out of interest have you given any thought at all to how your positions could be affected if we do see a serious drop in Oz property prices in the next few years?
And if so what measures have you put in place to guard against this? eg reducing leverage etc.

The thing that has me bearish on property in Oz atm is the fact the rest of the western world has seen some huge drops in property prices and I'm not so sure Oz's economy and RE market will be strong enough to ride it out without some sort of decent drop in prices.
Also with this credit crunch making finance harder to get (larger deposits & tighter lending standards) and if we do see an increase in unemployment (and it looks like we will) I think we will see a substantial shift in supply and demand which will affect prices as well.

Obviously we are yet to see this play out fully in Aust but to me the risks outweigh the rewards atm but in 12 months time we should have a clear picture.


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## Lancelot (24 December 2008)

noirua said:


> In other words, completely disregard post 2589 as it has no citing.




Yes, because anything contradictory to your belief pains you so.

Real life examples don't count, make it go away

Should I get it published in the MSM? would that hold any credibility?

What about links to websites that show increases?, but theyed have vested interests wouldn't they?

Keep clutching at straws noirua, you at least provide me with a laugh with your denial.

I'll believe it's all over for me when I actually see it in MY figures


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## Lancelot (24 December 2008)

nomore4s said:


> And the increased debt.




Only an increase in debt when spent, not while its sitting there doing nothing


> Now should be the time to be reducing leverage not increasing it imho but if it is working for you good luck.




I havent increased it


> Lancelot it looks like you have done well in property over the last X number of years but just out of interest have you given any thought at all to how your positions could be affected if we do see a serious drop in Oz property prices in the next few years?
> And if so what measures have you put in place to guard against this? eg reducing leverage etc.




Dilligently paid down debt intead of buying worthless junk over the years was my plan

$70 covers weekly repayments on each place at todays interest rate, rent is considerably more


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## numbercruncher (24 December 2008)

Lancelot said:


> Denial and delusional NC?
> 
> clench your fists and stamp your feet and your HPC may come true, in your dreams at least





your turning this thread into your own little spam blog .....

Im here debating ' House prices to keep rising for years ' ....

Not interested in peoples personal positions ...

And to save confusion what is it that we are in denial about exactly ?


----------



## Lancelot (24 December 2008)

numbercruncher said:


> your turning this thread into your own little spam blog .....




Oh I dont know, with over 2000 posts I'm sure you have more posts than me spammy blogger, pot kettle black?


> Im here debating ' House prices to keep rising for years ' ....




Cool, I thought you were arguing that its all downhill, house owners to burn blah blah blah



> Not interested in peoples personal positions ...




I could say, "I know this other guy" if it makes you feel better, but I would have thought real examples to be better than some pap written by MSM with the sole purpose of selling newspapers



> And to save confusion what is it that we are in denial about exactly ?




Nothing , house prices to infinity and beyond


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## kincella (24 December 2008)

my 2 cents worth...when interest rates drop...if you keep paying the instalments at the old higher rate, you will pay down your capital balance much faster ...its too easy....and if that is what you want to do...especially if its your principal residence  and the interest is not tax deductible....

I am waiting and praying the loan interest will go as low as 3%..but I may lock in at 4%....
I am talking investment properties....so if by may or june 09 the rates are that low...I may buy another property at a depressed price... there is less reason to reduce  the capital balance when rates are low for an investor...and more reason to borrow...depending on your circumstances...

I am a property bull.....and very much aware of the media making every bit of news as if it were the absolute worst.
Funny thing...australians spending 38 billion this xmas.....obviously they are not aware of the recession.....or do they not believe the media and think they will come out of it all ok ??


read this article for an example.....the real facts are small differences and compared to last year which was an all time high etc
http://business.theage.com.au/business/world-business/us-housing-prices-collapse-20081224-74g8.html


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## gfresh (24 December 2008)

What on earth makes you think the banks will offer you a long-term loan at 3-4% ? The US now has 0% central bank rates, and the lowest long-term rates are still around 5%. Rates are getting closer to the bottom than the average punter thinks. Any lower rates are going to benefit one group only - the banks, and keep them in profitability as other avenues dry up. 

Australians will spend and spend, right up until debt collectors come knocking at the door to take things away from them. Having known people in this situation, that's pretty much the way it goes too, until there is absolutely no way they can spend, they will keep spending. Then when they can't the true (psychological) depression sets in, yes they stuffed up and it's a very long way out. 

A lot of debt is a very nasty problem when one loses a job, and those minimum payments which are now "pft" will seem like a mountain.  Many won't even know they will be there until part-way through next year. Who knows, I could be there myself, hard to say for sure how 2009 will play out... but I'm sure as hell not spending like there is no tomorrow at this point in time.

If I am lucky and do manage to hold my job through 2009, then maybe then I will look at buying somewhere. But it'll be the same position for everybody else out there as well.


----------



## kincella (24 December 2008)

gfresh said:


> What on earth makes you think the banks will offer you a long-term loan at 3-4% ? The US now has 0% central bank rates, and the lowest long-term rates are still around 5%. Rates are getting closer to the bottom than the average punter thinks. Any lower rates are going to benefit one group only - the banks, and keep them in profitability as other avenues dry up.
> 
> A = Because before the dec rate cuts banks were offereing 3.99 fixed...then the 1% cut in December....and I expect another in Jan 09...I will benefit enormously from another rate cut....just refinanced some loans and saving over 16.000 pa in interest alone.....
> 
> If I am lucky and do manage to hold my job through 2009, then maybe then I will look at buying somewhere. But it'll be the same position for everybody else out there as well.




You may need to be more specific about your circumstances...are you a first home buyer ???   as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
cheers


----------



## robots (24 December 2008)

kincella said:


> You may need to be more specific about your circumstances...are you a first home buyer ???   as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
> plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
> cheers




hello,

top effort man,

plenty of the money box brigade, specuvestor renter's, handout crew, affordability whinners, low income earners around here brother

anything you say or do has to run through the "opinion" police kincella

enjoy your rewards bro

thankyou
robots


----------



## Glen48 (24 December 2008)

Speculators in QLD  with rentals are in for a good time after June both parties have to give 2 months notice.
I wonder how many  home owners had looked at  returns on RE over a long term say 30 yrs and found out they are lucky to get 3%PA if lucky.
House prices have only gone up about 3% for the past 10 yrs and about to take a dive.


----------



## chops_a_must (24 December 2008)

kincella said:


> I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
> cheers



Until it gives a positive return, why would they?


----------



## tech/a (24 December 2008)

Glen48 said:


> House prices have only gone up about 3% for the past 10 yrs and about to take a dive.





Evidently they have been taking a dive for around 4 yrs now.
If you flick to the back of "Property Investor" mag and look up SA.
You'll find that Seaford/Rise,Port Noarlunga and Christies Beach and Moana  have caned your 3% a year.
10 yrs ago I bought a 4 bedder in Seaford Rise for $92,000 now $345,000
Worst deal has been 2 Esplanade Apartments for $180,000 now $450,000 ea.

Have a 4 apartment development on the books for next year.
Ready to submit to council just need 1600m2 at the right price,on a corner.
Considering 3---now we have time. Builders are falling over themselves to secure the contract.Negotiation on Price is continuous.Start and finish times have never been quicker.(Those offered).

You guys really aren't creative are you?
You think like losers.(From what Ive seen here).
Would you actually recognise a great deal if it landed in front of you?

Stop whinging and start identifying opportunity.
*I'll bet in 5 yrs time when its slipped past you AGAIN *youll all still be here telling us all it cant be done!

*Chops.*
Positive return can be found if you have enough capital.
But if an IP you'd be suprised how what looks negative after a good accountant has played with it is and can become positive.(geared).


----------



## chops_a_must (24 December 2008)

tech/a said:


> *Chops.*
> Positive return can be found if you have enough capital.
> But if an IP you'd be suprised how what looks negative after a good accountant has played with it is and can become positive.(geared).




Yah, but at my age, I would not even be close.

I would expect within a couple of years to be able to buy some things in Perth that were affordable to me. But that is certainly not at current levels. Apartments between 120-150 inner city, is what I would be expecting. Otherwise, wont bother. The supply is going to be ridiculous here over the next few years. So unless the prices drop, I'll keep telling them they're dreaming.


----------



## gfresh (24 December 2008)

kincella said:


> You may need to be more specific about your circumstances...are you a first home buyer ???   as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
> plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
> cheers




Looking to buy first owner occupier, to live for the first 12 months at least, then rent it out and go back to renting. To be honest don't expect to make any good capital gains for 3 years, but at least I will benefit if it happens. Was renting out the family home for a couple of years, but we sold at the start of this year due to things looking nasty. 

Other than teaser short-term rates (and that 4.99 for 3 from westpac which disappeared pretty quickly), best presently seems to be 6.19% for 5 years.. a long way from under 5%. Not holding my breath for anything too much lower.

If you're a professional investor, probably less need to care about the job market, but for the majority out there that will be the concern in 09. 

To be honest, I think the sharemarket offers the best opportunities for a very long time, and can't have property rising without the other being successful also . 

If investors believed property really is going to launch, would have thought that buying into stocks such as Mirvac, Stockland, the Banks, etc would be putting their money where their mouth is.


----------



## Lancelot (24 December 2008)

Glen48 said:


> House prices have only gone up about 3% for the past 10 yrs and about to take a dive.




LMAO

Here are ones my parents purchased, all QLD

1974 Brassal (Ipswich) $21k  + 33 years @ 8% compounding= $267,000

1982 Redcliffe $28k + 24 years @11% compounding = $343,000

1985 Redcliffe $38k + 21 years @11% compounding = $340,000

3% ha


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## kincella (24 December 2008)

hmm.....there is a big difference to buying home building stocks and managing your own portfolio...its about management and what lies beneath the surface.... I manage my properties...I am the boss...I know all the ins and outs of the business...however much as I like and expect boral and others to recover....I do not know the  extent of their borrowings....if they have margin loans attached to management shares....if the shares are being shorted.....or really what else is going on in that building business.....
as a rule I do have some shares in other property companies.....I like what they are doing and where they are going.....but suffer massive  paper losses atm.....
plenty of time later when I see recovery taking place....in the meantime I prefer to trust myself versus all the others
cheers


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## kincella (24 December 2008)

I love how people use the 3% as a return on property investments.....only because the readers do not understand there is a difference between 3% earning on a term deposit or internet account...to which they compare the property return to...
the term deposit can never grow by itself.....nothing you can do while its sitting in the bank to make it any different.....except lose it until the bank guarantee came in.

however if you invest the same amount in a property whether it is your own home or as an investment....in most cases it will grow...due to house prices and voila capital growth....
they should refer the property growth figure as a capital growth rate....in commercial property they use the CAP RATE.....
which means usually if the interest on deposit rates are say 5%...then you would expect to earn at least 4% as a cap rate on the property....
the cap rate is calculated as the income divided by the rate....eg 15000 divided by 3% = market value of 500,000......it allows for future capital growth
when interest rates come down cap rates come down...= higher market value....and the opposite occurs..when interest rates go up so does the cap rate....eg 15000/10% =150,0000 
but in australia they only use the cap rate for commercial   property, whereas they seem to use it on resi in the US....as well as commercial
if I apply the cap rate to one small residential property earning 15000 pa and use the 5% rate I come up with 300,000 sounds about right to me....
however when bank rates drop again I may need to use a figure of 4.5 which shows about 333.000 (not using calculating) or 4% - mv 375000
difference between an asset growth compared to no growth.....sure some may laugh this off now.....but hey you say houses prices are coming down and you are calculating increased prices......
well I do that for when the price recovers I will know far better than any resi agent as to what my property is worth....
ps you ignore the cost of borrowing or interest cost in this exercise


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## pilots (24 December 2008)

Glen48 said:


> Speculators in QLD  with rentals are in for a good time after June both parties have to give 2 months notice.
> I wonder how many  home owners had looked at  returns on RE over a long term say 30 yrs and found out they are lucky to get 3%PA if lucky.
> House prices have only gone up about 3% for the past 10 yrs and about to take a dive.



Glen48, we bought in Karrinup 14-6-2000, we paid $90k, last year it was valued at $800k, last week one two doors away sold for $700k. we are up around $600k in that short time, it give us $250 a week in rent.


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## Macquack (24 December 2008)

tech/a said:


> *Chops.*
> Positive return can be found if you have enough capital.
> But if an IP you'd be suprised how what looks negative after a *good accountant* has played with it is and can become positive.(geared).




I dont get this.

A "good" accountant (your term) may be able to turn a "positively" geared property into a "negatively" geared property and maximise the tax saving by "fudging" some expenses upwards.

 However, I cant see how "any" accountant could reduce expenses below their actual real cost to produce a "positively" geared outcome from a previously "negative" geared property.


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## Glen48 (24 December 2008)

_10 yrs ago I bought a 4 bedder in Seaford Rise for $92,000 now $345,000
Worst deal has been 2 Esplanade Apartments for $180,000 now $450,000 ea

When did you sell it, how long did it take to sell?_
If you haven't sold it it is not worth any thing until you have the money in the bank.
What will you think in a few yrs time when its worth a lot less and going no where for a long time?
I have  lawn mover worth 10 K all I need is a buyer.
House prices over a long say 30- 50 yrs average 3%.


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## Glen48 (24 December 2008)

This has been a once in 100 yrs chance to make money out of RE. not that RE has gone up, the only reason RE has gone up is due to the credit bubble nothing to do with houses.
Just the same as buying a Vase at a garage sale and finding out it priceless in the right place at the right time.
If you have sold and sitting back waiting for the fall you will win.


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## Lancelot (24 December 2008)

Glen48 said:


> _
> I have  lawn mover worth 10 K all I need is a buyer.
> _



_

Thanks for that laugh, its about the most desperate display I've seen for a while.




			House prices over a long say *30- 50 yrs average 3%.*

Click to expand...



HAHAHAHAhahahaha

Thats the way glen, change the rules when you realise you got it wrong




			Quote:
Originally Posted by Glen48 View Post
House prices have only gone up about *3% for the past 10 yrs* and about to take a dive.
		
Click to expand...



*FAIL*_


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## theasxgorilla (24 December 2008)

Glen48 said:


> House prices over a long say 30- 50 yrs average 3%.




It barely warrants a response but for what it's worth (not much) this is a poorly backed and unsophisticated argument, if you even have one.

Take a gander around high-demand areas with a scarcity factor and you'll see property prices that have very little chance of achieving the 3% target you're fabricating.  Beach-side and inner-city spring to mind.


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## chops_a_must (24 December 2008)

theasxgorilla said:


> Take a gander around high-demand areas with a scarcity factor and you'll see property prices that have very little chance of achieving the 3% target you're fabricating.  Beach-side and inner-city spring to mind.



It also supposes that all those in the property market have access to buying in those areas.

Which is a clearly fallacious argument, as you have to have people on either side of the average to make the average.


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## theasxgorilla (24 December 2008)

chops_a_must said:


> It also supposes that all those in the property market have access to buying in those areas.
> 
> Which is a clearly fallacious argument, as you have to have people on either side of the average to make the average.




Let's first remember it's a free country.  You, they, them, whoever, does have access to these areas.

This concept that real estate investing is about averages doesn't work for me.  I don't look for average situations or statistics...I look for exceptional opportunities.

I'm starting to see some in Sweden, Holland and Australia.  But my deflationary expectations suggest there could be more and better when some of what we've seen in equity and money markets hits the real economy in 2009.  Of course if I'm wrong about that I'm ready to move quickly either way, if it comes to that.  Are ye?


----------



## nth brisbanite (24 December 2008)

gfresh said:


> What on earth makes you think the banks will offer you a long-term loan at 3-4% ? The US now has 0% central bank rates, and the lowest long-term rates are still around 5%. Rates are getting closer to the bottom than the average punter thinks.




Westpac were recently offering 4.99% fixed over 3 years.  If the financial situation worsens in Australia, can't see why banks won't get down to 3-4%.


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## chops_a_must (24 December 2008)

theasxgorilla said:


> Let's first remember it's a free country.  You, they, them, whoever, does have access to these areas.
> 
> This concept that real estate investing is about averages doesn't work for me.  I don't look for average situations or statistics...I look for exceptional opportunities.
> 
> I'm starting to see some in Sweden, Holland and Australia.  But my deflationary expectations suggest there could be more and better when some of what we've seen in equity and money markets hits the real economy in 2009.  Of course if I'm wrong about that I'm ready to move quickly either way, if it comes to that.  Are ye?




I know what you are saying. But, most people aren't like you or I, and hence, the average.

Anyone expecting average returns that have got in over the last year or three, at average prices, are absolutely kidding themselves.


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## noirua (24 December 2008)

Lancelot said:


> Amazing stuff, well not really.
> 
> Just had notification from the bank that some Brisbane property I had re valued last week, has increased by on average 12% on the valuation 18 months ago and the extra funds, if I choose to use them, are there for the taking.
> 
> ...



Can you cite any property showing such an increase (12%) in Brisbane during the last 18 months?


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## robots (24 December 2008)

hello,

get on down to St Kilda, 14.8% for units and 14.7% for houses in one quarter

less than 30 sales in that quarter, fantastic

also many others Melton, Broady i think

they will be queing up out the front of my joints soon just to get a peek

thankyou
robots


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## Glen48 (25 December 2008)

How many other can see the connection between house prices and say a  XYGT having gone from 20K to 200k?
You will only win with current House prices if you have cashed in before now.


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## Passive (25 December 2008)

chops_a_must said:


> Yah, but at my age, I would not even be close.
> 
> I would expect within a couple of years to be able to buy some things in Perth that were affordable to me. But that is certainly not at current levels. Apartments between 120-150 inner city, is what I would be expecting. Otherwise, wont bother. The supply is going to be ridiculous here over the next few years. So unless the prices drop, I'll keep telling them they're dreaming.




You've given up before you started. Decent apartments between 120-150 will just not eventuate - at that price you will be competing with a lot of cashed up boomers and we have the equity and will get in to maximise our income. At these low rates , and lower to come buying units so cheap will be a no brainer if only from an income perspective. You would be looking at a drop of 50% on good stock and I venture to say someone is dreaming and its not them!

On a fixed loan , backed by other resi , I would be positively geared on stuff at that price so I and a ton of others would qualify well before many of the younger gen - that was the reality in the last boom and fortune will favour those with equity and serviceability more than ever. Best you can do is try and access the avenues available to FHB assuming you are one. But you will wait in vain for a collapse - cause it ain't comin - not this time anyway!

The regional migration is beginning, we still have high levels of external migration, for how long I don't know and soon the average property investor is going to start pulling their houses from the market as are formerly distressed sellers. Supply would be a problem if houses were empty but that is just not the case. The recession we had to have was infinitely worse than what we have here at the moment and everything is being done to turn this around. Then rates were huge and Keating was in denial. Rudd has learnt from the past.


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## tech/a (25 December 2008)

*Merry xmas everyone.*

*Glen*.
Its a business to me.
I have sold some properties and freehold others.
I have completed 2 developments in the past 8 yrs with another on the board now. Obviously funds were used to decrease gearing.

*Passive* has it pretty well nailed.
Gearing is very low and funds and equity are just sitting there to be used given the right opportunity. Serviceability is now the governing factor.(Always was really)

I have been where you and Chops are.
You have to start at some point (or never) and trying to time it perfectly just wont happen unless you fluke it and you wont know till after the fact.

Fear is a particularly powerful emotion.
Look for how you can do it rather than why you cant!

A friend once observed.
Better to risk your $50k than your $2 million!


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## noirua (25 December 2008)

Suburb profiles, Property prices* for houses and units etc.,
http://www.domain.com.au/public/suburbprofile.aspx?mode=rent&suburb=BRISBANE&postcode=4000


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## kincella (25 December 2008)

Merry Christmas to all
Some good posts and information from posters on this site....agree with Passive....the cashed up society are well placed ...it is real competition for the other buyers....and generally if they already own properties they have the experience to back them....versus the nervous, intrepid first home buyers...

Tech...you are spot on about...look how you can do it, rather than why you cannot....

I am not knocking FHB, and I dislike the competition between us oldies and the young ones on any subject.
But I do believe a section of society today has a very flippant attitude towards their finances...easy come, easy go attitude....which is not conducive to financial success.

Did anyone watch the TV series 'the nest' on SBS....you can catch it again on the website.
I only saw the 4th and 6th final episode....they took about 6 young ones who were living at home....sent them all into shared accommodation for 2 weeks, then sent them back home.  The parents wre happy for the kids to stay at home,,,thinking the parents were helping the children out,,,and for the kids to be saving for their own homes.....

Bernard Salt said the parents were doing the kids a disadvantage.....the kids were not saving or learning to be independent....in fact the kids were doing the opposite,,,spending and wasting money like there was no tomorrow...they all felt they could come home at any time....they were not independent. It was also harmful for the parents...they were spending their retirement money on the kids, with no future payback or compensation for the parents investment.

My advice for the kids is to do it like we boomers did.....nothing was  too easy, it was hard work (financially) for most of my early life and career, but we did party and have a great time, all within budgets and goals.....A home to me was a forced saving, we bought our first home when I was 21.  It forced you to stop wasting and spending money, the great australian dream did eventuate, as although it was our family home, there was the payoff down the track. Sold for about 8 times the cost when we divorced.

In my late 30's I opted for a full time career, moved to Melb, my income doubled...I worked hard and  I partied for about 4 years.  New found freedom disease....then in 1987 stock market crashed and my reasonably young employers took fright (they had more work than they could handle, reality, but they were fearful, in their minds, and I could see the word DOWNSIZE coming) 
I took the opportunity to start my own business (data confirms most start up businesses start this way in such a climate)
I missed buying property at the then, bottom of the market...simply because banks wanted a 5 year history....and mine was a new business.  So I just concentrated on my business, gritting my teeth every now and again as to how I was missing out on the property market.
I started investing in stocks, and got caught in the tech wreck crash.....I had made some big gains but did not get out quick enough....

Then I looked around at property....Melb seemed too expensive, but  I saw an opportunity in the region where I grew up....I figured people like myself would look for a safer option....the media were screaming tech wreck.....but were silent on property.. *** I have similar thoughts in today climate

By August 2000, I found some little bargains....noticed most people turning up at inspection times and auctions were  the same age....and city people in regional areas means...tree and see changes.....They were selling their big city priced homes and opting for the country life, at half the price and with cash to spare.
The FHOG was in and agents were asking an extra $7000-$10,000 a piece, as soon as I told them not a FHO they dropped the price immediately....
By 2004, I had bought 4 resi props and 2 commercial props....I sold off 1 resi for triple the price and 1 commercial for triple.....
I recall the media screaming by 2001 that property was too high and would come crashing down....well they got that wrong.....
I must admit I was not looking for a bottom in property to enter....it was all about my circumstances and timing....and I did have a 10 year investment plan.  Some of those plans paid off within 2-3 years rather than 10. I had no intention of selling any property under 10 years...however new opportunities arose, which I believed fitted into my longer term plans.

One of the longer term plans was to buy a retail shop, in a specific street and location.  I waited 5 years for one to come onto the market (tightly held area, most shops are held in trust and passed down through 3-5 generations, which was also my plan) My budgets and plans, forecast downturns and un expected events, so cash flow was paramount together with sufficient funds set aside.  So I sold the other commercial property....a sacrifice, but it was never going to match the returns on the new property.  The sale of the other resi prop was made in order to re-develop another property, again providing better capital and income returns.  Each time the profit on sale of one property was reinvested in another better performing property.

To sum up this post.....have a plan, with budgets and forecasts of different scenarios.  You dont have to wait for the bottom of the market to make money, you just have to be in a position to recognize an opportunity.  You need to do sufficient research for the market you are entering.  And you need to position yourself financially to take up some of those once in a lifetime opportunities that present themselves from time to time.

I have probably spent more time researching and understanding the pitfalls and benefits of commercial real estate...to the detriment of my other business...however the commercial property is a business and earning a good income equivalent to any other form of income...and in time it will become a passive income....'.you reap what you sow' springs to mind.....or that old pc saying...rubbish in  equals rubbish out.....
The same quality time spent on resi props should ensure you are successful.
Cheers
ps it seems well pathetic to be here on xmas day......but hey its my first by myself, by choice, a totally free day, devoid of any committments, and I am enjoying this.


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## joeyr46 (25 December 2008)

Passive said:


> You've given up before you started. Decent apartments between 120-150 will just not eventuate - at that price you will be competing with a lot of cashed up boomers and we have the equity and will get in to maximise our income. At these low rates , and lower to come buying units so cheap will be a no brainer if only from an income perspective. You would be looking at a drop of 50% on good stock and I venture to say someone is dreaming and its not them!




Passive if I'd suggested that a house in Brisbane would go from $150000 in 91 to $750000 in 2005 would you have believed that Especially if you knew wages would only rise 50% or so. I don't know how far prices will fall but the bias is to the downside at the moment and prices are dictated by too a large degree banks willingness to lend and the criteria they lend under(IMO) not our pricing model of costs or anything else because most of us don't really know the costs, and I have seen houses sold for much less than replacement cost and have bought a few myself. but you are right that cashed up people will put a bottom under prices at some point and then as banks start to lend again other people will follow. At this point banks have only tightened lending criteria but I have seen them completely stop lending on houses, interest rates were going up strongly at the time so there was pressure on them and their resources were stretched This could happen this time with falling interest rates and then watch the falls start . So I would,nt rule any prices out


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## kincella (25 December 2008)

Joey...I heard the talk about the banks clamping down....but 2 weeks ago, got angry with my lender for not passing on rate cuts...called CBA to gain infor and whilst talking to them generally....he said I had been approved for refinancing loans...took 10 minutes.....I could not believe how easy it was.

The other lender for the commercial prop was also not passing on the rate cuts...ING and BOQ were offering 6% fixed rates...so called my lender and said I am leaving...they dropped it that day to 7.65% which is the same as me paying another lender set up fees of 2400 and a 6% rate

In all my years of borrowing I have never seen it so simple and easy..all over the phone in a few minutes.....

maybe people need to be more specific ....banks will probably stop using 100% finance in the current climate.....or not lend to unemployed people etc or apply some risk re house prices...say lend only 80% etc

there are people out there with good credit history and equity and finances to back up their borrowings....it will not affect them


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## Passive (25 December 2008)

Joey

The comments you make really epitomise the nature of the market. Totally unpredictable and therein lies the danger. Often to buy a house in itself is one major accomplishment as you no doubt are aware. Once in, if budgetted correctly, the fight is then on to hold on until it becomes easier, either owing to increase in wages or inflation... Your first house is not an investment in the strict sense of the term - home first and foremost. Investment in housing begins with house 2 - not before!

My point is that 4 times in my life I have had to start again one way or another and it has never been easy. I actually had to be damn inventive, determined and downright resourceful as I don't have anyone in the family who had money. In the  90s I bought heavily , firstly primary dwelling, then 2 units, another number of homes and each one was a task. Never was easy!
I did believe I would treble my money and did - treble on the home value but at least 1000% on the actual money put down! Thanks to leverage and a belief Perth prices were horribly undervalued.

Evertime I read that property was dead in the water I felt ill, everytime council rates time came around I felt ill, ad nauseum. Everyone around me thought I was daft. However as I had seen 3 times before , despite the naysayers I hit the jackpot and started to consolidate. Have been bored for last 2-3 years and all becoming interesting now. As Kincella knows I was going to buy set of 8 units to help kids but the change in the market and drop in rates is allowing me to refocus on Perth and am now watching to buy here again. There are the opportunities to buy - not across the board but when they do come up I will be contacted first because of my network and thats how it works.FHB are the last in the queue with bargains.

Interesting side point is that I do not really believe that for what you get houses have not really gone up that much allowing for inflation but leverage has allowed me to to very well and inflation is tearing down the value of my remaining debt and rates are making it all look good again.


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## Passive (25 December 2008)

Kincella

In Perth resi had dropped commercial on its head by miles. I sold one of my houses and was quite pleased with myself as I would have a tidy sum in the bank. Almost to the day my investment house settled my landlord over a business interest told me he was selling and under duress I bought - otherwise good bye business. Nothing available at the time. Begrudgingly I settled in full and mutter mutter had my titles and first commercial property which had gone up very little in the last 10 years but 6 months before I bought went up 30%.
Not impressed - however 12 months later it went up by another 60% and rents skyrocketted and is well placed in good area. Hence my intro and slowly becoming a convert as this will be my pension in my dotage. Not after capital growth here - leave that to resi. As for my super - stuffed - thank goodness for my property interests and that they are in Aus - and no their values may decline here and there but if they have not collapsed by now they never will. One of the biggest blessings is that we are a mere speck on the world economy and therefore will not follow other basket cases if it has not done so by now.


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## kincella (25 December 2008)

passive..so you fell into the commercial property....a left of field moment, that comes unexpectedly, you were lucky/or fortunate you could take up the offer. Were you able to negoiate it down ?  Sometimes it turns out to be a godsend in disguise. Pleased it is working well for you know. 

One of the links I sent to you today had news about Perth Office space....not sure of the date, but it was saying it was a tight market.  Another article was about Sydney and Melb office space....all the big boys were leaving in droves....the ones that were in trouble recently...and a hive of activity in sub letting the premises....so assuming some of those miners go under or wind up, one might think there would be a surplus of office space coming up in Perth..

Sounds like you have been learning the hard way..you said had to start over several times...lets hope you have got it right by now.

My shops are in a trust, cannot be sold or split until the youngest grandchild turns 25, but the parents share the income in the meantime.  Had to do the will with so much at stake.  The children do not have my drive and need to be careful with partners, at this stage in their life.  So its just about protecting them and ...hoping they will gain the necessary skills to look after it themselves.
It will be worth just so much more in another 20 years time
I was going to put it into a superfund for tax purposes, but in the event of my death it would have been sold and split up.

In the meantime I do consider it my superfund, its a nice earner, and the capital growth has been phenomonem.  
Good luck with everything
cheers


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## Lancelot (25 December 2008)

noirua said:


> Can you cite any property showing such an increase (12%) in Brisbane during the last 18 months?
> 
> 
> 
> ...




Not that I would use domain figures as they are unreliable IMHO. The only valuation that counts comes from a valuer based on previous sales, but, as you like to use domain......................................

http://www.domain.com.au/public/suburbprofile.aspx?mode=rent&suburb=Oxley&postcode=4075

http://www.domain.com.au/public/suburbprofile.aspx?mode=rent&searchterm=wynnum

http://www.domain.com.au/public/SuburbProfile.aspx?mode=rent&suburb=Windsor&postcode=4030

http://www.domain.com.au/public/SuburbProfile.aspx?mode=rent&suburb=Red Hill&postcode=4059


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## chops_a_must (25 December 2008)

Passive said:


> You've given up before you started. Decent apartments between 120-150 will just not eventuate - at that price you will be competing with a lot of cashed up boomers and we have the equity and will get in to maximise our income. At these low rates , and lower to come buying units so cheap will be a no brainer if only from an income perspective. You would be looking at a drop of 50% on good stock and I venture to say someone is dreaming and its not them!




Income? You're dreaming. Occupancy will be the biggest factor in inner city Perth in the future.

And if it doesn't drop that much. Pretty simple really. I'll buy and live in Melbourne. Last time I looked better locations in Melbourne were still cheaper than Perth. No way I would buy in Perth unless that came back into line, and it has a long long way to go when you factor in likely occupancy problems with all these apartments piling in.


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## Passive (25 December 2008)

Proportion of flats and high density in Perth is amongst the lowest in Australia and a lot of it is newish and that adds to the price. Top end is hopelessly overvalued but seems to be holding its own. Your idea re Melbourne is a good one and no malice intended. Sometimes it pays to move away and build equity where there is obvious value and potential.

Just can't see your Perth inner city scenario unfolding.


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## chops_a_must (25 December 2008)

I mean, if it doesn't get where I think it might, no biggie, like I say, I'll look at Melbourne instead.

Although Perth has the lowest density in Australia, it probably is also going to have the highest percentage change in supply in that market over the next 5-10 years as well - as current projects get finished and the various infill projects come to fruition.

And yeah... it is absolutely ludicrous that you pay 350k for something you can get in Southbank for 220-250.  I mean... you'd be insane to buy that in Perth...


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## Passive (25 December 2008)

kincella said:


> passive..so you fell into the commercial property....a left of field moment, that comes unexpectedly, you were lucky/or fortunate you could take up the offer. Were you able to negoiate it down ?  Sometimes it turns out to be a godsend in disguise. Pleased it is working well for you know.
> 
> One of the links I sent to you today had news about Perth Office space....not sure of the date, but it was saying it was a tight market.  Another article was about Sydney and Melb office space....all the big boys were leaving in droves....the ones that were in trouble recently...and a hive of activity in sub letting the premises....so assuming some of those miners go under or wind up, one might think there would be a surplus of office space coming up in Perth..
> 
> ...



Did a bundle in the recession we had to have! Migrant from Africa - anti-apartheid protester et al does not win you brownie points - volatile times and I got out-had to start again - all does shape you.They reckon its character building - have enough of that! Financially very well off thanks to my belief in residential real estate especially through leverage. Owe a huge debt to Jan Sommers - whilst I had a basic idea she through her books chrystallised it all for me. Not a plug just genuinely appreciative for the good advice based on experience of an average person.  Perth is at a plateau but in the long term will reignite as the resources industry has a while to run with the China/India phenomenon. Can now afford to be patient.

Doing my due diligence on commercial - thanks for the heads up. Never too late to learn. Guess that is what leaves me flabbergasted is the rebuke you get from the know alls when its infinitely smarter to learn from successful practitioners. Will pick your brain from time to time on commercial.


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## knocker (25 December 2008)

robots said:


> hello,
> 
> get on down to St Kilda, 14.8% for units and 14.7% for houses in one quarter
> 
> ...



lol Who the hell wants to live in Broady or melton. or even st Kilda for that matter. Gees your a card robots Anyway merry xmas.:


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## theasxgorilla (25 December 2008)

chops_a_must said:


> And yeah... it is absolutely ludicrous that you pay 350k for something you can get in Southbank for 220-250.  I mean... you'd be insane to buy that in Perth...




And now for the engineers approach of looking at a scenario from all number of different angles...wouldn't you have been insane not to have sold Perth at those prices?  Had it really transformed so much, fundamentally, in such a short period of time?


----------



## Passive (26 December 2008)

Yes it has changed greatly. If you sell your home - then what?
Run the risk off a further run up - greater reentry costs. Selling some IPs was a good idea - allowed for consolidation.


----------



## theasxgorilla (26 December 2008)

Passive said:


> Yes it has changed greatly. If you sell your home - then what?
> Run the risk off a further run up - greater reentry costs. Selling some IPs was a good idea - allowed for consolidation.




My comment was in response to Chops comment about the relative price of apartments in Perth that he inferred were comparable to South Bank apartments in Melbourne.  From that comparison I deduced that these were inner city, high-density, homogeneous and relatively newly developed.  In my opinion they're the absolute worse place to be from a capital gains perspective when the market tanks.  

Everyone else is in line to get their profit before you. From the original land owner to the architects to the developer to the tradespeople to the marketers to the companies that provided the decor.  It's not my cup of tea.


----------



## kincella (26 December 2008)

gorilla, I dont know Perth, but have family who come to Melbourne and adore Melb compared to Perth. More for the high rise buildings and everything available 24/7

South Bank and the Docklands area are stunning places overlooking water....still not have been there, keep promising myself to go and have a look.
At the end of the day even though I am biased on Melbourne, believe it is a more vibrant place and employment and business opportunites abound....more opportunities on the east coast etc. Perth is well known as being the area where it is reliant on resources....but it's population is so small compared to Melb or Sydney.

I  have to question what you can buy for 220 in   that area, when I last looked a couple of months ago it was bottom prices of 550 to mid 2 million for Docklands, and 450,000 for South Bank.... he may have got mixed up with Melb city and studio apartments which is a very different market

here is a link which covers actual sales of units in the the Docklands, showing the 550,000 figures

http://pvg.webcentral.com.au/propertyValueGuideChart.asp

and Southbank
http://pvg.webcentral.com.au/propertyValueGuideChart.asp

I think the majority of us stick to investing in a known local area, we understand the demographics etc, compared to chasing movements in prices between cities.  Anyway cashing in on the WA resources boom areas was a smart move for those that are that way inclined and can afford it....but big money involved in buying and selling realestate...most of us are happy to wear the ordinary ups and downs in our home cities.


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## Passive (26 December 2008)

Perth is not to be written off too quickly. Been here a while and seen its ups and downs but its not over red rover for a while. The beauty about this place is not to buy and hold at all costs. That now seems a bad policy even for the blue chips on the ASX. The resources sector will have its resurgence - that is a given - but money can be made here and the key is to buy at the bottom when no-one dares or is avoided by all and sundry. This is a state of excessess but as the population continues to grow and growing it is - it will even out over time. Still a vibrant state economically and real estate was on the nose b4 the crisis as it had shot up so much. Here it always pays to have more than your own house if you are to score from the fluctuations in price and you need to consolidate on the highs. True to say that you always do better in your own backyard.

My last visist to Melb left me under no illusion that within 10 -15 kms from the City it aint cheap at all by Perth standards.


----------



## kincella (26 December 2008)

l about St Kilda....spent a couple of hours down there yesterday....took the dog for walk on the beach....but the kiosks were not open and we were looking to snack....luckily Acland St was alive with several cafes and bakeries open....found a shady spot in the main street....and just sat there watching the crowds....(the dog watches other dogs)....
its more of a tourist place now....did not see any of the drunks and ferals I used to see years ago....
when I first moved to Melb...I could have bought a beautiful little one bedroom on the beach for about 150,000 lovely old grand 1930's building...but did not like the culture in the surrounds....

my my has it grown  and beautified itself....I am only talking about right on the beach, I have not looked or am interested in anywhere else.....its gorgeous....probably way outside my budget.....
but it is only 5 minutes away...from where I live...but if I were younger I would be very interested in a beach front apartment


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## Passive (26 December 2008)

When I visited Melb last thought I would try and pick a bargain or two. Not that easy and the problem stems from some of the new stuff developers were building and hoping to sell to cashed up West Aussies. Most of these were believed to be Southbank but more places that were miles away from there! Our papers were filled with so called fancy apartments for sale in cheap Melbourne.

My sons mate was about to buy 2 off the plan and my son was trying to rope me in - no thanks -as stated earlier best place to do your dough.

One thing about Perths inner city stuff - small city - really large country town -lot have incredible views - near river - dream views - nearly new -absolutely magic and high rise totally underdeveloped.

Problem is that a lot of the views on this City come from kids who 5-7 years ago were paying $120 rent for 2 bdrm apartments, could buy a house for 
for 200k within 20ks from city and still complained - hello the real world has caught up with them and those days are gone - its like us telling our kids 5c could buy a slab of chocolate and they roll their eyes - no different with this - they just missed the boat and few will make the needed sacrifices we all took as necessary.


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## Passive (26 December 2008)

Renovated 2 bedroom apartment on busy Melb road in Williamstown $350k.
By Perth standards for what you get in Perth its not cheap! 

I will wait till that drops to 150 then I will buy and make you all look foolish. Would suggest that Perth is no different to most capital cities and now that the resources and especially easy money on stockmarket is gone a dose of reality is emerging for the Perth whingers. Funny how most claim they have made money on ASX - don't believe a word of it!

Most are young and can sit on their butts and quote reams of economic claptrap and then claim to be working - can't lose your Ausstudy that easily I suppose!


----------



## kincella (26 December 2008)

hey passive...lord elpus has come over...he is on the property forum on the other site...told him to join this site as well.....
this property investing is time consuming...until you find the right one....you are lucky in that your daughter is here to check out props for you and give you local knowledge....
I still think investing in your city or were you live..with your local knowledge beats trying to find the best deal australia wide.....nothing beats local knowledge...you just drive around and ask questions to separate fact from fiction.
cheers


----------



## theasxgorilla (26 December 2008)

kincella said:


> gorilla, I dont know Perth, but have family who come to Melbourne and adore Melb compared to Perth. More for the high rise buildings and everything available 24/7




I don't know Perth in any amount of detail either, but I imagine it's a very nice place to live.  If you're used to a big city like Melbourne or Sydney then I imagine you'd probably struggle.  But some people prefer what the west has to offer.  For friends of mine this has been the case and they've emigrated to Perth.

If I was considering it as a place to invest I'd still put it under the banner of highly speculative, and unfortunately you can't move it closer to anything either, which IMO is a negative impact on the immigration trump card (unless you're a South African).  

The return of resources demand will revive Perth (even I can remember the 80s!) but then there is that in between period.  Thankfully I think that the recent prosperity has made it a better place to live so even if the resource sector doesn't recover it's not going to go back to being the way it was.   And there will always be a test match, some one-dayers and (hopefully) two football teams there...not to mention the fantastic beaches, nature and lifestyle friendly work-ethic.

For those wondering about Melbourne property prices, here is one next door to robots for $329,000...in the heart of St Kilda...and you get to keep your job 

http://www.realestate.com.au



> I think the majority of us stick to investing in a known local area, we understand the demographics etc, compared to chasing movements in prices between cities.




BTW, investing outside of where one lives doesn't need to involve chasing price moves.  One can have several "known local areas" and be at the ready to pounce when opportunities arise.


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## Monario (26 December 2008)

My take on perth is its housing industry is about to be hit hard.

Surely it is only simple maths.

The resource sector over there is crumbling, all be it rather fast. The majority of home owners over there are somehow tied to W.A's huge mining industry, either directly or indirectly. With that said now that the boom has turned to bust and people are losing HIGHLY PAID jobs I am sure we are going to see a lot of people finding it hard to meet huge mortgage repayments.

One thing I found astounding about W.A. is the absolute rediculous prices in the small dust bowl mining towns... These areas are going to be hit so hard it scares me.

Another point to think about is the fact that immigration will also drop now that we have so many people out of work, companies dont need to look offshore for skilled labour anymore. Infact there are people already lobbying to have work visas cut.


----------



## Passive (27 December 2008)

Some sweeping statements there Monario. This economy is not tied in the majority to mining sector. As most were not direct beneficiaries of the boom , in fact got hurt by it , there are many industries and rural sector still going.

Reason means understanding this place on the ground and whilst it will not be as vibrant as b4 it is still in a growth phase. Beware of all the alarmist nonsense! Before the resources boom there was an economy and there is one after. Gas has not stopped production, BHP still expanding, many mines still going. Immigrants still coming in believe it or not. Family member granted visa last week - coming in with pots of dough - another house to be bought, another car, does not need to work, stimulates the economy - all depends on your take I guess!

There is a large govt sector still working.
There are still teachers, doctors, nurses , farmers, bankers, truckdrivers, lawnmowing contractors etc etc etc . 

Many in the media writing sensationalist headlines find this all new -older ones remember that boom times are brief and usually so are tough economic times you just are more aware of them.


----------



## robots (27 December 2008)

hello,

this deflation thing going on is fantastic Explod, driving home last night picked up a washing machine 35% less than paid for a few years back, same model

will bang it in storage for a while until i need it, going to Harvey's joint today to see if the Bunk Bed's are being thrown out for crazy prices, awesome

have a great day

thankyou
robots


----------



## juddy (27 December 2008)

Passive said:


> Funny how most claim they have made money on ASX - don't believe a word of it!




That is an astoundingly stupid and provocative statement to make on a sharemarket site.

I suspect there is more than a touch of envy in that.

Ask yourself why you (and a few of your mates) are on a share market site when there are so many dedicated property sites around.

(Apart from the fact you have all been banned from that other share market site.)


----------



## kincella (27 December 2008)

Hi Juddy, I am a friend of Passive and Lord elpus...are you insinuating we have all been banned ?


----------



## kincella (27 December 2008)

mistake in last post...only passive applicable...lord elpus not here


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## Passive (27 December 2008)

juddy said:


> That is an astoundingly stupid and provocative statement to make on a sharemarket site.
> 
> I suspect there is more than a touch of envy in that.
> 
> ...




Juddy - envy just is not in my makeup - I have personally done a lot of investing in the sharemarket and will quite happily admit I have neither made or lost dough. Can't say that is true of many , if not the majority or have I been asleep whilst everyone is making 50% - I thought it was a drop of 50% - silly me!Yes my super has but the facts remain that the property bears are having a field day on the property bulls and blow me down I make a comment not very different to what is being said on the other side of the fence and its stupid and provocative, why is it that most of the protagonists are not able to buy homes, complain about the prices, will wait for them to come down - yes it is an assumption however I believe it is based on their personal lack of affordability. I stand to be corrected and don't mean to cause offence. Those who are trying to get in , and I might add I have helped many find a way in to get their primary home have a totally different mindset to what I see on these sites. If I am not mistaken this is a property thread anyway!

For the record I will be re-entering the sharemarket when appropriate as I have quite a penchant for it and believe it will come back soon, not quite yet. I too hope to learn from the experienced punters on these sites as I would have thought many would learn from our successes.There are obviously successful players on whose posters I await with bated breath. By the way I wish it were easier to get into owning your own home, lament the lack of direct govt involvment and what I experienced in my many years of oppossing a unjust regime being banned means diddly squat.


----------



## chops_a_must (27 December 2008)

Passive said:


> why is it that most of the protagonists are not able to buy homes, complain about the prices, will wait for them to come down - yes it is an assumption however I believe it is based on their personal lack of affordability.




I think you will find, most of the property bears are either relatively young and or single.

Which makes other asset classes much much more attractive.

But it is also important as a driver of property price, because at the end of the day, they are the ones that would traditionally move into the home ownership bracket, and if they don't, it's a serious problem for the bulls.


----------



## IFocus (27 December 2008)

Passive said:


> Some sweeping statements there Monario. This economy is not tied in the majority to mining sector. As most were not direct beneficiaries of the boom , in fact got hurt by it , there are many industries and rural sector still going.
> 
> Reason means understanding this place on the ground and whilst it will not be as vibrant as b4 it is still in a growth phase. Beware of all the alarmist nonsense! Before the resources boom there was an economy and there is one after. Gas has not stopped production, BHP still expanding, many mines still going. Immigrants still coming in believe it or not. Family member granted visa last week - coming in with pots of dough - another house to be bought, another car, does not need to work, stimulates the economy - all depends on your take I guess!
> 
> ...




A couple of things, WA has a number of speeds in its economy hence some see no problems while others are worried.

Start with housing, the last 5 years of price rise's are unprecedented here in WA we have never ever that's never had a average housing price up there with Sydney that cannot be sustained.

Don't be surprised if house prices fall at an unprecedented rate, not saying they will but there are some good reasons why they could.

I have many friends through out the mining and manufacturing sectors here in the West many at management levels, there are many jobs currently swinging in the balance this is a fact not rumor, not media.

As all ways I guess we will have to wait and see


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## kincella (27 December 2008)

A bit of tongue in cheek here but.....

I think we can blame the boomers for this mess...going to tree change and sea change places...after selling off their city props for an average 600-800k's, then buying up in remote places for  a third to half that amount  (driving up prices to ridiculous levels) and left with all that spare cash.....or worse still then buying huge caravans and travelling to remote places...
I only like Melb....but look at the prices for Brisbane, Darwin and Hobart for goodness sake...or worse Canberra...or Perth.....(for passive hehe)

in my opinion they are all 'godforsaken' places....mostly only habitable because  even native animals departed them........except Darwin...the crocs have come back and wandering around the town.....the big Panthers are coming into town somewhere near the Blue Mountains.......

I love Melbourne city only...I dislike the bush, the country etc....
I could not imagine living anywhere else in the world...but thats me....
**Do not be offended.....just having a joke....rather bored with all this spare time on my hands....


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## chops_a_must (27 December 2008)

Canberra is not a bad place to invest in property at all IMO.

The outlooks in terms of occupancy have always been good, and the local populace is largely sheltered from downturns.


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## Passive (27 December 2008)

You'll keep mate.

I do not exaggerate to say I have been to Melb over 100 times and it was on the 98th I started to like the place.

You must have an innane ability to recognise quality which has taken me a while to achieve.

Stayed at the Park Hyatt as a treat , and of late the Windsor, and what a treat to walk around the City feeling safe and free at night - or am I being foolhardy? Some lovely authentic curries -cheaper the better it seems - in Perth I would think twice at venturing out for walkies at night.

If I told my wife we are moving to Melb I would be single again! Maybe after another 100 visits she may acquiesce - amazing what you can get use to. Do love country Victoria though!


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## Passive (27 December 2008)

chops_a_must said:


> I think you will find, most of the property bears are either relatively young and or single.
> 
> Which makes other asset classes much much more attractive.
> 
> But it is also important as a driver of property price, because at the end of the day, they are the ones that would traditionally move into the home ownership bracket, and if they don't, it's a serious problem for the bulls.




Very true and it has almost become a given for me, and many of our friends to assist our adult kids into homes. Succeeded with most of them and hoping to help the rest but you are right is is a lot more difficult than it use to be. I can't see that changing but I do see the need for family assistance being the order of the day if you want to get in on average wage. Many of us are happy to help - but how it has all changed Australia wide one way or another.


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## Passive (27 December 2008)

chops_a_must said:


> Canberra is not a bad place to invest in property at all IMO.
> 
> The outlooks in terms of occupancy have always been good, and the local populace is largely sheltered from downturns.





Sheltered employment


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## chops_a_must (27 December 2008)

Passive said:


> Very true and *it has almost become a given for me, and many of our friends to assist our adult kids into homes.* Succeeded with most of them and hoping to help the rest but you are right is is a lot more difficult than it use to be. I can't see that changing but I do see the need for family assistance being the order of the day if you want to get in on average wage. Many of us are happy to help - but how it has all changed Australia wide one way or another.




And you don't see a problem with this??? 



Passive said:


> Sheltered employment



Indeed.

Plus the fact that it has a high transitory workforce who don't intend to stay there for long, makes it an ideal property investment locale IMO.


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## kincella (27 December 2008)

sheltered employment...thats funny....sheltered from the real world...
friend moved there few years ago from Melb...he hated it..cold and like living on another planet...no 24/7 shopping and culture....he moved to Syd and loved it there

and passive the head of the GP organisation was bashed in Williamstown recently ......
Melb is probably   safe till around 11.00pm at night.... but going by the local media  and news, there has been a bit of strife lately with the young ones...think it all happens after midnight and in the early hours...extra cops employed to curb it....last week ambo's complaining about being bashed up by the drunks and drugo's...and hospitals full of same....
they did have a 2.00pm lockout trial recently....
not sure sometimes about what is real or what is a 'beat up' for another reason....problems with the police association versus the commissioner....at war with each other...but she is now leaving anyway....

maybe the younger ones have more idea


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## Passive (27 December 2008)

chops_a_must said:


> And you don't see a problem with this???
> 
> 
> Indeed.
> ...




I do see a problem with it - but little I can do to change things
Until then I will work the system for the good of those I can assist using the system in place that is so property biased in Aus and voter friendly that few pollies dare to alter.


----------



## Passive (27 December 2008)

IFocus said:


> A couple of things, WA has a number of speeds in its economy hence some see no problems while others are worried.
> 
> Start with housing, the last 5 years of price rise's are unprecedented here in WA we have never ever that's never had a average housing price up there with Sydney that cannot be sustained.
> 
> ...




IFocus

We have never seen such a surge in commodities needed by the giant China. WA prices are not too different from other states medians and remember NSW is a basket case as was Melb with the last recession. From the research I was doing in the late 90s and early naughties we were underpriced in price and rents. Caught up and dropped back to what I think, and I may be wrong - but don't think so -sustainable levels.

The China/India/Tiger economies story is not over and Perth will perform well long term and may exceed Sydney prices for decades to come once the world goes back to growth mode long term. If a place has what others want it gets an advantage like the oil rich countries. Granted slow for them now but long term  - no! What makes the resource states different long term?

With low rates many homeowners will hold their homes as it is that first and foremost a home and not an investment. Employment is well over 95% - yes there is fear but that can change quickly - and as rates go down less and less pressure to sell.


----------



## numbercruncher (27 December 2008)

> The China/India/Tiger economies story is not over





Chindia can buy as much dirt from our holes as they can afford but it isnt going to replace the loss of demand created by the rest of the recessioned world.


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## Monario (27 December 2008)

Passive said:


> IFocus
> 
> 
> 
> ...




The only thing that would stave this off is the other big world economies pulling themselves out of recession in a short time frame... anyone think this is going to happen?


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## numbercruncher (27 December 2008)

The exodus of skilled ring ins should now gather momentum ....




> Departures start as boom turns to bust
> 
> THE Harvey family savoured their last, warm Aussie Christmas Day on Perth's riverside yesterday before they head to greener pastures overseas.
> 
> ...




http://www.theaustralian.news.com.au/business/story/0,,24843589-36418,00.html


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## Passive (27 December 2008)

To the UK ? LOL


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## chops_a_must (27 December 2008)

Passive said:


> I do see a problem with it - but little I can do to change things
> Until then I will work the system for the good of those I can assist using the system in place that is so property biased in Aus and voter friendly that few pollies dare to alter.




Got nothing to do with doing the right thing or anything like that. It means that prices have undoubtedly reached a ceiling if they can no longer be afforded by responsible people earning above slighty average wages.

I'm not sure if you have lived here for a long time, but Perth has an historically massive emigration problem. As late as 2003 young people were leaving Perth in droves. I remember being involved in programs as to find out why, and what to do about it.

Hence, historically problematic occupancy rates.



Passive said:


> To the UK ? LOL




And as above, it will continue to be that way. If there are no jobs here, young people wont stay. It is one of the worst places to live as an 18-40 year old.

My engineering mates who I get a lot of information from about various projects, have told me that a whole heap of skilled migrants who were organised to come here in boom times, and have finally arrived, are going to start being laid off and sent back because there isn't even enough work to keep the locals employed.


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## numbercruncher (27 December 2008)

> have told me that a whole heap of skilled migrants who were organised to come here in boom times, and have finally arrived, are going to start being laid off and sent back because there isn't even enough work to keep the locals employed.





The Gov is already being lobbyed to slash immigration to boot ...


----------



## knocker (27 December 2008)

numbercruncher said:


> The Gov is already being lobbyed to slash immigration to boot ...




Well if there is not enough work then that follows


----------



## Passive (27 December 2008)

Whole batch of migrants with money just approved - my niece and family one of them.

Been here more than 25 years and seen it all before. Perth has more panic merchants than elsewhere and if values drop seize the opportunity as they will go up again. Often said we have a cowboy economy here and many opportunities to make and lose money.

We all have anecdotal stuff we hear - time will tell!


----------



## numbercruncher (27 December 2008)

> Whole batch of migrants with money just approved





We never knock back people with money 


Welcome to Austraaaalia Mates


----------



## robots (28 December 2008)

hello,

yeap, we different all right:

http://au.news.yahoo.com/a/-/world/5234859/man-shot-talking-pitt-film/

popped at the cinema, for christ's sake get with the program United States

what a top day, got home safely on the pushie without getting a cap in the bum

thankyou
robots


----------



## numbercruncher (28 December 2008)

Always rambling about USA Robi ...... they have 15x our population so you would expect to see 15x the number of crimes .....




> Australia’s urban crime rate is on par with most large cities in the United States that have medium crime rates.




https://www.osac.gov/Reports/report.cfm?contentID=69927


Melbournes full of gun toting "underbelly" types i hear, and those on budgets settle for knives I hear ?


----------



## robots (28 December 2008)

hello,

get it:

http://en.wikipedia.org/wiki/List_of_countries_by_homicide_rate

gee, is australia there somewhere?

thankyou
robots


----------



## robots (28 December 2008)

hello,

you still there Number? if you having trouble with the link data i will pm if you like? 

thankyou
robots


----------



## Lancelot (28 December 2008)

Hi robots, same for nouria, suddenly goes all quiet when the facts are produced





> Quote:
> Originally Posted by noirua View Post
> Can you cite any property showing such an increase (12%) in Brisbane during the last 18 months?
> 
> ...










Lancelot said:


> Not that I would use domain figures as they are unreliable IMHO. The only valuation that counts comes from a valuer based on previous sales, but, as you like to use domain......................................
> 
> http://www.domain.com.au/public/suburbprofile.aspx?mode=rent&suburb=Oxley&postcode=4075
> 
> ...


----------



## numbercruncher (28 December 2008)

robots said:


> hello,
> 
> you still there Number? if you having trouble with the link data i will pm if you like?
> 
> ...






That crime rate should jump as the recession intensifys 

Patience ....


----------



## chops_a_must (29 December 2008)

Got no idea about homicide rates, but pretty sure anyone involved with St. Kilda contributes to the homocide rate.


----------



## Lancelot (29 December 2008)

chops_a_must said:


> Got no idea about homicide rates, but pretty sure anyone involved with St. Kilda contributes to the homicide rate.




And being involved with Perth contributes to shark attacks:shake:


----------



## numbercruncher (30 December 2008)

Thanks pops ...


----------



## Beej (30 December 2008)

numbercruncher said:


> Thanks pops ...
> 
> View attachment 26773




What a load of whinging, bitter, over-emotional non-property-owner propaganda! And a load of rubbish to boot..... 

For a start, there is no great housing crash or housing bailout going on in this fine country. Just the business as usual incentives to encourage home ownership (better for people when they retire) plus subsidies for the private provision of what otherwise would be publically funded housing.

Oh yes, all your financial problems, lack of foresight, inaction when opportunity presented itself etc are all the fault of previous generations and not yourself or your own decisions in anyway whatsoever.....

Plenty of decent property around at affordable prices for the kiddies to get a start, all over the country. Always has been, always will be, just requires a few compromises along the way before you get to where you would really like to be. 

If anyone has a philosophical problem with debt for housing (ie having a mortgage) then keep on paying rent, you'll just make gramps a happier man than he already is in the long run!  Or you could be smart like him and look forward to the time when you get to live rent free in your own home (fully owned) plus maybe live off the rent income being paid by others to you instead of to others by you......

Beej


----------



## kincella (30 December 2008)

beej, I reckon your post about sums it up...right....
now if they can just eliminate the picture of stock price graphs and insert the history graph for housing..and remember the two are miles apart....there may be a better understanding regarding the roof over their heads...
with interest rates coming down to 2-3% this coming year....looks like a window of opportunity for some...
and then there is this report from the business spectator...copied from another site...............................

Few subjects elicit more emotive debate than house prices. And rightly so given that the average Australian family has 60-70 percent of all their wealth in the world invested in their home. Understanding whether house prices are moving up, down or sideways is of vital importance to us all.

Yet as the co-producer of one of Australia’s most frequently referenced house price indices, I have been amazed at the number of times individuals have expressed disbelief at the remarkable resilience displayed by the median Australian house price during the last 12 months.

Despite households being slammed with five-plus interest rate hikes between November 2007 and mid 2008, plummeting consumer and business confidence, a non-farm economy that registered negative growth in the third quarter, daily doom and gloom regarding the global financial crisis, and unprecedented 50 percent across-the-board falls in shares and listed property trusts, Australian house prices have barely budged.

In the year to end October 2008 they are off by about 1 per cent notwithstanding hyperbolic predictions from several commentators of 30-50 per cent price falls. In fact, the latest data indicates that Australian house prices have stabilised in the fourth quarter.

And yet if you believed the headlines and the statements of various pundits you would think the world was coming to an end. The media has incessantly recycled war stories from affluent areas -- such as Sydney’s northern and eastern suburbs -- about precipitous price discounting, cataclysmic losses on multi-million dollar homes, and vast swathes of properties listed for sale in salubrious destinations like Palm Beach.

As economists like Macquarie Bank’s Rory Robertson have noted, the quality of reporting in general has, however, been very poor. For example, under the headline “Dismal Outlook for Housing” The Australian Financial Review exclaimed on 16 December 2008 that “median house values had fallen since September”. But this is just plain wrong: according to the two key house price indices published by the Reserve Bank of Australia -- APM and RP Data-Rismark -- median Australian house values have actually risen since September.

More generally, conversations amongst the commentariat and members of the financial services industry in particular are littered with bearish stories of house prices plummeting in luxury markets and vendors not getting the gains they expected (which is equated with a real loss). But what these folks don’t understand is that price movements in the $1 million plus sector are of virtually no relevance to the average Australian home owner or the overall housing market.

The truth is that an important behavioural bias, known as ‘anchoring’, is responsible for the inability of many journalists (and the financial services executives to whom they speak) to fathom Australia’s housing market dynamics. Anchoring denotes the tendency of people to rely far too heavily on small pieces of non-representative information when making decisions or estimating probabilities.

In 2002 Daniel Kahneman was awarded the Nobel Prize in Economics for his work (with the late Amos Tversky) documenting the anchoring bias and other behavioural dispositions that adversely afflict human decision-making. These frailties in our judgment have been shown to exacerbate the protracted booms and busts in share prices that we have observed over the last 30 years.

When it comes to house prices, purported experts tend to make the mistake of extrapolating out from their individual circumstances and using this information as a credible proxy for the wider market. Yet despite the media prominence given to homes worth more than the magical $1 million mark, these properties account for only 5 per cent of all sales in Australia. That is, they are of no relevance to 95 percent of home owners. In fact, nearly 80 percent of all Australian property sales in the last year have comprised of homes valued between $200,000 and $600,000.

Importantly, there has also been a great disconnect between the performance of properties in the luxury and mass markets. The global financial crisis has hit middle to upper income households in the financial services sector hardest. So-called ‘affluent unemployment’ has triggered substantial property price falls in dress-circle locations such as the eastern and northern suburbs of Sydney and the Tooraks of Melbourne. And thus the top 10 per cent of all homes in Sydney and Melbourne ranked by value have suffered the highest price falls, declining by more than 12 per cent over 2008.

Yet the median Australian home, worth just over $400,000, has been extraordinarily resilient falling by little more than 1 per cent. It is, therefore, highly misleading to presume that the experience of upper income households can be applied to the average Australian home owner as is the media’s wont. While rising unemployment will inevitably put further pressure on prices, this will be counterbalanced by 30-50 per cent reductions in mortgage rates combined with the government’s commitment to support households via greater fiscal stimulus. Australia’s media also needs to come to the party by spending less time fuelling consumer fears with sensationalist headlines and investing more effort objectively analysing the data.

The $3.3 trillion housing market is simply too big a topic to get wrong.

Christopher Joye writes Business Spectator's property blog and is managing director of research group Rismark International which produces the RP Data-Rismark Hedonic House Price Indices in conjunction with Australia’s largest property information company, RP Data.


----------



## kincella (30 December 2008)

kincella said:


> The truth is that an important behavioural bias, known as ‘anchoring’, is responsible for the inability of many journalists (and the financial services executives to whom they speak) to fathom Australia’s housing market dynamics. Anchoring denotes the tendency of people to rely far too heavily on small pieces of non-representative information when making decisions or estimating probabilities.
> 
> In 2002 Daniel Kahneman was awarded the Nobel Prize in Economics for his work (with the late Amos Tversky) documenting the anchoring bias and other behavioural dispositions that adversely afflict human decision-making. These frailties in our judgment have been shown to exacerbate the protracted booms and busts in share prices that we have observed over the last 30 years.
> 
> ...




both the bulls and the bears suffer from the same trait....neither takes any notice of the opposite view......its an interesting concept to think about..
explains why the average mum and dad home owner is not rushing out to sell their HOME.....and the average renter is not about to change his attitude just yet...
except an interesting change takes place at some stage.....hmmm fall in love...get married...and guess what.....the missus wants her own home to raise her babies  in....

I dont mind either way.....renters and home owners can all live together
cheers


----------



## MrBurns (30 December 2008)

kincella said:


> Christopher Joye writes Business Spectator's property blog and is managing director of research group Rismark International which produces the RP Data-Rismark Hedonic House Price Indices in conjunction with Australia’s largest property information company, RP Data.




When the weather experts tell me it's sunny but I look out the window and it's raining I believe what I see, these housing experts should also look out the window sometimes instead of burying themselves in "research" that not even they understand and is inevitably wrong.

There are houses all around me that have been on the market for months or are sold at hundreds of thousands of dollars below last years levels, upmarket suburb in Melbourne, so I dont need some arrogant full of himself ******** telling me house prices have fallen 1%.


----------



## robots (30 December 2008)

MrBurns said:


> When the weather experts tell me it's sunny but I look out the window and it's raining I believe what I see, these housing experts should also look out the window sometimes instead of burying themselves in "research" that not even they understand and is inevitably wrong.
> 
> *There are houses all around me that have been on the market for months or are sold at hundreds of thousands of dollars below last years levels,* upmarket suburb in Melbourne, so I dont need some arrogant full of himself ******** telling me house prices have fallen 1%.




hello,

come on Mr Burns give us an example, just one please, herald-sun would have an article on it surely

thankyou
robots


----------



## Beej (30 December 2008)

MrBurns said:


> When the weather experts tell me it's sunny but I look out the window and it's raining I believe what I see, these housing experts should also look out the window sometimes instead of burying themselves in "research" that not even they understand and is inevitably wrong.
> 
> There are houses all around me that have been on the market for months or are sold at hundreds of thousands of dollars below last years levels, upmarket suburb in Melbourne, so I dont need some arrogant full of himself ******** telling me house prices have fallen 1%.




We here could quite easily say also that we don't need some grumpy, full of himself internet nobody telling us all the experts in the field or full of it and they know better!  Did you actually read that posted article? It states clearly the mistake you are making by trying to judge the whole market and it's outlook based on what you see in one "upmarket"/affluent Melbourne suburb. 

Not all area's are equal, some are under more pressure than others, some are ticking along quite nicely without any high volume of sales, forced or otherwise. The average suburbs in the major markets of Sydney and Melbourne are all doing quite fine - the median stats for the Dec quarter will show this when they are released.

Beej


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> come on Mr Burns give us an example, just one please, herald-sun would have an article on it surely
> 
> ...




Glennferrie Rd Kew, up for Expression of Interest months ago, not sold still there, give me one example of something that sold for 14.8% higher in 08" than it was worth the year before in St Kilda robots


----------



## robots (30 December 2008)

hello,

blessington st, st kilda, west three doors down opposite entry to botanical gardens, 

thankyou
robots


----------



## MrBurns (30 December 2008)

Beej said:


> We here could quite easily say also that we don't need some grumpy, full of himself internet nobody telling us all the experts in the field or full of it and they know better!  Did you actually read that posted article? It states clearly the mistake you are making by trying to judge the whole market and it's outlook based on what you see in one "upmarket"/affluent Melbourne suburb.
> 
> Not all area's are equal, some are under more pressure than others, some are ticking along quite nicely without any high volume of sales, forced or otherwise. The average suburbs in the major markets of Sydney and Melbourne are all doing quite fine - the median stats for the Dec quarter will show this when they are released.
> 
> Beej




Well you could say that but that would be personalizing the argument wouldn't it, I was talking about the guy from RP Data and there you go attacking me personally as If I were talking about you.

I could say you were a property permabull internet nobody who attatches himself to any piece of property propaganda to make himself feel vindicated and smug about his teetering property investment/s but I won't.

To say they've fallen 1% is misleading and it's not just one area it's a whole city of suburbs.
There will always be exceptions but overall it's all over rover for the permabulls but you wont know it till they're moving your furniture out onto the nature strip........thats if you have nature strips in St Kilda, I think the doors generally open directly into the gutter there.


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> blessington st, st kilda, west three doors down opposite entry to botanical gardens,
> 
> ...




Bulldust I know that property and it was overvalued the year before so it actually went down, any others ???


----------



## robots (30 December 2008)

hello,

charnwood rd, st kilda has big tree in the front yard, green fence roughly half way in street, double story 

thankyou
robots


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> charnwood rd, st kilda has big tree in the front yard, green fence roughly half way in street, double story
> 
> ...




There is no such property, you made that up.........next !


----------



## robots (30 December 2008)

hello,

pakington st, st kilda, double story open plan, wood pizza in backyard, double garage, lap pool and nature strip

can i include east st kilda as well mr burns

thankyou
robots


----------



## MrBurns (30 December 2008)

RP Data are either owned by or have very close links to Realestate.com.au the figures can be tweaked to say whatever you like as with most statistics.

One big sale in a location, where there's hardly any volume will show that the area has lifted, let's say but 14.8% but in fact hasn't has it, thats how it works, you're better to look out the window and leave the analyzing of the stats to those who exist in another dimension.


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> pakington st, st kilda, double story open plan, wood pizza in backyard, double garage, lap pool and nature strip
> 
> ...




That property was on Backyard Renovation show on TV not relevant - next !


----------



## theasxgorilla (30 December 2008)

MrBurns said:


> Bulldust I know that property and it was overvalued the year before so it actually went down, any others ???




Interesting argument Burns...how do you mean exactly?  You say it was overvalued...by whom?


----------



## numbercruncher (30 December 2008)

robots said:


> hello,
> 
> come on Mr Burns give us an example, just one please, herald-sun would have an article on it surely
> 
> ...






Google came up with so many results i didnt know where to start ....



> houses in Melbourne's blue-chip Toorak slumped 24 per cent in the six months to September.




http://www.news.com.au/business/money/story/0,28323,24610167-5013951,00.html

Thats only half a mil of fat shaved off ..... nothing compared to Torakians share portfolios perhaps ?


----------



## robots (30 December 2008)

hello,

great, we happy with using those figures, 

st kilda units up 14.8% for 2008, sensational 

utopia, what a place

thankyou
robots


----------



## MrBurns (30 December 2008)

theasxgorilla said:


> Interesting argument Burns...how do you mean exactly?  You say it was overvalued...by whom?




The agents who tried to sell it at the time.


----------



## theasxgorilla (30 December 2008)

MrBurns said:


> The agents who tried to sell it at the time.




So you're saying the property sold for less this year than those agents were trying to sell it for last year, so it's gone down in price?


----------



## 2BAD4U (30 December 2008)

If a property is truly overvalued then it wouldn't sell in any market.  So if it sold at a lower price this isn't an indication that prices fell, just that it was overvalued.


----------



## kincella (30 December 2008)

here are the commbank figures...obviously not enough sales but it does show 10% growth...
if commbank is not big in the area for loans then it can distort the figures...but abs and others often use commbanks loan figures in their stats...

after taking a stake in aussie and now wizard they will probably be the biggest lenders in the future

just food for thought
http://pvg.webcentral.com.au/propertyValueGuideChart.asp

I notice a heap of affordable places on domain..whioch lists recent sales...however I believe a lot of bottom of the market props have been sold recently in other areas I watch..which brings the  median price down....


----------



## MrBurns (30 December 2008)

theasxgorilla said:


> So you're saying the property sold for less this year than those agents were trying to sell it for last year, so it's gone down in price?



.

No I'm saying it hasnt gone up


----------



## robots (30 December 2008)

hello,

whats going on with that property then Mr Burns? ROE tells me everything goes up by 10% per annum, and to double in 7-10yrs

is it next to a brothel or something?

thankyou
robots


----------



## MrBurns (30 December 2008)

kincella said:


> http://pvg.webcentral.com.au/propertyValueGuideChart.asp
> 
> ....




Interesting link kincella thanks


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> whats going on with that property then Mr Burns? ROE tells me everything goes up by 10% per annum, and to double in 7-10yrs
> 
> ...




There are always exceptions to the rule, the market in some areas is effected by one or 2 large sales on very low volumes plus the market is being proped up to some extent by the lower interest rates and Govt bribes, next year will tell the story but if the housing market can survive this I'll be amazed, akin to defying gravity.

The best way is to attend auctions in your area see what properties are actually being sold for as against what they might have got a year ago,.


----------



## robots (30 December 2008)

hello,

it is amazing Mr Burns the resilience of property, 

why is it taking soo long to hit aussie land, this saga has been going on for about 12mths in US (declining prices)

ah! i know, you dont get popped going to Coles or Westfield Shoppingtown in Aussie land

i know i know i have to what, it's going to be 2009 or 2010 now

thankyou
robots


----------



## tech/a (30 December 2008)

For what its worth


----------



## explod (30 December 2008)

Struth Robots.  

Looks like that info you gave me on St Kilda could be a bit shonky.   

In fact Tech's chart says it crashed in 08


----------



## MrBurns (30 December 2008)

robots said:


> hello,
> 
> it is amazing Mr Burns the resilience of property,
> 
> ...




Yes it is taking longer here, pent up demand, lower interest rates, Govt grants, and *still *it's falling, imagine what will happen when those factors change plus job losses kick in.

Wont be the same as the US though, probably.


----------



## robots (30 December 2008)

hello,

other people must of given me dodgy information, cant be my fault Explod

thankyou
robots


----------



## BigAl (30 December 2008)

Now I've heard it all.

We are immune from the worlds problems.

This time its different.


----------



## 2BAD4U (30 December 2008)

Here's some food for thought.

Australia's population is growing at 1.7% a year (Source: ABS).

At this rate of growth it will take approximately 45 years for our population to double.  All those extra people will have to live some where.

So what's it to be?
a) All these extra people will buy houses pushing prices back up again.
b) All these people will be so far priced out of the market it will create boom times for property investors.
c) A little bit of a) and a little bit of b).

All you property bears must concede one point though. At some time houses will turn and start to increase in value again, otherwise all your arguments support a goal of free housing for everyone or zero growth. Neither of which can happen (zero growth short term but not sustainable long term).


----------



## Lancelot (30 December 2008)

MrBurns said:


> so I dont need some arrogant full of himself ******** telling me house prices have fallen 1%.




I agree, I dont need some arrogant full of himself ******** telling me house prices have fallen either




> Quote:
> Originally Posted by Lancelot View Post
> Not that I would use domain figures as they are unreliable IMHO. The only valuation that counts comes from a valuer based on previous sales, but, as you like to use domain......................................
> 
> ...


----------



## MrBurns (30 December 2008)

2BAD4U said:


> Here's some food for thought.
> 
> Australia's population is growing at 1.7% a year (Source: ABS).
> 
> ...





It will go up again eventually but it will go down first and stay there for a few years in all probability, the property boom was huge , the crash will be just as big.


----------



## Lancelot (30 December 2008)

numbercruncher said:


> Thanks pops ...
> 
> View attachment 2677




That picture has been getting a workout today Hired Goon..............er I mean, numbercruncher


----------



## MrBurns (30 December 2008)

nothing.......


----------



## MrBurns (30 December 2008)

Lancelot said:


> I agree, I dont need some arrogant full of himself ******** telling me house prices have fallen either



 only 1%, I agree it's more like 15% so far.


----------



## Lancelot (30 December 2008)

MrBurns said:


> only 1%, I agree it's more like 15% so far.




Not according to those links or latest valuations for my areas

https://www.aussiestockforums.com/forums/showpost.php?p=377989&postcount=2682

Maybe in your areas, but I'm not invested there so it's not an issue for me.

You see, looking at the wobbly green line its plain to see that different areas have different cycles, mines on the up, yours is not but was possibly on the up while mine were down.

Cycles eh


----------



## MrBurns (30 December 2008)

Lancelot said:


> Not according to those links or latest valuations for my areas
> 
> https://www.aussiestockforums.com/forums/showpost.php?p=377989&postcount=2682
> 
> ...




Yeah cycles, boom and bust always in Australia, it will cover the whole property scene though, next year, starting Friday.


----------



## grace (30 December 2008)

MrBurns said:


> Yeah cycles, boom and bust always in Australia, it will cover the whole property scene though, next year, starting Friday.




It is kind of funny how all of us share investors can handle the fact that the sharemarket goes up, then it comes down.  

Why are there so many headstrong property bulls on this sight who don't seem to be able to say the words?


----------



## theasxgorilla (31 December 2008)

explod said:


> Struth Robots.
> 
> Looks like that info you gave me on St Kilda could be a bit shonky.
> 
> In fact Tech's chart says it crashed in 08




Should I point out that on the x-axis we have annual price _growth_, not price?  Oh, I just did.


----------



## agathos (31 December 2008)

HI everyone,

There IS a different opinion in The Weekend Financial Review, December 30 2008 - January 04 2009 issue. 

On page 27, titled, "Property : A tale of 2 markets" by Robert Harley, I would like to highlight manually a few paragraphs, especially *paragraph 7: *

paragraph 4:

"But in 2009, the negatives - falling incomes, debt reduction, unemployment and the wild card, a consumer credit crunch - will _outweigh_ the positives"

(italics and highlight in red is mine). 

paragraph 5:

"As always, the impact will vary around the country. At luxury end of the market - for the multi-million dollar mansions and weekend retreats - the fall will be hard. Many boom mining towns will also have a hard landing as investment hit the brakes". 

paragraph 6:

"But at the botoom end of the market - in places such as Western Sydney & regional Victoria - activity is increasing due to improvements in affordability, and financial inducements from federal and state governments".

paragraph 7:

"The head of real estate research @ Macquarie Grou, Rod Cornish, is predicting some house price falls in Australia in 2009. In the cities where affordability is most stretched, in Brisbane and Perth, the total decline - from peak to trough - will be in "double digits". 
I am not highlighting stuff in Paragraph 7, of page 27, of AFR Weekend Edition of Dec 30 08 - Jan 04 2009:

Ye who understand perfect Queens and OZ English shall comprehend this opinion that double digits total decline can be anywhere from 10.1% to 99.9%. (No lah, just kidding). 

Probably 10%( percect) or more , to be very, very conservative!
15%-20% some says in other post in this ASF. 

But as I have posted elsewhere on the other forum that is juxtaposed in title to this one, there WILL be a precipitating DROP in house price and everyone knows it...............in fact, now that the saga is full blown, every the very informed, and self serving groups are waking up to the fact that even premium areas in Perth like Mount Pleasant and Pepper Mint Grove are not spared!

If walls can hear, they will hear the sobbing and undried tears of those who have lost HUGE amounts of money in ABC Learning, CENTRO Property, Fortesque Metal, Rio T, etc. 

I've tallied the share punt in the Australian in late December 2008. NOT one single prediction came true. in fact, all of you know that Linc Energy and a little well known phosphate mining company in Xmas Island came in tops! 

For sale signs are up from Apple Cross to Alaska................
It's not that I am a sadistic person 

But property everywhere in the world are *the same*in Singapore, people rush in to buy homes at the Sentosa Cove
Bankers tell me stories of aunties (mom and dad investors) who are shrewd who put up their 1,000,000 bank term deposit to obtain a 7 times amount and punt on some sea side bungalows.

Some made some real GOOD money flipping these sea side properties, which range from 2 million to 7 million each!!!!!!!

Now, check this out - today, the last one who HOLD that baby is crying and don't know what to do!

Jump also cannot
Cry also can't do anything
Daily, the bank is banging on their door, knocking for the salvation of the bank's money................................

Same with London..............and the United Kingdom................
Same with Japan...............................................................

in fact, if you read the report by the ex-Reserve bank of New Zealand (Dr. Donald Brash who was RB NZ from 1988 till 2002), he actually in his report in December 2007 says that in the USA, just prior to the subprime crisis, affordability wasn't even a problem even in California where it's a thriving and popular top city in the USA.

It doesn't mean that hot spots must have bubbles..........Check out that report. Anyone who wants that report, I can send it to you if you email me your email. I can't upload is it is bigger than the limit allowed to post. 

So, the verdict is going to coming soon
Men always have opinions
To each his own

Just as there is a judgement day, there will be a D Day for the housing market
Lobby groups, self perpetuating groups can lobby as hard..........................

But when the time has come.................
The verdict will be out.........................
It's only fair. What the secular sees as cyclical to me is supernatural JUBILEE

What an exciting time to live in..............
To those who own properties.........*rejoice *for those of us who need to get into the market.........property drop in my humble opinion is just Nature's way, the JUBILEE needed by ordinary OZ block who have been trying to own a decent roof without the help of their parents and full-tax-paying migrants like us from everywhere who are decent, honest blokes who contribute and integrate into the OZ way of life............................

Happy 2009..................agathos.


----------



## MrBurns (31 December 2008)

grace said:


> It is kind of funny how all of us share investors can handle the fact that the sharemarket goes up, then it comes down.
> 
> Why are there so many headstrong property bulls on this sight who don't seem to be able to say the words?





1/ They havent seen this before and cant get their head around it yet.

2/ Debt - they are highly leveraged and cant admit that it may be a problem going forward.

3/ see #1 again - they just dont believe their precious property can actually go backwards.


----------



## wayneL (31 December 2008)

Today on Radio BBC4 was a phone in program on the state of the property market.

Lots of LOLs and headshake moments... very bearish, some talk of 50% falls, lots of denial too.

Here is the replay ~1 hour

http://www.bbc.co.uk/iplayer/console/b00g4b4r


----------



## theasxgorilla (31 December 2008)

MrBurns said:


> 1/ They havent seen this before and cant get their head around it yet.
> 
> 2/ Debt - they are highly leveraged and cant admit that it may be a problem going forward.
> 
> 3/ see #1 again - they just dont believe their precious property can actually go backwards.




Re: 2, in an ideal world, would it really be that bad if people did leverage to 100%, or even 110% or 120% if they wanted to do some renovations and buy some furniture?  

If rents were a truer reflection of a landlord's mortgage repayment plus other outgoings and some profit then surely anyone who has proven that they can cope with paying rent consistently can handle home ownership.  Leverage isn't a problem in itself if you can afford the payments.


----------



## Bill M (31 December 2008)

I have had several rental properties over the years but I sold the last one about 8 years ago. The only property I have now is the place I live in. These days I invest in stocks and a small amount of interest bearing accounts.

Having lived through a few sharemarket crashes and recessions and property cycles I am now thinking of property again, just a small one, you might ask why.

In Sydney where I live (near the beaches) we have a severe shortage of rental properties. No matter what the economy brings to our door steps we can always rent these properties for good money. A 300K property can rent for around $325 per week. There are no shortage of takers, when there is a open for rental inspection there are dozens of people wanting to rent these places. Recession or no recession they in high demand. 

Sales, the lower price range between 300K and 400K they still sell very quickly, the only noticeable difference around right now is that there are less buyers around but that doesn't mean there isn't fierce competition. Most of these properties are snavelled up in 2 to 4 weeks.

Property in my area has never ever taken a 50% fall over the cliff type of dive like the sharemarket has, that is still something I have to get use to. Further more 2 of my stocks have stopped paying dividends and others have reduced dividends. This doesn't happen with renting an investment property, not to me in my area.

The returns from stocks income wise are without doubt far better and more tax efficient than real estate but the volatility is extreme. The all ords is off 45% in a year and they predict even higher losses for next year.

So in conclusion a regular secure income from real estate (even if prices don't go up for a while) sounds a lot better than a 50% drop in shares with dropping dividends. For the first time in 8 years I have started thinking about property again, some buyers have disappeared and I like the secure income. Just my thoughts from personal experiences, good luck to you all.


----------



## prawn_86 (31 December 2008)

Bill M said:


> So in conclusion a regular secure income from real estate (even if prices don't go up for a while) sounds a lot better than a 50% drop in shares with dropping dividends. For the first time in 8 years I have started thinking about property again, some buyers have disappeared and I like the secure income. Just my thoughts from personal experiences, good luck to you all.




The only problem with property is you have to have enough spare capital to be able to bring the loan down to cash-flow positive, if your are after a yeild that goes in your pocket rather than straight off the mortage.

If you borrowed 100% of that 300k then the rent payments would only just be meeting the interest repayments, at current rates.  But if you had a spare 100k you could knock off the principal straight away then its a different story i guess.


----------



## Beej (31 December 2008)

MrBurns said:


> 1/ They havent seen this before and cant get their head around it yet.
> 
> 2/ Debt - they are highly leveraged and cant admit that it may be a problem going forward.
> 
> 3/ see #1 again - they just dont believe their precious property can actually go backwards.




First - apologies to Mr Burns for my "personalisation" of the issue yesterday. Just frustration with the ever repeating same old arguments bubbling to the surface.....

Now as for the above post - sorry but you are wrong if that is your take on those of us with a more positive outlook for AU property (permabulls if you define a permabull as someone who does not expect massive price falls across the board).

1/ I have been invested in property for over 20 years and have actively watched the market for 25 and have seen several boom/bust cycles during this time - and what I have NEVER seen, especially in Sydney, is a great crash in property prices akin to a share market crash. Oz Property is NOT as volatile as shares, FULL STOP. The permabears here better get used to that idea because it is one of the primary reasons why there will not be a great house price crash in this country. Corrections historically play out with small falls (< 10%) over a 12 month period or so on  very low sales volumes, followed by a few years of flat to below inflation price growth. During these times it is actually quite hard to find decent property on the market, as all the owners pull their heads in for a while. My prediction was, and still is, that is what will happen this time around again, and in fact we might be done with the falls already now and moving into the next phase as recessionary expectation kicks in - certainly in Sydney and Melbourne anyway.

2/ As a supposed "permabull", I am not highly leveraged at all. 6 months ago I owned my PPOR outright (had for years, and it was my 2nd place - I owned my previous PPOR outright before that too), and had a couple of investment properties at about the 50% geared level (which were cash flow positive and increasingly so at current rates). I have since sold my PPOR and one of the investment properties and used the proceeds to upgrade my PPOR (as in buy a better one), on which I now have a very small mortgage to the tune of about 15% of it's purchase price. 

Personally, I believe this level of property ownership, and the financial security and freedom it provides, is attainable to many people here if only they would open their eyes to the possibilities and think long term. I'm not saying don't invest in shares either (I have significant share holdings as well), but I think you are MAD not to see the benefit in acquiring and paying off your PPOR as early as you possibly can in life. Just owning my current house delivers me an effective before tax return of over 9%pa on my invested capital, guaranteed and GROWING, year in year out, just from the rent I don't have to pay to provide a well located (and admittedly pretty nice, EDIT: which is of course my lifestyle choice) home for my family to live in.

3/ I know that individual property markets move in cycles, and there is some linkage between them all, but also some independence. Even more so when comparing to international markets. I also know, from experience, and an understanding of the factors driving our market here, that as a whole it tends to not have BIG falls - it tends to have periods of strong growth (boom), followed by relatively small price falls (gives back maybe the last boom year of growth), followed by periods of stagnation/slower growth before the next boom starts again big time. I also know that most people who wait for price crashes miss out in the start of the next boom and then you never here the end of it from them for the next decade! 

So there! In my case at least, your gross generalisations are completely wrong.



Bill M said:


> In Sydney where I live (near the beaches) we have a severe shortage of rental properties. No matter what the economy brings to our door steps we can always rent these properties for good money. A 300K property can rent for around $325 per week. There are no shortage of takers, when there is a open for rental inspection there are dozens of people wanting to rent these places. Recession or no recession they in high demand.
> 
> Sales, the lower price range between 300K and 400K they still sell very quickly, the only noticeable difference around right now is that there are less buyers around but that doesn't mean there isn't fierce competition. Most of these properties are snavelled up in 2 to 4 weeks.
> 
> Property in my area has never ever taken a 50% fall over the cliff type of dive like the sharemarket has, that is still something I have to get use to. Further more 2 of my stocks have stopped paying dividends and others have reduced dividends. This doesn't happen with renting an investment property, not to me in my area.




Hear hear! This experience mirrors what I have observed in the inner west and lower north shore of Sydney over the past year as well. The Sydney boom ended 4 years ago - it's business as usual now and those who are in denial about that will miss out, again.....

Beej


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## kincella (31 December 2008)

Just be careful when you see actual figures of house prices dropping....my research has shown the houses that  have been selling consistently for the past year, are actually all in the lower price bracket....hence bringing the median price for the area down......*** it has not been the average ordinary home sales with a mix of middle plus some lower and higher props.....
thus   if it is only all the lower end...then the median price reflects a lower than average price.....but it is in fact misleading....it only reflects the lower priced props....and probably not the type of property you would be interested in

Gained the impression a lot of talk on this site relates to Perth and WA...or at least the posts I have read....
I follow a regional city on the nsw/vic border...grew up there and have props there....its been hit by the drought of 15 years...they have finally received some rain in the past month....

have copied a couple of posts from another forum....one relates to the perth area...

Unfortunately due to the sharemarket recession and additions to the family i had to get a temporary job untill my property sells (hopefully up nearly $1million in 12months due to subdivision). This temporary job see's me delivering building materials via truck to new homesites in all of Perths suburbs.

Unbelievable nearly every ForSale sign in the not so well to do suburbs has a SOLD or UnderOffer sticker on it.

NOT the recession the media have been portraying, perhaps it is just the very bottom end of town that is selling?

BUT there seems to be NO recession at the bottom end of town in WA and with lower interest rates comming perhaps the big end will start to fire as well as happened in 1987.

Are you ready? 

the other relates to the area I follow...............

I noticed the same thing in a suburb I follow...regional nsw/vic border....since Jun 08 to Nov 08...the lower value props were selling, and I believe they were selling at a premium to their real value IMO....however something quite dramatic happened in mid Nov early Dec 08....most of the lower value props has been sold, and in its place were sales of the higher value props....not the average props...the average/normal props seem to have been pulled from sale....deduced because they are not listed for sale and not recorded as being sold.....

so what happened....interest rates were cut in Oct, Nov and Dec
average monthly sales jun to nov were consistent at 30 pm...or one per day on average....

now the interesting thing is if you are looking at the median price for sale for those months...you would notice the average sale price has dropped...compared to last year...on closer examination...and the facts....in the past 6 months only sales occurred at the lower end of the market....imo there were no sales of the ordinary average home in that area.....
some people will be 'fooled' by the median price of those sales...but only some...not all of us....
the sales that did well were those awful little props under 200,000 a far cry from the average home....and they sold for on average about 30.000 higher than normal

traps for players....I would not be at all surprised if this has been the trend australia wide....ie the lower priced homes are selling..bringing down the median prices...fuelling the media and others predictions for a fall....
ps I know the area well, I know the nice areas and the not nice areas....and then there are the rather ordinary places.. research and being familiar with the area ...like doing your homework...pays off....very different to the 'one size fits all mentality' of the mobs...demanding blood on the street.....
I even missed out on one I had my eye on


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## wayneL (31 December 2008)

The bulls make fine arguments, but if accurate, will leave Australia with the most expensive property market on the planet in a couple of years.

Is it worth it?


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## prawn_86 (31 December 2008)

Beej said:


> Personally, I believe this level of property ownership, and the financial security and freedom it provides, is attainable to many people here if only they would open their eyes to the possibilities and think long term. I'm not saying don't invest in shares either (I have significant share holdings as well), but I think you are MAD not to see the *benefit in acquiring and paying off your PPOR as early as you possibly can in life*. Just owning my current house delivers me an effective before tax return of over 9% on my invested capital, guaranteed and GROWING, year in year out, just from the rent I don't have to pay to provide a well located (and admittedly pretty nice) home for my family to live in.




While i can see what you are saying, how do you propose that young people such as myself (21yo) acquire a house early, when the wages of 'standard' jobs (teacher, nurses, clerks etc) are not enough to cover the 'average' mortage?

Surely it is better renting and investing/saving the difference, until they/I reach a point at which i have a large enough deposit to be able to start paying off principal in large amounts, rather than just paying off interest.

The place we currently rent, has a prime location, yet the rent we pay is only about 90% of what the mortage would be if it was a 100% loan (was only about 50% when rates were higher), and thats not taking into account bodycorp fees and maintenance, rates etc


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## robots (31 December 2008)

wayneL said:


> The bulls make fine arguments, but if accurate, will leave Australia with the most expensive property market on the planet in a couple of years.
> 
> Is it worth it?




hello,

of course it is, expensive to who? not everybody on a pittance WayneL

to even say these things is so far fetched, you can buy property for an assortment of prices and as such something for everybody

oh, the great divide

thankyou
robots


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## explod (31 December 2008)

prawn_86 said:


> Whil i can see what you are saying, how do you propose that young people such as myself (21yo) acquire a house early, when the wages of 'standard' jobs (teacher, nurses, clerks etc) are not enough to cover the 'average' mortage?
> 
> Surely it is better renting and investing/saving the difference, until they/I reach a point at which i have a large enough deposit to be able to start paying off principal in large amounts, rather than just paying off interest.
> 
> The place we currently rent, has a prime location, yet the rent we pay is only about 90% of what the mortage would be if it was a 100% loan (was only about 50% when rates were higher), and thats not taking into account bodycorp fees and maintenance, rates etc




Your approach prawn is spot on for the moment.   With property prices at best going sideways it is a time to sit and watch as all indications point to better buying opportunities later (18 moths or so)  The financial contagion has not hit properly yet so lets watch and see what plays out, then act when some certainty returns.


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## Lancelot (31 December 2008)

MrBurns said:


> 1/ They havent seen this before and cant get their head around it yet.
> 
> 2/ Debt - they are highly leveraged and cant admit that it may be a problem going forward.
> 
> 3/ see #1 again - they just dont believe their precious property can actually go backwards.




I dont know, I'm old enough to have seen a few cycles, property go back and stagnate and seen people lose property before.

Have you?


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## wayneL (31 December 2008)

robots said:


> hello,
> 
> of course it is, expensive to who? not everybody on a pittance WayneL
> 
> ...



LOL It's hopeless!


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## Beej (31 December 2008)

prawn_86 said:


> While i can see what you are saying, how do you propose that young people such as myself (21yo) acquire a house early, when the wages of 'standard' jobs (teacher, nurses, clerks etc) are not enough to cover the 'average' mortage?




With a decent deposit (say $50k) a single person on one of those average wages (say $60k) should easily afford a $350k place ($2k/month payments). And there are plenty of flats or houses around for that sort of money, even in Sydney, in good areas. If you were smart, as a single person you'd even get a flat mate in who would help you pay that first place off real fast 

A couple of course on those combined average wages with a good deposit could easily afford to buy an "average" house, but maybe they would buy something cheaper and pay it off faster, then get a better house down the track without a big mortgage?

Now the real trick if you want to get ahead, is don't aspire to earn the average wage, figure out how to earn a LOT more than that! 

I read a couple of books by Noel Whittaker when I was about 20 that helped a lot in figuring all this stuff out. If they are still around they are well worth a read - "Making Money Made Simple" and "More Money" were their titles. I still have them on my book shelf now!



> Surely it is better renting and investing/saving the difference, until they/I reach a point at which i have a large enough deposit to be able to start paying off principal in large amounts, rather than just paying off interest.




Yes this can work and is not a bad strategy per se, but it requires a lot of discipline, and carries the risk of a stock market crash etc which could really set you back. As you get closer to the time to buy your desired property you would really need to pull everything out of stocks and put it in cash in good time (ie several years earlier) to mitigate those risks. Also gives you no scope for extra income from flat-mates etc etc. What's more, if property prices shoot up again at some point that could hurt the strategy badly, as you wouldn't have anywhere near the same leverage in your shares to counter the house price growth. That is to say, you would need a lot more growth from the other investments to make up for an upwards move in house prices.

So personally, I would still buy as early as I could at a price point that enabled me to pay the mortgage off quickly (< 10 years). You will be surprised how if you did this, and you add some flatmate income here and there into the mix, plus some wages growth, or maybe even a partner comes onto the scene, you might actually have that mortgage gone in 5 years 



> The place we currently rent, has a prime location, yet the rent we pay is only about 90% of what the mortage would be if it was a 100% loan (was only about 50% when rates were higher), and thats not taking into account bodycorp fees and maintenance, rates etc




But if you bought it now, and in 3 years the rent was say 12.5% higher, wouldn't you start to be better off for having bought? Extrapolate that into the future and it only get's better..... And that's without assuming any house price growth even 

Cheers,

Beej


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## Lancelot (31 December 2008)

Probably here already, note the date


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## numbercruncher (31 December 2008)

Lancelot said:


> Probably here already, note the date





Your Daddy ?


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## numbercruncher (31 December 2008)

Beej said:


> What a load of whinging, bitter, over-emotional non-property-owner propaganda! And a load of rubbish to boot.....
> 
> 
> Beej





Reeeeeely ?


Thats easy to say from someone who supposedly lives in a 2 million $ shack .... ( vested interest ? )

Heres the reality ....

Australias median wage is 58k ....




> The Mortgage Choice/REIA Real Estate Market Facts released today has reported that the Australian weighted average median house price decreased from $459,795 in the June quarter 2008 to reach *$447,659 *in September quarter, a decrease of 2.6% over the quarter, and an increase of 0.7% over the year




http://www.reiaustralia.com.au/media/releases.asp


Median Houses at 7.5 x Median wages has NEVER been the norm ....

When I purchased my first home there was plenty available for 3x Median wages !

The credit bubble changed this ....

Happy New Year banana republicans


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## kincella (31 December 2008)

I believe there are plenty of affordable  props around Melb suburbs, 15 mins to the CBD..close to public transport....Govt hands over 14,000 for established, or 21.000 for a new home plus the Vic govt gives extra for regional areas...
so instead of aiming for the big grand family home for the future....and instead of paying rent....do your sums and see what you could afford to buy in the next 6 months....how much different is it to the current rent ???
I call buying a home a forced saving plan...for the future...it teaches to you curb your spending....and instead of paying rent...dead money....you are paying off your home....you can even make some changes to suit your lifestyle.....
ask your boomer parents for their ideas...they may even help with the deposit...in the old days the banks required you to prove you could save on a regular basis.....at least 6-12 months proof...as per your savings book or bank statements....
no more spending $100 for a night on the town on a regular basis..
its your disposable income..so its up to you...get rid of the car loans and credit cards for a start....plenty of time later on to party...


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## Bill M (31 December 2008)

prawn_86 said:


> The only problem with property is you have to have enough spare capital to be able to bring the loan down to cash-flow positive, if your are after a yeild that goes in your pocket rather than straight off the mortage.
> 
> If you borrowed 100% of that 300k then the rent payments would only just be meeting the interest repayments, at current rates.  But if you had a spare 100k you could knock off the principal straight away then its a different story i guess.



Hello prawn, you are right. I've worked it out myself, if I borrow 200K on a 300K property I would come out square. That is taking loans and expenses into consideration. I can raise 100K if I need too but then that 100K becomes cash flow neutral versus say an ASX 200 ETF which pays 10% partly franked income. This is what I must think long and hard about.

I guess we could use that as a subject of debate, if you had 100K cash would you invest it in the ASX 200 ETF (that pays 10% income) or would you use it as a deposit on a property (that is cost neutral)? Which would win in say 5 years? Anybody?


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## nomore4s (31 December 2008)

kincella said:


> I believe there are plenty of affordable  props around Melb suburbs, 15 mins to the CBD..close to public transport....Govt hands over 14,000 for established, or 21.000 for a new home plus the Vic govt gives extra for regional areas...
> so instead of aiming for the big grand family home for the future....and instead of paying rent....do your sums and see what you could afford to buy in the next 6 months....how much different is it to the current rent ???
> I call buying a home a forced saving plan...for the future...it teaches to you curb your spending....and instead of paying rent...dead money....you are paying off your home....you can even make some changes to suit your lifestyle.....
> ask your boomer parents for their ideas...they may even help with the deposit...in the old days the banks required you to prove you could save on a regular basis.....at least 6-12 months proof...as per your savings book or bank statements....
> ...




lol, problem is 75%+ of people don't think like this nowadays, they want the mcmansion and the "lifestyle" to go with it and are willing to take on heaps of debt to achieve it.


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## Beej (31 December 2008)

numbercruncher said:


> Median Houses at 7.5 x Median wages has NEVER been the norm ....
> 
> When I purchased my first home there was plenty available for 3x Median wages !
> 
> ...




Your problem is you live in Perth - and that has given you a warped perspective. You remember property prices when that city was not really much more than a large country town (which was only a couple of decades ago!). Since then it has grown into much more of a real city, plus the region around it has seen an unprecedented increase in prosperity, investments, higher paying jobs etc etc. That is fundamentally what has driven prices up, not your so-called credit bubble. If the fundamentals remain (which they probably will long term), you will NEVER see property prices at country town levels again - sorry, but that's the way it works. If you want a house at 3 x average wages then you will need to buy in another country town somewhere..... Perth prices may well fall some more, but you can really forget about your fantasy of 3 x average wages!

Houses near the Sydney CBD were relatively cheap once too, but that will never happen again, as Sydney turned from big country town into major national city into mega globalised business and financial hub over the past century, and that clock does not wind back. These type of demographic and socio-economic changes are also the drivers of high capital returns from astute real estate investment: But of course you have to understand what's going on to find and profit from the opportunities! 

EDIT: Oh and PS: There are houses and flats around $200k (= just over 3 x average wages) in Sydney, just not in the most salubrious areas. I bet the same goes for Perth still as well....

Cheers,

Beej


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## kincella (31 December 2008)

where exactly are you going to earn 10% on an asx listed stock ???
lets just compare....a term deposit paying 4% in the future
4% on dividends....say they were paying 5% last year, doubt it in the next year.
or earning 5% on a rental prop, and paying 3% interest
assuming rates will come down to 3% for borrowers and deposits similar
and a 300,000 home/unit earning 15000 rent pa.

if rates come down as I am guessing they will....my idea is to borrow for growth at those low rates.....not interested in earning anything at 3-4% even 5% is neither here nor there...or going to pay for anything...imo

but it will be a time to go on a buying spree at those low rates....just be careful what you are buying....
the old saying...a fool and his money is easily parted....
cheers


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## finnsk (31 December 2008)

Hi all
I have been reading nearly all comments in this thread, one thing I dont understand is when people say that we will not have a property crash.
It happens in USA, Europe ect. What is the reason that it happend in those countries? and why can`t it happen here.


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## numbercruncher (31 December 2008)

nomore4s said:


> lol, problem is 75%+ of people don't think like this nowadays, they want the mcmansion and the "lifestyle" to go with it and are willing to take on heaps of debt to achieve it.





Is there a link to back that up ?

Even if it was true it wouldnt happen if banks hadnt dropped there lending standards so far that even a gold fish could access funds ....


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## numbercruncher (31 December 2008)

finnsk said:


> Hi all
> I have been reading nearly all comments in this thread, one thing I dont understand is when people say that we will not have a property crash.
> It happens in USA, Europe ect. What is the reason that it happend in those countries? and why can`t it happen here.





Because we have Kangaroos and Koalas


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## sofman2000 (31 December 2008)

if you look at average aussie wages then look at house pricing- the most probable situation is that propery will go down in value - especially if unemployment rises- or is this too simplistic?


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## Bill M (31 December 2008)

kincella said:


> where exactly are you going to earn 10% on an asx listed stock ???
> 
> cheers




Look at (STW) SPDR S&P/ASX200 Fund. STW is an Exchange Traded Fund. It invests in the ASX 200 index. So whatever the ASX 200 does this fund follows closely. Look it up on Commsec, it pays 10% partly franked. So back to the question:

"if you had 100K cash would you invest it in the ASX 200 ETF (that pays 10% income) or would you use it as a deposit on a property (that is cost neutral)? Which would win in say 5 years? Anybody?"


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## sofman2000 (31 December 2008)

Just as a side comment. I have also heard that banks are not chasing developers with millions worth of loans due to their equity being eaten up- so they are just adding the interest and penalties to the accounts hoping for some type of return- Is this another bubble about to burst also? They cant hang on forever. Has anyone else heard of these types of scenarios?


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## gfresh (31 December 2008)

Plenty of opportunities for stocks that will provide reasonable yield, and should have steady profit during 2009 - just need to spend some time researching, and use some common sense.  

I can find plenty that have a fully franked yield around 4% (higher return than TD rates after tax) and are the same price as 6 months ago, in fact I'm starting to collect them as term deposits look decidedly ordinary  Things such as utilities don't suffer so much in recessions, in fact price hikes in 09 will ensure higher profits. 

AOD ETF also has a yield of 6.8%, mostly franked... they take care of working out a yield strategy for you, and can change their weighting if an individual co drops its div. 

History also shows that after a bear market ends, the average gain in the next 12 months can be 20/30/40% - plenty of scope for large capital gains if one gets the timing +- a few months. Leverage up as per property to LVR 70% if you are willing to take the risk.

Sharemarket still provides opportunities, for those that are game.



			
				kincella said:
			
		

> assuming rates will come down to 3% for borrowers and deposits similar and a 300,000 home/unit earning 15000 rent pa.




They may well do for variable rates, but as you would know, these sort of rates do not last long before the cycle changes, 6 months at most. It's more to get borrowers back into the market, so the banks can scoop buyers in to profit as rates return to longer-term averages quite quickly.


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## prawn_86 (31 December 2008)

kincella said:


> I believe there are plenty of affordable  props around Melb suburbs, 15 mins to the CBD..close to public transport....Govt hands over 14,000 for established, or 21.000 for a new home plus the Vic govt gives extra for regional areas...
> so instead of aiming for the big grand family home for the future....and instead of paying rent....do your sums and see what you could afford to buy in the next 6 months....how much different is it to the current rent ???
> I call buying a home a forced saving plan...for the future...it teaches to you curb your spending....and instead of paying rent...dead money....you are paying off your home....you can even make some changes to suit your lifestyle.....
> ask your boomer parents for their ideas...they may even help with the deposit...in the old days the banks required you to prove you could save on a regular basis.....at least 6-12 months proof...as per your savings book or bank statements....
> ...






nomore4s said:


> lol, problem is 75%+ of people don't think like this nowadays, they want the mcmansion and the "lifestyle" to go with it and are willing to take on heaps of debt to achieve it.




I just dont see why i should buy a property and put myself deep into debt, when i can live renting in the best suburb in my city and save the difference as to what it would cost to buy the place im renting.

I dont want to live out in the suburbs and have to spend a lot of my time travelling etc. At the moment we (me and my partner) can both walk to work in the CBD within 20min, so we only have 1 car. 

Here's a few brief calcs as to what 'intangibles' we are saving on by renting so close to the CBD (and our rent is the same as if we were to live a couple suburbs out, we have a good deal going).

The following is assuming we bought a house that took 30min to drive to work:

Saved time: $60. 20min per day each. So just say 3 hours a week between us as we might walk slower some days etc @ $20 per hr

Saved fuel: $10 I currently spend about $10 pw on fuel (economic car). That would at least double at the very minimum. 

Saved car running costs: $5pw. Services, breakdowns etc

Saved parking: $40pw. Walking means we dont have to park in the city.

*So by living close and walking to work, as opposed to buying further out and driving to work we 'save' $115pw.*

Even if we caught the bus to work from further out:

Saved time: $160. 50min per day each. Buses take longer to get there, but you save on parking, car costs etc.


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## 2BAD4U (31 December 2008)

MrBurns said:


> 1/ They havent seen this before and cant get their head around it yet.
> 
> 2/ Debt - they are highly leveraged and cant admit that it may be a problem going forward.
> 
> 3/ see #1 again - they just dont believe their precious property can actually go backwards.




1/ - yes we have.  The only one's who haven't seen it before are those too young (and this goes for both sides of the argument).

2/ - as said many times, it only becomes a proplem if and only if you are forced to sell, as property prices will rise again over time.

3/ - yes we do. Infact almost everybody on here would agree that property prices have come back (with the exception of St Kilda  ).


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## 2BAD4U (31 December 2008)

finnsk said:


> Hi all
> I have been reading nearly all comments in this thread, one thing I dont understand is when people say that we will not have a property crash.
> It happens in USA, Europe ect. What is the reason that it happend in those countries? and why can`t it happen here.




It can, but many of us don't believe it will. There are two main reasons that I see. Firstly we have a growing population which will always stimulate the housing market. Secondly we have tighter regulation of our lending ie: in the US you just hand back the keys and walk away from the house & debt and that's the end of it. Over here you can't do that.  Your only option is to declare yourself bankrupt and many people would see this as an absolute last resort and be prepared to work through tough times to avoid it.

Now I will put on my flame proof suit and wait for all the bears with their buts and ifs.


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## Beej (31 December 2008)

prawn_86 said:


> I just dont see why i should buy a property and put myself deep into debt, when i can live renting in the best suburb in my city and save the difference as to what it would cost to buy the place im renting.
> 
> I dont want to live out in the suburbs and have to spend a lot of my time travelling etc. At the moment we (me and my partner) can both walk to work in the CBD within 20min, so we only have 1 car.
> 
> ...




Prawn, no-one says you have to buy, you can keep doing what you are doing if it works for you that's just fine. BUT, you must understand that you are not making an affordability/price bubble argument as are most bear posters here. You are making a conscious lifestyle and location / expectation choice.

The exact same calculations/reasons why you like renting close to the CBD right now are also the fundamentals that support the much higher house prices commanded in those area's. Imagine you had the capital to pay cash for the place you currently live in - wouldn't all the exact same financial factors you cite above apply on the "why I should buy this place" argument as well? Think about it?

You also seem to have an aversion to taking on debt (ie mortgage) for housing, but you have no problem with paying someone else rent? To me they are both essentially the same thing in the short term, but very different in the long term - but that's just my view.

Cheers,

Beej


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## finnsk (31 December 2008)

2BAD4U said:


> It can, but many of us don't believe it will. There are two main reasons that I see. Firstly we have a growing population which will always stimulate the housing market.



Europe have a growing population as well 







> Secondly we have tighter regulation of our lending ie: in the US you just hand back the keys and walk away from the house & debt and that's the end of it. Over here you can't do that.



 I am still in shock that it is possible to walk away from your responsibilities like that, but that does not explain why Europe is dropping in prices


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## kincella (31 December 2008)

prawn....I dont want you to change your mind or your circumstances....
being a prop investor we need people like you to rent our props from us....

so far I believe the mix is 70% are home owners...30% are renters....
which means of those 70% homeowners...30% of them are also property investors... or roughly...some have multiple properties and some have none...doubtful too many renters would be investors...but who knows..

I think  the stats have changed from the 60/40 ratio. from the past....

overtime todays renters will be owners in the future and the cycle goes around....
which leads me to be confident in being a property investor....
we do not want you renters to suddenly start becoming owners,,,,or change the stats by too much....
you have no argument from me....
but my posts are probably more for the renters who want to become owners
cheers


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## numbercruncher (31 December 2008)

2BAD4U said:


> It can, but many of us don't believe it will. There are two main reasons that I see. Firstly we have a growing population which will always stimulate the housing market. .





Temporary spike, Immigration about to be slashed surely etc etc ...



> The net growth in population occurred in the 80s and 90s but is set to decline in the next 15 years, Salt told an Australian Institute of Superannuation Trustees meeting in Melbourne.
> 
> “The past 30 years has delivered a pool of wealthy Australians,” he said.
> 
> ...






> Australia is now beginning to suffer a fall in its net working population, and this is predicted to continue for the next 50 years.
> 
> “The baby boomers arrived in the workforce in a rising labour market and they could dictate their terms,” he said.
> 
> ...




http://www.egoli.com.au/epiServer/Templates/Public/Pages/StoryArticle.aspx?id=33961&epslanguage=en&AspxAutoDetectCookieSupport=1


Superfunds smashed, share portfolios smashed, unemployment rising, Job advertisments getting smashed .....

We still have fruit salad though, prices to boom for decades ! 

ps. news im watching now China says effect on her economy is being underestimated, massive unemployment expected ...


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## nomore4s (31 December 2008)

These property threads make me laugh.

I have noticed alot of the perma bulls in these threads are already well established in the property markets with multiple properties. Now I don't blame them for being bullish because if I was in the same position with good gearing levels and nice income from property brought before/at the start of the boom I too would not be selling and have a positive outlook.

What most of the perma bulls can't seem to get their heads around is there are people out there in different circumstances to them and the fact for someone out of the market or people earning average wages the property market is currently expensive whether you want an investment property or a home to live in.
Not everyone has $100,000 to put down for a deposit, not everyone can afford to pay $650+ a week in repayments for a $350,000 house, not everyone earns $75,000+ a year.
They carry on about improving your earning capacity etc,etc but not everyone is capable of doing this. Also most people nowadays just don't know how to save money or budget, everyone seems to want everything now.

Now imo for the property market to continue to grow at it's current rate you need new money flowing into the market pushing prices upwards, but I see it getting harder and harder for new money to enter the market atm especially if the banks continue to tighten lending standards.
So we either have to see wages jump sharply or house prices come down to become more affordable, in the current economic conditions I know which is more likely atm.

Most of the bulls seem unwilling to admit that property has seen a boom and that is normally followed by some sort of bust.
Surely some of you bulls must admit that property is overpriced and expensive atm, especially on a house price to average earnings ratio?

It also amuses me how the bulls think we will be immune from the carnage happening in the rest of the world especially the western world, they may be right but I have serious doubts about that.

No doubt there is money to be made from property but I think there will be better opportunties in the near future.


----------



## prawn_86 (31 December 2008)

Beej said:


> You also seem to have an aversion to taking on debt (ie mortgage) for housing, but you have no problem with paying someone else rent? To me they are both essentially the same thing in the short term, but very different in the long term - but that's just my view.




No aversion to debt, i just believe that the income (either saved through not renting and living in a PPOR, or through renting an investment property) should be able to pay off at least some of the principal, not be relying solely on capital growth. On that basic premise i think either property needs to come down, or wages need to rise significantly so that the 'average' wage can afford a house.

As i have said before, most people wouldnt buy a business making a loss (IE negative geared house), so why should they do the same with housing (unless they expect to be able to reduce the mortgage down quickly)?



nomore4s said:


> Surely some of you bulls must admit that property is overpriced and expensive atm, especially on a house price to average earnings ratio?




Totally agree with this statement


----------



## kincella (31 December 2008)

guys, just a couple of points...two incomes can surely afford a 300,000 place or less...interest  rate at 4% = 12000 pa or 1000pm for the interest component...
the other point from a prop investor view...is the capital gains at the end of the exercise.....its not the rental that gets me excited...its the end game

this striving for wages to go up or house prices to come down will get you nowhere...like you want to go back to a time when thats how it was....but the wages were so much lower....
and as for the population...we have lots more wealthier people today...its not millions of poor people and one alan bond any more....I think we made it to 1 million people were millionaires in oz this year...so you are competing against a lot more people who can afford these  houses....

what if the wheel has turned and the majority become renters as in europe ???  they will never be able to afford their home.....its really just an aussie abhoration this single minded view...that you must own your own home,,,,forget it and enjoy life regardless


----------



## kincella (31 December 2008)

nomore4s....you are in Darwin....the most expenseive place on the planet imo...and rents are so high...what are you doing up there ???

prawns  in Adelaide...again its expensive.......done a big growth spurt,,,may do it again with Olympic Dam going ahead as an open cut....

Melb is bigger, better and cheaper...from what I can see of Melb prices....

most people with the complaints seem to be stuck in WA.....but not earning the big dollars ????


----------



## grace (31 December 2008)

So, what would you rather buy, stocks down 41% for the year, or property down at a much lower pace?  

I will be a buyer of property, but not yet!


----------



## numbercruncher (31 December 2008)

kincella said:


> guys, just a couple of points...*two incomes can surely afford a 300,000 place* or less...interest  rate at 4% = 12000 pa or 1000pm for the interest component...
> the other point from a prop investor view...is the capital gains at the end of the exercise.....its not the rental that gets me excited...its the end game





2 incomes for the cheapest houses, yes its that big a joke in Australia it seems ? ....



> interest  rate at 4%




Whos doing 4pc mortgages then ? is it implied they wont again rise ? perhaps even rapidly ?


----------



## nomore4s (31 December 2008)

kincella said:


> nomore4s....you are in Darwin....the most expenseive place on the planet imo...and rents are so high...what are you doing up there ???




lol, ability to earn good money here, and the lifestyle is good if you can stand the heat. But you are right it is extremely expensive up here.

Rents are high, but I'm renting off a mate and have just moved into a brand new 3 bedroom place for the same as I was paying on my mortgage for a 2 bedroom unit, but now the interest from the proceeds of the sale of the unit pay more than half the rent.

I will buy again but not yet.


----------



## kincella (31 December 2008)

think Nab and CBA both doing a 1 year fixed atm....but lower rates are on the cards and you will be able to fix for 3 years at least...nab have a 3 year fixed at 5.49 ...now...but you could take out a variable and then fix it as they come down.....
2009 will be rather nasty on the market and the scaredy cats companies dumping staff..and everything they can lay their hands on......
all knee jerk reactions....you can expect a bumpy ride....no smooth sailing this year


----------



## Lancelot (31 December 2008)

Bill M said:


> I guess we could use that as a subject of debate, if you had 100K cash would you invest it in the ASX 200 ETF (that pays 10% income) or would you use it as a deposit on a property (that is cost neutral)? Which would win in say 5 years? Anybody?




$100k @10% compounding over 5 years = $161k...................$61,000 up
Pay tax = $42000 profit

$100k as deposit for $500k property at a conservative 5% over 5 years = $638,000.........$138,000 up  *TAX FREE*


----------



## numbercruncher (31 December 2008)

Lancelot said:


> $100k @10% compounding over 5 years = $161k...................$61,000 up
> Pay tax = $42000 profit
> 
> $100k as deposit for $500k property at a conservative 5% over 5 years = $638,000.........$138,000 up  *TAX FREE*





You ASSume the shares dont/wont rise in value ? you assume the shares dividends arnt already franked/taxed ?


----------



## Lancelot (31 December 2008)

nomore4s said:


> What most of the perma bulls can't seem to get their heads around is there are people out there in different circumstances to them and the fact for someone out of the market or people earning average wages the property market is currently expensive whether you want an investment property or a home to live in.





Just like in this 1970's article
https://www.aussiestockforums.com/forums/showpost.php?p=378788&postcount=2744



> Not everyone has $100,000 to put down for a deposit, not everyone can afford to pay $650+ a week in repayments for a $350,000 house, not everyone earns $75,000+ a year.




Not everyone gets to own a house, it was never a requirment in previous generations, why do you feel it is now?



> They carry on about improving your earning capacity etc,etc but not everyone is capable of doing this. Also most people nowadays just don't know how to save money or budget, everyone seems to want everything now.




Yep, these are the renters



> Now imo for the property market to continue to grow at it's current rate you need new money flowing into the market pushing prices upwards, but I see it getting harder and harder for new money to enter the market atm especially if the banks continue to tighten lending standards.
> So we either have to see wages jump sharply or house prices come down to become more affordable, in the current economic conditions I know which is more likely atm.




Or house prices sit flat for several years, some that have to sell will and possibly at a lower price, but most wont as they dont have to sell



> Most of the bulls seem unwilling to admit that property has seen a boom and that is normally followed by some sort of bust.




Or flattening, stagnation


> Surely some of you bulls must admit that property is overpriced and expensive atm, especially on a house price to average earnings ratio?




In some areas for some earners, $50k earner finds a $500k unit expensive, a $100k earner finds a $400k house cheap



> It also amuses me how the bulls think we will be immune from the carnage happening in the rest of the world especially the western world, they may be right but I have serious doubts about that.




We do seem better positioned with know where near the vacancy rates and defaults as other countries


----------



## Lancelot (31 December 2008)

numbercruncher said:


> You ASSume the shares dont/wont rise in value ? you assume the shares dividends arnt already franked/taxed ?




Goalposts changing?

Even if they are franked/taxed the figures on the property example are miles infront.


----------



## numbercruncher (31 December 2008)

Lancelot said:


> Goalposts changing?





Yes and you changed them again, lets stick to " House prices to keep rising for years " - already proved wrong with prices down last few quarters ....


----------



## Lancelot (31 December 2008)

numbercruncher said:


> Yes and you changed them again, lets stick to " House prices to keep rising for years "



Where did I change the goalposts?  examples please



> - already proved wrong with prices down last few quarters ....




Do I need to refer you to the links I posted earlier that show prices in my areas still going up?

Oh, you mean house prices *AROUND YOU* are dropping, therefore they are everywhere


----------



## numbercruncher (31 December 2008)

Over all medians are down .... ....

But it does warm the cockles of my heart to know that yours and robis apartments are going up each month ....


----------



## numbercruncher (31 December 2008)

Lancelot said:


> Even if they are franked/taxed the figures on the property example are miles infront.


----------



## Beej (31 December 2008)

Some good posts on the thread today! Go Kincella, 2Bad4U and Lancelot (plus others) - at least I'm not the only one trying to impart some wisdom for these mis-guided folks  Prawn_86 has also raised some good questions and sparked some interesting discussion! Numbercruncher and co, well, they are still going on as they have been for the past year on this and the other property thread like a broken record..... But everyone is entitled to their opinion of course!!

HAVE A HAPPY NEW YEAR ALL!

I've got to finish getting my house ready now for the dozen or so bikini clad ladies that will be seeing the new year in around the pool at my place this evening I'm not joking either! The wifes netball team you see.....  

Cheers,

Beej


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## kincella (31 December 2008)

numbercruncher....if for the past 6 months, only the lowest priced props were selling..not ordinary average props sold for less...there is a huge difference....and that would have a major affect on the median value....
it would go way down.....
so on a level playing field....its not comparing apples with apples.....the average house has not been selling...its been taken off the market....

it does not mean prop prices have dropped....you have to dig below the surface a bit to find the truth....
I dont mind.though, if everyone is yelling fire fire....it may give me another opportunity to buy a bargain....
cheers


----------



## kincella (31 December 2008)

beej...thank you...and wish all of you a very prosperous new year....
ps too much time on my hands atm....just taking a well earned break

will take the dog for a walk on the beach..so she can say hello to her cousins and brothers etc....then buy some takeway...she likes mongolian beef atm...or KFc
cheers


----------



## tech/a (31 December 2008)

> What is the reason that it happend in those countries? and why can`t it happen here.




There is a very very big difference.

(1) Inventory. In the US there was at the beginning of this 9mth supply of housing given its "CURRENT" demand. Now with VERY LITTLE DEMAND,inventory has stretched out even further. Unlike Australia large builders in the US and Europe build large subdivisions of 200+ houses *BEFORE* they sell them.
We however have more brains and build ON DEMAND.

(2) Record levels of rent demand and with so called "unaffordability" its only getting worse.

(3) We dont have anywhere near the number of low doc loans per capita.



> What most of the perma bulls can't seem to get their heads around is there are people out there in different circumstances to them and the fact for someone out of the market or people earning average wages the property market is currently expensive whether you want an investment property or a home to live in.




What makes you think it wasnt exactly the same as it is now in our day.
It was! We needed 2 wages to buy our first home. We DIDNT get a *1St Home owners grant* either! We didnt have interest rates at *6.5% either!* Try 12%!

Every 15 or so years market conditions like those seen in the late 90s will come around---just wait! (Being sarcastic!).

But read this below very closely perhaps it maybe time to consider what some of us old timers are attempting to impart on you guys----We WERE there once ourselves---we did it so can you!



> guys, just a couple of points...two incomes can surely afford a 300,000 place or less...interest rate at 4% = 12000 pa or 1000pm for the interest component...
> the other point from a prop investor view...is the capital gains at the end of the exercise.....its not the rental that gets me excited...its the end game
> 
> this striving for wages to go up or house prices to come down will get you nowhere...like you want to go back to a time when thats how it was....but the wages were so much lower....
> ...




You guys keep comparing Property and Stocks.
*What a joke*.
How many of you actually have or ever would invest the same as you would on property in shares.
IE take out a loan on $100K and buy $500,000K of shares.
I doubt more than a handful of traders here have ever traded that sort of money particularly borrowed!---or ever will.

How many would have borrowed $2,000,000 in the late 90s to take advantage of the bull run in stocks?-----Zilch here I'll bet.

But a few did with property.



> I will be a buyer of property, but not yet!




I see this quote from people all the time.
Question.
Specifically what are you waiting for?? A serious question! 
(1)What specific conditions or criteria will set off the *BUY *button!
(2) What makes you think these conditions will actually occur?


----------



## robots (31 December 2008)

finnsk said:


> Hi all
> I have been reading nearly all comments in this thread, *one thing I dont understand is when people say that we will not have a property crash.*
> It happens in USA, Europe ect. What is the reason that it happend in those countries? and why can`t it happen here.




hello,

we dont sell guns at Kmart, 7-eleven, or the $2 shop and we dont do crack in this great country

*IMO* thats why we sitting pretty brothers

and for the record we used to sell guns at Kmart, but the fine people of this country saw the light and CHANGED things

thankyou
robots


----------



## Bill M (31 December 2008)

With all due fairness, the All Ords closed today at 3,659 points. From the 1st. of Jan to 31st. of Dec the loss from the opening to the close was -43%. Dividends have gone down also.

On the other hand, my property has maintained it's price. Rental prices if anything have gone up. You can say what you like but in 30 years of investing in both shares and property, property has NEVER EVER in my suburb (Sydney Beaches) taken such a dive, just something to consider.


----------



## robots (31 December 2008)

hello,

thanks Bill M, fine contributions

you right up there next to me in the Top 5 contributors for this thread 

thankyou
robots


----------



## generalofthearmy (31 December 2008)

this discussion is superfluous considering whether the prices increase or not. no one here has any idea, nor should pay any attention to any of the opinions stated herein.


----------



## kincella (31 December 2008)

general....I and a few others do know what we are talking about....and then you come in to stir the pot....good luck....
doubt anyone here would ask for your opinion..but one never knows!


----------



## chops_a_must (31 December 2008)

2BAD4U said:


> So what's it to be?
> a) All these extra people will buy houses pushing prices back up again.
> b) All these people will be so far priced out of the market it will create boom times for property investors.
> c) A little bit of a) and a little bit of b).




"The self-deception of the mass speculator must, however, have its element of justification. This is usually some generalised statement, sound enough within its proper field, but twisted to fit the speculative mania. In real estate booms, the "reasoning" is usually based upon the inherent permanence and growth of land values."

Guess who?

- Benjamin Graham. 



2BAD4U said:


> 1/ - yes we have.  The only one's who haven't seen it before are those too young (and this goes for both sides of the argument).




Yet we have someone else here, as a Perth property perma bull who has selectively completely ignored the historical vacancy rates in Perth, and completely discounting the risk that that entails.



tech/a said:


> Every 15 or so years market conditions like those seen in the late 90s will come around---just wait! (Being sarcastic!).
> 
> You guys keep comparing Property and Stocks.
> *What a joke*.
> ...




1. You continue to show your complete and utter ignorance of the futures market.

2. Most who can or will be able to afford to buy property, are waiting for conditions that make it an acceptable investment. It is not right now, in any typical case, by any stretch of the imagination.

3. Until the buying conditions of 2 are met, there will continue to be better opportunities available.

4. Property is an _investment_, not a trade. Therefore the same principles that come into play with any type of investment, come into play with property. It has to make sense. It does not now. But at some point in the future, in some locations, it will make sense. It is already starting to make sense in isolated cases here, with a lot of margin called and bankrupted western suburbs properties coming onto the market here in Perth.


----------



## dhukka (31 December 2008)

Bill M said:


> With all due fairness, the All Ords closed today at 3,659 points. From the 1st. of Jan to 31st. of Dec the loss from the opening to the close was -43%. Dividends have gone down also.
> 
> On the other hand, my property has maintained it's price. Rental prices if anything have gone up. You can say what you like but in 30 years of investing in both shares and property, property has NEVER EVER in my suburb (Sydney Beaches) taken such a dive, just something to consider.




I doubt you'll ever see a 40% decline in eastern suburbs property prices either. However if we've learned one thing this year it is that history isn't as good a guide to the future as most people believe, regardless of whether you've been investing 30 years. I wonder if you still think CBA was a good buy at *$50* back in February?


----------



## Lancelot (31 December 2008)

chops_a_must said:


> 2. Most who can or will be able to afford to buy property, are waiting for conditions that make it an acceptable investment. It is not right now, in any typical case, by any stretch of the imagination.




Good O, keep renting


chops_a_must said:


> 3. Until the buying conditions of 2 are met, there will continue to be better opportunities available.




Fantastic, load up and place your bets


chops_a_must said:


> 4. Property is an _investment_, not a trade. Therefore the same principles that come into play with any type of investment, come into play with property. It has to make sense. It does not now.




There is still opportunity, some places getting near CF+ again especially with some work or re-development


chops_a_must said:


> But at some point in the future, in some locations, it will make sense. It is already starting to make sense in isolated cases here,




see above, makes even more sense if prepared to do some work and not just take the lazy mans way out and pray for a crash



chops_a_must said:


> with a lot of margin called and bankrupted western suburbs properties coming onto the market here in Perth.




A lot as in a few or a lot as in the majority?
I suspect a few as in not enough to make a difference to the majority


----------



## chops_a_must (31 December 2008)

Even single digit numbers in illiquid markets like Mosman Park/ Peppy Grove, would be a lot, in comparison to times gone by.

Impossible to quantify though...


----------



## 2BAD4U (31 December 2008)

chops_a_must said:


> "Yet we have someone else here, as a Perth property perma bull who has selectively completely ignored the historical vacancy rates in Perth, and completely discounting the risk that that entails.



What vacancy rate problem? 2% that's a huge problem isn't it 

And if all you bears are right then the vacancy rates will go down because no one will be able to afford to buy a house and all will be renting. So which is it to be? Careful you don't fall off the fence.

Happy New Year everyone and good luck to all in 09 when both shares and property will start to rebound.


----------



## chops_a_must (31 December 2008)

2BAD4U said:


> What vacancy rate problem? 2% that's a huge problem isn't it




Christ some of you perma bulls are stupid.

Did you notice the word "historical" in there?

Nothing in Perth in the last 10 years has changed the factors that contribute to high occupancy rates over the longer term.


----------



## robots (31 December 2008)

hello,

yeah, all the best brothers

remember its only debate and discussion, its not an argument

we all still in the trenches together,

thankyou
robots


----------



## 2BAD4U (31 December 2008)

chops_a_must said:


> Christ some of you perma bulls are stupid.
> 
> Did you notice the word "historical" in there?
> 
> Nothing in Perth in the last 10 years has changed the factors that contribute to high occupancy rates over the longer term.




Don't bring christ into it he had his turn last week.

OK so lets average 4% vacancy, thats 2 weeks a year at a median rent of $350 that's $700 a year. Quick sell it's gunna break the bank.


----------



## tech/a (31 December 2008)

> 1. You continue to show your complete and utter ignorance of the futures market.




One contract can control $100,000 US but your not investing $100,000 of your hard earned.
I was and am talking on the topic of comparison of Share Investing to Property Investing.
Just let me know when you have $100,000 in your Margin Account for trading futures and your trading 100 Nasdaq Futures Contracts.---Even better let me know when its a couple of Mill.
Your hooting and hollering is becoming tedious.I'm not going away.



> 2. Most who can or will be able to afford to buy property, are waiting for conditions that make it an acceptable investment. It is not right now, in any typical case, by any stretch of the imagination.




What are these conditions? I saw conditions as plain as a futures scalp in the late 90s and will list them off if you want---*Frankly I doubt you or those "Waiting" actually know what they are waiting for*.
List them!



> 3. Until the buying conditions of 2 are met, there will continue to be better opportunities available.




In the meantime if you have a deposit and your waiting for these conditions to be ideal---- trade futures?
So New home buyers with $50,000 should be looking at what?
List these better opportunities?



> 4. Property is an investment, not a trade. Therefore the same principles that come into play with any type of investment, come into play with property. It has to make sense. It does not now. But at some point in the future, in some locations, it will make sense. It is already starting to make sense in isolated cases here, with a lot of margin called and bankrupted western suburbs properties coming onto the market here in Perth.




Now Chops your showing your ignorance and arrogance in property knowledge. Flipping or trading properties is certainly a property strategy.In Fact I'm in the beginnings of building 4 apartments to flip before they are constructed now.

My replies aren't for the Chops of the world who are experts in everything without ever taking part---but those who genuinely want to know how those who are involved actually do it.
On this site being experienced and successful in what you do is seen as flagrant self indulgence.
Fortunately there are enough genuine people who appreciate the efforts of those willing to show the rare glimpses into their experiences.

Something you regularly attack and rarely contribute.

So get off my case and have a *Great and Safe 2009.*
See you next year.


----------



## chops_a_must (31 December 2008)

2BAD4U said:


> Don't bring christ into it he had his turn last week.
> 
> OK so lets average 4% vacancy, thats 2 weeks a year at a median rent of $350 that's $700 a year. Quick sell it's gunna break the bank.




That's an absolutely cretinous way to look at it. If you analyse like that, no wonder you think property is such a great investment at all time highs.

Vacancy rates in Perth have typically been between 5-10% from memory.

But the effects are much more pervasive.

Firstly, it drops the overall worth of property, because the risks of it going unoccupied are far higher.

Secondly, you are in a race to the bottom to attract renters, reducing returns, which further may drop the value of the property.

And thirdly, you may not know which areas will go unoccupied, and once one area does gain an occupancy problem, the effects are circular.


----------



## chops_a_must (31 December 2008)

tech/a said:


> My replies aren't for the Chops of the world who are experts in everything without ever taking part---but those who genuinely want to know how those who are involved actually do it.
> On this site being experienced and successful in what you do is seen as flagrant self indulgence.
> Fortunately there are enough genuine people who appreciate the efforts of those willing to show the rare glimpses into their experiences.
> 
> ...




WTF are you on about? I find it most ironic you post that, in comparison to your attacks on TH.

Developing and what most people do are two completely different kettles of fish. I've PM'd you about property, and where I get my opinions on it from.

To keep it simple. Entry conditions would be, near neutral or positive gearing equivalent from outset. Ideally on land that is capable of further development. That's exactly what I've spoken about in PM's to you. 

Simple enough?


----------



## 2BAD4U (31 December 2008)

nomore4s said:


> These property threads make me laugh.
> 
> I have noticed alot of the perma bulls in these threads are already well established in the property markets with multiple properties. Now I don't blame them for being bullish because if I was in the same position with good gearing levels and nice income from property brought before/at the start of the boom I too would not be selling and have a positive outlook.
> 
> ...



Perhaps people should get off their a55 instead of complaining. Do you think everyone with investment properties where born with a silver spoon in their mouth?  The argument about housing affordability has been going on for decades and will continue.  Most of the people I know with investment properties have taken risks and made sacrifices to get to where they are.  Likewise most of the people I see complaining earn the same amount of money but choose a different lifestyle that affects their capacity to purchase.

We all have choices to make in life.  I was one who never thought I would own an investment property. I didn't suddenly come into money or get a massive pay rise. I simply worked my butt off to get what I wanted and listened to the advise given to me by others.  Perhaps it would serve you well to listen to the advise offered by others in this forum.


----------



## 2BAD4U (31 December 2008)

chops_a_must said:


> Vacancy rates in Perth have typically been between 5-10% from memory.




Crap. Try a long term average of 3%.


----------



## chops_a_must (31 December 2008)

2BAD4U said:


> Crap. Try a long term average of 3%.




No.

That's an arbitrary measurement used to assess squeeze levels.

I'd love to know where you got the historical figures of rental vacancies in Perth.

With commercial, I'm confident it would be well above 5%, which is one of the factors we have had such a monumental run up.


----------



## finnsk (31 December 2008)

> There is a very very big difference.
> 
> (1) Inventory. In the US there was at the beginning of this 9mth supply of housing given its "CURRENT" demand. Now with VERY LITTLE DEMAND,inventory has stretched out even further. Unlike Australia large builders in the US and Europe build large subdivisions of 200+ houses *BEFORE* they sell them.
> We however have more brains and build ON DEMAND.
> ...



So you belive that prices will keep going up because of the reasons you stated thats fine by me.
Some years ago an old friend of mine and his wife, moved here to Australia (Sydney) one day he told me a little story. 
In his home country they were able to buy a house with a mortgage and live on the biggest pay "including paying of the house" and save the smallest pay, both of them worked in the printing industry, they looked to buy a house here "Harbord" but they was not able to save much, still working in the same industri, his opinion there was only three solutions to the problem.

1) More pay, did not belive that would happen
2) House prices to come down in price, did not belive that would happen either
3) Go back to his country, so thats what he did.

Spoke to him few months ago, they have a nice house, 2 kids, few pets, and still able live on the biggest pay, and yes he is getting more pay now different job, but still. 

I dont know what the future brings, I am looking to buy property but not for the prices that we have now, for me it is very simple, if they come down I will buy if they dont I will not.


----------



## gfresh (31 December 2008)

lancelot said:
			
		

> $100k @10% compounding over 5 years = $161k...................$61,000 up
> Pay tax = $42000 profit
> 
> $100k as deposit for $500k property at a conservative 5% over 5 years = $638,000.........$138,000 up TAX FREE




Come on Lancelot, you know that your given property equation is grossly simplified with no regards to running costs or interest expenses which would tip it to very even. And if it's an IP there are a lot of other costs such as stamp duty and disposal costs (if sold) which are not deductible, plus capital gain would be payable. You are relying on those 10%+ p/a growth years to come along which makes it all worthwhile...and that is why most people are in property, which is probably fair enough. 

Anyhow, I have New Years to celebrate  2009 shall be very _interesting_ either side of the fence.


----------



## Lancelot (31 December 2008)

gfresh said:


> Come on Lancelot, you know that your given property equation is grossly simplified with no regards to running costs or interest expenses which would tip it to very even. And if it's an IP there are a lot of other costs such as stamp duty and disposal costs (if sold) which are not deductible, plus capital gain would be payable. You are relying on those 10%+ p/a growth years to come along which makes it all worthwhile...and that is why most people are in property, which is probably fair enough.
> 
> Anyhow, I have New Years to celebrate  2009 shall be very _interesting_ either side of the fence.



You made a mistake

I put a conservative 5% in, not 10% like you say


> Quote:
> Originally Posted by lancelot
> $100k @10% compounding over 5 years = $161k...................$61,000 up
> Pay tax = $42000 profit
> ...




If its a PPOR, it is tax free, the OP did not stipulate it had to be an IP


----------



## Julia (31 December 2008)

2BAD4U said:


> Perhaps people should get off their a55 instead of complaining. Do you think everyone with investment properties where born with a silver spoon in their mouth?  The argument about housing affordability has been going on for decades and will continue.  Most of the people I know with investment properties have taken risks and made sacrifices to get to where they are.  Likewise most of the people I see complaining earn the same amount of money but choose a different lifestyle that affects their capacity to purchase.
> 
> We all have choices to make in life.  I was one who never thought I would own an investment property. I didn't suddenly come into money or get a massive pay rise. I simply worked my butt off to get what I wanted and listened to the advise given to me by others.  Perhaps it would serve you well to listen to the advise offered by others in this forum.



I completely agree with this and with comments from Tech/A. Beej, Lancelot and others.

Whenever I read this thread I remember 'Stop the Clock' who ad nauseam trotted out all the same stuff that Chops posts.  I doubt that anyone would be surprised if we're all still on this forum when Chops and Stop the Clock are 95 and they're still sitting on the fence.

I can clearly remember the doom mongerers at the time I bought my first IP.
"Times are uncertain", they said.  "Interest rates could go higher".
(Already 22% on IP).  

"If there's a real downturn in the economy, you might not be able to get tenants".

"Tenants will give you all sorts of problems.  They're all irresponsible".

Etc Etc.

Never had a single problem with a tenant, never was that place vacant, inflation pushed rents higher all the time, and the capital appreciation was excellent.


----------



## wayneL (31 December 2008)

2BAD4U said:


> Perhaps people should get off their a55 instead of complaining. Do you think everyone with investment properties where born with a silver spoon in their mouth?  The argument about housing affordability has been going on for decades and will continue.  Most of the people I know with investment properties have taken risks and made sacrifices to get to where they are.  Likewise most of the people I see complaining earn the same amount of money but choose a different lifestyle that affects their capacity to purchase.
> 
> We all have choices to make in life.  I was one who never thought I would own an investment property. I didn't suddenly come into money or get a massive pay rise. I simply worked my butt off to get what I wanted and listened to the advise given to me by others.  Perhaps it would serve you well to listen to the advise offered by others in this forum.



Timing can be important.

BTL landlords who entered the market here in 2005-2007 are falling over like ten-pins in a bowling alley.

There are even margin calls here and there. 

Julia's comments above are valid, but there is a point where overvaluations can seriously hurt the investor.

I'm about to turn moderately bullish for the long term, as value is starting to appear here and there... and I mean "real" value . Add in that there will probably be an episode of high inflation after the depression and RE will make sense again. But not quite yet.

* Comments obviously refer to UK


----------



## Whiskers (1 January 2009)

I agree with Tech/a and Julia and others along the same lines. You'll never achieve, if you keep telling yourself you can't do it or get overly concerned with the wrong or relatively minor issues. 

I mean this rather trivial arguement about vacancy rates means little if you follow the basic's of property investment because you'll have a good property in a good position with good tennants... ie minimal vacancy time. 

Although I did turn over a few tennants, for the most part they left the property in good order. With one exception (which was two days) I always re-let the property the day after it was vacated. So in something like three years I only lost one day's rent. 



tech/a said:


> What makes you think it wasnt exactly the same as it is now in our day.
> It was! We needed 2 wages to buy our first home. We DIDNT get a *1St Home owners grant* either! We didnt have interest rates at *6.5% either!* Try 12%!




I did without some so called necessaties, that many young people feel they must have, to be able to built my own home. It was a conscious decision to build somewhere I could afford.

In the eighties a change of circumstances took me away for work, but I decided to borrow at about 21% I think it was, to buy a second house, rather than sell my home or rent for a couple of years. The job didn't last as long as forcast but still refinanced at 15% after about 12 months and rented for some time before selling for almost 50% gross gain... which brings me to tech/a's next point.



> Every 15 or so years market conditions like those seen in the late 90s will come around---just wait! (Being sarcastic!).




As some wise old timers I respected used to say there's a time and a place for everything... be prepared, bide your time and make it count, ie once you make the plan exercise it with commitment. Half hearted poorly though out plans rarely work out... but have a contingency plan, don't burn your bridges behind you.

For successful investment housing though, sound judgement doesn't just mean financial judgement... you or the property manager must have good people skills to evaluate the best tennants, which you should then treat as a valuable asset, just as your property.


----------



## Glen48 (1 January 2009)

I read about a bloke who sold a house at Broadbeach on the Gold Coast I can't remember the exact figures but it averaged 3% OVER about 50 yrs before inflation.
Yes RE does go up & down ..but any one who hasn't sold now will be left with a time bomb due to go off in 2009


----------



## kincella (1 January 2009)

Glen, that is not possible for property to remain at 3 % for over 50 years....someone is pulling your leg.... a house on the gold coast....
even if the house was unliveable...the land would have increased 5 fold

and the statement if not sold now... a time bomb to go off in 2009.....

you may be surprised...it could go upwards like a bomb....
generally property will not go down.....but individual props over 2 mill etc could be sold cheaper ..due to a margin loan or some specific problem with the owner...


----------



## Bill M (1 January 2009)

dhukka said:


> I doubt you'll ever see a 40% decline in eastern suburbs property prices either. However if we've learned one thing this year it is that history isn't as good a guide to the future as most people believe, regardless of whether you've been investing 30 years. I wonder if you still think CBA was a good buy at *$50* back in February?




Hello dhukka, good memory but I don't know why you bought up CBA in this thread. I made a wrong call but so did 90% of other people on 90% of other stocks available to buy. Who would have ever thought RIO would drop by 80% or even BHP by 60% or WPL by 60%, people on this forum were calling them good buys at their high prices. Anyhow as I mentioned back in Feb, I am a long term holder and as such I still hold CBA and collect very nice tax paid dividends. The end game isn't over until you sell.

Back to the thread now, has anyone ever experienced such catastrophic losses on real estate like 80% or 60% or even 43%? I never have.

Another reason why I'm annoyed with investing in some stocks is the CEO's and Directors get the jump on shareholders on info and sell their own stocks before the market gets the bad news. Hence they get out at higher prices and we get hammered when the announcements come out. How can they legally get away with that?

At least with property you are in direct control. You decide who manages it, who lives in it and how much rent you charge. There are no CEO's flogging stocks behind your back 1 week prior to sensitive announcements. So "House prices to keep rising for years"? Of course they will, too many people and not enough dwellings. With rents rising year after year, share markets falling over a cliff, dividend incomes dropping, people are looking for more certainty. Real Estate as an investment or for somewhere to live without ever increasing rents can provide that certainty.


----------



## Bill M (1 January 2009)

Lancelot said:


> Probably here already, note the date




That article dated 1970 is a beauty (click here for that), nothing has changed, nothing. People are still complaining about the same things.

Some 15 years ago a mate was whinging to me about the price of real estate. I said to him it is not that bad, all you need is 10% down and borrow 90%. Think small and just buy a 1 bedroom unit to start with. I said all you need is 25K, you can save that in a year. He said he could never live in a one bedroom unit, he wanted 3 bedrooms at least, he never saved that 25K. That guy is now paying rent of $650 per/week in a very ordinary suburb in Sydney. The 1 bedroom unit in the mean time has more than doubled. By making small sacrifices now can pay off very well for the future, we all did it the hard way.


----------



## kincella (1 January 2009)

Bill M,
 my thoughts regarding the stock market are similar to yours...and agree about the control over your property.....plus  70% of the population are home owners, and another 30% of homeowners are also property investors.....ie they provide the 30% of renters with a property ( my rough figures...govt public housing provides x% etc)...compelling case that property is a favoured asset and investment....

The majority of those prop owners are unlikely to swap and change on mood swings...which is what the CURRENT stock market relies on ....providing volatility for the PLAYERS...the stock market used to be marketed as an alternative for conservative  investors.....good stocks with good dividends......its been volatile since the 1930's....its more high risk than property ever was, there have been good years....like 2003 to 2007 but that has all been dissolved in 2008.....

None of us need the stress of watching a good stock plunge in price on a daily basis....with only the insiders aware of the new rules they play by...and shareholders being the outsiders, oblivious to their rules.

Some people mock the idea that at any local house auction a reasonable number of neighbours turn up to watch the prices....the neighbours have a good reason for this....they have an asset that needs protection....

I believe money is already flowing through to property, and a lot more will flow in, come 2009.  There are a lot of investors with money in superfunds, and in the sharemarket, and cash in the bank...who are  very angry with how their investments have been manipulated and managed.....they will opt out for a safer , lower risk investment that property offers.

Reminds me...an associate was planning on retirement Dec 08....originally had 300,000 in super...plus property on his own account....he was intending to use some of the super to reduce the loan on the investment property....super is probably worth half of that now....the prop loan was less than 40% LVR....imagine he would be stalling his retirement...but he may be angry enough to take what money is left and run....the interest on the loan will reduce...not much of a problem.anyway.....and will ease the burden....

his wife has several properties....funding her own retirement....very little super for the females over the years when they only ever worked part time..
he was a reluctant property investor in the beginning...but over the years the little property he did purchase has grown significantly, and returning a good cash flow income..at the same time he salary sacrificed into super and then added an extra 10,000 pa to the super.....I can just imagine how angry and dissapointed he will be....years of hard work and then on retirement to see it diminished.....I have other friends and associates in similar circumstances....there will be a backlash....I cannot see them sitting idly by and leaving funds in super or the stockmarket....most have an active approach regarding money...so a term deposit with the bank is not an option either....
I was right in reading the aftermath of the teck wreck and funds flowed into property....I believe we have a similar situation here...except its far greater than the teck wreck...and interest rates falling now..which was not the case then .........I will be very surprised if its different this time....

The younger readers may doubt me..they have...30 plus years to recover....but most of the older generation have too much to lose....right now either into retirement or on the brink of retirement....
cheers


----------



## robots (1 January 2009)

hello,

but chops, prawn, NC and others are doing well man as they saving hard, putting it away

thats the game rent and invest nothing wrong with that, people will do well

thankyou
robots


----------



## numbercruncher (1 January 2009)

No saving here, Investing, oportunity galore .....

Whats your guys big tip on RE Medians this year ? 2008 sucked for team re permabull, what sort of % + are we talking ?


----------



## robots (1 January 2009)

robots said:


> hello,
> 
> but chops, prawn, NC and others are doing well man as they saving hard, putting it away
> 
> ...




hello,

team robi done well St Kilda units up 14.8%, probably just kick back and continue to focus on income where the real risk free mega dollars are made

anything else a bonus

thankyou
robots


----------



## Lancelot (1 January 2009)

numbercruncher said:


> 2008 sucked for team re permabull,




Not for all of them it wasnt, some did very well thanks

Dont believe everything you read in the paper NC, ever heard of confirmation bias?


----------



## Bill M (1 January 2009)

Lancelot got me thinking of some of the old clippings I cut out years ago. Here is one after the early 90's recession, dated 1994. Note: exactly the same arguments then as now.

Quote from article:

"The table on this page shows how off the mark the doom and gloom merchants were, when, as they did in 1983 and more recently in 1992, they predicted that price increases were a thing from the past. Whilst caution is wise, undue caution could see some buyers miss out on excellent opportunities."

*Now the Sydney median house prices are around 550K*.


----------



## tech/a (1 January 2009)

Mooorrrning.

No hangover (I don't drink but so tiered need to get to bed!).

Some thoughts for 2009.
After recession and in worst cases depression there always follows---inflation and in some cases hyperinflation.

If you don't have property then---you'll likely never have it.
You'll all get your wish and rent for the rest of your lives as will your kids and their kids.
Cash will mean nothing as it is eroded by inflation.
That $300,000 home will become impossible to own as it will race away in price as your deposit becomes less and less in value.

You must have at least 1 home to keep in touch with inflationary trends.

Interest rates wont sit at 30 yr lows for another 30 yrs.
Those that have "ridiculous" loans will be laughing as they(The loans) diminish into in significance as inflation races away.

Ridiculous?
I give it 3 yrs TOPS.

There is opportunity arriving in a very short time---DONT MISS IT!

*Chops*
Everyone can develop even those without a home of their own.
Even with very little capital base.
All you need is holding and preliminary cost capital. 
This can be found with JV partners if you have a good development with excellent numbers.


----------



## numbercruncher (1 January 2009)

Lancelot said:


> Not for all of them it wasnt, some did very well thanks
> 
> Dont believe everything you read in the paper NC, ever heard of confirmation bias?








Yes some of the people win some of the time but never all of the people all of the time .....


----------



## numbercruncher (1 January 2009)

> Originally Posted by tech/a
> If you don't have property then---you'll likely never have it.
> You'll all get your wish and rent for the rest of your lives as will your kids and their kids.







Hilarious .....

Does it only last 3 generations or is it a eternal thing ?

We have links to back this fact up dont we ? ....... oh we dont ? 

Maybe Weimar Germany was your case study, can people still no longer afford property there ? who owns it all I wonder ? they must be old and wrinkly by now huh ?


----------



## gfresh (1 January 2009)

tech/a said:
			
		

> After recession and in worst cases depression there always follows---inflation and in some cases hyperinflation.




^^^ agreed, gold chart is interesting at the moment. 

The tail-end of that 1994 article is interesting .. 1989 (2007?) into 1994 (2012?) saw 5 years where effectively there was zero growth, even negative return for late 89 investors. If we're at a similar economic period to then, then plenty of time to get set for the profitable part of the cycle.


----------



## tech/a (1 January 2009)

> We have links to back this fact up dont we ? ....... oh we dont ?




In the UK many never own their own home---never will.
Even more only when their parents pass on and they inherit property.

Those who are above the "average" wage will find ways through their own entrepenurship.

Joe Average will unfortunatley reside on these threads with no way of getting ahead.



> Hilarious .....




In years to come you'll look back at this statement and without a smile on your face.


----------



## theasxgorilla (1 January 2009)

FWIW, anyone thinking of buying the line of "look what I did with property during the last 30 years" IMO should ask themselves, can it be different this time?

The answer is, no-one knows.  So therefore it's best of hedge any positions taken and/or wait for confirmation.

*How does one hedge residential direct property exactly?*


----------



## finnsk (1 January 2009)

tech/a said:


> Mooorrrning.
> 
> No hangover (I don't drink but so tiered need to get to bed!).
> 
> ...



Know we are getting somewhere with an interesting view of the future, will admit that I dont understand 100% what you mean but will learn as time go on, still believe that prices will come down in 2009 before they will go up again


----------



## Lancelot (1 January 2009)

numbercruncher said:


> Yes some of the people win some of the time but never all of the people all of the time .....




Thats life, and its different to previous generations how ?


----------



## numbercruncher (1 January 2009)

tech/a said:


> In the UK many never own their own home---never will.
> Even more only when their parents pass on and they inherit property.
> 
> Those who are above the "average" wage will find ways through their own entrepenurship.
> ...





Thanks for clarifying your position, at first i thought you were implying that people who dont own property once inflation started will be out along with their offspring for 3 generations or more ....

But only a spruiker would write such drivvle so obviously those words were a mirage .....


----------



## robots (1 January 2009)

hello,

thanks Number for confirming we still up there with 7x income to price, fantastic information

i thought it has crashed? shouldnt it be 4x or 5x, Keen says its imploded everywhere

oh, the great divide

thankyou
robots


----------



## tech/a (1 January 2009)

> How does one hedge residential direct property exactly?




*By owning it.*

*EVEN* when your making a *loss compared to rent.*


(1) You wont know inflation is biting before its too late.
You will find it even more difficult to get money when it does start to bite---best be in front.
(2) You generally wont be in the position to buy property when its on the rise because by the time you notice it a year or so has taken a good portion of the profit AND you'll need more deposit---your chasing.
(3) Even now and surely through 2009 you'll be able to get money easier at rates you wont see again in a very longtime. When it does turn for most it will be forget it!

*Example.* Simplistic but making a point.

You buy a home now at $200/ week premium to rent.
For 3 yrs you lose $30K on your $300,000 property.
Inflation takes off for 3 yrs and your $60,000 deposit has now cost you $90,000.
Housing rises 10% a year for those 3 yrs so your property is now worth $399,000.

If you hadent bought you would have to now find $80K (20% of $400K)
and you'll be paying say 9% on your $310,000. (see equity below.)
If you havent locked down then youd will be paying 9% on $240,000.If you purchased now.
If you locked down for 5 or more years that could be 6-7%.

Your infront and in the position to upgrade.Buy more.
You have $150,000 equity,buyer 2 has his $80,000 deposit.

Now do the figures on 15% compounding price rise on your property.
AND say 12% Interest rates.

*Hilarious????*


----------



## Judd (1 January 2009)

Each to their own on whether house prices (owner occupied or rental or whatever tag you wish to place against the dog kennel) will or will not rise/fall/remain static.

Just posting as I have found this fella humourous.  Like his style.

http://mysite.verizon.net/vodkajim/housingbubble/

On a more serious note (as if anything published by the Australian Federal Government is serious)

http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm


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## Nyden (1 January 2009)

tech/a said:


> *Example.* Simplistic but making a point.
> 
> You buy a home now at $200/ week premium to rent.
> For 3 yrs you lose $30K on your $300,000 property.
> ...





Tech, isn't this assuming that all the stars align? What if we experience deflation, as opposed to inflation for a while? What if a recession takes hold in Australia, and you lose your job - and many others do as well; would this not lower the price of the home, leaving you with a pile of debt with nothing to back it should you need to sell?

I keep questioning as to what people believe makes Australia so "special". I hate to break it, but Australia is a pretty ordinary country - A lot of people would even suggest there are better places to be, and even have intent on leaving once finishing their studies! The shock 

So, again - what makes Australia so great, that it will avoid the housing slump the rest of the world has faced? Are Australian consumers not riddled with debt? Is our economy not slowing? Have house prices not soared above average levels in the last decade?

Let's see what we've got here,

Immigration to be cut
Slowing economy
Rise in unemployment
Commodity boom in tatters
Already unaffordable prices

Aside from interest rate cuts that are perhaps too late to actually really help the economy, I honestly cannot see anything that will hold prices up?

Assuming history will *always* repeat can be rather dangerous, things always shift. One must always be open to the (however remote) possibility that it will not.

Sorry, but your post just seems a little "buy now, or miss out forever!" for me.


----------



## tech/a (1 January 2009)

Nice clip Judd---how true that is!

Saw this publication in Dymocks and has some great topics (Haven't read it yet but had a good browse).

*"How to Survive and Prosper in a falling Property market"
Peter Aranyi
ISBN 978-0-9582307-5-9*

and its an AUSTRALIAN publication!! (Well New Zealand!)


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## kincella (1 January 2009)

Bill M, now there is a devoted property watcher...and thank you for saving that information....***interesting synergy....did anyone note the drop in prices from 1989 ? on Bill's  chart.....it was Sydney median prices....made me stop and think....I keep a report with Australian house prices...and there was no dropping of the prices ever since 1986...see the link below....
so again it was the high flying Sydney people that pushed it up and then down again.....
at the same time 1989 was the peak in house prices after the stock market crash...however at the same time the US was heading into a recession ...the US feds had dropped rates 23 times between July 89 and July 92 before it was over....I could be wrong...memory not so good today...but I doubt we had rates dropping.here ..in fact they were rising until Howard came in in 1996 and sent them down again....

The Sydney house market is not indicative of the whole Australian wide market....prices were  Aust wide 1989 .  138,600 and gradually crept up each year until 1994 at 148,100.....so do not get too excited about the drops in Sydney ... it was much higher to begin with 62,000 higher and went lower in the following years...but still higher than the aust wide average, in the end at 68,000 higher in 1994 ...sydney prices have always been higher than melb....and doubt if it was worth counting the other cities...in those years they would have been so low as to distort the figures.....of course it is different today...Perth and Brisbane have finally grown up

here is the 20 year chart....and note the disposable income figures...that is the amount a family has available to spend on housing and everything else...staggering

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## nomore4s (1 January 2009)

Lancelot said:


> Not everyone gets to own a house, it was never a requirment in previous generations, why do you feel it is now?




Where did I say I thought it was a requirement that everyone can/should own thier own home?



2BAD4U said:


> Perhaps people should get off their a55 instead of complaining. Do you think everyone with investment properties where born with a silver spoon in their mouth?  The argument about housing affordability has been going on for decades and will continue.  Most of the people I know with investment properties have taken risks and made sacrifices to get to where they are.  Likewise most of the people I see complaining earn the same amount of money but choose a different lifestyle that affects their capacity to purchase.
> 
> We all have choices to make in life.  I was one who never thought I would own an investment property. I didn't suddenly come into money or get a massive pay rise. I simply worked my butt off to get what I wanted and listened to the advise given to me by others.  Perhaps it would serve you well to listen to the advise offered by others in this forum.




Again more assumptions, just because I'm currently bearish on property doesn't mean I'm a total nuf nuf. Why do property bulls think they are the only people who are successful and if you are bearish about property you can't afford it or are whinging about not having had the same chances as others who have done well?

I've owned property before and I will own property again when I find something that is within my criteria, but for me atm it makes better sense to rent.
This doesn't mean I'm not working as hard as I can to be in a position to take advantage of any opportunities when they do present themselves.

And I'm not sure it's a wise move to take advice off someone who can't spell it:


----------



## numbercruncher (1 January 2009)

Seen as australias 22m inhabitants are quickly running out of room and apparently atleast the next 3 generations wont be able to afford to purchase a property ..... just maybe we should round these pesky heathen non-home owners up and send them off to .........


http://invadenewzealand.com/


----------



## xoa (1 January 2009)

tech/a said:


> If you don't have property then---you'll likely never have it.
> You'll all get your wish and rent for the rest of your lives as will your kids and their kids.
> 
> There is opportunity arriving in a very short time---DONT MISS IT!




*"Buy now, or be priced out FOREVER!"*
Maximus Speculatus, 240BC
Roman real estate agent​


----------



## theasxgorilla (1 January 2009)

tech/a said:


> Now do the figures on 15% compounding price rise on your property.
> AND say 12% Interest rates.
> 
> *Hilarious????*




Not at all tech/a.

I've run it in Excel and I understand the mechanics of how the bull market works.  But what if I buy now and my property starts going down in value and I'm running it at a loss (negative cashflow) with the intention of making capital gains?

Can I hedge this?  I'm not joking when I say that in Sweden you can (or at least you could pre-financial-crisis...as with mortgage insurance in Australia I'm not sure how well it works when we're all running for the same little exit).


----------



## IFocus (1 January 2009)

Nyden said:


> Tech, isn't this assuming that all the stars align? What if we experience deflation, as opposed to inflation for a while? What if a recession takes hold in Australia, and you lose your job - and many others do as well; would this not lower the price of the home, leaving you with a pile of debt with nothing to back it should you need to sell?
> 
> I keep questioning as to what people believe makes Australia so "special". I hate to break it, but Australia is a pretty ordinary country - A lot of people would even suggest there are better places to be, and even have intent on leaving once finishing their studies! The shock
> 
> ...




I agree Nyden

I hold investment properties currently that I bought 6 to 7 years ago and feel like an absolute guru from the gains but in reality have just been very lucky.

Its not the 1st time this has happened but at all times I used a lot research so I could deploy some sort of risk management for worst case scenarios very little of which I see here from the property bulls.

There is clearly plenty of bias based on personal circumstances from both sides of the argument. 

There are any number of strategies in any investment and there will always be niches to make money in property but I find others urging new comers to buy IP,s now quite incredulous.

Like Nyden I don't think Oz is special and we will feel the heat from the biggest global financial / economic crisis ever in our generation and there will be losers.

This will affect jobs and income which in turn will create opportunities and in property if you have done your home work and research you will have plenty of time to enter the market you do not need to be the 1st to get in. 

One last point is that there will be a rebalanced of property pricing not sure how this will happen but it will, to expect the same average returns as recent years without a return to the mean and even an over shoot to the down side is surprising.

PS I write this with a WA bias


----------



## Glen48 (1 January 2009)

You only make money out  of property when you sell it, saying you have a house worth $10 gazzillion is nothing.
Houses prices go up and down just like shares an gold so you buy and sell as things change but if you sit there long  term you get this:


http://www.miamicondoforum.com/wp-content/uploads/2008/12/pricechange.jpg


I realise Houses in USDA are different to OZ  so some one can use try and use as an excuse but any consumable  item is the same any where in the World.


----------



## theasxgorilla (1 January 2009)

numbercruncher said:


> *Seen as australias 22m inhabitants are quickly running out of room* and apparently atleast the next 3 generations wont be able to afford to purchase a property ..... just maybe we should round these pesky heathen non-home owners up and send them off to .........




It's an often heard remark this one, usually in response to arguments by property bulls that high property prices are a result of rising demand in response to such things as immigration.  Yet its so easy to counter the bull argument by pointing out that we have ample land and that immigration is not proportional to house price growth, therefore we have a bubble.

Curiously I was doing some homework recently in prep for another move abroad and I stumbled across these facts:

Population density per square kilometer:

Sydney, 2058
Melbourne, 1566
The Randstad, 1224

The Randstad being that part of the Netherlands where 7 million people live, encompassing Amsterdam, Utrecht, Rotterdam, The Hague, and where on a daily basis traffic jams are measured  in tens if not hundreds of kilometres.

When I compare the infrastructure in Sydney and Melbourne to what is available in many smaller size, less dense European cities I come to the conclusion that there may not be as much of the good life to go around Down Under.  It adds an interesting angle to the supply/demand argument in any case.


----------



## kincella (1 January 2009)

Glen...only make money when you sell it ?....not entirely correct....you can make it work for you in the meantime...increase the loan to buy other assets...want to go into business by yourself...need money...banks will only be interested in lending if you have a little residential property on the side...
its amazing what a resi property can do for you
its the equity in that is attractive....and the leverage you can use ...want to borrow against it to buy shares ???? (not recommended by me) but beats all those margin loans that is bringing everyone undone at the moment....
I am not advising you to buy property, now or anytime in the future...everyone has choices....I am not here to change anyones mind about property....
associate borrowed about 50,000 ten years ago and bought shares, very happy, every so often borrows some more to buy more shares, when shares are sold the funds go back to reduce the loan...loan is secured against the resi property...last year mv of shares was 250,000 this year before the crash about 500,000.....but the loans are manageable..affordable....banks will not come after or take the shares away.....not happy with the dive in shares.. but all the risks are managable.....property worth about 750,000 with no other lending against it....original cost of house , about 250,000 many moons ago
cheers


----------



## Lancelot (1 January 2009)

Glen48 said:


> I read about a bloke who sold a house at Broadbeach on the Gold Coast I can't remember the exact figures but it averaged 3% OVER about 50 yrs before inflation.
> Yes RE does go up & down ..but any one who hasn't sold now will be left with a time bomb due to go off in 2009




Gotta link?


----------



## wayneL (1 January 2009)

xoa said:


> *"Buy now, or be priced out FOREVER!"*
> Maximus Speculatus, 240BC
> Roman real estate agent​




GOLD! lol


----------



## robots (1 January 2009)

Nyden said:


> Tech, isn't this assuming that all the stars align? What if we experience deflation, as opposed to inflation for a while? What if a recession takes hold in Australia, and you lose your job - and many others do as well; would this not lower the price of the home, leaving you with a pile of debt with nothing to back it should you need to sell?
> 
> I keep questioning as to what people believe makes Australia so "special". I hate to break it, but Australia is a pretty ordinary country - A lot of people would even suggest there are better places to be, and even have intent on leaving once finishing their studies! The shock
> 
> ...




hello,

for those who dont rate Australia:

Love it or Leave it, no big deal right, planes are still going to your favorite destination

no  loss

thankyou
robots


----------



## Nyden (1 January 2009)

robots said:


> hello,
> 
> for those who dont rate Australia:
> 
> ...




Well, aren't you just a good little brainwashed patriotic sheep. Australia is a great country, I love living here. But, do not kid yourself - Australia is not the *best* country in the world. Everyone from every western country claims that theirs is the best - that's the whole idea of patriotism! Idiotic rivalry between countries, from sports, to holding onto the grudges of past wars.

Every country cannot be the best, just as every religion cannot be right (or any, for that matter) - that's kind of the point of brainwashing from a very young age though, isn't it 

I've said it once, and I'll say it again - no one would want to goto war, and possibly die, for the third best country in the world, now would they?


----------



## robots (1 January 2009)

Nyden said:


> Well, aren't you just a good little brainwashed patriotic sheep. Australia is a great country, I love living here. But, do not kid yourself - Australia is not the *best* country in the world. Everyone from every western country claims that theirs is the best - that's the whole idea of patriotism! Idiotic rivalry between countries, from sports, to holding onto the grudges of past wars.
> 
> Every country cannot be the best, just as every religion cannot be right (or any, for that matter) - that's kind of the point of brainwashing from a very young age though, isn't it
> 
> I've said it once, and I'll say it again - no one would want to goto war, and possibly die, for the third best country in the world, now would they?




hello,

gee what a turn around: "i hate to break it, but Australia is a pretty ordinary country"

to: "Australia is a great country, i love living here"

wouldnt want you side by side in the trenches, be jumping ship

thankyou
robots


----------



## Passive (1 January 2009)

wayneL said:


> GOLD! lol




You should have listened to him. I did!

Maximus Beneficius 2009


----------



## Nyden (1 January 2009)

robots said:


> hello,
> 
> gee what a turn around: "i hate to break it, but Australia is a pretty ordinary country"
> 
> ...




It is ordinary. By your opinion can ordinary not be great? Apples are pretty ordinary too, they rot, they're often flawed - but I love them.

Australia is ordinary when compared to other western countries. Some countries have more affordable housing, some have better health care, far better culture, history, and yes - even a greater (non-recession) job market.

The US, and UK are ordinary as well - that's my whole point. *No country* is special. I would probably love living there as well, as my needs are quite minimal.

You're darn right you wouldn't want me in the trenches. I wouldn't fight, nor die for any country. My loyalty lies to myself. I don't believe in an afterlife, so why the heck should I sacrifice my life for *anything*? I'd rather be branded a coward, a traitor, a deserter, heck - even be imprisoned for 10 years. At least I'd be alive


----------



## Glen48 (1 January 2009)

Lancealot
Sorry don't have a link it was a letter to the Editor in the Courier Mail.
There was a story about a house sold on the G C  beach and they paid some low amount for it and it sold a long time later for around a $1M some bloke worked out it had only gone up about 3% PA.
Having a house worth $$$ is no use to you unless you can use the equity tied up it the thing to make more money, buying and selling houses is ok as long as you can pick the market just like Gold, shares art work etc.
living in a $$$M house doing nothing is costing you money these days and will do for years and after the collapse it you need to hope you live long enough for it to come back to today's prices.
Is it worth the risk to sit there thinking it will keep going up when every thing associated with money is a dud.?


----------



## chops_a_must (1 January 2009)

theasxgorilla said:


> It's an often heard remark this one, usually in response to arguments by property bulls that high property prices are a result of rising demand in response to such things as immigration.  Yet its so easy to counter the bull argument by pointing out that we have ample land and that immigration is not proportional to house price growth, therefore we have a bubble.




It's probably where a bit of urban planning background comes in handy. I assume those places have better public transport than we do? Decentralised work?

There is a theory, and it seems to hold, that there are actually these quasi/ psychological limits which impose themselves on the physical limits of cities. Generally, it is thought that most people aren't prepared to live further than 30 minutes away from their main transport destination. This varies depending on the type of transport though. So if for example, they have better rail and light rail, people will be prepared to live further out.

And a quick bit of research after writing that, and it will give you the answer:

"Railways

The Randstad is the keystone of the Dutch railway network; most intercity connections terminate in one of the key cities in the Randstad. The railway network in the area is dense and heavily used."

Rapid mass transit can be used to both densify, and extend the physical limits of a city. Although in the latter case it would probably develop atypically to what we are used to.



Julia said:


> Whenever I read this thread I remember 'Stop the Clock' who ad nauseam trotted out all the same stuff that Chops posts.  I doubt that anyone would be surprised if we're all still on this forum when Chops and Stop the Clock are 95 and they're still sitting on the fence.
> 
> I can clearly remember the doom mongerers at the time I bought my first IP.
> "Times are uncertain", they said.  "Interest rates could go higher".
> ...




I think you are missing something in my argument Julia. I'm not talking about occupancy rates anywhere else but Perth in the context of Passive completely ignoring it as a real factor. It is a real problem in Perth property over the long term.

Also, if you have read my discussions with Agathos, I'm certainly not altogether bearish property. In fact, I think property is a fantastic investment. If you can time it well enough or near enough, you can effectively have an almost risk free passive income stream. I'd take that on a call writing strategy any day of the week.

It is also not clear cut, because I think there are some great deals in property starting to appear here in Perth, if you have the ability to get in position:

http://www.bigfooty.com/forum/showthread.php?t=528606

Going back to the Agathos discussion Julia, I have my areas where I am long term bullish, and long term comparatively flat. I'm not exactly sure how you can see me sitting on the fence there.  If I see a deal that makes sense in one of these areas,  I'll do it when I can. No two ways about it. Like I've said over and over again, the Beacy strip through Hammy Hill and maybe Coolbellup is where I will be looking because of its proximity to Freo, and development potential.

But there is probably another issue that needs to be looked which I will do with Tech's post.



tech/a said:


> Mooorrrning.
> 
> No hangover (I don't drink but so tiered need to get to bed!).
> 
> ...




Yeah... I don't agree. You may just as well buy gold.

If inflation pushes rents up, but wages apparently stay the same so they can't afford said inflating property, there will come a point where rent will intersect total earnings. People will just stop working, and society will cease to function. It just isn't a logical argument.

I'd hypothesise that if we did get some kind of inflation - personally... I think a Japan scenario is a much greater probability than hyperinflation - property would actually inflate at less than the inflation rate. After all, it seems to have been property that was one of the main pushes behind our inflation. 
Interest rates wont sit at 30 yr lows for another 30 yrs.
Those that have "ridiculous" loans will be laughing as they(The loans) diminish into in significance as inflation races away.



tech/a said:


> *Chops*
> Everyone can develop even those without a home of their own.
> Even with very little capital base.
> All you need is holding and preliminary cost capital.
> This can be found with JV partners if you have a good development with excellent numbers.




This is true. But I'm also wary of doing these sorts of deals. It is a distinct possibility with the brother and the contacts in the future.

It is also a reason why I would be prepared to pay quite a bit more for developable land. Subdivide, live in one and sell the other. I know quite a lot of people do this, but I don't understand why more don't.

I'm sorry for giving you some heat over the last day or two. I apologise for that considering your circumstances at the moment.

Another thing I want to point out, as I mentioned above. In relation to running battles on this thread between the "haves" and the "have nots". Maybe it should be italicised or bolded or something.

There is a big problem with those who already have property, not understanding the nature of property investing. Not in a bad way, but from the perspective of not being in the market. Typical property investing is not _generally_ something you take on for a short time. In a lot of cases it is essentially a permanent investment. Therefore, entry is everything. 

If you have got in at a good time, for one reason or another, generally, you are set. You are running. As long as you aren't stupid, outside influences are generally irrelevant. For those not in the market, that's not the case. Get in at a bad time, it can set you back 5-10 years maybe. 

So there is this rather large disconnect between the two viewing points of the groups. The owners on here, seem to have done very well for themselves, and so long as they haven't been stupid, so long as they have invested wisely, a lot of what is happening is just noise. They are past the point of having to worry about the factors that may or may not inhibit them to begin with.

For the rest, it is a matter of, if they so wish, to be able to get into that position where it really doesn't matter if houses go down 10-20%, so long as they are getting a return. And it seems most are. But the fact that the two groups are looking at, and have completely different parameters to work with, within the same asset class, means there is a whole heap of misunderstanding. And I don't think that that is something that can't be overcome.



robots said:


> hello,
> 
> but chops, prawn, NC and others are doing well man as they saving hard, putting it away
> 
> ...




See, Robi gets it. 

Nawww... I love you Robi. :


----------



## kincella (1 January 2009)

chops...seems you are in WA so not familiar with other city limits....Melb has this 2030 vision plan that they have been playing with since about 2000....they..the govt.. will not open up or release any new land for subdivision...tight controls on the land...regardless of what the citizens want or demand or need....we are limited to the land that has been designated years ago....the govt. suggests we deal with the shortage by allowing developers to do multi dwellings...aka units...high rise etc on the current land...which basically means they have to find a existing house, demolish it and build high rise... 
then there is the Urban Land Authority...another govt dept, charged with release of land outside our boundary...eg like building another suburb out west somewhere....their land release is so small...people camp out for days in advance in order to get a parcel of land of their choice...its auctioned, fuels demand...
Sydney is similar, with restrictions....think it was late October on the news, the kids packed a tent and waited a week for that land authority to auction land on site....think it was the first land in over a year or was it 2 years
to come onto the market......

Maybe all you WA people do not have that problem over there...or if it were applicable , you are not aware of it....

Even in the regional city on the nsw border that I follow....land for housing is only released once a year or sometimes you wait 2 years...the adjoining city is the same....so if you think you just willy nilly go out and buy land to build a house...you need to think again.....in that case its only 100 blocks..so thats only 100 new houses available....and its not in town..its out on the edge...or further out where the town planners suggest a whole new suburb for the future...but the first ones are the guinea pigs....nothing there to begin with

so when you all go on about what shortage, there is none etc...how big australia is and how much land is available.....you are being rather short on the facts......most of australia is not suitable for housing....most of it is desert, no roads water or anything...and today a lot of it is locked up by the natives....you cannot travel haphazardly over the country with your tent as they did years ago...you are confronted with shotguns and no permission to travel onto native land...
oh and I forgot to add...about 1/3rd of Vic has been taken over by Parks and Gardens Vic....it is locked up...they do no maintenance on it, no fire prevention, no bush fire tracks...and god help the famers and neighbours whose properties border the parks.....explains why the past 5 or more years we have had massive fires in east victoria.....nsw has a similar problem


----------



## chops_a_must (1 January 2009)

Well... Perth is really really pushing its physical limits as well.

I'm reasonably well versed on the 2030 vision as a few of my lecturers worked on it... and aren't all that happy with it.

It would be fine so long as they would be forthcoming and meeting the timetable in regards to public transport, and some badly needed cross directional train lines.


If you are able to comprehend what I said to ASX Kincella, you would know I'm not being antagonistic towards the limited land supply conundrum. It's good to see you are just as annoying here as you were on HC on the VRE or INL threads I was down ramping at the time. 

Like I said, cities have practical physical limits, regardless of policy generally.

In WA, a lot depends on the council locality you are in. You have some completely anal retentive councils like Melville, where I'm living at the moment which have some seriously dick brained regulations which would not help investors.

And in Victoria, the 2030 planning is needed specifically in relation to one massive problem you will face in the future, energy.


----------



## kincella (1 January 2009)

chops....I am just as annoying...why is that...stating facts about a subject ??? and how am I supposed to know what you said to the asx  ...I have no idea who you are...or what was said or when etc....and if I can comprehend ???? who are you to question my understanding of a subject....

I prefer not to insult people or question their intelligence etc...but some people come out fighting...being argumentive...
difficult to deal with...just for the sake of it, it seems....
so i hit the ignore button....


----------



## Beej (1 January 2009)

Glen48 said:


> Living in a $$$M house doing nothing is costing you money these days and will do for years and after the collapse it you need to hope you live long enough for it to come back to today's prices.




Rubbish! You are forgetting about the rent you would otherwise be paying, with after tax $$$..... The house I live in would rent out for at least $1200/week - so it actually "earns" me ~$60k pa after tax regardless of any potential capital appreciation, or other use that I might put the equity in it towards. Another way to look at it is the money tied up in my house provides my family with a $60k (after tax) a year lifestyle, in addition to all the other benefits mentioned by previous posts (equity etc).

Oh and PS, there will be no "collapse" so your entire point is both wrong, and moot.



			
				Chops_a_Must said:
			
		

> If inflation pushes rents up, but wages apparently stay the same so they can't afford said inflating property, there will come a point where rent will intersect total earnings. People will just stop working, and society will cease to function. It just isn't a logical argument.




You haven't lived/worked through a higher inflation environment yet have you? I remember the 10%pa inflation days of the mid/late 80s well - usually wages rise quite fast and in line with inflation, so the argument about rent not being able to increase doesn't hold water. What inflation primarily does is devalue any cash you are currently holding at a rapid rate due to the ravages of taxation on cash earnings coupled with the price inflation of other assets like property. Otherwise you raise some good points in those last couple of posts!

Beej


----------



## chops_a_must (1 January 2009)

kincella said:


> chops....I am just as annoying...why is that...stating facts about a subject ??? and how am I supposed to know what you said to the asx  ...I have no idea who you are...or what was said or when etc....and if I can comprehend ???? who are you to question my understanding of a subject....



It was in the post you were responding too...


----------



## tech/a (1 January 2009)

> After all, it seems to have been property that was one of the main pushes behind our inflation.




Property prices were to some degree a consequence of inflation.

Increased Commodity prices.
Oil Gas,Food.
Increase in the AUD 
Pretty well zero unemployment.
Easy credit.
Rising interest rates.

Were major contributors to infaltion.


----------



## Passive (1 January 2009)

Chops

Your post has given a pretty good indication of where you are placed and I must admit I had no illusion it was otherwise. I grant you that you are not totally onesided against real estate per se and thats refreshing, but please don't think we all bulls are either.

There is no way Perth is finished by a long chalk in the long term and its a fallacy to believe more people will be able to afford to buy and subdivide. Usually these blocks are not cheap for first time entrants and many are landbanked as it were by the wealthier. After you factor in the costs of development, nonsense with councils easier to buy where you can afford - so feel most FHB.

Will Perth depopulate - not likely - long term it will remain a growth point. Did we overbuild last boom - yes - but what happened here was a wave of investing that became trendy - now a lot of firstimers are offloading. Not many empty houses though -just a redistribution of ownership.

You are good on theory as your lecturers are - however reality has a habit of bypassing these folk. Perth develops into the suburbs - then the infrastructure follows. Merriwa, Quinns, Mindarie were infrastructure less, years behind, now infrastructure - 15 years later in place. Ellenbrook/Aveley/the Vines/Henley Brook 30-40 mins away same problem. No infrastructure - people love living there . Neat suburbs etc  but eventually politics demands new roads/trainlines etc develop. Midland now caters for employment there as does Joondalup in the North. Also Flynn Rd industrial site near Joondalup will have a larger commercial area than Canningvale and is growing at the rate of knots. Fremantle will become more touristy and Henderson etc are the areas that will remain industrial etc.

We all faced the almost impossible dilemma to get in. We got in by going to the periphery and then worked in. Why is it any different today?

Analogies to Japan are just a nonsense as they have a totally different approach to real estate , mature society that has made some real mistakes with their protectionist and unwieldy banking system.

We will have inflation , count on it, we will have people flocking here, Perth will grow long term and it is still a growing state with huge future potential.

Now I have two assignments for you

1. Pick this post apart sentence by sentence in your usual satisfied manner
2. Ask your lecturers where they have done their real estate investing 

And when you have done that go and ask Luigi who owns half of Spearwood and surrounds, and the other migrants how they built their wealth? Sure as hell was not by listening to academia. For the record I majored in economics and was the largest amount of horse.... I have ever come across.


----------



## chops_a_must (1 January 2009)

Yeah...

One of them will probably own a fair bit of the North Quay Island. You were saying?  They have also over the last 30 years or so, acquired a tonne of property actually in Freo. I don't think you would get very far being in the urban planning world without knowing where the best property is and will be.

The place I am living in now, is just shy of being sub dividable. Probably will be able to be eventually. Worth between 330-400. But it is Melville council... so the anal retentive comment and your comment go some way to explaining that.

The landbanking issue is one I've spoken to Tech about in PM's. Far from being exclusionary for me, it may be a bonus. The reality is I will likely pool with the brother to get anything done.

I have enough for a deposit, for anything I deem suitable. But being self employed, working a lot of cash in hand and doing the records to minimise tax completely is not exactly conducive to getting finance... That's probably 12-24 months away for me.

Another problem property investors here now have is the Libs. No money for infrastructure. No value adding to the community. Almost the exact same circumstances we had the last time they were in power and we had emigration problems.


----------



## Passive (1 January 2009)

If that block is subdivisable in Melville you are dreaming about the price!


----------



## Passive (1 January 2009)

chops_a_must said:


> Yeah...
> 
> One of them will probably own a fair bit of the North Quay Island. You were saying?  They have also over the last 30 years or so, acquired a tonne of property actually in Freo. I don't think you would get very far being in the urban planning world without knowing where the best property is and will be.
> 
> ...





Just for the record I hope you and bro pull it off and that I mean sincerely.

I thought Labor was WA INC - and Libs fixed economy and handed over sound base to lucky Labor - but I must be in a wrong dimension! Sliders here we come I may end up in the same world as you - shows you how wrong I am!


----------



## chops_a_must (1 January 2009)

Passive said:


> If that block is subdivisable in Melville you are dreaming about the price!



Nah, Melville council.

It's in the derroville part of Kardinya. 200m down the road to Cooby and every second house is a meth lab, lol.

Was quoted at 400 start of last year.

Had 3 sales from 10 neighbours in the last few months, all with slightly better houses, but basically same size block... all about 5square metres from being sub dividable, for between 330 and 350 if I've heard correctly.

Silly really. It would be able to have all sorts of things done to it if it was in the Cockburn jurisdiction.


----------



## chops_a_must (1 January 2009)

Passive said:


> Just for the record I hope you and bro pull it off and that I mean sincerely.
> 
> I thought Labor was WA INC - and Libs fixed economy and handed over sound base to lucky Labor - but I must be in a wrong dimension! Sliders here we come I may end up in the same world as you - shows you how wrong I am!




Cheers.

The Libs like to tear the crap out of public transport etc. 

But Dick Court is perhaps the most underrated person in Australia in terms of the boom we've had. He did more than anyone. 

But... the capacity he built in the north was not added to in Perth IMO. Regressive social policy, entertainment precinct issues, that still remain.

Just the Libs have a long history of tearing up value adding infrastructure projects. Took out the Freo train line at one stage. And the Ellenbrook line looks completely shot... as does the stadium, Northbride link, old power station project etc etc etc.

Labor have probably done much more for property investors than they are given credit for IMO. It's just a pity they had the carpenter that never built anything, and realised they needed to really do more in the city, but too late.


----------



## Passive (1 January 2009)

OK - smart move nonetheless - still reckon its cheapish and with the requirement about 1000 sq being relaxed again hope it woks for you. Kardinya has the advantage of becoming gentrified thanks to Sommerville Estate, some good suburbs like Winthrop/Murdoch/ etc will help and a good employment base nearby in Myaree etc.

Good choice but you must admit at this stage there is a reluctance on the part of many to live there but your decision will put you ahead of the pack in the long term and thats when you do well.


----------



## chops_a_must (1 January 2009)

All of the suburbs around here have large proportions of uni students from Murdoch. 

I'd say that is the biggest appeal from an investor's perspective. You don't have much trouble finding housemates.

Great public transport. 3-4 minute drive into Freo.


----------



## chops_a_must (1 January 2009)

Actually I was wrong.

One has gone for 400k. Much much nicer house than this rental. 4 and 2 as opposed to 2 and a 1/2 and 1.


----------



## Passive (1 January 2009)

I tend to focus on the North of Perth - of late been looking at Bayswater but where you suggest is a good option.

Students accommodation in Joondalup I missed out on completely - was cynical - thats how we learn I guess.

Don't think Barnett can do anything with the chalice he has been handed - seems reasonably honest. Point taken about the social issues.


----------



## kincella (1 January 2009)

passive..lord elpus (not on this site yet) is intending to do the student accommodation thing this year....probably get 1200 pw 6 students in a 3 bdr...or he might go for a 4 bdr....you probably know this....
I think its a good idea if you have the tenancity to make it work....big demand in Melb for it...and in regional centres wherever there is a uni..

I suggested hostel like bedrooms....(they only sleep there) but emphasis on communal living with big roomy living areas, kitchen and separate study area...the kids seems to like it and its a bit cheaper than each having their own rooms.....
I was looking for accommodation for a  family member earlier this year, he came to melb to work...only thing available was temp accomm....8 or 16 bed hostels...all emphasis on the lounge with games, tv and entertainment

Le has been getting good feedback form other people who run these sharestays..student accomm.... a big hands up for the asian students...apparently good work ethic and very pleasant
cheers


----------



## robots (1 January 2009)

hello,

i hope Harvey's got plenty of bunk bed's at his joint

thankyou
robots


----------



## xoa (1 January 2009)

kincella said:


> passive..lord elpus (not on this site yet) is intending to do the student accommodation thing this year....probably get 1200 pw 6 students in a 3 bdr...




$200/wk for half a bedroom in a sharehouse? 

You must think international students are braindead.


----------



## numbercruncher (2 January 2009)

> Originally Posted by kincella
> passive..lord elpus (not on this site yet) is intending to do the student accommodation thing this year....probably get 1200 pw 6 students in a 3 bdr




Naw youll get 3 per room at 300 a head wouldnt yah ? few in the garage ? erect 3x3 garden sheds out back theyll only cost a grand each for 600 pw rent (2 per shed), when the Elec bill comes in you can whack another zero on it a clean up - suck em dumb foreign students in hey ? Pesky buggers will probably mow the lawns with scissors for you as well ...




Im struggling to keep interest in these threads with the amount of garbage in them - can the bulls start using some facts and links for a change ?


----------



## kincella (2 January 2009)

apparently thats the market in Melb...the going rate.....but then your response borders on the ridiculous.....
the situation in Sydney is not nice...15 students in 2br house...and councils up there clamping down....
ever researched the subject ???
ever looked into backpackers accommodation ?...8.16 and 24 bed hostels...at an average 25-30 a day....thats 16 people in bunk beds in the one room....and apparently the backpackers just love it.....


----------



## Passive (2 January 2009)

Numbercruncher

Love your work. Obviously you are well informed, eloquent and obviously as every building has one = your it. Absolute infinite source of wisdom - wonder if I can pick your brain mate where would you invest and how would you go about maximising providing student accommodation and what rates would you be charging? Maybe mum or dad can help you if you are lost for answers.

Whats Kincella know - the guy lives in some crappy suburb in Melb, not well informed, thinks because he has a lot of real estate he has learnt something - hell what would he know.

Oh by the way my son is a student and he pays $175 for a room in Perth - have you any contacts that can get that down for me? Good to have such know alls around - just great.


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## numbercruncher (2 January 2009)

You guys are just full of it spruikers.


Why on earth would these guys collectively pay 3x the going rent when they can combine resources and just rent a place like normal people.


Give me links otherwise you talking dribble ... again ....


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## prawn_86 (2 January 2009)

Passive said:


> Oh by the way my son is a student and he pays $175 for a room in Perth - have you any contacts that can get that down for me? Good to have such know alls around - just great.




Im not familar with the Perth market, but here is adel we rent a 2br apartment for just over $200 pw in the nicest suburb, and within walking distance to the unis.

Why doesnt your son get a mate with $150 pw each and get a $300 pw place?? Save them both $25 pw and have more room and less people probably....


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## kincella (2 January 2009)

numbercruncher....how about you do your own research, I am not going back over mine....simple really , google it, or look for web sites that cater for the students...
now who do you remind me of ?....there is another one who always needs proof...but never does the research himself....
I really only keep sites in my favourites, that I will refer to on a regular basis, now if I were in your shoes and doubted, I would check it out for myself, but thats me....like to get my facts straight


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## theasxgorilla (2 January 2009)

As a moderator I'll chime in here and remind everyone to avoid making purposely antagonistic posts.  Use your sarcasm sparingly too, taken to an extreme I classify it as trolling.

Nothing specific yet, just a spidey-sense thing stemming from the rich history we've had in these threads.


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## numbercruncher (2 January 2009)

theasxgorilla said:


> As a moderator I'll chime in here and remind everyone to avoid making purposely antagonistic posts.  Use your sarcasm sparingly too, taken to an extreme I classify it as trolling.
> 
> Nothing specific yet, just a spidey-sense thing stemming from the rich history we've had in these threads.





Point taken ASG .....

These guys are using my favorite bait and im hungry


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## kincella (2 January 2009)

Prawn...thats a good idea and I am sure many students do the same....however just maybe Melb has a rental shortage problem, and a bigger student demand...due to several uni's and tafes over here...and the students have more competition for the lower priced units....
when I checked last week....the share house market....there was not very much available and most wanted age 25 plus....there are specific sites that cater for students....and not much to choose from....
there are developers who cater specifically for that market....think they are closer to the cbd...
I know a lot of country students who come to Melb over the years...the parents have purchased a unit for their  use...then sell on completion... and that has been popular for over 20 years....
due to the population Syd would have similar problems....maybe Adelaide does not have the accommodation problems the larger cities have ?????


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## MrBurns (2 January 2009)

numbercruncher said:


> Point taken ASG .....
> 
> These guys are using my favorite bait and im hungry





Great to see someone else copping a serve except me.
I might be vicious and hateful but I mean it in a loving caring way.


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## Passive (2 January 2009)

Prawn

Those comments are valid and apply here in Perth as well.

However $300pw in Perth anything half decent near  the campus is considered acceptable to reasonable for 2 bdrms.

A number of the foreign students are happy to pay a bit of a premium but then dip out in the end of the year and don't have the burden of being on the bond or contract. Plus the little extra may include some services. Horses for courses but in Perth things shot up and placed a lot of pressure on students away from home. As with all things if you dig a  little deeper there are compelling reasons and quite frankly the dynamics for students who want to make a go of it is far from funny for the locals let alone the foreign kids who are just happy to pay a little more for the convenience.


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## xoa (2 January 2009)

kincella said:


> apparently thats the market in Melb...the going rate.....but then your response borders on the ridiculous.....
> the situation in Sydney is not nice...15 students in 2br house...and councils up there clamping down....
> ever researched the subject ???




You might be able to get $200pw for a spacious bedroom in a fully furnished home, with all utilities included. But nobody will pay that much, long term, to rent a bunk at a barracks. There are many other options available in that price range. They could share a unit with a friend, or live with an accredited homestay family (with meals included) for less than $250pw.



kincella said:


> ever looked into backpackers accommodation ?...8.16 and 24 bed hostels...at an average 25-30 a day....thats 16 people in bunk beds in the one room....and apparently the backpackers just love it.....




Actually, it's more like $22 per night. Backpackers don't mind paying that, because it's short term holiday accommodation. It's like how hotel suites go for $200+ per night, yet you don't see landlords getting $1400pw for studio apartments.


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## wayneL (2 January 2009)

http://news.bbc.co.uk/1/hi/business/7795672.stm



> Going from bad to worse in 2009?
> 
> Analysis
> By Ian Pollock
> ...


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## MrBurns (2 January 2009)

Yeah but if you look at the price of real estate in say, London it could go down 80% and you'd still have to be a squillioinaire to buy in.


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## kincella (2 January 2009)

xao....students....fully furnished everything provided....luxury accommodation...broadband.games room.separate study with pc.s

as for serviced apartments....between 500 to 700 pw in the regional  for a 1 bdr or 2 bdr city...higher in melb...again everything is provided...
friend stayed in melb last year a 2bdr in the city...1200pw...was ordinary,,,but still cheaper than hotels...a 3 star rating ??? brings the price down....on and off seasons here anyway..cheaper after the kids go back to school...


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## wayneL (2 January 2009)

MrBurns said:


> Yeah but if you look at the price of real estate in say, London it could go down 80% and you'd still have to be a squillioinaire to buy in.




Yer not wrong Narelle. I posted some photos I took of an EA's window in Knightsbridge a while back... I'm still reeling.


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## Passive (2 January 2009)

Got it in one Mr Burns

Were property prices to plunge I along with many bulls would be in there buying like crazy cause we look long term and below a certain threshold plus with low rates you would be a fool not to. We obviously are the biggest of them all as we did it with the last recession when after that any fool could have made money and we did.

Now this time , should it happen, guess who will be there before the hopeful bears, Passive and his cronies buying up big for his kids and grandkids because it will be an opportunity of a lifetime. Now with another million or so cashed up boomers in Aus doing the same what chance have the hopefuls got?  Some have no idea. Top end of town have lost heavily and quite frankly if it all came back down it would not be long before it zoomed up again because there is so much in favour of property investing in Australia it seems absolutely ridiculous to preclude this asset class from your portfolio if you have half a decent income and equity elsewhere.


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## IFocus (2 January 2009)

wayneL said:


> http://news.bbc.co.uk/1/hi/business/7795672.stm




Apparently that cannot happen here...........just like it couldn't happen there.........we are special.........not


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## IFocus (2 January 2009)

Passive said:


> Got it in one Mr Burns
> 
> Were property prices to plunge I along with many bulls would be in there buying like crazy cause we look long term and below a certain threshold plus with low rates you would be a fool not to. We obviously are the biggest of them all as we did it with the last recession when after that any fool could have made money and we did.




Risk management?

This crisis is global and X 10 the last recession why would you buy in a falling market this time?




> Now this time , should it happen, guess who will be there before the hopeful bears, Passive and his cronies buying up big for his kids and grandkids because it will be an opportunity of a lifetime. Now with another million or so cashed up boomers in Aus doing the same what chance have the hopefuls got?  Some have no idea. Top end of town have lost heavily and quite frankly if it all came back down it would not be long before it zoomed up again because there is so much in favour of property investing in Australia it seems absolutely ridiculous to preclude this asset class from your portfolio if you have half a decent income and equity elsewhere.




Not so sure you understand its not necessarily about bears I see it as risk bias still unfortunately 2009 will fly past and we will find out soon enough but I suspect we will still be talking about this come the end on 2010 if we are still solvent.


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## Passive (2 January 2009)

Hinges on your outlook. Not as negative as you by a long chalk!


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## nomore4s (2 January 2009)

Passive said:


> Were property prices to plunge I along with many bulls would be in there buying like crazy cause we look long term and below a certain threshold plus with low rates you would be a fool not to. We obviously are the biggest of them all as we did it with the last recession when after that any fool could have made money and we did.




lol, it wouldn't be only the bulls buying I'm sure some cashed up bears will be buying when they see value.

Bears are bears to become bulls again.

Why do some of the bulls on this thread continue to think the bears are totally stupid? And why do they also think the bears have never made money off real estate?


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## wayneL (2 January 2009)

Passive said:


> Got it in one Mr Burns
> 
> Were property prices to plunge I along with many bulls would be in there buying like crazy cause we look long term and below a certain threshold plus with low rates you would be a fool not to. We obviously are the biggest of them all as we did it with the last recession when after that any fool could have made money and we did.
> 
> Now this time , should it happen, guess who will be there before the hopeful bears, Passive and his cronies buying up big for his kids and grandkids because it will be an opportunity of a lifetime. Now with another million or so cashed up boomers in Aus doing the same what chance have the hopefuls got?  Some have no idea. Top end of town have lost heavily and quite frankly if it all came back down it would not be long before it zoomed up again because there is so much in favour of property investing in Australia it seems absolutely ridiculous to preclude this asset class from your portfolio if you have half a decent income and equity elsewhere.



This was exactly what the pommy property bulls were saying a few months ago. It's not working out that way.

The reason is that anybody who is leveraged has had their equity totally decimated, and deposit requirements have been increased. Result, BTLers cannot get finance. In fact they are going broke in their droves as rents are also getting squeezed because of the number of accidental landlords.

This will all eventually happen in Oz, sure as eggs.


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## IFocus (2 January 2009)

Passive said:


> Hinges on your outlook. Not as negative as you by a long chalk!




To be honest passive I hope you are closer to the mark than I


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## MrBurns (2 January 2009)

The property market wont have bottomed until everyone including all of you and I just aren't interested any more, all the spark will have gone there will be no rush and all the fever of the boom will have been forgotten.

So you buy then, but dont expect another boom for a long long time, this one was fuelled by record low interest rates for a very very long time.

They will go back up and stay there and property will no longer be booming.

It will revert to the developers who will make money from property, take a block of offices, subdivide it and re sell on.......that sort of thing.

Simply buying a residential property and stitting back watching the value go berserk just wont happen any more.


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## MrBurns (2 January 2009)

BUT - yes thats when I'll be buying for the long term (I hate that phrase because it's been over used by wankers but in this case it's appropriate)


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## gfresh (2 January 2009)

> Why on earth would these guys collectively pay 3x the going rent when they can combine resources and just rent a place like normal people.




Well to be honest, it's actually not that uncommon, especially in Melbourne. For them, they're coming to a country they barely know how the system works, and also have to deal with various prejudices and discrimination from realestate agents and landlords when trying to find accommodation.

With no rental history, no employment (mummy and daddy paying their costs most likely), and in inner city Melbourne, a fairly tight rental market, the chances of finding somewhere pretty decent are very low... hence they have been forced into places such as this. 

You've also got to look at the transient nature of international students, often back home for 9 months of the 12 months of the year, doesn't really offer a great picture to a standard landlord. 

So maybe it's not so stupid.. although I know recently they were talking about (or just recently introduced?) regulation to stop these sardine factories getting out of hand. You'd also have to look at things such as liability insurance, fire prevention, and all sorts of other costs compared to a standard rental - probably becomes closer to a commercial property I would imagine?


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## 2BAD4U (2 January 2009)

MrBurns said:


> *The property market wont have bottomed until everyone including all of you and I just aren't interested any more, all the spark will have gone there will be no rush and all the fever of the boom will have been forgotten.*
> 
> So you buy then, but dont expect another boom for a long long time, this one was fuelled by record low interest rates for a very very long time.
> 
> ...




Two yellow thumbs up MrBurns.:iagree:

Last time this happened (in WA atleast) was 20 years ago and probably won't happen again for another 20 years.


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## Glen48 (2 January 2009)

Kincella
Why have some tenant paying of your liability when it is sinking in price?
Sell now if you can find a sucker and wait until the market has hit rock bottom in a few yrs time and then look at buying back in.
I have brought and sold about 7 houses and only made money on 2 of them the last one I sold in 07/08 an waiting for the market to die and pick up again, waiting for house prices to go up more will never happen once this bubble pops nothing will happen in RE for a long time, i have seen it were houses go no where for 10 yrs or more.
In the first lot of post there are some good charts showing how much OZ's suckers are in debt.


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## kincella (2 January 2009)

glen thanks for the advice...really, but I am fairly stubborn....

I have bought 10, sold 5 made good money everytime....would never dream of selling for a loss, and I have earmarked one for a major  renovation, with very low interest rates, it should be a breeze....
claim the tax loss on running costs,if there is a loss on the other props

hopefully there will not be a shortage of builders...but I doubt it.....
depending on how busy I want to be,,,might buy another little bargain if I can find one....just rent it out and sit back and wait....for the recovery....
or I can do nothing....a passive investment....

see regardless of all the predictions....with low interest rates its better to be borrowing and buying bargains...than doing nothing....changes the goal posts....would only pay down capital when rates are high...do the opposite when rates are low....but this is my personal view,,,,contrarian type investor, inclined to do the opposite of what everyone else is doing....worked for me before.....
refinanced loans in December...wiped off 16,000 pa in 2 loans....expect to better that with the next rate cuts...aiming  for a reduction of 30,000 in interest costs...like having another wage without having to work for it...
cheers


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## Lancelot (2 January 2009)

MrBurns said:


> The property market wont have bottomed until everyone including all of you and I just aren't interested any more, all the spark will have gone there will be no rush and all the fever of the boom will have been forgotten.




Some of us are always interested, was last time, dont see why not this time


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## robots (2 January 2009)

hello,

its been that way for 12mths now, many temporary developers gone down, slashed staff etc

those with $(relationships) have survived

this is why its great to be in property, look at construction levels the slide is on and on,

only those with the income ($) will last or return in the near future, fantastic

slow and steady she goes, who knows

thankyou
robots


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## chops_a_must (2 January 2009)

prawn_86 said:


> Im not familar with the Perth market, but here is adel we rent a 2br apartment for just over $200 pw in the nicest suburb, and within walking distance to the unis.
> 
> Why doesnt your son get a mate with $150 pw each and get a $300 pw place?? Save them both $25 pw and have more room and less people probably....



It's 140 pw here. Very close to a bus that goes straight to the uni. 4 minute bus trip.



2BAD4U said:


> Two yellow thumbs up MrBurns.:iagree:
> 
> Last time this happened (in WA atleast) was 20 years ago and probably won't happen again for another 20 years.




Try 99/00. But property was absolutely rooted here for the better part of 15 years here after 87.


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## robots (2 January 2009)

chops_a_must said:


> It's 140 pw here. Very close to a bus that goes straight to the uni. 4 minute bus trip.
> 
> 
> 
> Try 99/00. But property was absolutely rooted here for the better part of 15 years here after 87.




hello,

not rooted when you getting *principle* and *interest* paid off is it?

thankyou
robots


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## Passive (2 January 2009)

Chops

$140 - that is in the heart of suburbia - closer to UWA or ECU in Mt Lawley its dearer and if cheaper they are usually a depressants dive!

Property was not rooted in WA - the old ethos applied to buy quality and there was modest growth over the years. That is what I hope it reverts to for then that stability plus leverage allows for some good profit over the years. Don't really like this boom and bust bizzo as it forces you to sell to lock in inordinate profits and causes the hiatus we see now. In essence all this is just no different to most states. Was not long ago that Victoria was a basket case, now NSW - just cycles you work with and for the long term punter if it is 20 years of sane growth great, but if in the accumulative stage and a boom comes along - yahoo!


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## kincella (2 January 2009)

passive, when I bought all those props back around 2000- 2002, I had excel worksheets with lots of ifs and buts..different scenarios...a modest 10% cap growth column and a 15% cap growth.....and I was more than happy for the plan to take its time and just cook and simmer away.......little did I know what was just around the corner....
but hey, did the media do me a favour ??? they were screaming, sell sell sell its all going bust....at the same time buyers were saying...I want to buy your prop....one sold first day on the market....I just put it out there to see if it was for real
But then all hell broke loose from 2003 to 2004...the market was paying the estimated 10 year mv within 2 years, and triple the value on one within 2 years....I know what you mean about HAVING to sell....well they had come to the end of their life in my portfolio...achieved the results I was looking for...and I sent them on their way.....
I have more simmering away for the next time
cheers


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## chops_a_must (2 January 2009)

robots said:


> hello,
> 
> not rooted when you getting *principle* and *interest* paid off is it?
> 
> ...



It was a good time to buy, if you had a good job. But wage growth was very slow here, hence little capital appreciation. The point being that property tends to wallow after big hits. And that patience potentially pays bigger dividends.

I doubt the way most specuvestors treat property now would have done anything but chew you up in that environment.



kincella said:


> passive, when I bought all those props back around 2000- 2002, I had excel worksheets with lots of ifs and buts..different scenarios...a modest 10% cap growth column and a 15% cap growth.....




How on earth can you have a modest cap growth assumption that is well above long term growth rates? 


And Passive, I agree completely about it returning to how it was. For mine, typical property investment should not used as a means for pure capital growth, unless you are an actual developer. Like I've said many times, property should be used for income, and anything else I don't think should come into normal strategies unless in an abnormal environment.

Too many property types have either forgotten that, or never experienced the need to adopt that strategy.


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## Passive (2 January 2009)

Good thing about being in - despite whether for income or capital - the abnormal environments arise and make you a fortune. That is reality and keeps defying the odds much to my delight.

In 1991 I was suggesting to my friends with money to stack their share portfolio with cheap resource stocks, did not follow my own advice, but this time round, those shares that have the resources and are at 1c or 2c I will buy - next year or two and be it 5-10 years time I'll hit the jackpot. You just have to love WA - better than lotto if you play the game. The game is - How easily everyone forgets that when everything seems so different this time its just the same as the last. I am shocked at how history just ends up repeating itself - just the detail differs - and with leveraging real estate is an unbelievable deliverer of wealth - and the journey is as boring as hell. 

With the speccies I am developing a useful network and hope to get in on the seed capital side of things and the real estate will give me the borrowing capacity. Real estate equity gives one so much scope.

When it comes to borrowing  when opportunities arise you have to go to some of the most economic and financial illiterates on this planet to let you aspire to success - to wit your local bank manager - and what does he and she comprehend - colatteral - against what - real estate of course - anything else and they are out of their league. This asset class is far more than its intrinsic value - it is also what it empowers you to achieve - rightly or wrongly!


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## kincella (2 January 2009)

well the history charts were showing about 8% on average consistently, I like to round things up to easy numbers....and there was this big shift going on for the tree and sea change lifestyles....
You would have to be amongst it to recognise it...all these city people we kept meeting from Syd and Melb...told us they had sold their big city props and were looking for a tree change....meet them out having coffee/dining....the streets were packed with 'new faces'....I knew something big and different was on the cards.....the neighbours were buzzing, it was like it had become the hottest spot for  tourists...it was like that for a couple of years....a surrounding town 100klms away doubled the population in 2 years from 3000 to 6000....all newbies/ retirees from the cities....and with money to spend....
it can take years for those changes to show up in ABS stats....
cheers


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## chops_a_must (2 January 2009)

ROFL.

You round the conservative figure for growth UP, above long term growth, and still call it modest?

That is seriously funny.


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## robots (2 January 2009)

chops_a_must said:


> It was a good time to buy, if you had a good job. But wage growth was very slow here, hence little capital appreciation. *The point being that property tends to wallow after big hits. And that patience potentially pays bigger dividends.*
> 
> I doubt the way most specuvestors treat property now would have done anything but chew you up in that environment.
> 
> ...




hello,

5yrs gone, 10yrs gone, 20yrs is nothing man, year on year it appears to get quicker and quicker and some others may share that thought around more

and yes the "dividends" will be there for both property owners and the rent/invest crew out there with those time frames

what a great day here in Melbourne today, rain then sunshine fantastic, kept the pushie going strong on a massive tour around the streets, few latte's in there

thankyou
robots


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## theasxgorilla (2 January 2009)

chops_a_must said:


> And Passive, I agree completely about it returning to how it was. For mine, typical property investment should not used as a means for pure capital growth, *unless you are an actual developer*. Like I've said many times, property should be used for income, and anything else I don't think should come into normal strategies unless in an abnormal environment.




At risk of appearing anal, I'm guessing a _developer_ can broadly mean those who embark on fixer-upper projects too, right?  Large or small.


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## robots (2 January 2009)

hello,

even trailer park stuff is development ASX G, 

thankyou
robots


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## gav (2 January 2009)

State house sales slump 25% (Victoria)

http://www.theage.com.au/national/state-house-sales-slump-25-20081219-72e8.html?page=1

In 2009 I will be a 1st home buyer.  I have my deposit ready, and I'm adding to it considerably as each fortnight goes by.  

I have 11 properties on my watchlist, all very nice places advertised at 20-30% below median house price for the beautiful suburbs I'm looking at.  On my wage I'll be able to pay it off pretty quickly, even faster once my g/f finishes studying.

My money will no longer be wasted on renting, and there will be one less fantastic tennant out there for landlords


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## tech/a (2 January 2009)

Gav

I think your being wise in investigating opportunity.

Those sitting on the fence seriously need to ask these questions and have some sort of answer.

(1) How long are interest rates going to be at 30 yr lows?
(2) How low will house prices in the area *I want to live *actually going to fall?
(3) How long will rents stay below the norm?
(4) How long will inflation be capped?

Sure there are "Better" times than others to buy for some.
Those who believe there are better times---for them---need to be able to identify exactly what these better times are and see them when they are in their face.


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## chops_a_must (2 January 2009)

tech/a said:


> Gav
> 
> I think your being wise in investigating opportunity.
> 
> ...




Tech, with all due respect, some of those questions are completely loaded and complete BS.

For #1, going into debt at the start of a cycle of high interest rates in my mind is not smart. That is a question that needs to be asked of the people already in. As we can't fix for long terms here.

For #3... you could just as easily ask why rents have vastly exceeded wage growth, and are still not even in line with property prices, and how long it will stay like that. 

For #4. Just buy gold. Seriously.


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## dhukka (2 January 2009)

Bill M said:


> Hello dhukka, good memory but I don't know why you bought up CBA in this thread. I made a wrong call but so did 90% of other people on 90% of other stocks available to buy. Who would have ever thought RIO would drop by 80% or even BHP by 60% or WPL by 60%, people on this forum were calling them good buys at their high prices.




I for one and plenty of others thought they could fall that much and have voiced opinions here to that effect. But that is not the point of my post. The point is, that whilst 30 years of investing experience is no doubt of value, relying too much on the past as a guide for investment decisions can lead to mistakes such as buying CBA at $50. Thus when thinking about future property prices, the last 30 years of history should be taken with a grain of salt.


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## wayneL (2 January 2009)

The Halifax has just reported that house prices are down 16.2% for the calendar year over here. No link yet.

That makes low interest rates irrelevant and can seriously impact future borrowing ability if purchases were made in 2006-7.


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## wayneL (2 January 2009)

wayneL said:


> The Halifax has just reported that house prices are down 16.2% for the calendar year over here. No link yet.
> 
> That makes low interest rates irrelevant and can seriously impact future borrowing ability if purchases were made in 2006-7.




Linky: http://www.dailymail.co.uk/news/art...ture-rate-cuts-house-prices-fall-16-year.html



> Nationwide refuses to pass on future interest rate cuts as house prices fall by 16% in a year
> By DAILY MAIL REPORTER
> Last updated at 11:04 AM on 02nd January 2009
> 
> ...


----------



## dhukka (2 January 2009)

tech/a said:


> Mooorrrning.
> 
> No hangover (I don't drink but so tiered need to get to bed!).
> 
> ...




Serously, these inflation fears are farcical. 2009 will be a year of deflation, don't be surprised to see the RBA cash rate with a 2 handle on it. There is no urgency to rush out and buy property in the next 12 months.


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## Lancelot (2 January 2009)

chops_a_must said:


> Tech, with all due respect, some of those questions are completely loaded and complete BS.
> 
> For #1, going into debt at the start of a cycle of high interest rates in my mind is not smart. That is a question that needs to be asked of the people already in. As we can't fix for long terms here.
> .




10 years long enough?

Rams 10 year at 6.79% puts about $1800/week in my pocket after ALL expenses on todays rentals price

http://www.rams.com.au/default.asp?page=/home+loans/interest+rates+\+fees



> 1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed 10 Year Fixed
> Full Doc Rates: 5.79% 5.59% 5.99% 6.29% 6.29% 6.79%
> Low Doc Rates: 6.54% 6.34% 6.74% 7.04% 7.04% 7.54%
> SE Pro Pack Rates: 5.79% 5.59% 5.99% 6.29% 6.29% 6.79%




Westpac offer similar after discounts

http://www.westpac.com.au/internet/publish.nsf/Content/PBHLHCPI+Interest+Rates


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## wayneL (2 January 2009)

dhukka said:


> Serously, these inflation fears are farcical. 2009 will be a year of deflation, don't be surprised to see the RBA cash rate with a 2 handle on it. There is no urgency to rush out and buy property in the next 12 months.



Agreed

There are some economists that believe under the unique conditions at present, even so called "printing money" will have the opposite effect to what intended. ie more capital destruction and cementing in a period of serious asset deflation.

The fact is that in a deleveraging environment, historic vectors of value must return to the housing market. Sans very high wage inflation, there is only one direction for house prices in the intermediate future.

I'd suggest folks keep a very close eye on these things, but I'd put the period at even longer, several years.

But repeat, be prepared to jump in if CB's efforts to re-inflate start to get out of control.


----------



## theasxgorilla (2 January 2009)

dhukka said:


> Serously, these inflation fears are farcical. 2009 will be a year of deflation, don't be surprised to see the RBA cash rate with a 2 handle on it. There is no urgency to rush out and buy property in the next 12 months.




I agree.  Besides, why not treat it like a trend following exercise instead of trying to pick bottoms or investing into what could in all likelihood get a whole lot worse before it gets better??

Unless you must buy for lifestyle reasons, in which case you've hedged your investment right there IMO.


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## cuttlefish (2 January 2009)

Wow this thread is a busy one isn't it!

What I want to know is what tf were people doing debating property prices half an hour away from NYE- thats bluddy sad imo! 


Tech - if you're doing some kind of off-the-plan style development right now I certainly hope you've got an 'I can pull the pin if I don't like it' clause - the risks of property development right now would have to be extreme.

On the deflation vs inflation argument - well it will be interesting to see how it pans out but if there's hyperinflation you'd want to be set with a hedge - the right unencumbered property(s) (location, yield, land value, accom demand etc.) would seem to be a valid choice.

Property is highly dependant on rule of law though ... so no invasions, no govt overthrows, civil wars.  Even in a more benign environment property value can be affected by legislation (e.g. rent control, tax legislation (cap gains, land tax, income tax etc.) - something to consider.


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## gav (2 January 2009)

tech/a said:


> Gav
> 
> I think your being wise in investigating opportunity.
> 
> ...




Tech/A,

Thank-you for your concern, obviously its not a decision I will take lightly.

The places I have been looking at are above the quality of the average house in those suburbs, yet the prices are 20-30% below the median price.  I have set myself a limit for how much I am willing to borrow, and the figure is very conservative (ie. I could still meet repayments if interest rates were 11-12% myself, and thats not including my g/f's future income).  If I borrowed right now, my deposit would be around 18-25% (depending on which property), and I am putting a little more away each fortnight.  

Apart from one hobby, I dont have any other expenses and I would be putting almost every spare dollar towards the loan each fortnight to pay it off as quickly as possible.

I could potentially borrow almost double this amount, but I am not willing to take that risk.

And taking current rent prices into consideration, if I only met the minimum payments per week for the loan (as I said before I'd pay more) then the minimum loan repayment is only $40 per week more expensive than renting in the same area.  I'd be crazy to continue renting...

The only question is: Will the prices in the area I'm look at continue to fall?

Obviously I do not know.  They could, but I doubt the ones I have my eye on would fall much further.  If I can afford it now, is it worth taking the risk hoping they fall even further?


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## Passive (2 January 2009)

dhukka said:


> I for one and plenty of others thought they could fall that much and have voiced opinions here to that effect. But that is not the point of my post. The point is, that whilst 30 years of investing experience is no doubt of value, relying too much on the past as a guide for investment decisions can lead to mistakes such as buying CBA at $50. Thus when thinking about future property prices, the last 30 years of history should be taken with a grain of salt.




The analogy to the share market with property fits in how?

That  has been our point all along - this is not a cheap shot - the nature of this asset class is such that it primarily is a dwelling and therefore not susceptible to the gyrations of the stockmarket. The property holder owns a house as a home. In reality a second house is an investment and that is shielded by the attitude of the owner of PPOR in Australia - sorry can't see the connection.


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## wayneL (2 January 2009)

Passive said:


> The analogy to the share market with property fits in how?
> 
> That  has been our point all along - this is not a cheap shot - the nature of this asset class is such that it primarily is a dwelling and therefore not susceptible to the gyrations of the stockmarket. The property holder owns a house as a home. *In reality a second house is an investment and that is shielded by the attitude of the owner of PPOR in Australia - sorry can't see the connection.*




But you'r not looking at the lesson of the UK. The British have an identical attitude to PPOR, the proportions of OOs and renters being nearly identical... An Englishman's home is his castle blah blah.

As a matter of fact, I would says the Poms are even more property obsessed than Aussies; but let's just say it's the same.

I posted an article only a few posts back that show UK house Prices down 16.2% for 2008. This disguises individual falls. To be sure some areas have not fallen that much, but some ares are down greater than 30% already, with individual examples greater than 50%.

This is not that different to experiences in the sharemarket.

Australia has been shielded somewhat by the resource boom and the China growth caused by the Beijing Olympics. As predicted by myself and others, the conclusion of the Olympics would be the conclusion of the resource boom.

That was only 4 short month ago and things are turning to shyte in line with that prediction. This puts Oz probably a good year behind the rest of the west in the economic cycle.

So attitudes to PPOR are no shield from calamitous mark downs in price, particularly in the resource based states.


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## Bill M (3 January 2009)

dhukka said:


> Thus when thinking about future property prices, the last 30 years of history should be taken with a grain of salt.




I totally disagree with this statement, history is still the best guide, we will see again.


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## Bill M (3 January 2009)

There was some discussion earlier about rents. Today I went to a friends room in Manly Sydney. For a small bedsitter with bathroom he was paying $360 per week. I asked him why he was paying so much and his reply was "if you want to live in manly that is the going rate". If he moved out tomorrow there will be dozens of people queuing up to get in. The landlord owns this massive big old style brick home and sublets several rooms to people at these rates. Nice little money spinner and no shortage of takers.


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## wayneL (3 January 2009)

Bill M said:


> dhukka said:
> 
> 
> > Thus when thinking about future property prices, the last 30 years of history should be taken with a grain of salt.
> ...




But we will be looking back a lot further than a boomer bubbled 30 years though.


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## theasxgorilla (3 January 2009)

Bill M said:


> I totally disagree with this statement, history is still the best guide, we will see again.




But market conditions and cycles aren't like rolling a die with an equal probability of turning up a 1 or a 6, are they?

The present and therefore the future is inextricably linked to the past.


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## Stormin_Norman (3 January 2009)

Bill M said:


> There was some discussion earlier about rents. Today I went to a friends room in Manly Sydney. For a small bedsitter with bathroom he was paying $360 per week. I asked him why he was paying so much and his reply was "if you want to live in manly that is the going rate". If he moved out tomorrow there will be dozens of people queuing up to get in. The landlord owns this massive big old style brick home and sublets several rooms to people at these rates. Nice little money spinner and no shortage of takers.




that story is why our housing prices will sustain better then the USA's. we do not have the oversupply of housing that the US created over the past 10 years.


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## wayneL (3 January 2009)

Stormin_Norman said:


> that story is why our housing prices will sustain better then the USA's. we do not have the oversupply of housing that the US created over the past 10 years.




Again we must then look to the UK where there is a putative undersupply. We are now back to 2004 prices on this little island, the most crowded nation in Europe, with rampant immigration, disappearing builders and a stringent green belt policy.

It must also be said that the oversupply in the US only applies to certain areas in the Sun Belt and Rust Belt. New Yawwwk, and the NE doesn't have oversupply, yet has still seen hefty falls.


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## Stormin_Norman (3 January 2009)

wayneL said:


> Again we must then look to the UK where there is a putative undersupply. We are now back to 2004 prices on this little island, the most crowded nation in Europe, with rampant immigration, disappearing builders and a stringent green belt policy.
> 
> It must also be said that the oversupply in the US only applies to certain areas in the Sun Belt and Rust Belt. New Yawwwk, and the NE doesn't have oversupply, yet has still seen hefty falls.




the statistics dont share that view. UK rents were worse:




what's the figures on house price drops in NY compared to the sun/rust belt you talk of?

im not saying there wont be a drop (financial market deflation has to put downward pressure on prices). just it wont drop off a cliff.


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## wayneL (3 January 2009)

Stormin_Norman said:


> the statistics dont share that view. UK rents were worse:
> 
> 
> 
> ...




Apples and oranges.

You've compared US and UK rent/house price ratios. I am comparing UK and Oz levels of putative undersupply and effects of cushioning price falls, with the US NE as an afterthought.

Some rust belt and sunbelt falls have been nothing short of catastrophic (eg Detroit, florida, Arizona, some parts of California). The NE still has had falls in line with London and other major high profile cities.

Oz won't see Detroit type falls. But I see Sydney and Melbourne having NY city/Boston type falls, with Perth being more serious.

Perhaps Detroit type falls in the NW... maybe.


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## Stormin_Norman (3 January 2009)

i was correcting your assumption that there was an undersupply of houses in the UK. judging by rent prices there wasnt.

other then that i generally agree with you. its hard to say how far housing prices will fall in oz. but our demand/supply is much stronger then both the UK and USA. id love a similar graph for oz.


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## wayneL (3 January 2009)

Stormin_Norman said:


> i was correcting your assumption that there was an undersupply of houses in the UK. judging by rent prices there wasnt.
> 
> other then that i generally agree with you. its hard to say how far housing prices will fall in oz. but our demand/supply is much stronger then both the UK and USA. id love a similar graph for oz.




Oh

I agree that in reality there is not an undersupply here, but that view is against the prevailing "wisdom". But there is not any particular oversupply either. Their was an illusory undersupply due to the boom however.

On that basis, (without definitive proof) my suspicion is that Ozis in a similar situation. An illusory undersupply, but not in reality. But that will take a few months to reveal itself.


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## chops_a_must (3 January 2009)

There certainly isn't an undersupply in Perth, the most heated market. The southern suburbs have had oodles of land released. A heck of a lot of land available in Cockburn for instance, if you want it. Old Jandakot, new Success for instance has heaps of supply I don't know how they are going to shift.


Not to mention, Canada, Australia's economic sister has had large price falls as well. Despite large homeless rates by their standards, and high rental yields, it hasn't meant squat. Property in Vancouver, is literally sinking.


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## kransky (3 January 2009)

i am a non home owner hoping for big falls in prices... i'd like a house without the lifetime enslavement currently associated with buying one.

ever since they changed the capitals gains law for home value increase every tom dick and harry has become a property investor... at the cost of the younger generation. at current house affordability levels we young people are majorly screwed.

a major correction would be justice for the many who have got rich simply because they were born 20 years before me and possibly took big risks.. yeah well deserved.

sorry.. enough of my venting.

i suspect that prices in oz wont correct so far down as unemployment wont be as big a problem here is is in the us and uk... uk has large immigration so large unemployment when things go bad.

if we start getting much higher unemployment then i expect prices to fall to normal affordability levels.


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## kransky (3 January 2009)

cuttlefish said:


> Wow this thread is a busy one isn't it!
> 
> What I want to know is what tf were people doing debating property prices half an hour away from NYE- thats bluddy sad imo!




i went back through the thread and it yeah, doesnt skip a beat... right through NYs.. LOL


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## Stormin_Norman (3 January 2009)

maybe the losses meant they couldnt afford to go out?

or perhaps we're all market nerds with no friends? :


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## knocker (3 January 2009)

robots said:


> hello,
> 
> 5yrs gone, 10yrs gone, 20yrs is nothing man, year on year it appears to get quicker and quicker and some others may share that thought around more
> 
> ...




It is if you die lol 

thankyou, over and out


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## theasxgorilla (3 January 2009)

kransky said:


> i am a non home owner hoping for big falls in prices... *i'd like a house without the lifetime enslavement currently associated with buying one.*




You better have a plan that involves doing something "outside the box" because the system wants your lifetime enslavement.  Neo-serfdom is the term coined by Michael Hudson:

http://www.michael-hudson.com/interviews/080730FictitiousEconomy2.html


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## Passive (3 January 2009)

Thats nothing new -I am ageing poor idealist - my chosen methodology was then outside the box as it were - real estate. Worked well.

Sadly - biggest pawns and tools of the lords - your good old graduates educated by unwittin academia - fodder for the system of snakes and ladders - footsoldiers of commerce!

No thanks


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## wayneL (3 January 2009)

Passive said:


> Thats nothing new -I am ageing poor idealist - my chosen methodology was then outside the box as it were - real estate. Worked well.




Real Estate? Outside the Box?

LOL

Look! Real estate is a fantastic investment vehicle, particularly if you're lucky enough to catch the most massive credit expansion ever... but outside the box it ain't.

It's been a standard investment practice for centuries.

LOLOL


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## chops_a_must (3 January 2009)

Passive said:


> Thats nothing new -I am ageing poor idealist - my chosen methodology was then outside the box as it were - real estate. Worked well.
> 
> Sadly - biggest pawns and tools of the lords - your good old graduates educated by unwittin academia - fodder for the system of snakes and ladders - footsoldiers of commerce!
> 
> No thanks




Didn't I already counter that from you?


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## tech/a (3 January 2009)

chops_a_must said:


> Tech, with all due respect, some of those questions are completely loaded and complete BS.
> 
> For #1, going into debt at the start of a cycle of high interest rates in my mind is not smart. That is a question that needs to be asked of the people already in. As we can't fix for long terms here.




Dont think its close yet (The increasing of rates) but it will come as will a bottom.I can get 7 yrs no problem fixed but not yet (Wont fix yet). I'll be locking them in on the way DOWN not on the way UP either!




> For #3... you could just as easily ask why rents have vastly exceeded wage growth, and are still not even in line with property prices, and how long it will stay like that.




Yes you could and the answers wouldnt auger well for stability in housing prices. 



> For #4. Just buy gold. Seriously.




Yes you could. But you cant live in a $350,000 Gold Bar or take advantages of Tax breaks or rent a part of it to a tennent or do some work on it to add value or subdivide it and increase its value.
You could however buy a smaller bar.



dhukka said:


> Serously, these inflation fears are farcical. 2009 will be a year of deflation, don't be surprised to see the RBA cash rate with a 2 handle on it. There is no urgency to rush out and buy property in the next 12 months.




I agree but there will come a time when there is a bottom.
Those sitting on the fence should be (If they want a home) watching carefully.

*GAV*
I wasnt/am not concerned for you.
I was of the opinion you have considered the questions and those of your own.


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## tech/a (3 January 2009)

> Originally Posted by kransky  View Post
> i am a non home owner hoping for big falls in prices... i'd like a house without the lifetime enslavement currently associated with buying one.




Initially this is the perception and a very real fear from first home buyers.
Initially this will be the case for most. 2 wages seemingly disappearing into a bottomless pit.
But as time goes by you WILL build an equity in your home---equity that should be wisely used in duplication,as you become more experienced in the life long business of securing your and your families financial future.

Duplication is the key---this may not be sloey housing either. But duplication or inclusion of investments which generate income in surplus to your own wage.
It maybe another house or so if conditions in the future scream BUY NOW.
It maybe some developement as you learn how this can be a great money spinner without massive risk.
It maybe a share portfolio as you see a re emergence of strong growth.
It maybe a business which you buy and have managed by others while you still work. That equity (At suitable times) should be used wisely NOT left sitting doing NOTHING.


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## joeyr46 (3 January 2009)

kincella said:


> glen thanks for the advice...really, but I am fairly stubborn....
> 
> I have bought 10, sold 5 made good money everytime....would never dream of selling for a loss, and I have earmarked one for a major  renovation, with very low interest rates, it should be a breeze....
> claim the tax loss on running costs,if there is a loss on the other props
> ...






Passive said:


> Got it in one Mr Burns
> 
> Were property prices to plunge I along with many bulls would be in there buying like crazy cause we look long term and below a certain threshold plus with low rates you would be a fool not to. We obviously are the biggest of them all as we did it with the last recession when after that any fool could have made money and we did.
> 
> Now this time , should it happen, guess who will be there before the hopeful bears, Passive and his cronies buying up big for his kids and grandkids because it will be an opportunity of a lifetime. Now with another million or so cashed up boomers in Aus doing the same what chance have the hopefuls got?  Some have no idea. Top end of town have lost heavily and quite frankly if it all came back down it would not be long before it zoomed up again because there is so much in favour of property investing in Australia it seems absolutely ridiculous to preclude this asset class from your portfolio if you have half a decent income and equity elsewhere.




Love this were prices too plunge I and my mates would be in there buying.
Every bear market I've ever seen is recognisable by 3 distinct features 
1) Banks are reluctant to lend/have tight lending criteria
2) Lots of sellers  no buyers (real estate windows will be full again)
3) just like in nature bottoms are like wide valleys were as tops are like mountain peaks. Peaks form quickly the bottoms take a long time and you won't have to fight anyone to buy all the houses you want

The other problem with buying when rates are low and going down further you have to ask why they are low and going down further 
answer probably pointing to low pressure for money (supply demand) or pointing to deflation 
High rates after all gave property people there biggest capital gains via inflation and real rates is probably the real key here. I remember paying minus at one point when rates were 13% but inflation was rampant at about 18% till banks caught up and inflation also came down 
Your right there will be a bottom but just like last time there is no panic it won't happen overnight and I'd rather look at the criteria before I buy when the downturn has just started .
By the way I'm not a perma bear but when the government panics and gives away $10 billion to pensioners etc to fix the economy I sit up and take notice and ask what they know that we don't yet know and when the stock market charts all say MAJOR correction just starting not ending even though we will have a good rally this year IMO I think housing much closer to top than bottom


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## kincella (3 January 2009)

Joey...whatever...banks tightening credit....where is the evidence ? I called CBA early Dec to get information about their loans....not a customer, but the guy on the other end said most australians were a customer...he checked my name, sure enough...I was with commsec, so am classified as a cba customer...refinance approved over a 10 min tel call....
no worries....not hocked to the hilt...plenty of equity....
my lender was not passing on the rate cuts....hence the change
happy days


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## Beej (3 January 2009)

kransky said:


> ever since they changed the capitals gains law for home value increase every tom dick and harry has become a property investor... at the cost of the younger generation. at current house affordability levels we young people are majorly screwed.




Sorry, but which change to capital gains tax law would that be exactly and when???

Are you referring to the actual original introduction of the requirement to pay capital gains tax on investment property (and anything other asset for that matter) capital profits, which was introduced by the Hawke government in 1984? 

Ie, prior to 1984 all profit from investment property was absolutely tax free, and I can't see how that change supports your point above??

Beej


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## joeyr46 (3 January 2009)

kincella said:


> Joey...whatever...banks tightening credit....where is the evidence ? I called CBA early Dec to get information about their loans....not a customer, but the guy on the other end said most australians were a customer...he checked my name, sure enough...I was with commsec, so am classified as a cba customer...refinance approved over a 10 min tel call....
> no worries....not hocked to the hilt...plenty of equity....
> my lender was not passing on the rate cuts....hence the change
> happy days




Exactly my point were not at the bottom 
Banks lend willingly at tops inc low doc loans but at bottoms no matter how much equity you have they are reluctant to lend 
Not even sure if there wil be another run in house prices before they give way but cycles and history show we are very close to if not past top 
Simple investment clock I learnt was at 6.00 clock (bottom) we thhen start to see rising commodity prices  followed by rising stock prices followed by rising RE prices then higher interest rates as demand for money goes up
At 12.00 (top) we start to see falling commodity prices followed by falling SP then falling RE then falling IR as demand for money falls . Said it before interest rates have nothing to do with reserve bank they dont set rates market does and if you look closely over time you will see governments (all levels are reactive not proactive (this includes reserve bank)
never before seen such falls at the same time and cannot see how or why RE should be any different but not sure how far it will fall just know to look for the signs that there are no buyers (except for Passive and his mates) and the press is headlining nothing about houses or RE in general


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## kincella (3 January 2009)

joey, sounds like lots of theory....are you not a homeowner ....I have been in property for over 40 years.....have some experience.....I tend not to do what the crowd does.....


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## Lancelot (3 January 2009)

wayneL said:


> It must also be said that the oversupply in the US only applies to certain areas in the Sun Belt and Rust Belt. New Yawwwk, and the NE doesn't have oversupply, yet has still seen hefty falls.




Brings out the pic again


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## Lancelot (3 January 2009)

kincella said:


> Joey...whatever...banks tightening credit....where is the evidence ? I called CBA early Dec to get information about their loans....not a customer, but the guy on the other end said most australians were a customer...he checked my name, sure enough...I was with commsec, so am classified as a cba customer...refinance approved over a 10 min tel call....
> no worries....not hocked to the hilt...plenty of equity....
> my lender was not passing on the rate cuts....hence the change
> happy days




Same same, except the bank actually asked us when we were going to go again, almost pushing the cash on us they were.


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## knocker (3 January 2009)

Quite frankly anyone who takes any advice from this or any other board regarding real estate their finances etc. needs their heads read. The only decent thing that comes from posts here are links to reports data etc. Up to the individual to make the decision.


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## IFocus (3 January 2009)

Passive said:


> The analogy to the share market with property fits in how?
> 
> That  has been our point all along - this is not a cheap shot - the nature of this asset class is such that it primarily is a dwelling and therefore not susceptible to the gyrations of the stockmarket. The property holder owns a house as a home. In reality a second house is an investment and that is shielded by the attitude of the owner of PPOR in Australia - sorry can't see the connection.




The psychology around this discussion is very FMG thread like, people who are in love with their investment.

Whats puts people at high risk is their complete belief of the invincibility of investing in property.

To think that some how there will be little effect at some time in the future here in Oz from the biggest global financial crisis seen in our generation is bizarre.  

When was the last time you remember an Oz Gov throwing $10bil at the economy and demanding people spend it.

Check out the rate of fall in the 30 day cash rate find another time this happened........ you wont.

Will it unfold to a crisis here I don't know but Fu#K if you cannot see the looming risk your brain dead, of course IMHO.


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## juddy (3 January 2009)

joeyr46 said:


> the press is headlining nothing about houses or RE in general




Speaking of headlines, did anybody catch the West Australian front page this morning?


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## wayneL (3 January 2009)

Lancelot said:


> Brings out the pic again




Which includes all the sun belt/rust belt rubbish.


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## kransky (3 January 2009)

Beej said:


> Sorry, but which change to capital gains tax law would that be exactly and when???
> 
> Are you referring to the actual original introduction of the requirement to pay capital gains tax on investment property (and anything other asset for that matter) capital profits, which was introduced by the Hawke government in 1984?
> 
> ...




i was under the incorrect impression that capital gains laws were changed around then which helped stimulate the house as an investment vehicle boom.... where the hell did i get that from  

anyway, capital gains tax was introduced in 86... 
http://www.aph.gov.au/library/INTGUIDE/law/taxlaw.htm


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## tech/a (3 January 2009)

IFocus said:


> The psychology around this discussion is very FMG thread like, people who are in love with their investment.




Can be said of any held investment.Those who held on to their managed funds/stock with 50% loss are no different. Those who hold on or have bought property which is likely to see 50% fall in price are certainly in the "thick" pile of humanity.Property is like any other investment it will rise and fall.Some investments rise and fall spectacularly---so to can property.
Some hold their value exceptionally well---so to can property. Some investors mitigate risk while "Speculating"---so to can property investors.



> Whats puts people at high risk is their complete belief of the invincibility of investing in property.




This is true of a small minority who buy tops.
What puts people at high risk of financial mediocrity is the lack of ability to 
(1) Recognise opportunity
(2) Know how to take advantage of it.
(3) DO IT.
Fear paralysis would be *NUMBER ONE* on my list



> To think that some how there will be little effect at some time in the future here in Oz from the biggest global financial crisis seen in our generation is bizarre.




To think that there cant be opportunity and there will be financial armageddon infinitum is just as bizarre.  



> When was the last time you remember an Oz Gov throwing $10bil at the economy and demanding people spend it.




Its been a while since we had such a dumb govt.Throwing 10 billion to the masses who have proven they cant control their own financial affairs---in a quick fix feel good xmas gesture to "Stimulate" the economy over the xmas period is BIZARRE. This govt has lead its people in a display of excess stupidity. 10 bill on Infrastructure would have had far reaching stimulus in the years to come. Its band aid effects have even now passed!



> Check out the rate of fall in the 30 day cash rate find another time this happened........ you wont.
> 
> Will it unfold to a crisis here I don't know but Fu#K if you cannot see the looming risk your brain dead, of course IMHO.





And if you've done nothing to mitigate risk AND closed your mind to opportunity then your just as Brain Dead.
Buffett's been buying his brains out whilst mitigating risk.

Is it not possible that the general populace cant do the same in all areas of investment?
Do you really believe that its that impossible either now or in the not to distant future? 
Do you really believe that anyone who holds property in particular multiple properties are doomed to stupidity and mass destruction of nett wealth. 
Do you really think that people who have put themselves in the position to take advantage of opportunity are that dumb that they cant evaluate and mitigate their own risk profiles?

Whats so *BIZARRE* about this thread is the insistence that those taking part are either full on Bullish OR full on Bearish property.
There are some here who aren't going to PANICK.
Who aren't going to throw caution to the wind
Who are going to and are turning this "Perceived" negative into a positive.

It is an opportunity to re balance your portfolio if you haven't already and place yourself in a position to take advantage of the economic armageddon.


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## dhukka (3 January 2009)

Stormin_Norman said:


> the statistics dont share that view. UK rents were worse:
> 
> 
> 
> ...





According to the Case Shiller Home Price Index, as of October 2008, home price falls from their respective peaks are as follows;

New York  *-11.9%*
Boston *-12.8%*
Detroit *-32.2%*

20 City average *-23.4%*


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## gfresh (3 January 2009)

It's not bizarre, it's human nature..  it wouldn't be a good argument if everybody was to meet somewhere in the middle would it ?  Without provocative comments I don't think half of the good posts would have come out on here. 

We've only seen round #1 of the handouts. $40bn is in the next round of "infrastructure" / longer term spending. 

Chops comment on Canada was worth following up on some similarities to Aussie economy. Can't find too many references to see it's crashing, but seems to be similar state to Australian market at present... almost like you're reading an Aussie newspaper  

http://www.propertywire.com/news/north-america/falls-property-canada-2009-200901012330.html

http://www.theglobeandmail.com/servlet/story/RTGAM.20081211.reBelford1212/REStory/RealEstate/home


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## Bill M (3 January 2009)

tech/a said:


> Whats so *BIZARRE* about this thread is the insistence that those taking part are either full on Bullish OR full on Bearish property.
> There are some here who aren't going to PANICK.
> Who aren't going to throw caution to the wind
> Who are going to and are turning this "Perceived" negative into a positive.
> ...




Never a truer word spoken. In the next few Months interest rates will probably be lower and you will be able to get home loans at 50 years lows. Some buyers might disappear which will make buying that property just that much easier. I am seriously thinking of taking advantage of this situation, particularly with the rental shortage we have here.


----------



## kransky (3 January 2009)

tech/a said:


> Its been a while since we had such a dumb govt.Throwing 10 billion to the masses who have proven they cant control their own financial affairs---in a quick fix feel good xmas gesture to "Stimulate" the economy over the xmas period is BIZARRE. This govt has lead its people in a display of excess stupidity. 10 bill on Infrastructure would have had far reaching stimulus in the years to come. Its band aid effects have even now passed!




cash payments over infrastructure spending drives me crazy... bloody politics BS


----------



## tech/a (3 January 2009)

> It's not bizarre, it's human nature.. it wouldn't be a good argument if everybody was to meet somewhere in the middle would it ? Without provocative comments I don't think half of the good posts would have come out on here.




Those who have an all or nothing philosophy to life would agree with you.
80% of posts by the extremists here have no value to those reading. Just I'm right your wrong---no argument as to why or how or what to look for.

If a more balanced argument came from the extremists they to might have a more balanced and secure financial future.

Oh and Human Nature tends to be a poor indicator for argument/opportunity.


----------



## dhukka (3 January 2009)

Bill M said:


> I totally disagree with this statement, history is still the best guide, we will see again.




Sure it's a guide, but expecting the next 30 years to play out the same or even similar to the last 30 years should be viewed with caution.


----------



## dhukka (3 January 2009)

wayneL said:


> But we will be looking back a lot further than a boomer bubbled 30 years though.




Robert Shiller has shown through his analysis of US home prices from 1890 that over time they have only kept up with inflation. Would it be more accurate to view the last 30 years as a guide or an anomaly?


----------



## wayneL (3 January 2009)

tech/a said:


> Those who have an all or nothing philosophy to life would agree with you.
> 80% of posts by the extremists here have no value to those reading. Just I'm right your wrong---no argument as to why or how or what to look for.
> *
> If a more balanced argument came from the extremists they to might have a more balanced and secure financial future.*
> ...



Are only bears extremists?


----------



## wayneL (3 January 2009)

dhukka said:


> Robert Shiller has shown through his analysis of US home prices from 1890 that over time they have only kept up with inflation. Would it be more accurate to view the last 30 years as a guide or an anomaly?




I'm going for the anomaly... not just in housing either.


----------



## kincella (3 January 2009)

Tech.....spot on
'80% of posts by the extremists here have no value to those reading. Just I'm right your wrong---no argument as to why or how or what to look for.'

dhukka....
why with history going back  100 years...perfect hindsight for you...saves you trying to pick the future...would you view with caution....????

the current crisis being played out right now...is an exact repeat of  what happened in the 1970's....same fraudsters, same bailout by feds..., except then inflation was at 12%, interest rates  18-20%...add to that asian crisis, oil embargo.....hint do some quick research.....in fact there has hardly been a time in history when there is not some crisis unfolding, coming to an end...just beginning.......

even Buffett (who I think is more lucky and cautious than smart) suggests look backwards to find out where you are going in the future.....

I use the 100 year housing charts to plot my future.....almost nothing else is required.....the only thing I dont do, is buy at the top of the market....and interest rates change...so again I dont worry too much about them....
this plan has worked a treat so far.....and I am already planning to buy more props.....with interest rates coming down to 2.5 to 3%......its too much of a godsend to not take up....a window of opportunity....some people only see it once in a lifetime...others never see it....others are always on the lookout...
****absolutley no way do I want to influence anyone into buying....** just offering some  of my own experience...use it as you want...
cheers


----------



## tech/a (3 January 2009)

wayneL said:


> Are only bears extremists?




*My opinion* is that ANY consistently dogmatic view without supporting arguement is extremist.
NOT wether it fits with my view or not.

I have mellowed in view point----somewhat over the years not without the odd hit in the head from the Wayne Ls of the world.


----------



## IFocus (3 January 2009)

tech/a said:


> Can be said of any held investment.Those who held on to their managed funds/stock with 50% loss are no different.




I leverage much higher into property than stocks losing 50% in property as a new participant would be a problem I assume this would apply to many others. 



> Those who hold on or have bought property which is likely to see 50% fall in price are certainly in the "thick" pile of humanity.Property is like any other investment it will rise and fall.Some investments rise and fall spectacularly---so to can property.
> Some hold their value exceptionally well---so to can property. Some investors mitigate risk while "Speculating"---so to can property investors.




Excellent so we agree then




> This is true of a small minority who buy tops.
> What puts people at high risk of financial mediocrity is the lack of ability to
> (1) Recognise opportunity
> (2) Know how to take advantage of it.
> ...




(4) Measuring your risk and understanding an exit plan again extraordinary you don't note this in fact is bizarre given your own life experiences etc wouldn't it be number one.  





> To think that there cant be opportunity and there will be financial armageddon infinitum is just as bizarre.




Opportunity to come is a given already mentioned numerous times but not so sure of financial Armageddon infinitum,  uncertainty of where it will go 2009 -2010 absolutely, warning signs, flashing red lights, sirens. 





> Its been a while since we had such a dumb govt.Throwing 10 billion to the masses who have proven they cant control their own financial affairs---in a quick fix feel good xmas gesture to "Stimulate" the economy over the xmas period is BIZARRE. This govt has lead its people in a display of excess stupidity. 10 bill on Infrastructure would have had far reaching stimulus in the years to come. Its band aid effects have even now passed!





Actually if you look at the key government measures it was about underpinning housing prices and banks. The measures that they have taken is advice directly from treasury and the RBA I take it you are calling them dumb, Labour are not smart enough to know actually what to do. Whats more of a shock is calls from the Libs front bench are worse. 





> And if you've done nothing to mitigate risk AND closed your mind to opportunity then your just as Brain Dead.
> Buffett's been buying his brains out whilst mitigating risk.
> 
> Is it not possible that the general populace cant do the same in all areas of investment?
> ...





Think if you read the FMG thread you will see the answer........





> Whats so *BIZARRE* about this thread is the insistence that those taking part are either full on Bullish OR full on Bearish property.
> There are some here who aren't going to PANICK.
> Who aren't going to throw caution to the wind
> Who are going to and are turning this "Perceived" negative into a positive.




I missed those posts




> It is an opportunity to re balance your portfolio if you haven't already and place yourself in a position to take advantage of the economic Armageddon.




Agree here except I am not so sure of the Armageddon bit but I am sure of the risk.


----------



## numbercruncher (3 January 2009)

tech/a said:


> *My opinion* is that ANY consistently dogmatic view without supporting arguement is extremist.
> NOT wether it fits with my view or not.
> 
> I have mellowed in view point----somewhat over the years not without the odd hit in the head from the Wayne Ls of the world.






Arnt you the same chap that said a few pages back that anyone not buying realestate (before your predicted inflationary period) will find themselves and their offspring for atleast 3 generations locked out of home ownership ?

Is that not extremism personified ? did you have supporting arguments for this dire prediction ?


----------



## Lancelot (3 January 2009)

wayneL said:


> Which includes all the sun belt/rust belt rubbish.




And all the crap here as well


----------



## knocker (3 January 2009)

numbercruncher said:


> Arnt you the same chap that said a few pages back that anyone not buying realestate (before your predicted inflationary period) will find themselves and their offspring for atleast 3 generations locked out of home ownership ?
> 
> Is that not extremism personified ? did you have supporting arguments for this dire prediction ?




I agree. i think such posts are condescending and indicative of the low calibre type person who would post. All these legends who proclaim to be the best because they made a few bucks from real estate are full of the proverbial in my opinion.


----------



## juddy (3 January 2009)

kincella said:


> I use the 100 year housing charts to plot my future....




You mean the ones you stumbled across a fortnight ago?


----------



## Lancelot (3 January 2009)

knocker said:


> I agree. i think such posts are condescending and indicative of the low calibre type person who would post. All these legends who proclaim to be the best because they made a few bucks from real estate are full of the proverbial in my opinion.




Says he making condescending comments.

You wouldnt be a low calibre type person knocker would you?


----------



## kransky (3 January 2009)

from a theoretical standpoint, if houses are used as a investment vehicle then i can see how they could possibly keep rising for a long time...

you get the situation where the have's get richer and richer as their property appreciates, generates income and they accrue more... and the have-not's get poorer and poorer and less and less likely to ever own their home as they pay more for rent and prices rise..

i mean for property that is desirable.. ie close to jobs and infrastructure and facilities etc...

seems plausible.. but i see a possible energy crisis emerge to change all this...
if food production becomes more person and less energy intensive if energy becomes much more expensive then their will be a change in what locations are desirable..


----------



## tech/a (3 January 2009)

> (4) Measuring your risk and understanding an exit plan again extraordinary you don't note this in fact is bizarre given your own life experiences etc wouldn't it be number one.




Measuring opportunity is inter related to risk.
If there is too much risk then its not an opportunity is it?



> Actually if you look at the key government measures it was about underpinning housing prices and banks.




We are talking of the 10 billion. Yeh they are DUMB. Didnt see the Yanks or the Pomms getting a few grand for Xmas spending!



> Arnt you the same chap that said a few pages back that anyone not buying realestate (before your predicted inflationary period) will find themselves and their offspring for atleast 3 generations locked out of home ownership ?




Reading isnt your strong point.
"After* EVERY* Recessionary-or Depressionary period there is a period of inflation---at worse Hyper inflation"
Go have a look.I'm not going to do all your due diligence for you!

Hey look guys rent your brains out.
retirement will be fun if you ever get in that positions.
By the time you retire its unlikely governments will be able to afford supporting you. Paying your rent will be fun without a cashflow.

But hey thats years off---


----------



## Beej (3 January 2009)

kransky said:


> i was under the incorrect impression that capital gains laws were changed around then which helped stimulate the house as an investment vehicle boom.... where the hell did i get that from
> 
> anyway, capital gains tax was introduced in 86...
> http://www.aph.gov.au/library/INTGUIDE/law/taxlaw.htm




Yes you are correct 1986 it was introduced. I think there may have been some retrospectivity back to 1984 related to property though?

Anyway the change you may be thinking of occurred in the in the late 90s or so under Howard to the situation now where you get a 50% discount in CGT payable if you hold an investment for 12 months or more? The thing with that change is it also removed the ability to index you cost base for CGT purposes by inflation, and in most cases you actually ended paying a bit more CGT believe it or not than under the old rules without the discount... (unless the capital gain is significantly higher than the aggregate inflation rate over the period the investment was held).

Negative gearing for property was also removed at one point in the mid/late 80s, but that proved to be a disaster (rents spiraled and there was a major actual housing crisis underway) and it was quickly re-introduced a year or 2 later. The government at the time forgot that the whole negative gearing thing was there to provide an incentive for private sector provision of what would otherwise have to be publically funded housing....

Cheers,

Beej


----------



## kincella (3 January 2009)

Juddy...cheap shot the best you can do is it...
I have been following the charts since oh I dont know...how about 1970 to begin with.....

or was you who stumbled across....  well anything

sounds like some of you might have spent too much time on the ...housepricecrash sites ????


----------



## juddy (3 January 2009)

kincella said:


> Juddy...cheap shot the best you can do is it...




No, but when people tell outright lies...

You posted the chart on another shares site and went on about 'how you'd just discovered them' to back up a point.


----------



## tech/a (3 January 2009)

Here Numbers Educate yourself.

http://www.dailyreckoning.com.au/inflation-recession/2008/02/11/


----------



## kincella (3 January 2009)

you got me mixed up with someone else


----------



## kincella (3 January 2009)

Juddy, for a start I dont tell lies...suggest you check your source again....I dont like being called a liar


----------



## knocker (3 January 2009)

Lancelot said:


> Says he making condescending comments.
> 
> You wouldnt be a low calibre type person knocker would you?




No as low as a chimp holding a gun to his head lol


----------



## numbercruncher (3 January 2009)

Hello Tech,


Just pulling you up on your " extremist " scaremongering comment that three generations will be locked out .... That would make the owners of all the property very old, would it not ?

No need for an education from the old hat factory.

My Grandparents lived through the Great Depression yet owned a home, as did all their Children and 95pc of their grandchildren.

Thankyou...

Bonecruncher.


----------



## chops_a_must (3 January 2009)

juddy said:


> Speaking of headlines, did anybody catch the West Australian front page this morning?




Prey tell? 



kincella said:


> even Buffett (who I think is more lucky and cautious than smart) suggests look backwards to find out where you are going in the future.....




Lol, yeah, and it wouldn't be pretty for property.


----------



## profit off it (3 January 2009)

tech/a said:


> Oh and Human Nature tends to be a poor indicator for argument/opportunity.




Hey! Don't get stuck into Human Nature! What did they do?


----------



## robots (3 January 2009)

hello,

how's this legend:

http://www.theage.com.au/national/c...off-their-land-says-doctor-20090102-794u.html

not bad effort just for putting the key in the door, a humble home

council valuation gone from 1.2 to 6mil, wouldnt care too much for deflation, stagflation or inflation would they, being council its probably a bit undervalued as well,

probably at age where he will sell, friend of mine had same situation as an original land holder of a huge estate in Melbourne (5yrs old and still going)

much younger though, so went in with JV partner (delfin, ULC etc) and gets a great royalty of every new block sold

the money grab just got too much

thankyou
robots


----------



## 2BAD4U (3 January 2009)

And activity has returned to the bottom end of the market .... HERE

And before you say, "but they're agents they would say that". Here is the supporting data.

_"The Office of State Revenue would not release data on the number of applications pending but did confirm that there had been a heightened level of telephone inquiry from prospective first-homebuyers since the Commonwealth funding boost was announced."_

With more homes selling at the bottom end of the market, the median house price will come down but this doesn't mean prices are falling.


----------



## numbercruncher (3 January 2009)

2BAD4U said:


> And activity has returned to the bottom end of the market .... HERE
> 
> And before you say, "but they're agents they would say that". Here is the supporting data.
> 
> ...





OMFG its worse than I suspected and WA is the only place im invested in RE (outside of LPTs) ....




> More than $4.25 million in First Home Owner Boost grants have been paid to WA first-homebuyers since the Federal Government announced the additional grant in October.
> 
> Figures released to The West Australian, show 546 first-homebuyers had taken advantage of the new boost grant to buy their first home. The boost grants are in addition to the $7000 first-homeowners grant.





546 FHBs for a whole 2 months for the entire state of WA with a doubled grant - carnage.

At this pace FHBs will buy 7000 homes this year, boom times ?


----------



## IFocus (3 January 2009)

2BAD4U said:


> And activity has returned to the bottom end of the market .... HERE
> 
> And before you say, "but they're agents they would say that". Here is the supporting data.
> 
> ...




Hopefully the Govs efforts will put a floor under pricing as its intended to and that the velocity of the $10bil remains high enough to maintain confidence.

That maybe gets us to mid year Dhukka how long do you think?


----------



## dhukka (3 January 2009)

Passive said:


> The analogy to the share market with property fits in how?
> 
> That  has been our point all along - this is not a cheap shot - the nature of this asset class is such that it primarily is a dwelling and therefore not susceptible to the gyrations of the stockmarket. The property holder owns a house as a home. In reality a second house is an investment and that is shielded by the attitude of the owner of PPOR in Australia - sorry can't see the connection.




You've missed the point. I'm not saying the property market will act the same as the sharemarket. The property market is nowhere near as volatile as the sharemarket for sure. The point is, extrapolating the past to predict the future is fraught with danger whatever you are trying to predict, stockmarkets, property, the weather.


----------



## dhukka (3 January 2009)

kincella said:


> dhukka....
> why with history going back  100 years...perfect hindsight for you...saves you trying to pick the future...would you view with caution....????




kincella, 

I've read this a number of times now...... I see a question mark.........not sure of the question though........kind of hard to read with all the dots.........


----------



## kincella (3 January 2009)

2bad4u.....seems like the truth is stranger than fiction (read fiction = media)
couple of us have been doing our own research and know all the low priced properties are all but sold out....in the suburbs we follow.....
hello....another reason median prices are going down....

ps you probably do not need to be familiar with the suburb to determine they are the lower priced props.....just think 1 bdr's are usually bottom of the market....and then the appearance/ exterior.....sometimes you need to go further.... for eg; in one suburb I follow if you did not know the area ...you would not know that suburb xxxx is full of housing commission homes and low life, or another area not much better...in fact it has several awful burbs to stay clear of...but I see homes in those areas have been selling past 3 months.....
I guess 'due diligence' springs to mind, drive around the neighbourhood of the chosen property, check it out at different times.....see what the neighbours ae like in the evening etc....
cheers


----------



## 2BAD4U (3 January 2009)

numbercruncher said:


> 546 FHBs for a whole 2 months for the entire state of WA with a doubled grant - carnage.
> 
> At this pace FHBs will buy 7000 homes this year, boom times ?




Oh I'm sorry, do you need a link for the definitions of "returned" and "hightened".  Perhaps a link to see how median prices are calculated and how this "return" of first home buyers affects that figure, the one that's falling which means we must all be losing money.


----------



## 2BAD4U (3 January 2009)

numbercruncher said:


> OMFG its worse than I suspected and WA is the only place im invested in RE (outside of LPTs) ....




That's a shame - because it's also happening in NSW


----------



## numbercruncher (3 January 2009)

> Oh I'm sorry, do you need a link





Yes Id love the permabulls to start providing links instead of "personal" stories in the " House prices to keep rising for years " debate.


----------



## gfresh (3 January 2009)

Medians can be just as skewed on the upside as the downside, and have been used to boast about how much values have risen in certain suburbs in the past, so quid quo pro when quoting medians in heavily rising *or* falling markets.

546 FHB for WA is a woefully small figure, it's going to take a hell of a lot more than that. The RHS index of that page is a laughable list of RE propaganda titles:

"First fruit for home buyers"
"First home buyers snatch bargains"
"Cheapest suburb is underrated"
"Big  jump in Cotteslow values"
"Market falls but less than you thought"

 yup, all 546 of them are really storming down the gates. 

A suspiciously similar article to that WA one was also printed in the QLD papers about that time, simply change a few names around  Later articles also suggested that while enquiry was good, this was yet to translate to any reasonable level of sales. 

The amount of "contract crashed" listings in QLD is already a testament to how many buyers have bigger eyes than their borrowing budgets, and how tougher lending standards are stopping a few in their tracks.


----------



## theasxgorilla (3 January 2009)

numbercruncher said:


> Yes Id love the permabulls to start providing links instead of "personal" stories in the " House prices to keep rising for years " debate.




You're doing the devils work NC.  What do you think sells papers?  A good story.  What better story than "facts" about prices going up and prices going down.  It's the information age, there is no shortage of "evidence" to support either side.

I very much look forward to the day when you buy that Gold Coast mansion for 1977 prices.  Then I'll know you were right all along.


----------



## Lancelot (4 January 2009)

theasxgorilla said:


> I very much look forward to the day when you buy that Gold Coast mansion for 1977 prices.  Then I'll know you were right all along.




LOL


----------



## Lancelot (4 January 2009)

gfresh said:


> The amount of "contract crashed" listings in QLD is already a testament to how many buyers have bigger eyes than their borrowing budgets, and how tougher lending standards are stopping a few in their tracks.




So what are you saying, new buyers want it all now?

Maybe they should start a bit smaller like previous generations did instead of aiming for mummy and daddies house as a first home.

Some of the auctions I have been to recently had more than a few young buyers  with "stars in their eyes" getting a dose of reality


----------



## robots (4 January 2009)

numbercruncher said:


> Yes Id love the permabulls to start providing links instead of "personal" stories in the " House prices to keep rising for years " debate.




hello,

see post #2991 from Robots, council does valuation every 2yrs

so in two years gone from 1.2mil to 6mil, put that one in the pipe Numbercruncher,

what a day, looks like plenty of life out there in the property world

just also sent email with attachment to S.Keen on above, havent heard much from him recently has he left the country or something?

thankyou
robots


----------



## knocker (4 January 2009)

robots said:


> hello,
> 
> see post #2991 from Robots, council does valuation every 2yrs
> 
> ...



Hello
I guess that single sale is what keeps the property boom going hey robie lol. Good to see you spending your unemployed hours fruitfully.

thankyou, over and out


----------



## Judd (4 January 2009)

Pity that the rationale for this increase was due to a rezoning which the owner did not want.  So extracting that "good luck" what would the property be worth.

Really, robi, you do tend to distort facts - just like any other PR person, ie manipulate the data to suit your hypothesis.


----------



## robots (4 January 2009)

hello,

yeah man, unemployed, distort facts awesome writings will make the day even greater, thanks for the words

fact is council has valued at 6mil now, yes thats right brothers 6mil for this guy's humble home, gotta be in it to win it 

paradise here today, 25degrees, sun blasting from the sky about to head off on a walk into the city centre, 

booked in to enjoy the succulent bird at an Indian joint

might even flip a homeless guy 20cents

thankyou
robots


----------



## numbercruncher (4 January 2009)

Robi Robi ...

Man o man you tempt fate and stir bad Karma ....

 .... best you flip that guy 50 cents for good measure


----------



## wayneL (4 January 2009)

robots said:


> might even flip a homeless guy 20cents
> 
> thankyou
> robots



Homeless? In the urban Utopia of Melbourne?

Surely you jest! :


----------



## knocker (4 January 2009)

robots said:


> hello,
> 
> yeah man, unemployed, distort facts awesome writings will make the day even greater, thanks for the words
> 
> ...




hello

Where is this Indian brothel bro? Watch out you don't get mugged for that 20 cents on your walk.

thankyou over and out


----------



## Glen48 (4 January 2009)

Wonder if Robots had to hock his Car?
At least he is not racist to go  perving on some Indian School girl helping her parents in the store ,the smell of Curry is a powerful force and can make you image thing that are not true.


----------



## Beej (4 January 2009)

Interesting and reasonably balanced article presenting different "expert" views on the 2009 outlook for Sydney residential property: 

http://www.smh.com.au/news/national...ctions-for-2009/2009/01/03/1230681809451.html

Summary seems to be much uncertainty with ongoing softness for more expensive suburbs but likely strong sales and possible price growth for lower priced suburbs.

Cheers,

Beej


----------



## Adam A (4 January 2009)

I,m very suspicious of any real estate reporting in any newspapers
I think a lot of it is loaded with self interest. In my local area a full page colour add cost $4000.00 for one issue
Ive also noticed that my colour section of the real estate  in my local rag, has dropped quite a lot in quantity of adds in the months prior to christmas.

I also understand that realestate adds are number one in revenue for the papers with car adds next! 

The papers must be hurting

I believe the press will grab at any positive news, and will ride to death all the way down, just like they did in the UK

I have two friends currently on the market,both of them are now at prices from 2004,both are still not sold


----------



## robots (4 January 2009)

hello,

well fellow brothers an eventful day in the streets of this fine city, walked in via St Kilda Rd a grand boulevard at least

the succulent bird came out on a sizzling plate, some chutney, salad and ordered 4 naan breads, superb

2 mango lassi's, what a day

as we were leaving got caught up in the protest going on over gaza strip so a bit of disruption to the trams, around 95% rent a crowd at the protest i would say, usual suspects

probably the same free-loaders squatting in the Melbourne uni house, 

got some cakes to enjoy at home with a couple of ruski's

thankyou
robots


----------



## theasxgorilla (4 January 2009)

Adam A said:


> I have two friends currently on the market,both of them are now at prices from 2004,both are still not sold




Location, location, location.

What's the location and configuration of your friends' properties?


----------



## 2BAD4U (4 January 2009)

Adam A said:


> I,m very suspicious of any real estate reporting in any newspapers
> I think a lot of it is loaded with self interest. In my local area a full page colour add cost $4000.00 for one issue
> Ive also noticed that my colour section of the real estate  in my local rag, has dropped quite a lot in quantity of adds in the months prior to christmas.
> 
> ...




Post pictures of your friends, I'm sure someone would be interested in buying them. 


Seriously Adam, what papers are you reading?  They have been full of bad news.  Also, the period before christmas is always quiet for property.


----------



## Judd (5 January 2009)

Gee, how about that lucky family in Sydney, robots.  Paid heaps for a waterfront mansion seven years ago and cannot live in the place or even sell it as the grounds are contaminated.  A little like the reverse of your 1.6m to 6m but in this case it's 1.6m to zero.


----------



## Adam A (5 January 2009)

Friends propertys are located on the northern beaches of Sydney and con sist  of, one three bedroom house on a 600 m2 block  the other is a two bedder house on 1000m2 block

I realise that their has been reporting on the negative side of the margin by the press, however what gets my goat is that it is now being reported that its only the rich people  who are suffering ie Mosman,Bellevue hill,Vaucluse,Palmbeach, ect,and that the western suburbs still has some hot spots??  

IMHO if the world economy continues to falter and peoples jobs are on the line,then the property boom is over,and folk will have to go back to saving money and working hard,no more houses as an ATM. 

Im a great believer in property and it will come back as a wealth creator. I guess it all depends on when you buy. 

The bottom is not in yet IMHO


----------



## Lancelot (5 January 2009)

Judd said:


> Gee, how about that lucky family in Sydney, robots.  Paid heaps for a waterfront mansion seven years ago and cannot live in the place or even sell it as the grounds are contaminated.  A little like the reverse of your 1.6m to 6m but in this case it's 1.6m to zero.




How about all those lucky people who had all that money and super on the stock market.

Paid heaps for all those shares and now down to zip, what have they got to show for it?

Sydney people have a roof over there heads at least


----------



## kincella (5 January 2009)

I thought this quote sounds appropriate for some on here-

Have you ever met a rich person who bitches and
moans all day long.

When you're whining, moaning and complaining,
the only likely outcome is that you're going to
get more of the same crap that you're
complaining about.

When you're complaining, you become a living,
breathing crap-magnet.....end extract

and the link
http://millionaire-phenomena.com/crazy-offer

ps I have started a new thread about winners and losers....its all about the attitude of the individual
cheers
-----


----------



## knocker (5 January 2009)

robots said:


> hello,
> 
> well fellow brothers an eventful day in the streets of this fine city, walked in via St Kilda Rd a grand boulevard at least
> 
> ...




hello
WTF has this to do with real estate. Robi I think you should join zacko over at the corby thread. Maybe you can get some cheap choof to keep your lonely brain cell ticking over.

thankyou


----------



## chops_a_must (5 January 2009)

Lancelot said:


> How about all those lucky people who had all that money and super on the stock market.
> 
> Paid heaps for all those shares and now down to zip, what have they got to show for it?
> 
> Sydney people have a roof over there heads at least




Enough for a deposit for starters...


----------



## kincella (5 January 2009)

Wondering why all posting on this stock site...when there is a dedicated property site for you to post on.....owned by the same group (I think)
there you can post on the state you live/interested in  ....chat about mortgages etc ???? start numerous threads that relate to property

yet all here on either of 2 threads,,,houses up, or houses down.....
and the fact the same thread has been going for yonks...with every subject within the same thread....
the other site was suggested to me....but it seems not many are interested.....in posting on a pure property site........


----------



## MrBurns (5 January 2009)

kincella said:


> Wondering why all posting on this stock site...when there is a dedicated property site for you to post on.....owned by the same group (I think)
> there you can post on the state you live/interested in  ....chat about mortgages etc ???? start numerous threads that relate to property
> 
> yet all here on either of 2 threads,,,houses up, or houses down.....
> ...




You need to understand peope to understand the Internet and usabliliy, why arent you using it ?


----------



## dhukka (5 January 2009)

IFocus said:


> Hopefully the Govs efforts will put a floor under pricing as its intended to and that the velocity of the $10bil remains high enough to maintain confidence.
> 
> That maybe gets us to mid year Dhukka how long do you think?




Sorry, only just realized this was directed at me. It will be interesting to see what the government does mid year. Obviously the total amount set aside for homebuyers grants won't be used up and the economy will only be getting worse at that point so an extension of the grants could be a possibility.


----------



## robots (5 January 2009)

hello,

glorious day again here in Melbourne knocker,

the wind is blowing the trees are sprouting new growth and life with property is just rolling on, going with the flow man

don't see too many for sale boards up which is interesting, and will be interesting with results coming out soon for states

thankyou
robots


----------



## gfresh (5 January 2009)

Still down here in Melb, the mood and things here is quite different to QLD at the moment I would agree... turnover seems to still be pretty good, plenty of sold stickers on those signs, probably more positive sentiment at the moment from Melbournites I know.


----------



## roofa (5 January 2009)

Lower to bottom end yes it is selling, mid to top end of the market in melbourne has the agent working for a living for a change. Down at least 20%.


----------



## gav (5 January 2009)

There are properties in good areas of Melb that are cheaper than renting - alot in outer suburbs, some even in St.Kilda.  Not hard to find...


----------



## chops_a_must (5 January 2009)

I've noticed quite a few places in Freo can be now positively geared, well and truly with 100% leverage.

Wouldn't imagine them lasting long. Would be great buys.


----------



## Lancelot (6 January 2009)

chops_a_must said:


> I've noticed quite a few places in Freo can be now positively geared, well and truly with 100% leverage.
> 
> Wouldn't imagine them lasting long. Would be great buys.




Nice one, off to the bank are we?

If not care to share?


----------



## chops_a_must (6 January 2009)

Lancelot said:


> Nice one, off to the bank are we?
> 
> If not care to share?



I would be given another 12 months or so.

The ones I was looking at have been taken off - no surprises.

http://property.com.au/cgi-bin/rsearch?a=qfp&cu=fn-pca&m=1&p=200&t=res&id=Fremantle+-+WA

The lower end there are or would be at worst neutrally geared, on probably 80% or greater leverage.


----------



## prawn_86 (6 January 2009)

chops_a_must said:


> I would be given another 12 months or so.
> 
> The ones I was looking at have been taken off - no surprises.
> 
> ...




Is that with current interest rates or with a bit of room for upwards movement?


----------



## chops_a_must (6 January 2009)

prawn_86 said:


> Is that with current interest rates or with a bit of room for upwards movement?




The ones I saw over the weekend had quite a big margin.

Those ones there don't.


----------



## MrBurns (6 January 2009)

See this - a little big to post here.

https://www.aussiestockforums.com/forums/showthread.php?t=13964


----------



## gfresh (6 January 2009)

??

http://www.property.com.au/cgi-bin/...mt=&header=&c=66904333&m=1&s=wa&tm=1231211791


----------



## prawn_86 (6 January 2009)

gfresh said:


> ??
> 
> http://www.property.com.au/cgi-bin/...mt=&header=&c=66904333&m=1&s=wa&tm=1231211791




Thats what im talking about 

I wonder if the bank will give this student a loan?  I can cough up some deposit


----------



## Lancelot (6 January 2009)

MrBurns said:


> See this - a little big to post here.
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=13964




Oh look, I can double post and cut and past as well



Who's Adam Schwab?

Sounds like some whiney little b*tch hoping for a crash so he can load up or a whiney little b*tch who failed to buy when they were cheap and is now upset at his failure


----------



## Lancelot (6 January 2009)

gfresh said:


> ??
> 
> http://www.property.com.au/cgi-bin/...mt=&header=&c=66904333&m=1&s=wa&tm=1231211791




Nice one, would be interested to see what the rent is after that "Guaranteed " period ends, still, looks pretty good at first glance, affordable and water views


----------



## knocker (6 January 2009)

Lancelot said:


> Nice one, would be interested to see what the rent is after that "Guaranteed " period ends, still, looks pretty good at first glance, affordable and water views




Pity they don't show the actual townhouse. Probably the type of place lower primates would inhabit. lol


----------



## MrBurns (6 January 2009)

> Sounds like some whiney little b*tch hoping for a crash so he can load up or a whiney little b*tch who failed to buy when they were cheap and is now upset at his failure




How do you know he'a waiting for a crash ?

How do you know he failed to buy ?

What makes you think he's a failure at anything ?

See when I use your logic it sounds just as stupid as when you do.


----------



## robots (6 January 2009)

hello,

what another great day g-man here in Melbourne

welcome all the visitors here to ASF and its great that ASF let people of all sorts and opinions post, ie. you dont get banned or cop ridiculous abuse for having an opinion here

well done brothers look forward to the next 30+ years and remember life rolls on together all as friends 

thankyou
robots


----------



## Lancelot (6 January 2009)

MrBurns said:


> How do you know he'a waiting for a crash ?
> 
> How do you know he failed to buy ?
> 
> ...





What logic have you used?

I used the words "sounds like" meaning he may or may not

you use the words like "you, don't and are" as in "You don't" and "don't get" and "You didn't" and "are now".

Do you see the difference?

I am saying he "sounds like"

You are saying "I am"

Like I said, what logic ?


----------



## nunthewiser (6 January 2009)

robots said:


> welcome all the visitors here to ASF and its great that ASF let people of all sorts and opinions post, ie. you dont get banned or cop ridiculous abuse for having an opinion here
> 
> 
> 
> ...




Amen

trust all is well in sunny st kilda robots


----------



## robots (6 January 2009)

hello,

yes all fine thanks nunthewiser, how was the time away?

look at this:

http://www.news.com.au/heraldsun/story/0,21985,24879271-662,00.html

the humble pushi shop is going bezerk, i know when you stop at lights its not long before 6,7 or 8 fellow brothers are next to you enjoying paradise

the secondhand pushie is very very wanted now, a bit grease and oil, keep the legs ticking over, singlespeed's everywhere on the urban streets

save a few bob here and there, money renting rates low as and utopia rolls on 

thankyou
robots


----------



## nunthewiser (6 January 2009)

robots said:


> hello,
> 
> yes all fine thanks nunthewiser, how was the time away?
> 
> ...




Excellent robots and thankyou for asking

i myself am not into this whole pushi phase as im a V8 fuel guzzling kinda guy ..

do tip hat to those doing it tho as good to see fit and happy ppl enjoying a nice ride along the esplanades..


----------



## robots (6 January 2009)

hello,

getting around on the pushie you "here it" when people wind up these motor's,

the aston martin's have always had the sweet note, but recently having witnessed (heard) these little merc's i think C63 amg wind up is sweet as,

thankyou
robots


----------



## grace (6 January 2009)

robots said:


> hello,
> 
> what another great day g-man here in Melbourne
> 
> ...




Hey Robots, I'm going to check out St Kilda while I'm in Melbourne watching a few tennis matches in a couple of weeks!  I expect it will be up there with the tennis from reading all of your posts! (not trying to pick an argument, just chatting of course)


----------



## kincella (7 January 2009)

geez, nothing like free speech, ego bashing and bitching....thought only women did the bitching thing....some of you guys put them to shame.


----------



## Go Nuke (7 January 2009)

numbercruncher said:


> If consuming more than you produce is measured in monetary terms, we literally suck.
> 
> View attachment 18128
> 
> ...




Dont forget rising unemployment!!
But is it becasue there is NOTHING LEFT TO SAVE AFTER THE COST OF EVERYDAY LIVING!! Well almost nothing.


----------



## Go Nuke (7 January 2009)

KIWIKARLOS said:


> Really whats their other option?
> 
> Buy a house or live in a cardboard box :
> 
> Perhaps move to a rural community where there is no work, and no ladies :




If rent continued to rise, then yes you are right...people would continue to pay it. Perhaps moved further out of the city, further clogging Brisbanes roads getting to and from work, spending more money on fuel, less time with the kids......(not that i have any because we cant really afford to look at buying a place AND having children)

Oh and I think with that opinion, people who would pay increasingly higher rents would spend even less money, thereby hurting the economy just that little bit more.

Just my thoughts.


----------



## Go Nuke (7 January 2009)

moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...




Just a couple of points..

a) limited supply and increasing demand (immigration) Aren't we cutting back on immigrants so that Australians can have jobs with future unemployment rising?

d) increasing wealth trickling down from mining boom. Not sure about that one. I often wonder how many miners have been used to living on the big income and the shock they will get when they have to come back to the cities and earn the "average" income that their city counterparts earn.
Especially those that are now losing their jobs with mines closing down and expansions being postponed.

f) increasing wage pressure........Um what increase in wage pressure? People I know have either just lost their jobs or in my case, we have been told "Due to the economic slowdown blah,blah,blah...our wages have been frozen and we aren't getting a wage review for 08!
At my g/f's company they have cut out some bonuses and even cancelled the xmas party! (Thats Honeywell for the record!)

1) skilled labour shortages (tradies) Oh that would be me Refer to above response

2) increasing OHS requirements Totally agree with this one, hence why our work goes to India and China.

I'm just trying to post a view from another perspective. One that alot of people may not consider. Those of an "average income"...actually probably below average if the believe the rubbish figures the Aus government use..lol

I'd perfer them to use a "medium income"

Happy 09 all
oh...We hope to buy this year, so I'd be happy to see property prices come off a bit. Surely they will have to seen as wages aren't going to be increasing this year for most/some.


----------



## numbercruncher (7 January 2009)

Victorian property gamblers getting smashed .....





> VICTORIAN property values have plummeted about $40 billion in the past six months.




http://www.news.com.au/heraldsun/story/0,21985,24881569-661,00.html


----------



## Lancelot (7 January 2009)

numbercruncher said:


> Victorian property gamblers getting smashed .....
> 
> 
> 
> ...




Not as smashed as some other types of investors

Did they get margin calls and were they forced to sell their houses?


----------



## robots (7 January 2009)

grace said:


> Hey Robots, I'm going to check out St Kilda while I'm in Melbourne watching a few tennis matches in a couple of weeks!  I expect it will be up there with the tennis from reading all of your posts! (not trying to pick an argument, just chatting of course)




hello,

no worries Grace, gfresh has enjoyed the time in Melbourne and hopefully you do to,

i like to visit Dandenong at the moment for its range of culinary delights, the afghan bakeries in foster st are fantastic, charcoal lamb skewers, bread and salad for a massive $12 are my favorite

plenty of curry joints and some interesting african places as well, 

st kilda is very boutique at the moment, the whole area leading up to and including chapel st as well is very in vogue

hope everyone having a great day

thankyou
robots


----------



## MrBurns (7 January 2009)

Lancelot said:


> and were they forced to sell their houses?




Yes - Some are forced sales - residential and commercial premises and there's lots more to come.


----------



## tech/a (7 January 2009)

Lancelot said:


> Nice one, would be interested to see what the rent is after that "Guaranteed " period ends, still, looks pretty good at first glance, affordable and water views





Quest ---ooooohhhhhaaaaa---shiver shiver.

If YOU cant control a deal your mitigating someones risk.


----------



## gav (7 January 2009)

robots said:


> hello,
> 
> yes all fine thanks nunthewiser, how was the time away?
> 
> ...




As I walk from my work (in St.Kilda) to where I park my car (about 1KM away) and I see a push bike go passed, I think to myself: "I wonder if that's Robots"... :


----------



## robots (7 January 2009)

gav said:


> As I walk from my work (in St.Kilda) to where I park my car (about 1KM away) and I see a push bike go passed, I think to myself: "I wonder if that's Robots"... :




hello,

i hope it puts a smile on your face Gav, 

the visual pleasures this planet offers are just superb, how the new job going? you killing it

thankyou
robots


----------



## gav (7 January 2009)

Haha yes it puts a smile on the face.  New job is going great, and has a beautiful view of The Shrine and surrounds.  I often walk the 1KM to my car at 11.30pm (I do shift work), nothing to fear here in St.Kilda.

Have enough for a house deposit now, just being patient and looking around.  Although I wont be buying in St.Kilda, houses are a little out of my price range


----------



## robots (7 January 2009)

hello,

thats right safe as houses in sunny st kilda, walk the streets anytime

take your time finding that palace gav, 

thankyou
robots


----------



## kincella (8 January 2009)

gav....I looked at st kilda prices last week...units are very affordable down there atm....around 300.000 or less...plenty to choose from...are you the same gav as the other 2 sites ??? sent a reply to the APF site this morning...but will repeat it here for the others

might need its own new thread for discussions
...................................................................................................
hyperinflation when it hits will be your friend...after gold, silver,,,realestate is the next best thing to hold...
if petrol is %5 a litre,,what do they think bread or milk will be....forget about buying a house....if you have one the mortgage will shrink....dollar devalued.
if you have a job...and interest rates at zero...it will be easier to hold the house...
but trying to buy in...they will need 10 times more dollars to buy the same thing
houses will hold their value...while you wait for the hyperinflation to end
here is a clue...

http://blog.livinginaustin.com/2008/12/2009-housing-and-economic-prediction.html

*****hyperinflation...think Zimbabwe....
here is a clue about what happens to property during that period
http://www.propertywire.com/news/af...ected-to-continue-in-zimbabwe-2008011293.html


----------



## ROE (8 January 2009)

http://www.news.com.au/business/money/story/0,28323,24882746-5013951,00.html

Funny how they talk about short of supply that keep price up but price keep dropping every quarter 

Like many shares expert...price will go up 

when do they do that? when is the bottum?
the truth is no one knows and as long as there is a shortage of money price keep will keep dropping ... I'm down the coast and every minute drive u see a property put up for sale ...sign of things to come..


----------



## prawn_86 (8 January 2009)

ROE said:


> I'm down the coast and every minute drive u see a property put up for sale ...sign of things to come..




There was a BRW story on this a few months back.

Coastal properties are usaully the first hit as people sell up their holiday homes.


----------



## knocker (8 January 2009)

robots said:


> hello,
> 
> thats right safe as houses in sunny st kilda, walk the streets anytime
> 
> ...




Also you can go shopping for some nice ladies and pharmaceuticals. St Kilda has it all, please remember to wear thongs though lol


----------



## Glen48 (8 January 2009)

WANTED INVESTORS:
Looking for investors to purchase a store in St Killda as RE keeps rising by 14.8% year,  year out there will be a good return on your money, the store will sell tin undies due to the high demand for protection.  The risk of getting a cap in the ass is high in this suburb.
There is also growing trend for the locals to wear socks with thongs, the thongs will have the Australian Flag screened printed on the face these will be a side line.
We expert to return 12% a month so any one who got caught in Storm or by Made off here is a good secure low risk.
We have arranged to have the store opened by a very well known local Celeb.
who's name escape's me.


----------



## kincella (8 January 2009)

Roe....couple of clues....the bottom of the market has been selling...so the median dives with it....and the headlines...40 billion or whatever wiped off....how much has been wiped off the stock market... for comparison purposes....
two types of investors.....the ignorant....and the informed....

now St Kilda...its become a tourist mecca....its growing up from the past slums...note all the national retailers in there now....not too much difference from any other shopping strip now...but 2 mins to the beach and 10 mins to the city.....
its still not my cup of tea....I prefer Toorak, and Chapel St....compared to the bohemian/tourist types....but its ok for a visit...and I love the beach...only walk the dog there now...these days...then go for coffee and cake in Acland St.....

Too each his own....
on a CA tonight..forget which one 9?....tree change thing..talking about a house for $80,000....at 3% interest thats 2400 a year for interest only.... 
every man and his dog can afford a house at those prices


----------



## gav (8 January 2009)

kincella, yes thats me on APF. I just posted a reply there.


----------



## kincella (9 January 2009)

The tree change segment on ch 9 last night....re Bernard Salt's bargain areas in each state..meet certain criteria...ie within 3 hours drive of a capital city etc.
first one was Bright, in Vic NE.... a weekender for $80,000 and the average between 250,000 to 300,000, thought most of the areas were on average around the 300.000....
now I do not find that a bargain, when you can probably get one on Melb's outer suburbs for a similar price and only an hour to the city....

the tree change thing might be ok for retirees, but not for young ones needing work......hardly any jobs out in those remote places amongst the trees

I grew up in a TREE place for first umpteen years,,,,and I don't like the trees or the ferals that moved into the area, and changed it from a lovely place....so my advice is always biased, toward the inner city....

I only like Melb, and only 1-2 suburbs....so I dont really care for all this talk about prices (the one size fits all models worldwide propoganda)....that will always happen in the not so popular suburbs....and who in their right mind would look at some of those places in Sydneys west....the ones always on the news for riots, fights , gangs taking over the streets etc.....they are feral suburbs and always will be....until the gangs kids grow up....has Broadmeadows in Vic changed over the years ???, since the gangs there grew up, and now just  full of oldies on the pension....guess it has, its not in the news so much today.....

Lets renew this conversation in a year or so.....maybe more time....good inner city locations will hold their own and become even more expensive in the future.....the others will recover and provide basic housing....but never compare them to the benefits of the inner cities....world wide


----------



## Go Nuke (9 January 2009)

kincella said:


> gav....I looked at st kilda prices last week...units are very affordable down there atm....around 300.000 or less...plenty to choose from...are you the same gav as the other 2 sites ??? sent a reply to the APF site this morning...but will repeat it here for the others
> 
> might need its own new thread for discussions
> ...................................................................................................
> ...




Um unless you know Gav pretty well...how do you know that $300,000 is _"very affordable"_ for him??

A presumptuous comment if Ive ever read one


----------



## kincella (9 January 2009)

oh come on now....300,000 is the first home buyer range....at 5% interest its 15000 pa  4% =120000.....etc and 30 years to pay off the capital...

mediocre or just ill informed ?


----------



## kincella (10 January 2009)

Interesting to read the negative comments against property as an investment....or is it just an excuse ?
Since less than 10% of the population will ever invest in an IP....90% do not, but 70% of the population are home owners....
copy of a post I made on another site today on the subject
..................................................................................................
just read parts of Jan Sommers 'building wealth in changing times'...it was first released in 1994.....
I did not buy it until 2002, after I had purchased the bulk of my props....and only then because of all the gush surrounding the book.....and to see how her methods compared to my own assumptions....

interesting reading parts of it again....less than 10% of the population invests in property, 
the following is extracts from her book
.........................................................

then there are all the excuses people have for not investing....here are just ten of the main excuses

1. I am afraid to borrow money (the most common)
2. I cannot afford to ( the next most common)
3. waiting for interest rates to go down
4. I might become unemployed
5. waiting for house prices to go down
6. waiting for inflation to go down
7. waiting until I have saved some money
8. too many people in property already
9. waiting for the right time
10, my friend, spouse, uncle, or grandfather don't think its a good investment
*** FEAR of all or any of the above
Human nature
apathy, inertia, laziness, lack of time, lack of confidence in one's own ability to make decisions

90% of the worlds wealth is in the hands of 10% of the population....
that 10% overcome fear,inertia, and lack of confidence, and go and do something about it....

..........................................................
some or all of the above sound familiar to you ???
well most of it comes from the bears .....they all have some excuses or many excuses.....and it comes in the form of the arguments they have against property as an investment......
hence the reason there are so few property bulls....less than 10% of the population invest in property....90% do not...
but 70% of the population buy their own home.....
I think its funny


----------



## numbercruncher (10 January 2009)

Hello Kincella thanks for your 10 mute points, pretty sure i read them in a sales brochure.

Thankyou.

PS. Nice sig "  I hold for 10 years or the mv reaches my sell figure " 

Have you ever held a property for 10 years ?


----------



## tech/a (10 January 2009)

All investments---property included will move form High demand to Consolidation to Little demand.

Understanding how to take advantage of the cycle in which you find yourself with your investment--property or otherwise---will see you investing differently at each point of the cycle.

"Excuses" at various points in a cycle of an investment may well be valid.
Excuses which become *perminent* are and always will be killers of investment.

Just as it is rediculous to be frozen by indecision its just as rediculous to make no decision/s at all!


----------



## prawn_86 (10 January 2009)

Yeh i especially like number 2 "I cannot afford to"

Ever thought that some people actually can't afford to. I know i'm not going to go massively into debt and be struggling to reach re-payments just to "own" a home

EDIT - Well said Tech also


----------



## Go Nuke (10 January 2009)

prawn_86 said:


> Yeh i especially like number 2 "I cannot afford to"
> 
> Ever thought that some people actually can't afford to. I know i'm not going to go massively into debt and be struggling to reach re-payments just to "own" a home
> 
> EDIT - Well said Tech also




+1 to that Prawn!
Some people just dont understand how the other half live.

Some people just cant or dont want to live with the stress associated with all those points listed.


----------



## tech/a (10 January 2009)

> Some people just cant or dont want to live with the stress associated with all those points listed.




You dont have to stress.
Stress only comes from poor planning and lack of understanding.


----------



## Go Nuke (10 January 2009)

kincella said:


> oh come on now....300,000 is the first home buyer range....at 5% interest its 15000 pa  4% =120000.....etc and 30 years to pay off the capital...
> 
> mediocre or just ill informed ?




All Im saying is that we dont know his income level or status etc

Using these figures, I know alot of people that would be spending over 30% of their combined income to repay this...


----------



## kincella (10 January 2009)

??? whoever asked the question have I held prop for more than 10 years.....well the first prop for 30 years....others purchased from 2000-2002,
still hold 1 coming up 9 years....is that close enough....others 6-8 years

sometimes the props have increased so much in the first couple of years 2-3 instead of my 10 year goal...so I sold when they reached the 10 year figure ...even though it may have been held for only 2 years...bought 10 sold half, hold 5


----------



## Bill M (10 January 2009)

Just back from some open for inspections. Very little property beach side available and heaps and heaps of buyers. The agents are screaming that there's not enough stock. Can only mean one thing, up goes prices even more.


----------



## nunthewiser (10 January 2009)

back from some open for inspections. Numerous property beach side available and NO buyers. The agents are screaming that there's not enough BUYERS. Can only mean one thing, DOWN goes prices even more


----------



## nunthewiser (10 January 2009)

excuse my previous post as just makin a point that my post and the other post were just as useless as each other without any verifiable back up

hell im gunna double my house price this year because thats what happened the other year 

avaniceday


----------



## tech/a (10 January 2009)

nunthewiser said:


> back from some open for inspections. Numerous property beach side available and NO buyers. The agents are screaming that there's not enough BUYERS. Can only mean one thing, DOWN goes prices even more





I live on the Espy.
Each Friday I drive along my stretch (4 ks) and count the For Sale signs.
Plus see whats available and how much.
Yesterday 3
Behind is a Main road 5 streets back. 5 for sale

Difference is that the Espy ones last around 3 weeks max.
The others---well some Have been for sale for months.

Quality always goes first.
Particularly in this market.


----------



## kincella (10 January 2009)

in Toorak they would be lucky to last a week.....makes me wonder sometimes...why do the agents bother with the signs.....is it the old idea of just advertising..which works for the agent, rather than the seller ???
I think so, believe a lot of people would have approached the agents looking for properties...well I do that when in buying mode....
the properties sell so quickly down here.....and its not all been by auction, or if it is, they sell prior to auction...
I am talking about lower priced units right on Toorak Rd, and in the lower Toorak areas., under 1 million.....not multi million dollar homes...but the larger multi mills have been changing hands see SOLD props in the realestate web site....
cheers


----------



## Bill M (10 January 2009)

nunthewiser said:


> excuse my previous post as just makin a point that my post and the other post were just as useless as each other without any verifiable back up
> 
> hell im gunna double my house price this year because thats what happened the other year
> 
> avaniceday




I can't give you a link to show a dozen couples going through the same unit as I did but I get your point. In my area there is a chronic shortage of property. 1 bedroom units start at 310K, 35 year old units they are, very hard to get set. The agent said they did some appraisals this week and they are hoping for some to come through. I doubt very much that anything will double this year, however I can't see any worse than going sideways for a while then say 5% growth over the next few years. Anyhow the hardest part right now is finding that property, if I can't find it I will invest elsewhere, cheers.


----------



## Bill M (10 January 2009)

Here is a link out of the Daily Telegrah

Full Story Here

*AUSTRALIANS are more confident investing in property than in shares during 2009, a survey says.*

Many market economists are forecasting the central bank to cut the cash rate to at least 3 per cent by June, 2009.

And the Federal Government's increase in the first home owner's grant is set to stimulate the property market.

"It's (the cash rate) expected to go lower, and that is obviously encouraging to prospective property buyers,'' Mr Kolenda said.

"The increase in the first home owners grant to $14,000 and to $21,000 for buying or building a new home will expire on June 30 this year.

*Only 6 per cent of those surveyed said they would invest in shares, following the Australian All Ordinaries index falling 43 per cent in 2008.*


----------



## numbercruncher (10 January 2009)

kincella said:


> in Toorak they would be lucky to last a week.....makes me wonder sometimes...why do the agents bother with the signs.....is it the old idea of just advertising..which works for the agent, rather than the seller ???




Link ?






http://data1.reiv.com.au/trendchart/default.aspx


----------



## numbercruncher (10 January 2009)

Bill M said:


> And the Federal Government's increase in the first home owner's grant is set to stimulate the property market.





haha they have been saying that since it was increased and NOTHING


Why buy now when prices will be cheaper tomorrow is the attitude that prevails .....


----------



## Julia (10 January 2009)

Bill M said:


> Here is a link out of the Daily Telegrah
> 
> Full Story Here
> 
> ...



Hard to assess the validity of this comment when the total number of respondents surveyed is not supplied.  
I'm not necessarily suggesting that the bias towards/against the sharemarket or property isn't as above, but it's either sloppy research or sloppy reporting.


----------



## kincella (10 January 2009)

Julia.....sloppy ??? ......is it research or reporting...its probably in the reporting.

the group that did the research have over 500 mortgage brokers and support staff in AUS and NZ......
you doubt their numbers, yet it would be quite easy to do a poll with all the clients of the mortgage brokers....
in fact if you go to their website they are conducting a poll on use of the govt handout.....
so it would have been just as easy to do a poll regarding investing in either the property or the stockmarket.....

from a personal point of view, self being a baby boomer, most people I know are either out of the stockmarket never to return, or may return but not for a very long time......they no longer trust the stockmarket, and being a conservative lot....have far more faith in the property market....

however if you are much younger, with 30 or more years to retirement, meaning plenty of time to recover your losses....than you may have the opposite view.....probably picking up 'bargains' now, and or active in the stockmarket....

maybe that group could provide more details regarding the poll, including the age bracket of the respondents....
the stockmarket has cost investors between 50-80% of  value...depending on the stock held............that in itself is a huge deterrent to any investor....

here is their web page link
http://www.loanmarketgroup.com.au/


----------



## MrBurns (10 January 2009)

Bill M said:


> Here is a link out of the Daily Telegrah
> 
> Full Story Here
> 
> ...




Duhhh, would you think everyone would say yes to shares at the moment ? and just because they would feel more comfortable with property doesnt mean they'll actually buy it.

Another useless survey *



			a survey says
		
Click to expand...


*probably taken during the office lunch break among the staff.

Oh it's a survey by a mortage broker LOL how unusual, you know there's another survey by a stock broker that says the opposite. How about that !


----------



## explod (10 January 2009)

> Many market economists are forecasting the central bank to cut the cash rate to at least 3 per cent by June, 2009.




Yeh, most of them, including those leading lights from AMP and CBA have all been wrong in all their forcasts of the last eighteen months.   Why because they want you to keep spending and borrowing so that they can live off the fat of these fees and commissions as you continue to go in and out.



> And the Federal Government's increase in the first home owner's grant is set to stimulate the property market.




Well it has not so far and none of the young ones I know are too excited.



> "It's (the cash rate) expected to go lower, and that is obviously encouraging to prospective property buyers,'' Mr Kolenda said.




It is going lower to encourage the banks, but they are becoming too scared to lend and have certainly only passed small cuts on so far.  As the global economics deteriorate further lending will stop, it is why many businesses are going to the wall, no cash flow between jobs and payment.

Anyone with a bit of a brain would be out of the share market at the moment and for awhile yet, but some of the yields offerred by some stocks, particularly in the food area will soon change that.


----------



## robots (10 January 2009)

hello,

another fantastic day, the streets are buzzing with the Open about to start,

check this number:




hey hey, here we go brothers

since you like median numbers this one might be of interest

thankyou
robots


----------



## Trevor_S (10 January 2009)

numbercruncher said:


> haha they have been saying that since it was increased and NOTHING




??
*First-home buyers to the rescue in Qld*

_Mr Fraser said the state's incentives, along with the federal government's boost to the first-home buyer grant and the Reserve Bank's decision to cut 300 basis points off the official cash rate since September had prompted the huge spike in applications.
_



Bill M said:


> "Only 6 per cent of those surveyed said they would invest in shares, following the Australian All Ordinaries index falling 43 per cent in 2008."




Seems like the time to buy shares then  why..

_"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."_


----------



## robots (10 January 2009)

hello,

another disgrace in the US:

http://www.news.com.au/heraldsun/story/0,21985,24895023-661,00.html

great to see Adrian with some fine comments, this is why this place is different we do things, make changes, show leadership to the rest of the world

its different all right, no 9mm or bullet proof Hummvee to get to the pizza shop in Aus 

thankyou
robots


----------



## Bill M (10 January 2009)

Trevor_S;383676

Seems like the time to buy shares then :D [URL="http://www.nytimes.com/2008/10/17/opinion/17buffett.html" said:
			
		

> why..[/URL]
> 
> _"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."_




Hey Trevor, that's where I am right now. Still thinking of getting more stocks or RE. I have mentioned before STW the ASX 200 ETF is paying a 10% divi right now, hard to let that go and get on the bandwaggon with RE paying about 5%. What I like about RE is the constant, secure rental (Sydney) no corrupt directors and no 43% plunges..... Thinking Thinking....


----------



## kincella (10 January 2009)

the graph defies logic....interest rates were rising.....what happened in March 08 to make it escalate so much ????  a gain of 60%


----------



## robots (10 January 2009)

hello,

i can only speculate but I think it comes down to the residents, just all great run of the mill people putting in for society,

or maybe supply? not many places for sale, who knows man

thankyou
robots


----------



## kincella (10 January 2009)

it was just on the news at 10 at 5.00pm today.....over 5000 have taken the grant since it was announced in late Oct 08...qld had the biggest number of over 2000,,,, etc
so thats over 5000 new home owners...not a bad number....

found a link about QLD and fhog
http://news.theage.com.au/national/firsthome-buyers-to-the-rescue-in-qld-20090110-7dw9.html

geez some posters are such time wasters....mediocracy at work again


----------



## sinner (10 January 2009)

kincella said:


> the graph defies logic....interest rates were rising.....what happened in March 08 to make it escalate so much ????  a gain of 60%




robots was "nice" enough to clip out the site disclaimer stating that the suburb had less than 35 sales for the quarter therefore the readings are "volatile" and probably not representative.


----------



## robots (10 January 2009)

hello,

some would say Sinner that is a very strong reason for the results on the graph,

thanks for highlighting that point, less than 35 sales, silly me

the title still going strong brothers

thankyou
robots


----------



## kincella (10 January 2009)

sinner, I did check that graph against CBA's information...it too did not have enough sales...but whats the other option for suburbs that have too few sales....consistently.....you just have to take it as it is......obviously a low turnover suburb,,,,similar to Toorak
ps..CBA use only loan data to give a report...so if for some reason CBA did not generate loans in a suburb for any reason....than forget it.....however I believe  CBA has the biggest loan book of all 4....and they do not change the figures for CPI or any other reason.... some reports I have seen going back 30 years or more have been changed to reflect now, the CPI costs then....and it makes it harder to substantiate those graphs against other reports of actual prices...who knows what else has been tampered with


----------



## numbercruncher (10 January 2009)

kincella said:


> the graph defies logic....interest rates were rising.....what happened in March 08 to make it escalate so much ????  a gain of 60%





Yes demonstrates the RE market left to self regulation in Oz has seen it become one big fat scam ..... Imagine if the stock markets etc were run in the same non regulated fashion.


----------



## robots (10 January 2009)

hello,

thats right Kincella, you just have to take the results as they are when you consistently have less than 35 sales, that's life man

thats life man, nirvana

and for those who work hard and put in in society the rewards are there, well done to those putting in

thankyou
robots


----------



## grace (10 January 2009)

kincella said:


> .............
> 
> ..........................................................
> some or all of the above sound familiar to you ???
> ...




I am a property bear at present.  I bought my first house at the age of 21 (at 13.5% interest rate I might add).  Paid it off in 3 years.  Bought my second house then, and so on.

But right now, we are nearlly all in cash (own a few shares and a bit of real estate, not much).

Just because we are bears does not mean we don't like investing in property!

Just not the right time yet.....


----------



## Glen48 (10 January 2009)

Come to the Sunshine Coast and save a 100K off in Holidays homes. no competiton FHO's are the only buyers using ATO money.


----------



## numbercruncher (10 January 2009)

moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...





This was the opening post with arguments why " House prices to keep rising for years " .......

All the permabulls agreed with the OP - then medians fell and how many of these reasons are still valid ?

Permabulls pulled some new reasons out of the hat though ....


----------



## noirua (10 January 2009)

Look across the pond and you see the property industry black clouds approaching. Realistic research may not work in the turbulence to come.


----------



## sinner (11 January 2009)

grace said:


> I am a property bear at present.  I bought my first house at the age of 21 (at 13.5% interest rate I might add).  Paid it off in 3 years.  Bought my second house then, and so on.




If you don't mind me asking, what was your personal house price:salary ratio when you bought your first house and what was the avg at the time?

If it took 3 years I assume the ratio must have been >3:1, which is below even the historical average.

Did you use deposit bonds or any similar instruments to buy the house?


----------



## numbercruncher (11 January 2009)

> If it took 3 years I assume the ratio must have been >3:1, which is below even the historical average.




Before the bubble there was plenty of renovators delights at 3:1 (and even less for apartments) , the historical average got you a average house folks.

My first house was 3.5x my salary (above average salary at the time) and it was a really nice house .....


----------



## robots (11 January 2009)

numbercruncher said:


> Before the bubble there was plenty of renovators delights at 3:1 (and even less for apartments) , the historical average got you a average house folks.
> 
> *My first house was 3.5x my salary (above average salary at the time) and it was a really nice house .....*




hello,

and where was the house Number? people today can get the same deal in suburbs across Melbourne

st kilda up 14.8% for Sept08, see the graph bro

thankyou
robots


----------



## robots (11 January 2009)

hello,

and with the anniversary coming up on 15th Feb will be a great time,

money renting rates well down, returns doing well both on capital gain and rental aspect, utopia here in St Kilda man

wonder how the money box crew are going with the trades? ABS stats will be interesting again

thankyou
robots


----------



## numbercruncher (11 January 2009)

More and more people questioning Australias dodgy realestate bodies .....




> How much is your house worth? Who knows?
> 
> Adam Schwab writes:
> 
> ...




http://www.crikey.com.au/Search.html?searchKeyWord=how+much+is+your+house+worth&Author=&YearFrom=0&MonthFrom=0&YearTo=0&MonthTo=0&Section=&SearchTags=&SortField=#simple


----------



## sinner (11 January 2009)

robots said:


> hello,
> 
> and where was the house Number? people today can get the same deal in suburbs across Melbourne




Which people? Where in Melbourne? If we take graces example of buying at 21, indicating most likely single income around average and using the Nov 2007 avg salary calculation of $57,000 (we can round up to $60k if you like) we are talking about $180k max house price.

A quick search on domain and realestate.com.au indicate to me that in Melbourne you aren't getting anything more than a studio apartment for $180,000. I don't know too much about Melbourne RE so did a Sydney search too, you aren't even going to get a kick up the butt for $180,000.

Certainly not a block of land with a house on it or even a 2br apartment unless you are willing to commute 2 hours to work! 

We are talking of offerings <40sqm type studio apartments for 3:1 ratio on the boom-time avg salary at $60k.

Anyone who thinks the Australian RE market will be able to avoid a return to historical norms which has affected every single country which used the wholesale debt market and fractional reserve lending to fuel growth, has their head firmly planted up their ****.

I predict plunging real salaries will widen the ratio even further exacerbating the fall in property by another order of magnitude.



> st kilda up 14.8% for Sept08, see the graph bro
> 
> thankyou
> robots




**** that is really aggravating, the way you keep saying that over and over again when it has already been established that this reading, 14.08% is NOT accurate or reflective of any reality, it is a volatile reading! So I issue you an ASF challenge robots, why don't you go get your house valued, see if you can even find a buyer AT ANY PRICE maybe, then come back and spout your 14.08%.


----------



## numbercruncher (11 January 2009)

robots said:


> hello,
> 
> and where was the house Number? people today can get the same deal in suburbs across Melbourne
> 
> ...





Nice suburb on the GC currently about 8 to 10x median salary .... In Melboune you need to live in Gangland underbelly cops shoot you dead for holding a toothpick central for 3.5 houses .....


Is there a point to you quoting St Kilda 14.8 continuously ?


----------



## robots (11 January 2009)

hello,

you keep forgetting people also have a deposit, I know many dont have $ but some people do

oh, its my right to have prices have at this figure of 3.5x salary, thanks for confirming things are still travelling well on Gold Coast with prices still at 8-10x average salary

well done to those in St Kilda, 14.8% for Sept08 Quarter, awesome results for those putting in for society

another thread confirmed (ala Mythbusters)

thankyou
robots


----------



## kincella (11 January 2009)

quote from ..numbercruncher
................................................................................................
Despite the importance of dwelling assets to many Australians, there is no accurate and transparent body which provides historical price information about property to investors or home-owners. Unlike publicly traded companies (who generally trade on the ASX), price data regarding residential property is generally provided by real estate bodies, such as the Real Estate institute of Victoria or New South Wales. 

As Crikey revealed recently, the accuracy of such data provided by real estate bodies is questionable, being produced and reported by real estate agents who themselves have a significant vested interest in disclosing minimal information and overly positive results
end quote
.....................................................................................................
and compared to the ASX....wearing two hats, a public listed company, and also the regulator of that same market........

to the other poster who disputes the 14.8% gain in st kilda.....

the CBA report shows a gain of 27% for the year....and 10% in the last 6 months....note CBA only uses home loans to compile these records....so if CBA is not the only lender...possibly more sales.....what benefit is it for CBA to misrepresent the figures.....in plenty of other suburbs australia wide, their reports show losses....
conspiracy theorists .....
http://pvg.webcentral.com.au/propertyValueGuideChart.asp


----------



## kincella (11 January 2009)

numbercruncher......it is robots *signature* which states the figure...he does not continually posts it........duuhh!


----------



## tech/a (11 January 2009)

Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.

Click to enlarge


----------



## sinner (11 January 2009)

tech/a said:


> Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.
> 
> Click to enlarge




Hi tech, as I am the one who referenced average wages I can only assume you are accusing me of being the waffler!

I take offence, as I did not just make up this number,

http://www.news.com.au/business/story/0,23636,22763090-462,00.html

this article confirms the exact number I quoted for that time period!

Using the number 40,000 as provided in your chart would indicate even those crappy 30sqm studio inner city "studio apartments" have been pushed beyond or to the high end of 3-5:1 ratio! Or is that waffle too?


----------



## grace (11 January 2009)

sinner said:


> If you don't mind me asking, what was your personal house price:salary ratio when you bought your first house and what was the avg at the time?
> 
> If it took 3 years I assume the ratio must have been >3:1, which is below even the historical average.
> 
> Did you use deposit bonds or any similar instruments to buy the house?




It was 3.28  :  1   (property to salary).   I rented 2 rooms out, so I 
-ve geared 2/3 of it.  This house would have been below the average at the time.  I bought early 90
s.  I sold it 10 years later for the same price I bought it for.  It was also in a better condition when I sold it, than when I bought it too.  So don't tell me that house prices can't go sideways for 10 years!  The market went down through the 90s then it was only just starting to pick up when I sold.  However, within 12 months of my sale, this house had doubled, and now tripled!  I'm not sad, I used the sale proceeds on something else.....  

Just found techs average wages, and it looks like I was 20% above the average wage at the time.

I had saved up a 24% deposit at the time of buying.


----------



## numbercruncher (11 January 2009)

tech/a said:


> Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.
> 
> Click to enlarge





Yes things are much much worse if you use the average rather than the Median as the spruik team insist on doing, forcing the rest of us to use it as the standard measure as well ......


----------



## robots (11 January 2009)

hello,

its all waffle Sinner, from the spruik team and the money box crew

the discussion has been going strong for many years now and its been a pleasure to be part of it,

well done to all in there putting in, St Kilda up 14.8% for units 2008

thankyou
robots


----------



## kincella (11 January 2009)

too many people fixtated by the house wage ratios.......the truth is the disposable income that determines affordablity of anything other than basic living costs.........
here is a chart of house prices...median and FHB prices, with the disposable income figure....note the RH column  house price to FT earnings ratio of 7, but only 5.4 ratio to disposable income...
and FHB paid on average 20,000 less for their homes

I prefer these recent times to anytime prior to the 90's, my cash goes further today with discretionary spending....all that cheap imported stuff from china....so much more competition, so much more choice for consumers
and food prices....imo its so much cheaper today....
and consumers have far more choices in how they spend their money....including the basics of food and clothing..

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## numbercruncher (11 January 2009)

Queensland rocking on .....




> Builders throw in free air conditioning and pools for buyers
> 
> By Anooska Tucker-Evans
> The Courier-Mail
> ...




http://www.news.com.au/story/0,27574,24898018-2,00.html

Wont be long until the 50k freebies becomes 50k discounts instead .....


----------



## Glen48 (11 January 2009)

As I have said before this soon to end boom has nothing to do with house prices rising, one day some one will work out how much they actually rose once the excess credit is taken out. Most likely about 3%.
It is like some kids gets a bankcard with a $20K limit and buys Fish and chips 3 times a day from the same shop, the shop owner notices business has picked up and buys a Merc. One day the bank writes to the kid and wants the money paid back, the kids stops buying food and the shop owner has to sell the Merc.
Multiply that a few billion people and that is what is happening the debt has to be repaid and bailouts won't help.
Japan looks like being the first country to go into a depression.


----------



## MrBurns (11 January 2009)

numbercruncher said:


> Queensland rocking on .....
> 
> 
> 
> ...




Isnt this sort of stuff that got us into trouble in the first place ? We're just going round in circles, ever decreasing.........


----------



## Beej (11 January 2009)

tech/a said:


> Average wages so you can re do your calculations and actually have substance to your postings instead of plain waffle.
> 
> Click to enlarge




Good post! I'll tell my FHB story:

First house bought in 1992, Sydney northern region (Mt Colah) for $182k, with a $30k deposit. At the time I was 23, a couple of years out of uni and earning $35k when I bought the house. Interest rates were over 10%pa.

So, house price to average wage ($22.9k according to previous post) multiple was 7.8.

SYDNEY median house price (1992 = $180k) to average multiple at that time was also 7.8.

House price to my salary multiple was 5.2. Remember I'll say it again as well - interest rates were OVER 10% pa at this time!! Today a higher personal wage/price multiple is available and sensible due to a lower (long term) interest rate and inflation environment, plus as mentioned by Kincella the significant increases in household disposable income less housing costs that have occurred since then.

I paid that mortgage off in 7 years - helped by falling interest rates, rising personal income and also had flatmates at various times that "helped" pay my mortgage off for me 

Financially, the best thing I ever did was buy that house at a young age - set me up for life! Most of my friends took off overseas and wasted all their money at that time. I still traveled heaps and did all that as well, but I waited a couple of years until I was comfortably on the way to paying off that house.

Cheers,

Beej


----------



## Bill M (11 January 2009)

Beej said:


> Financially, the best thing I ever did was buy that house at a young age - set me up for life! Most of my friends took off overseas and wasted all their money at that time. I still traveled heaps and did all that as well, but I waited a couple of years until I was comfortably on the way to paying off that house.
> 
> Cheers,
> 
> Beej




Excellent post, I did pretty much the same thing. You know what, some of my mates are now in their 50's and are still paying rent and blowing their weekly wage. Things really don't change and the same old excuses keep coming up.


----------



## kincella (11 January 2009)

some good sensible posts....
now if any were like myself in the early years, decided to buy a house, internet not invented at that stage.....none of my friends or no- one  I knew ever mentioned any ratios, the only thing of interest was 'interest rates'.

Our goal was to buy the house...after looking for 6 months, we just got tired of looking and bought, forget about interest rates, nothing we could do about it.
Sure some will say the house was cheap compared to today, but the cost of living in those days was higher, no cheap imports from china for competition ....and it was as hard as could be on our wages.  We bought out in the sticks, it was all we could afford , and then paid the extra in petrol to travel to work etc...
it was not a dream home, waited years and then upgraded closer to the city,

home buying is like a forced saving plan, you do the time, but unlike a bank, years later when you cash it in....you get a nice big tax free bonus
cheers


----------



## Julia (11 January 2009)

kincella said:


> Julia.....sloppy ??? ......is it research or reporting...its probably in the reporting.
> 
> the group that did the research have over 500 mortgage brokers and support staff in AUS and NZ......
> you doubt their numbers, yet it would be quite easy to do a poll with all the clients of the mortgage brokers....



Yes, agree it was probably in the reporting.
I made it clear that I wasn't necessarily questioning the claim.
I read Bill's post with the extract, then used the link to read the full article.
Nowhere did it quote the numbers involved, making the article fairly meaningless.  
For all we know someone asked a couple of dozen people, in which case the results would not be statistically valid.



> in fact if you go to their website they are conducting a poll on use of the govt handout.....
> so it would have been just as easy to do a poll regarding investing in either the property or the stockmarket.....



That's fine.  Doesn't alter my point.



> from a personal point of view, self being a baby boomer, most people I know are either out of the stockmarket never to return, or may return but not for a very long time......they no longer trust the stockmarket, and being a conservative lot....have far more faith in the property market....



I'm also a baby boomer and have benefited from both property and stock market.  I don't have any bias towards one or the other.  
"Trust the stockmarket"?  What does that mean?  The market is the market, it doesn't make promises to anyone.  Up to individuals  to make their own judgements according to market conditions both in shares and property, surely?
I've been out of shares for the last year, but will happily re-enter when there is some clear return of confidence.

Some people are just more comfortable with property than shares and vice versa.  Doesn't make either right or wrong.





> however if you are much younger, with 30 or more years to retirement, meaning plenty of time to recover your losses....than you may have the opposite view.....probably picking up 'bargains' now, and or active in the stockmarket....



Yes, agree completely.  The time frame makes all the difference.



> maybe that group could provide more details regarding the poll, including the age bracket of the respondents....
> the stockmarket has cost investors between 50-80% of  value...depending on the stock held............that in itself is a huge deterrent to any investor..



..
Sorry, I don't mean to be having a go at you, but the market itself hasn't cost investors anything.   If we've lost money, on the whole (barring non-disclosure etc) it's our own judgement that has cost us.


----------



## Glen48 (11 January 2009)

Buying a house in the 50-70 was ok because you couldn't buy a Plasma TV, Spa, AC, pool, carpets, SUV. PC's etc and get deeper in to debt this is what we have to come back to before things return to normal.
Tell me just suppose house prices were going drop to say $20K instead of 200K and you knew it was going to happen  what would you do?????


----------



## Go Nuke (11 January 2009)

sinner said:


> Hi tech, as I am the one who referenced average wages I can only assume you are accusing me of being the waffler!
> 
> I take offence, as I did not just make up this number,
> 
> ...




Ah the good old "average income of $57K rubbish...gota love that one

This bit is so true though.. ("The average pay packet might be $57,000, but very few people are actually earning that. it is skewed because of the massive pay packets of the upper end of the scale which hide the fact that most people are earning between $35,000 to $40,000.")


Honestly, I can only think of about 2 or 3 people who earn more than that. My dad and my g/f's dad rofl
Maybe it says somthing about my social circles, but thats reality.

Im a tradie (boilermaker, now maintenace co ordinator) working in Brisbane and I earn under $55K. And have been informed that we wont be getting a wage review for 2008!

Now I'd say that between myself and my partner we will be looking at spending about nearly 50% of our income in order to buy a house this year just to live in the outer suburbs of Brisbane.

But there has been some really great reading on this thread and its good to hear and learn how others have done it in the past.

As Grace said, the property market can go sideways for years, but I think it will have to drop a bit before it can continue up


----------



## So_Cynical (11 January 2009)

sinner said:


> Which people? Where in Melbourne? If we take graces example of buying at 21, indicating most likely single income around average and using the Nov 2007 avg salary calculation of $57,000




There is a lot lot of "average" people in Melbourne not making anywhere near 60K


----------



## Nyden (11 January 2009)

So_Cynical said:


> There is a lot lot of "average" people in Melbourne not making anywhere near 60K




I second that. I know quite a few people (a couple are nearly 30) earning something in the low 40s ...

Average wages aren't actually average wages  Someone should calculate the average wages of ordinary folk ... and not include the 100k+ salaries. We would see some real figures then.


----------



## tech/a (11 January 2009)

Things are no different to when I bought my first home 32 yrs ago.

Then I wasnt on the "Average wage"
Then as most younger people these days I combined my wage with my partners to buy my first home.

My daughter did exactly this 18 mths ago.

and this happened/is happening



> helped by falling interest rates, rising personal income and also had flatmates at various times that "helped" pay my mortgage off for me




Right at "The so called Top"
House bought for $270K houses in the suburb now $320K
So has a lower mortgage than those buying there NOW.


----------



## numbercruncher (11 January 2009)

> TROTT PARK$260,000-$280,000 Bedrooms3 Bathrooms1 Car Spaces2




http://www.realestate.com.au/cgi-bin/rsearch?id=trott+park&a=qfp&cu=fn-rea&t=res


----------



## theasxgorilla (11 January 2009)

Nyden said:


> I second that. I know quite a few people (a couple are nearly 30) earning something in the low 40s ...
> 
> Average wages aren't actually average wages  Someone should calculate the average wages of ordinary folk ... and not include the 100k+ salaries. We would see some real figures then.




A couple both earning in the low 40s becomes almost 100k.  Account for the fact that two people living together live much more cheaply than one and you have a growing case for not assuming that "ordinary" people are going out and buying "median" houses on "average" incomes.


----------



## Nyden (11 January 2009)

theasxgorilla said:


> A couple both earning in the low 40s becomes almost 100k.  Account for the fact that two people living together live much more cheaply than one and you have a growing case for not assuming that "ordinary" people are going out and buying "median" houses on "average" incomes.




Ah, no. I should have been more clear - I meant a couple of people, not a couple. One of them is in a relationship, but their partner is a uni student - and the other is single I believe.

However, for arguments sake - let's assume a couple is earning $85,000 together (where do you get 100 from? I said low 40s, not mid 40s) ... after tax, just how much are they actually earning - and what's disposable?

Lest we forget, that money (after tax) has to feed 2 (potentially 3 or more, if children are also involved) people, clothe 2 people, transport 2 people, and well - you get the point.

Is it a requirement that one be in a couple in order to secure financial freedom? Do people need a partner in order to have a happy retirement, and to keep a roof over their heads? Either way, I would never take out a 30 year loan. That's insanity, and frankly I have no intent on being a debt slave for the rest of my life.

Oh, and I do intend on purchasing a home. It will be a small house though, and if all goes to plan; it will be paid off before I turn 26. It'll be raman noodles for tea though


----------



## robots (11 January 2009)

tech/a said:


> Things are no different to when I bought my first home 32 yrs ago.
> 
> Then I wasnt on the "Average wage"
> Then as most younger people these days I combined my wage with my partners to buy my first home.
> ...




hello,

same here Tech, no different today

sideways, upwards, downwards who knows but with principle and interest getting paid off life is just rolling on man,

2039 is just around the corner and I hope people are thinking about it

what a great day

thankyou
robots


----------



## roofa (11 January 2009)

Go Nuke said:


> Ah the good old "average income of $57K rubbish...gota love that one
> 
> This bit is so true though.. ("The average pay packet might be $57,000, but very few people are actually earning that. it is skewed because of the massive pay packets of the upper end of the scale which hide the fact that most people are earning between $35,000 to $40,000.")




I think it might also depend on age groups etc, but I would think that only two mates out of my nearest ten would be on less than 60k. Just to add another perspective on it.


----------



## knocker (11 January 2009)

roofa said:


> Go Nuke said:
> 
> 
> > Ah the good old "average income of $57K rubbish...gota love that one
> ...




Sounds rather elitist given you live in Camberwell.


----------



## Beej (11 January 2009)

Nyden said:


> Ah, no. I should have been more clear - I meant a couple of people, not a couple. One of them is in a relationship, but their partner is a uni student - and the other is single I believe.
> 
> However, for arguments sake - let's assume a couple is earning $85,000 together (where do you get 100 from? I said low 40s, not mid 40s) ... after tax, just how much are they actually earning - and what's disposable?




$85k combined income would leave about $69.5k after tax, assuming equal proportions (from ATO tax calculator FY2008). Based on my own experience and budgets etc, a couple can live comfortably with an annual spend of $40k-$45k pa (not counting housing/investment etc related expenditure). That's of course if they don't waste money, have say one car (2nd hand owned outright), no credit card debts etc etc.

So your $85k couple could actually have a good $25k-$30k pa disposable income to put towards a mortgage if they so choose, which could fund a $350k-$400k mortgage comfortably with some margin and without too many worries. Add a deposit saved over a few years and that couple should be able to spend up to $400-$450k-ish for a first house, which would buy something reasonable in any AU capital city.

And that's without even getting into the whole is the average wage really the average wage argument? Which by the way of course it is! I love how everyone here seems to think they have more statistical expertise than the teams of people that produce this data at the ABS! 



> Either way, I would never take out a 30 year loan. That's insanity, and frankly I have no intent on being a debt slave for the rest of my life.




You are looking at it the wrong way! A 30 year loan only really exists for the time it takes to pay off! I have had several "30 year loans" and paid them off so they weren't really 30 year loans were they?? Get it?



> Oh, and I do intend on purchasing a home. It will be a small house though, and if all goes to plan; it will be paid off before I turn 26. It'll be raman noodles for tea though




Well that's a very sensible plan and I have no doubt will set you up on the road to true financial freedom in the long run! 

Cheers,

Beej


----------



## roofa (11 January 2009)

knocker said:


> roofa said:
> 
> 
> > Sounds rather elitist given you live in Camberwell.
> ...


----------



## Go Nuke (11 January 2009)

Beej said:


> $85k combined income would leave about $69.5k after tax, assuming equal proportions (from ATO tax calculator FY2008). Based on my own experience and budgets etc, a couple can live comfortably with an annual spend of $40k-$45k pa (not counting housing/investment etc related expenditure). That's of course if they don't waste money, have say one car (2nd hand owned outright), no credit card debts etc etc.
> 
> So your $85k couple could actually have a good $25k-$30k pa disposable income to put towards a mortgage if they so choose, which could fund a $350k-$400k mortgage comfortably with some margin and without too many worries. Add a deposit saved over a few years and that couple should be able to spend up to $400-$450k-ish for a first house, which would buy something reasonable in any AU capital city.
> 
> ...



Wow are you kidding?
A couple on 85k a year could afford the repayments on a $400k property? Easily?

Im not near a morgage calculator but im sure that would be what $650+ per week in repayments?
Thats a huge chunk of the take home income.

Id be happy to eat baked beans on toast but not sure about the girlfriend 

Just turned 30 so need to do my bit and think about supporting the aging generation with kids after the house :/


----------



## Go Nuke (11 January 2009)

Keep in mind Beej, those trying to save for a deposit on thier own home have been forking out increasing rents..which of course wont come down now.
Robots could remind us of that


----------



## roofa (11 January 2009)

Go Nuke said:


> Wow are you kidding?
> A couple on 85k a year could afford the repayments on a $400k property? Easily?
> 
> Im not near a morgage calculator but im sure that would be what $650+ per week in repayments?
> ...





$2400 per month repayment @ 6% for 400K over 30 Years.
Or $555 per week.


----------



## Glen48 (11 January 2009)

Rents will come down because the true believers thinking that house prices double every 7 yrs ( no evidence anywhere) will want to hang on their homes and wait for the next boom so they will move out and live  back with parents etc and rent out their property.


----------



## theasxgorilla (12 January 2009)

Beej said:


> You are looking at it the wrong way! A 30 year loan only really exists for the time it takes to pay off! I have had several "30 year loans" and paid them off so they weren't really 30 year loans were they?? Get it?




Whether it's a right or wrong way of looking at it depends of course on your circumstance.  I have an interest only loan for 50 years.  In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.

I rent the money to control the asset...on terms that satisfy me.  Nothing more, nothing less.  I have insurances to protect my earned income stream, so I have no pressing need to pay it off.  And if I did amortise then the amount that I can claim a tax deduction against is reduced each month.


----------



## theasxgorilla (12 January 2009)

roofa said:


> $2400 per month repayment @ 6% for 400K over 30 Years.
> Or $555 per week.




Or interest only on a 400K property, with a 360K mortgage, assuming our model couple did the "right" thing and saved a 10% deposit...you're looking at $1,800 per month.

A little over $200 per person per month, or 25% of each person's gross income.  Unreasonable??


----------



## GumbyLearner (12 January 2009)

theasxgorilla said:


> In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.




What are your projections for inflation long-term asx?


----------



## theasxgorilla (12 January 2009)

GumbyLearner said:


> What are your projections for inflation long-term asx?




It will progressively erode away the relative level of any 2009 debt.  

IMO it behoves one to factor in 3% average inflation over the next 35 years.  You can use Excel to calculate the positive effect it will have on your debt levels.  The wrap up is that that adjusted for inflation what most people owe on their houses in 2009 will become the least of their worries in the coming decades.

Alas what inflation giveth it also taketh away, and so you must factor the same inflation rates into your retirement saving projections.  Most people will have a lot less in retirement savings than they need because they're not thinking in 2045 dollars.


----------



## tech/a (12 January 2009)

theasxgorilla said:


> It will progressively erode away the relative level of any 2009 debt.
> 
> IMO it behoves one to factor in 3% average inflation over the next 35 years.  You can use Excel to calculate the positive effect it will have on your debt levels.  The wrap up is that that adjusted for inflation what most people owe on their houses in 2009 will become the least of their worries in the coming decades.
> 
> Alas what inflation giveth it also taketh away, and so you must factor the same inflation rates into your retirement saving projections.  Most people will have a lot less in retirement savings than they need because they're not thinking in 2045 dollars.




There is *much* to be gained by investigating ASX's comments above.


----------



## roofa (12 January 2009)

theasxgorilla said:


> Whether it's a right or wrong way of looking at it depends of course on your circumstance.  I have an interest only loan for 50 years.  In spite of recent projections for deflation in the short to medium term, anybody want to bet on what inflation does to the relative value of my mortgage in two decades, let alone five.
> 
> I rent the money to control the asset...on terms that satisfy me.  Nothing more, nothing less.  I have insurances to protect my earned income stream, so I have no pressing need to pay it off.  And if I did amortise then the amount that I can claim a tax deduction against is reduced each month.




The Bank would love you, 50 Years @ interest only.


----------



## theasxgorilla (12 January 2009)

roofa said:


> The Bank would love you, 50 Years @ interest only.




I think they've got more pressing issues right now.  They're one of the ones that found themselves in dire straits last year.  Maybe they were too generous to customers like me?  And now the tax payer must come to their (my) rescue.  

One can presume all kinds of things.  Many of the things you might presume are incidental though.  Financing is a means to an end, it's not the end.


----------



## numbercruncher (12 January 2009)

Speaking of generous banks, there is now a chance in the UK that some mortgages will PAY interest !! confused ?? read on .....




> The latest fall in interest rates, and its knock-on effect on mortgage rates, has raised the interesting possibility that some lenders may soon have to start paying interest to some of their mortgage customers.
> 
> These are the ones who, in the course of 2007 and even into last year, took out tracker deals that specified the interest rate would be at a margin below the Bank of England's base rate.




http://news.bbc.co.uk/2/hi/business/7819647.stm

Brings a new meaning to positively geared !!


----------



## Beej (12 January 2009)

roofa said:


> $2400 per month repayment @ 6% for 400K over 30 Years.
> Or $555 per week.




And that's principle and interest. Interest component of that is $460/week, or about 28% of their take home income. Many of the people you are talking about would already be paying close to that or more in rent each week. 



theasxgorilla said:


> Or interest only on a 400K property, with a 360K mortgage, assuming our model couple did the "right" thing and saved a 10% deposit...you're looking at $1,800 per month.
> 
> A little over $200 per person per month, or 25% of each person's gross income.  Unreasonable??




You see - asxgorilla get's it!  Although I think he meant $200/WEEK per person there  Still totally doable, and that's about 24% of their weekly take home.

I also second asx's comments re having a good think about inflation and how it relates to borrowing money for a house vs paying rent in the long term.

Cheers,

Beej


----------



## numbercruncher (12 January 2009)

Nice to see some legit debate coming from the permas ....

Yes low interest rates are wonderful, will you all survive if they double ?

But it sure does seem like we will Eventually get Inflation ....

Not to mention loads of unemployment and other interesting things ....


----------



## theasxgorilla (12 January 2009)

Beej said:


> You see - asxgorilla get's it!  Although I think he meant $200/WEEK per person there  Still totally doable, and that's about 24% of their weekly take home.




Indeed I did, sorry about that.


----------



## numbercruncher (12 January 2009)

60m pesky Poms fit in an area the size of Victoria and this was the result for 08'




> House prices 'fell 15.9% in 2008'
> 
> House prices fell by 15.9% last year, according to the latest survey by the Nationwide building society.
> 
> ...




http://news.bbc.co.uk/2/hi/business/7812108.stm

I bet its similar here but hidden by the b/s artists .....


----------



## kincella (12 January 2009)

why not factor in a cheaper property to begin with...I understood the 300.000 was the figure most used as a guide for first home buyers.....interest rates at 4% = 1000.00pm then add say 500 pm capital/loan repayment....

there are houses on the outskirts of Melb for around 250,000, near the big new freeways...1/2 hour to the city, faster travel to where ever they need to go for work.....

and how much are they paying in rent for a year while waiting for prices to come down ???? 300pw is around 15,000 a year...so wait for another 10% drop in house prices from 330.000 to 300,000 saves 30,000.....in the meantime spending 15,000 on rent.....
so saved 15,000 first year....

interest rates are coming down....and you could probably lock in for 5 years

the next 6 months, while govt panicks should be as good a time as any to set yourself with low rates.....


----------



## gfresh (12 January 2009)

Every city is different in terms of affordability. To me Melbourne is very affordable as you go further out, and has defined levels .. but it's quite different or Brisbane at least where it is very flat pricing wise (very little under $300k). 

I have already done these sums, which I've posted here in the past, and there is no real reason to buy short-term with any immediacy, except to get set up for later on. For the moment, 20% deposit in bank earns you interest (even if poor it's a couple of $k). Say rent $300/wk x 52 = $15600. For mortgage you're paying interest on $300k or however much @ 6% = approx $18000... plus add approx $1500 + $1500 for rates & body corp .. so $21k. So I wouldn't be seeing at as you are saving $15k vs renting.. but glass half full/half empty sort of thing I guess. 

I will be buying later this year, but it's not because of any short-term saving. 

I wish people would stop throwing in these 4% interest rates as if they were for the life of the loan..  it is not the longer term average, and eventually, unless people they go fixed (and they won't get 4% fixed for 5+ years), they'll be back at closer to 7.5% which has been the average for the last 20 years.


----------



## Beej (12 January 2009)

numbercruncher said:


> I bet its similar here but hidden by the b/s artists .....




You wish, but I think your bet is wrong! Can't wait for the final 08 quarterly stats to come out and prove this once and for all.

It's funny how the UK market peaked at exactly the same time as ours (Oct 07), and yet the bears all argue that our "crash" is still coming because we are 12-18 months behind the Poms? Yet our stock market tanked at the exact time as theirs as well??  And the Sydney property boom actually already finished way back in 2004? You can't have it both ways, and in trying to do so they all fail to recognise the resiliency of the residential property market over here.



gfresh said:


> Every city is different in terms of affordability. To me Melbourne is very affordable as you go further out, and has defined levels .. but it's quite different or Brisbane at least where it is very flat pricing wise (very little under $300k).




Sydney has a very broad market as well.



> I will be buying later this year, but it's not because of any short-term saving.
> 
> I wish people would stop throwing in these 4% interest rates as if they were for the life of the loan..  it is not the longer term average, and eventually, unless people they go fixed (and they won't get 4% fixed for 5+ years), they'll be back at closer to 7.5% which has been the average for the last 20 years.




I always use 7.5% in calcs/projections and allow for 10%.

As for buying, you probably want/need to buy for lifestyle and/or circumstance reasons, which is fine, but remember most potential buyers will be in the same boat. The current lower buyer numbers (because everyone's scared by reading forums like this one too much!) are sowing the "demand" seeds for the future price increases, given that at the same time supply is falling as well (demonstrated by declining falling new residential building approvals).

Cheers,

Beej


----------



## kincella (12 January 2009)

gfresh...you wish people would stop using 4%....well there are loans on offer now for 4% fixed for a year, and others at 5.3% fixed for 3 years....add another big rate cut of 1% and you will find a 4% fixed for probably 5 years....
it makes a big difference to a 7.5 rate

the other poster that uses a 7.5% rate is a good idea....and pay off the extra saved (5% instead of 7.5%) into the loan balance.........

nothing is going to change the world crisis in a year, in fact I believe it will get worse....some euphoria for awhile with the new president....he will not be able to change anything....implementing same old print money to bail out mates thingy....and our current govt is still in denial.....

since none of the govts are looking at fixing the problem that created the mess in the beginning....I am confident we could have 7-10 years of low rates,
a window of opportunity this year......probable we will not see the likes of it for another 20 years....


----------



## nomore4s (12 January 2009)

kincella said:


> nothing is going to change the world crisis in a year, in fact I believe it will get worse....some euphoria for awhile with the new president....he will not be able to change anything....implementing same old print money to bail out mates thingy....and our current govt is still in denial.....




But this won't have an affect on house prices in Aust?


----------



## gfresh (12 January 2009)

If rates go to 5.5% fixed for 5 years I will be quite surprised, but also happy to take up the offer .. however if they do offer these rates surely it indicates the banks think we have at least 5 years of rates below this, they won't want to shoot themselves in the foot. 

Lower rates are of course great for making a good dent in the principal for the first few years. 

Surely you know the two go hand in hand though? soon as there is any form of housing recovery, rates will be raised accordingly. If rates are kept low, it means there will be a continued malaise in the housing market (and probably economy in general), and house prices are likely to stay flat.

The reason I said that is that just read it a lot (on other forums too), the general impression that these rates are forever, and seem to be basing some sums such as cash flow neutral only on the now.. if so could be a few overstretched borrowers when rates go back up to 7/8/9%, of which could happen quickly as all the fresh cash printed to fix the global economy has to be sucked out again quickly to halt massive inflation. Not coincidentally I think that may be when most of the lowest of the fixed rates will end. 

If some borrowers found it difficult jumping from say 4.5% to 7%, it would be funny in a way, as that is the period we just came out of - how memories are short.


----------



## kincella (12 January 2009)

high interest rates means lower house prices.....hence the damage when rates rose from 7-10% in the past year.........

low rates keep house prices on an even keel....the affordability factor....

the banks give you a clue when they offer 5.3% for 3 years fixed.....but no longer at the moment....I think the 10 year rate is 7.2

if banks had 5.3 Fixed for 10 years now..and they the banks had it right,,,means they expect property to go nowhere for 10 years...

there is a hyperthetical applied for first home buyers.....a 200,000 loan at 10% = cost 20,000 pa...so that is all they are prepared to pay (2 incomes)

....rates go down, they can spend more so it becomes 300,000 at 7% = 21,000....
it all comes down to a figure they are prepared to spend on housing...low rates can buy more, high rates the prices drop
cheers


----------



## numbercruncher (12 January 2009)

> THE decline in the number of job advertisements in Australia accelerated in December and is now at recessionary levels.




http://www.theaustralian.news.com.au/business/story/0,28124,24900904-5018001,00.html


No use denying it prices and tanking and jobs vanishing .....


----------



## SBH (12 January 2009)

moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...




From the start of this thread in february!
Heres how these points look now.

a) limited supply and increasing demand (immigration)

Building approvals off the cliff. If there is limited supply we should be seeing a rental price surge right now. Its not happening. Immigration tap keeps pouring as a big unsustainable method our government uses to artificially increase consumption in our economy.. might not be able to last when jobs get lost.

b) increasing building costs of new homes ripples through to all housing

Building costs slashed. See NSW government reductions and FHB grants for new construction. Cost of materials through the floor, same with labour. Tradies must be desperate for jobs right now with building approvals so low.

c) increasing minimum expectations (McMansions)

Probably no longer as big when you are worried about unemployment and defaulting on your mortgage. Just one bathroom will be fine.

d) increasing wealth trickling down from mining boom

Mining boom over. Underemployed miners to offload properties?

e) increasing cost of capital (interest rates)

Yes capital costs have increased! Isnt this a negative for house prices? Interest rates are down in the RBAs panic... but banks cant keep them down forever

f) increasing wage pressure

non existent

So why havent we crashed?? I think there needs to be another point....
g) public sentiment that property is always a good investment
Yep this is one of the very few things left holding property up. Our media being more biased than any country to RE spruiking is a big factor here.


----------



## robots (12 January 2009)

hello,

yes SBH, i think Bill M might have raised that issue many many months ago

another fantastic day in this country, sunshine, fresh air in all its glory

any questions fire away there are plenty here to help

thankyou
robots


----------



## lioness (12 January 2009)

kincella said:


> high interest rates means lower house prices.....hence the damage when rates rose from 7-10% in the past year.........
> 
> low rates keep house prices on an even keel....the affordability factor....
> 
> ...





Get up with the program fellas, you can now get a 3 year fixed rate from Westpac for 4.99%.

Now after the RBA cuts rates another 1-2% by June 09, you will easily get 4.5% for 5 years and I will take it.


----------



## Glen48 (12 January 2009)

Rent or BUY?

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ref=patrick.net


----------



## Lancelot (12 January 2009)

lioness said:


> Get up with the program fellas, you can now get a 3 year fixed rate from Westpac for 4.99%.
> 
> Now after the RBA cuts rates another 1-2% by June 09, you will easily get 4.5% for 5 years and I will take it.




Linky please

I thought that had run out a month ago, have they started it up again?

I'll get me some more if they have


----------



## 2BAD4U (12 January 2009)

lioness said:


> Get up with the program fellas, you can now get a 3 year fixed rate from Westpac for 4.99%.
> 
> Now after the RBA cuts rates another 1-2% by June 09, you will easily get 4.5% for 5 years and I will take it.




That's a bit ambitious. Current rate for 3 years is 5.69% with a potential 0.20% discount on their Premier Advantage package making the rate 5.49%.  I think you are looking at the 0.7% discount on the Premier Advantage package but this only applies to variable rate loans.

And, don't forget the annual and monthly fees making the comparison rate 6.69%.


----------



## Lancelot (12 January 2009)

lioness said:


> Get up with the program fellas, you can now get a 3 year fixed rate from Westpac for 4.99%.
> 
> Now after the RBA cuts rates another 1-2% by June 09, you will easily get 4.5% for 5 years and I will take it.






2BAD4U said:


> That's a bit ambitious. Current rate for 3 years is 5.69% with a potential 0.20% discount on their Premier Advantage package making the rate 5.49%.  I think you are looking at the 0.7% discount on the Premier Advantage package but this only applies to variable rate loans.
> 
> And, don't forget the annual and monthly fees making the comparison rate 6.69%.




No, they did run the 4.99%, I got some locked on it, but as of last time I looked a few days back they have stopped doing it


----------



## robots (12 January 2009)

Glen48 said:


> Rent or BUY?
> 
> http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ref=patrick.net




hello,

great question Glen48 and thanks for the fantastic contributions over the past months, superb effort man

either scenario is very very good as long as the discipline in both paths is adhered too,

the suitcase crew will no doubt enjoy the rent technique and others will enjoy the buy technique, a lot of it comes down to being a saver

as Schiffie says we have to save, save and save, isnt that right Number?

thankyou
robots


----------



## Glen48 (12 January 2009)

Saving is the word Robots, think how much you can save by not buying a house until the recession ends?


----------



## robots (12 January 2009)

Glen48 said:


> Saving is the word Robots, think how much you can save by not buying a house until the recession ends?




hello,

heaps Glen48 if you have a job, hahahaha

isnt that how it goes? great stuff

oh, st kilda up 14.8% for the Sept08 Quarter in the recession, crikey whats going to happen to St Kilda when the recession ends if its pulling those results during the recession

thankyou
robots


----------



## Beej (12 January 2009)

Glen48 said:


> Rent or BUY?
> 
> http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ref=patrick.net




Just be careful to "tune" the advanced settings on that correctly for our situation in Oz as it has a lot of US defaults in it like very high property taxes and capital gains tax on the sale of the family home.... Also default is VERY high selling costs, maintenance and renovation, insurance costs high etc etc.....

EDIT: PS, I crunched the numbers on my current PPOR using correct/actual parameters, and even with only 1% long term capital growth I am in front after 6 years by owning rather than renting. If the long term capital appreciation is 5% (which is not much more than inflation) it's a no brainer and owning puts me ahead pretty much from day 1. Even 3% appreciation put's me ahead after 3 years.

Cheers,

Beej


----------



## lioness (12 January 2009)

Lancelot said:


> No, they did run the 4.99%, I got some locked on it, but as of last time I looked a few days back they have stopped doing it




Fair enough if it has stopped, but it won't be the last offer or the lowest, they will come in he next 6 months.


----------



## robots (13 January 2009)

hello,

what a fantastic day, mid 30's, plenty at the beach

great to see St Kilda on the Ch 7 news, I can see why it got +14.8% for Sept 08 Quarter, fantastic

this recession is awesome, 

thankyou
robots


----------



## numbercruncher (14 January 2009)

Dont we have a nth beaches permabull in this thread ?


Heres some confirmation that the market is smokin' .....




> AS PRICES in Sydney's prestige suburbs spiral down, a question prevails: will 2009 be a bear year or have the prices dropped enough to prompt a bull run?
> 
> Australian Property Monitors economist Liam O'Hara is a "bear for the short-term", predicting further falls of up to 14 per cent in areas such as Bondi, Mosman and Palm Beach, which come on top of steep declines last year.
> 
> Preliminary figures from APM confirm the median house price in Palm Beach fell from $2,512,500 in the year to December 2007, to $2 million in December 2008 - a 20.4 per cent drop. Mosman dropped from a median of $1.2 million to $865,000 - a fall of 27.9 per cent.




http://www.smh.com.au/news/national/sydney-property-predictions-for-2009/2009/01/03/1230681809451.html


----------



## kincella (14 January 2009)

regardless...I like this quote from Jack Miller......The best way to become a millionaire, is to borrow a million dollars and have your tenants/renters pay it off....
what happened to the old system for investment...you split your investments into 3 asset classes, a third into each...cash, shares and realestate.....unlikely all 3 will rise or fall at the same time..... 

currently shares have fallen, cash rates going down, and realestate.....holding its own.....or showing growth in some areas.....


----------



## kincella (14 January 2009)

here are some charts covering 30 countries world wide....quarter by quarter coverage.....note some countries have growth, and others minimal falls..

seems like the US follows AUS, not vice versa....so if you are watching the US and expecting AUS to follow...its just not happening

.....apart from Slovakia, and the Ukraine...over 20%.drops..or the case/schiller report US 16.55, there is no 30-40% drops.....
the case schiller report is out of whack with other US reports...I wonder why ? is it flawed !

click on the alpha list to find graphs for each country....
this is a summary

Aus peaked in 2003 at 15, bottomed 2005 at 0, rose up to 10 in 06/07...back to 0 in 2008
UK peaked 2003 at 20, bottomed 2005 at 0, now -15 in 08
US peaked 2005 at 9, bottomed / been falling ever since to -9 (Office of Federal Housing report)*****
****note how the US did not peak until 2005, the opposite of AUS...we bottomed 2005, AUS peaked 2003, the US bottomed that year......
I guess this is where the theory comes from...US follows AUS in housing...not vice versa


Ukraine to US charts
http://www.globalpropertyguide.com/real-estate-house-prices/U
http://www.globalpropertyguide.com/house-prices-indices/House-price-changes-year-to-end-Q3-2008


----------



## Beej (14 January 2009)

numbercruncher said:


> Dont we have a nth beaches permabull in this thread ?
> 
> 
> Heres some confirmation that the market is smokin' .....
> ...




As always stated in the disclaimers around such data you have to be careful - these are VERY expensive suburbs with houses that you would not believe in many cases. I can tell you for certain that in the case of Mosman the MEDIAN is down because the top end property ($2.5M+) is just not selling much, but most sub $2M property is being snapped up like hot cakes - thus the median is lower due to the lower end property for that area selling while the higher end is not. 

So really you can't use the prestige suburbs like Mosman, Palm Beach etc as a barometer of the whole market - plus the median stats can be easily skewed due to what I described above anyway. In fact if you look at lower priced and mid range Sydney suburbs which represent the MAJORITY of Sydney property turn-over, their prices are holding up extremely well and in many cases grew last year.

Of course this means there may well be opportunities to snap up a really expensive house at a big discount if the seller say is a Babcock and Brown exec with a huge margin loan to repay that MUST sell, and you have a lazy 3 or 4 mill lying around. But go out and actually try and do this, those deals are actually few and far between, and still stratospheric prices for the ordinary folks, but they certainly make good headlines!

EDIT: PS, I think that article might have quoted Bondi median price stats as Mosman in error as well!

Cheers,

Beej


----------



## numbercruncher (14 January 2009)

Beej said:


> but most sub $2M property is being snapped up like hot cakes -





Link ... link ... link link link link ????


----------



## numbercruncher (14 January 2009)

robots said:


> hello,
> 
> what a fantastic day, mid 30's, plenty at the beach
> 
> ...






Good stuff robi, you still gettin your hands dirty or takin' it easy these days ?


----------



## Beej (14 January 2009)

numbercruncher said:


> Link ... link ... link link link link ????




http://www.domain.com.au/public/SalesHistory.aspx?mode=research&postcode=2088&suburb=Mosman

This is a good start. As you can see not a lot of turnover in the top end property in this market. There are other sales of property in Mosman I am aware of (from looking at them) not in that list as well. The free website stuff is a bit hit and miss - if you really want to know purchase a full property sales report for the area! Or get out there and see for yourself. 

You have to put all of the pieces of the puzzle together Mr NC! I guess it's hard to know what's actually going on over here in AUs most dynamic city and biggest residential property market with minimal effort and a computer on the other side of the country......

Beej


----------



## amy997 (14 January 2009)

I live Mosman an definitely do not agree that sub 2.5M places are "being snapped up like hot cakes". 

Off the top of my head i could think of at least 20 places in that category that i walk past regularly and take note of that have been on the market for over 6 months, some of them for the past year. I can also think of 3 new developments where they are still trying to sell apartments 6 months-1 year after completion. 

I have also noticed that the average price for an apartment when one is sold these days is around 100,000 cheaper than it was 12 months ago. I have no figures to back that up its just an observation from looking at the sales prices each week.

I don't disagree with you beej that figures are skewed by more sales at the lower end of the market, but i do disagree that the lower end of the market is selling easily.


----------



## Beej (14 January 2009)

OK, "selling like hot cakes" may not be the right term, but there are certainly properties in that price range selling at some volume, although less sales than a year ago no doubt. Although apartments do in fact seem to be selling at higher volume if you look at that link I posted.

Regardless, more lower end properties for those expensive suburbs are selling than normal and therefore the median stats are skewed downwards. That is a fact.

Cheers,

Beej


----------



## gfresh (14 January 2009)

kincella said:


> here are some charts covering 30 countries world wide....quarter by quarter coverage.....note some countries have growth, and others minimal falls..




Ask some in some of the worst effected areas how far under they presently are, and they'd probably disagree with you with "minimal falls". Where's our resident UK Bear WayneL ? 

It's not the most detailed chart, however the UK chart shows approx £190k to £160k.. 15% fall. Not great if you had minimal equity. 



kincella said:


> the case schiller report is out of whack with other US reports...I wonder why ? is it flawed !




Well you could also ask why the other report is flawed  The Case-Shiller is actually the *S&P* Case-Schiller Index. Now while Standard & Poors has copped a lot of flack for it's ratings, they do have a reputation to protect and a large research team on their side. Some of the largest financial firms in the world are tracking that data for any possible hint of recovery.


----------



## Beej (14 January 2009)

Well well well - residential housing finance starts UP 1.4% in November:

http://business.smh.com.au/business/home-approvals-rise-20090114-7gl4.html

I also note from the ABS release of this data here: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument that the FHB % of these starts also INCREASED from 19.5% in Oct to 23.6% in November. 

So you have both an increased absolute number AND proportion of FHBs coming into the housing market at the moment, in a market where the number of financed starts is bottoming and actually rising again. It is clear to me that this is going to set up a solid floor under the market and that predictions of further dramatic price falls are even more likely to prove wrong.

Cheers,

Beej


----------



## Glen48 (14 January 2009)

And if the FHO were not getting Taxpayer's funds to help them get into debt what would the real figures be?
As it is not their money helping this Ponzi scheme they have nothing to loose and many will walk away when the recession proper starts  soon.
The Feds drip feeding the economy  might prolong the agony for a few more months they still think the 10.4 B was a boost over Xmas  once food is taken out of the equation it was a dud.


----------



## Beej (14 January 2009)

Glen48 said:


> And if the FHO were not getting Taxpayer's funds to help them get into debt what would the real figures be?
> As it is not their money helping this Ponzi scheme they have nothing to loose and many will walk away when the recession proper starts  soon.
> The Feds drip feeding the economy  might prolong the agony for a few more months they still think the 10.4 B was a boost over Xmas  once food is taken out of the equation it was a dud.




You talk as if you think everyone at some time in the past bought property without debt! The REAL figures are in fact the ones I posted links to. Your idea of the "real" figures are "imaginary" ones! The government is providing funds to FHB for good reason, and it is actually "their" (our - the peoples) money anyway, as they/us earned it, and paid it in taxes originally. So think of it as a targeted tax cut if that makes you feel better.......

PS: You could make the same silly arguments around sectors of the economy supported in part by the baby bonus, any welfare payments, the dole etc etc etc....

Re Ponzi schemes, saying the property market is a Ponzi scheme borders on the ridiculous. You can argue prices are inflated, or not, or expensive etc etc, but the value of property is tangible and real. People NEED somewhere to live. It HAS real value. It IS an ASSET. Property can generate real income/profit (from rent) or save you real expenditure by not having to pay rent. If property is a Ponzi scheme then so is the entire share market! The market for collectible things such as art, classic motor vehicles, fine wine, coins, stamps, even commodities like GOLD (which has no other use other than to make jewelery and/or be held until someone comes along who wants to buy it off you for more $$$ than you paid). If property IS a Ponzi scheme, then so is everything else, but at least it is one that has been running successfully for in the order of 10,000 years!!! 

Beej


----------



## gfresh (14 January 2009)

Finance figures are encouraging, although most of the growth seems to be in finance for new homes, not existing - which is chiefly due to the FHB grant. But not sure the FHB is capable of carrying the entire market for a long period.. there has to be a finite number of potential fhb's out there who have the capacity to jump into the market this year. 

Here in an interesting one on newspaper ads, the amount of advertising on realestate has plummeted in December... 

http://www.businessspectator.com.au/bs.nsf/Article/Fairfax-$pd20090114-N9TEE?OpenDocument&src=sph



> Classified advertising for motor vehicles and real estate had held up in September to November as dealers had to move stock and property as a ramification of the financial crisis. However, Goldman Sachs says that *in December real estate advertising fell, compared to December 2007, by 35 per cent at the SMH, 49 per cent at The Age and 62 per cent for The Australian Financial Review.*


----------



## dhukka (14 January 2009)

Beej said:


> Well well well - residential housing finance starts UP 1.4% in November:
> 
> http://business.smh.com.au/business/home-approvals-rise-20090114-7gl4.html
> 
> ...




It's amazing what you can read into statistics if you really want to see it. The total number of dwellings is down *-25%* from a year ago and the value down *-19%*, obviously 2 consecutive monthly rises means we've put in a floor. Do you do palms or tea leaves as well?


----------



## Beej (14 January 2009)

dhukka said:


> It's amazing what you can read into statistics if you really want to see it. The total number of dwellings is down *-25%* from a year ago and the value down *-19%*, obviously 2 consecutive monthly rises means we've put in a floor. Do you do palms or tea leaves as well?




A year ago it was absolute boom time. Clearly that is not the case now - the stats show that, yes. What I am, and always have been arguing here is that there IS NOT going to be a great house price crash as so many "hope". We are in for a period of relatively steady/flat prices, but with low opportunity due to low volume/turnover. The rise in FHB proportion and numbers as a trend has been going for a few months now. This is how floors are put under the housing market!

In this and the other thread people have been posting those exact same stats from a few months back and talking about/predicting an ever accelerating decline in housing finance starts and home sales. Remember there isn't supposed to be any credit available! Remember the banks are meant to have tightened standards! They predicted we were "falling off a cliff" just like the US and the UK - like graphs from those countries have been continually posted arguing that we would follow their same trend, but are 12-18 months behind them etc etc. The actual data more and more is countering these predictions.

If you look at the latest data now, even according to the ABS, it is clearly forming a bottom/flat trend at the moment - so it LOOKS LIKE we have not so much fallen off a cliff, as stumbled down a hill, and have started to re-find some footing. 

That is not just a gilded interpretation of the statistics, it is the conclusion of the ABS and much of the media reporting the data today as well.

EDIT: And PS, I should mention this thread is close to it's 1 year anniversary!

Cheers,

Beej


----------



## dhukka (14 January 2009)

Beej said:


> A year ago it was absolute boom time. Clearly that is not the case now - the stats show that, yes. What I am, and always have been arguing here is that there IS NOT going to be a great house price crash as so many "hope". We are in for a period of relatively steady/flat prices, but with low opportunity due to low volume/turnover. The rise in FHB proportion and numbers as a trend has been going for a few months now. This is how floors are put under the housing market!
> 
> In this and the other thread people have been posting those exact same stats from a few months back and talking about/predicting an ever accelerating decline in housing finance starts and home sales. Remember there isn't supposed to be any credit available! Remember the banks are meant to have tightened standards! They predicted we were "falling off a cliff" just like the US and the UK - like graphs from those countries have been continually posted arguing that we would follow their same trend, but are 12-18 months behind them etc etc. The actual data more and more is countering these predictions.
> 
> ...




Sorry beej, you don't speak for the abs. The abs does not draw conclusions, as they shouldn't, they just present the data. The seasonally adjusted data shows total starts rising for 2 consecutive months, you can call that a trend if you want, statisticians would tell you that it means very little given revisions and seasonal adjustments. In fact, the 'trend' data, which smooths out the irregular components of the seasonally adjusted series, shows that the total number of finance commitments has fallen for the last 12 months in a row, although the rate of decline in the last few months has slowed. You may be right that a floor is being put in, but the data does not support that conclusion.

Take a look a US housing data in the last few years, you can find several instances when sales and starts rose for 2 consecutive months, none of those points represented a bottom.  Unfortunately you'll only know the bottom when it has passed. 

Once again you need to be reminded that building straw men arguments does not bolster your case. Can you quote a post that forecast ever accelerating declines in housing finance starts and home sales? I don't seem to be able to find one.


----------



## robots (14 January 2009)

hello,

do both Numbercruncher, hands are dirty and taking it easy

because kicking it at work is the easiest risk free way of making $ ever

*its paradise*, the people with $ are still getting into businesses, i work across all sectors of building except infrastructure, mostly business orientated building

ie. restaurants, cafes, office conversion

anything else is a bonus, the income will kick you off though

hope the day is tremendous for everybody

thankyou
robots


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## numbercruncher (14 January 2009)

Beej said:


> OK, "selling like hot cakes" may not be the right term,





Nooooooo Bingo !!


----------



## robots (14 January 2009)

hello,

look out brothers:

http://www.reiv.com.au/news/Vacancy-rate-update

hope those specuvestors keep hanging in the cave, awesome news 

with construction diving as well, fantastic

well done 

thankyou
robots


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## kincella (15 January 2009)

property investor finance was down 6%, and some posters were applauding the numbers....did they forget, less investors equals less rental properties for the renters.....I guess they can take up the slack left by the renters who became FHB...was it close to 24% for Nov ???

I believe Dec was showing more positive traits...but probably petered out mid month, due to the festivities season........

overall positive numbers out in the news today....but its not enough to ward off the 1% rate cut due in Feb,,,imo

the uni students are all coming back looking for props to rent for another year...competition for rent....

we all need renters...to fill our props...so dont knock them ...treat them with care


----------



## Beej (15 January 2009)

From SMH:

http://business.smh.com.au/business/time-to-buy--if-job-is-safe-20090114-7gz5.html



> YOU can almost hear the sound of cheap champagne corks popping. A generation of would-be first-home buyers are getting ready to escape the clutches of the rental market.
> 
> First-home buyers have reappeared in their highest numbers since the boom of the early 2000s pushed them to the sideline to watch house prices and interest rates rise.
> 
> ...




And from a similar article: http://www.news.com.au/business/money/story/0,28323,24911998-5013951,00.html



> NSW enjoyed a strong recovery in home loans during November, with the 5.8 per cent rise in housing finance for owner-occupiers reversing nine consecutive months of decline.




So looks like NSW/Sydney is going to take the lead in any bottoming/recovery in the housing market. This aligns with my own experience in and observation of the Sydney over the past few months - increased FHB activity and buyers (even some investors) around, but still cautious. Pretty impressive considering the state of the NSW economy.... Imagine what might happen when the economy (eventually) picks up again?

Beej


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## MrBurns (15 January 2009)

I'm thinking of buying an investment unit at Port Douglas, will return income and I can sneak a few weeks in per year for myself.

I think it's a little early as there will be stacks coming onto the market when it really hits the fan but does anyone have any idea of the market up there ?

and I'm a little worried about the effect of rising sea levels, or more to the point the PERECEPTION of rising sea levels up there, I wouldnt want to be stuck with it after 10 years because a bunch of greenies have convinced everyone it will be under water in the future.

I had a look at the property forum but I was practically the only one there so I though I'd post this here.

Any help appreciated.


----------



## GumbyLearner (15 January 2009)

MrBurns said:


> I'm thinking of buying an investment unit at Port Douglas, will return income and I can sneak a few weeks in per year for myself.
> 
> I think it's a little early as there will be stacks coming onto the market when it really hits the fan but does anyone have any idea of the market up there ?
> 
> ...




Ive been up that way a few times Mr.Burns. It is stunningly beautiful, like North-West Tassie but with the warm sun. 

Dont know much about sea-levels, cant say not an expert in that science.  

Had an Uncle go up that way. He was dropped off an a few islands by the RAN during WW2 to measure sea levels. "Paradise untouched" were his words. 

There are greenies up there, most of them are pretty casual people from memory. Plenty of them live a life in the forest, self-made accomodation a lot of the time.

Definitely a beautiful place!


----------



## trading_rookie (15 January 2009)

> I'm thinking of buying an investment unit at Port Douglas, will return income and I can sneak a few weeks in per year for myself.
> 
> I think it's a little early as there will be stacks coming onto the market when it really hits the fan but does anyone have any idea of the market up there ?




I did read a snippet in the AFR a week or so ago that anything north or Noosa was very quiet during this holiday season...could be a sign of things to come.

Sneaking a few weeks...it's not with Break-Fre is it?

As for king tides, spring tides and storm surges...from the 7:30 report

http://mpegmedia.abc.net.au/730report/av/podcast/20090112-730kingtides_video4.wmv


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## robots (15 January 2009)

hello,

just rent some joint for the time you want to go there man, 

no hassle,

any other news today, cant seem to get the share market news for today as the ASX site doesnt appear on my computer, has it crashed?

thankyou
robots


----------



## kincella (15 January 2009)

sister has lived there, now in cairns...over 30 years, would not have it anywhere else....only ever freaked out once...last year ?? driving to work, heard report tsunami due in an hour...detoured and drove up into the hills, sat there for 4 hours, came back and got drunk.........had given up the grog a few years ago....went to work next day, rather embarrassed...kept her job.........
you should go up now, check it out, have a look around


----------



## MrBurns (15 January 2009)

Thanks everyone, I've just contacted the Council and they are going to get back to me, most helpful Council employee I've ever spoken to.

Not worried about the odd cyclone just long term sea level projections.

"I know you'd like us to sell your unit for you Mr Burns but we're having a bit of trouble with organizing inspections as we've lost the scuba gear"


----------



## ROE (15 January 2009)

if you are smart you want property not to fall now but say in 2-3 years  so up until then keep the price driven up ...

FOH great anything to keep the price the way it is good news for me....keep it up bring out all the positive news....


----------



## Beej (15 January 2009)

MrBurns said:


> Thanks everyone, I've just contacted the Council and they are going to get back to me, most helpful Council employee I've ever spoken to.
> 
> Not worried about the odd cyclone just long term sea level projections.
> 
> "I know you'd like us to sell your unit for you Mr Burns but we're having a bit of trouble with organizing inspections as we've lost the scuba gear"




Mr Burns - I think there is a thing on Google maps/earth where you can bring up an area, say Port Douglas, and get it to show you what the coast would look like if sea levels were say 1 metre, or 5 metres or whatever higher. Don't have a link handy but a quick search should find that for you. I have used it before so I know it is there somewhere!

Cheers,

Beej


----------



## MrBurns (15 January 2009)

Beej said:


> Mr Burns - I think there is a thing on Google maps/earth where you can bring up an area, say Port Douglas, and get it to show you what the coast would look like if sea levels were say 1 metre, or 5 metres or whatever higher. Don't have a link handy but a quick search should find that for you. I have used it before so I know it is there somewhere!
> 
> Cheers,
> 
> Beej




Thanks Beej and everyone else who chipped in, the info on the maps is a bit general, these units are very close to the beach, 2 minutes walk,  so I'm a little concerned, I'll wait for the Council then flip a coin I guess.


----------



## nunthewiser (15 January 2009)

robots said:


> hello,
> 
> just rent some joint for the time you want to go there man,
> 
> ...




agrees with robots burnsy........ lots of hidden body corporate fees , fees for this and that AND no control over ACTUAL investment as such . careful m8 ...... and again i reiterate be careful

its in the harder times the white shoe brigade make there investment ideas sound so much better


addition 

its not just the fees mate , often in these unit/holiday home deals there is often a body corporate made up of so called "directors" that do all the desicion making for the complex , if u aint on that board mate ..lookout ........... descions can be made without your approval that can drastically change the whole deal , ie rental periods , type of clients .blagh blah blah ....hopefully you get my drift and walk into it with 3 eyes open 

not all white picket fences out there dude


----------



## MrBurns (15 January 2009)

nunthewiser said:


> agrees with robots burnsy........ lots of hidden body corporate fees , fees for this and that AND no control over ACTUAL investment as such . careful m8 ...... and again i reiterate be careful
> 
> its in the harder times the white shoe brigade make there investment ideas sound so much better




Thanks nun I was a real estate agent for over 20 years (Melbourne) so I've seen it all and Noosa, Gold Coast and Port Douglas Qld are boom and bust towns from way back.

I look at the return after fees, you can then use the place for a few weeks a year just book with the management team and pay their commission only, I believe you can also opt out of the management agreement in many of them if you ever want to live there.

I want to get some money OUT of the bank before something goes wrong there.


----------



## SBH (16 January 2009)

Beej said:


> From SMH:
> 
> http://business.smh.com.au/business/time-to-buy--if-job-is-safe-20090114-7gz5.html
> 
> ...





Vacancy rate here is increasing. Go to sqmresearch.com. Jobs are going left right and centre! Very few people have job security for the long term and only idiot FHBs are jumping in now, akin to bogans breeding for the baby bonus. I cannot understand how a property speculator could risk NOT selling at the moment. You could lose everything and have almost no chance of gain in the next few years

To think australian property prices will survive on a permanantly high plateau through a global recession (recession being the best case scenario) is crazy.


----------



## Beej (16 January 2009)

SBH said:


> To think australian property prices will survive on a permanantly high plateau through a global recession (recession being the best case scenario) is crazy.




Such certainty in your statements! And yet property prices have held up extremely well through every recessionary period since WWII without any problem at all? Did people who held their property through 1974, 1981, 1991 loose it all???

Beej


----------



## kincella (16 January 2009)

Beej...the stats are against SBH to begin with....over 70% of the population are homeowners....and another 20% are also property investors....thats a very compelling 90% prefer property...whether its just a roof over the heads, lifestyle , investment or all of the above....

there are traps for players out there and maybe SBH just got caught... SQM research....is looking for cheap PR....bit like the Keen thing...outlandish claims...claims rental vacancy is not as low...bloke who runs it, used to be with APM...now on his own ??? only an email and mobile...
he explains his metholodgy...he estimates figures...etc etc...leaves a lot of room for error....

I cannot be bothered repeating the SBH post here.....assume he must be too young to understand the property game.....but calling people stupid is the easiest way to make enemies...get people offside...
and the history charts do not show anything like he suggests.....hint look back in history to show you where it will likely go into the future....

ps...why don't people on this 'house ' forum ... go over to the aussiepropertyforum ....site ??? I know its new...but set out nicely...state by state even....and just chat over there ????.....instead of here with only two topics....housing going up...or down....and having to sift through and find it amongst everything else ?????  I have been trying to promote it to friends, and good quality posters on property....and have been posting over there to try to encourage others....
anyone care to give a reason why you are not over there ???
cheers


----------



## numbercruncher (16 January 2009)

kincella said:


> Beej...the stats are against SBH to begin with....over 70% of the population are homeowners....and another 20% are also property investors....thats a very compelling 90% prefer property...





Does that leave 10% to rent that 20%





/yawn


----------



## kincella (16 January 2009)

30% of the population are renters.....govt provides about 10% of rental accommodation...leaving 20% private investors.....
one doubts too many renters would also be property investors


----------



## joeyr46 (16 January 2009)

Beej said:


> Such certainty in your statements! And yet property prices have held up extremely well through every recessionary period since WWII without any problem at all? Did people who held their property through 1974, 1981, 1991 loose it all???
> 
> Beej




Only if your overleveraged Did know of some in the 30's that lost it all because of rates going up and not getting tenants Property was on Whickahm Terrace Brisbane were all the specialists have there offices etc
, however regardless of a big fall or not the property is still worth a lot compared to wages or most other measures if we do have a major depression and is it 3 years the money in the bank is guaranteed for. that guarantee was given by the most trustworthy people on earth Politicians!it doesn't work for me

I also think your right atm as we have not seen any top in place only people's thoughts from what is happening overseas but no evidence yet that we are about to follow. I think we are some way off a major recession as commodities are still at good levels even after coming down so far 
Copper has a range rom 55c to 120c per lb normally but after going up to 400c lb it has only come down to about 145c it is still quite high. So even if we are in for a major depression (I think we are ) we are still likely to see a rally in house prices for a while while we still have a reasonable economy and GDP. And unemployment rising .1% is nothing like the other economies yet. As the fear subsides and people stop thinking about it as much, we could get a descent rally in house prices for a few months


----------



## wayneL (16 January 2009)

Beej said:


> Such certainty in your statements! And yet property prices have held up extremely well through every recessionary period since WWII without any problem at all? Did people who held their property through 1974, 1981, 1991 loose it all???
> 
> Beej



Some did.

You seriously need to study thos e periods in more detail.

This time has the potential to be much worse.

The message I keep trying to get out is: Amateurs hope - professionals hedge.

How will people fare if there is a serious depression and steep decline in house prices? Many (not all) would be utterly destroyed by the same disease that is causing business to fall over all over the world.


----------



## robots (16 January 2009)

hello,

past performance is no indicator of future performance, who knows

thankyou
robots


----------



## wayneL (16 January 2009)

robots said:


> hello,
> 
> past performance is no indicator of future performance, who knows
> 
> ...



Holy Crap!!!

The very first sensible comment I've seen you write.

Folks should do if/then analysis and contingency planning.


----------



## robots (16 January 2009)

hello,

what about the other 1434 posts? masterpieces like that one?

thankyou
robots


----------



## wayneL (16 January 2009)

robots said:


> hello,
> 
> what about the other 1434 posts? masterpieces like that one?
> 
> ...




Masterpieces, but not sensible.


----------



## Glen48 (16 January 2009)

Latest figure in USA show for every 1 house sold 2 are foreclosed. Malaysia housing prices are starting to crash, looks like OZ will be the only country not to have a RE crash strange because every thing else is going down except un-employment


----------



## overlap (16 January 2009)

First home owners grant inflates housing prices

http://www.crikey.com.au/Business/20090116-First-home-owners-grant-inflats-housing-prices.html

100% on the money

"The cure for a slump is a slump"


----------



## Julia (16 January 2009)

wayneL said:


> How will people fare if there is a serious depression and steep decline in house prices? Many (not all) would be utterly destroyed by the same disease that is causing business to fall over all over the world.




If you're planning to continue living in your existing home for ever, how are you going to be destroyed by falling prices (if you are not at the same time holding IP's)?


----------



## wayneL (16 January 2009)

Julia said:


> If you're planning to continue living in your existing home for ever, how are you going to be destroyed by falling prices (if you are not at the same time holding IP's)?




Using UK figures


Joe Schmoe buys at the top of the market in 2007

Joe, who works for Lehman Bros. as a junior analyst obtains a 100% liar loan to finance the house.

The mortgage payment is >50% of his wages, but no matter, houses always go up.

Fast forward a few months, house prices have dropped 10% or so, IF you can get a buyer, Joe is in negative equity, but Joe's not selling anyway.

Lehman's goes bust, Joe loses his job

There are no jobs for bankers in Londinium and certainly no jobs paying anywhere near what he was getting.

Joe can't pay his mortgage and is foreclosed.

Bank flogs house off at auction leaving a shortfall.

Joe is homeless, asset-less and still has £30,000 credit card debt on Saville Row Suits and bling, pus the shortfall from the house.

Joe is ####ed and is declared BK.

This is happening all the time and at all levels of society. Even Folks that bought in the 90's have MEWed themselves to the eyeballs and are now in negative equity.

The prudent, the cautious and the savers are paying for these clown's indiscretions.


----------



## sinner (16 January 2009)

Julia said:


> If you're planning to continue living in your existing home for ever, how are you going to be destroyed by falling prices (if you are not at the same time holding IP's)?




Why do people who are supposedly prudent and conservative citizens continuously bring up this question?

One would think that anyone who had put themselves in the hole to the tune of several hundred thousand dollars would do some research before "investing".

The "if" you so unoriginally provide ignores both the social factor of mobility and the financial factor of liquidity but even if you ignore both of those (which pretty much removes your example from the realm of reality) any first year macro-economics student can tell you that negative equity has a ripple effect through the entire economy.

You can see this plainly as the result of the sub-prime crisis. Negative equity in under 6% of the US real estate market caused the terrible mess we are in today. Can you imagine the effects when this negative equity is finally truly marked to market as the banks have been avoiding for 2 years now?

It won't be a ripple, it will be a tsunami.

Restriction of future credit due to mark to market will not only essentially outright halt the growth of the real estate sector (preventing it from returning to 0 equity) in the short to medium term (the damage could be so great as to be long term) but it will have a huge impact on the employment of millions of people. 

Almost every company employing more than a few hundred people relies on short term credit to fund their payroll, their day to day operations, their expansion, EVERYTHING. When this credit is gone, where will the paychecks come from?

The answer is: they won't come.


----------



## knocker (17 January 2009)

trading_rookie said:


> I did read a snippet in the AFR a week or so ago that anything north or Noosa was very quiet during this holiday season...could be a sign of things to come.
> 
> Sneaking a few weeks...it's not with Break-Fre is it?
> 
> ...




Was in cairns two weeks back place is dead. Shops empty and closing. Place runs on tourism of which there is little right now. Also mining has taken a hit so the fly in fly out workers have dissappeared. Also construction is ebbing.

Also weather sucks this time of year. Aside from that cheap rentals are always in demand up that, most people on the dole etc.

I have a few cheapies I rent up there, when they are empty for a few weeks, a sneak a break. Still a very nice place to be.


----------



## knocker (17 January 2009)

wayneL said:


> Using UK figures
> 
> 
> Joe Schmoe buys at the top of the market in 2007
> ...




Right on wayno.

On the upside BOE rates are approaching 0 fast, so anyone with a sensible mortgage employed in a sensible area, ie NHS etc, will be living the good life.

cheers


----------



## Dowdy (17 January 2009)

overlap said:


> First home owners grant inflates housing prices
> 
> http://www.crikey.com.au/Business/20090116-First-home-owners-grant-inflats-housing-prices.html
> 
> ...




*Exactly right on the money!*

The only thing keeping the housing market up is the grants which create artificial prices. When the grants go, then you'll see house prices return back to normality. Which will most likely mean a 30-50% drop in price. 

These government grants are pretty much the definition of *INFLATION* - if a magic wand gives everyone 1 million dollars, markets will respond by increasing their prices to the new money in the system.


----------



## aleckara (17 January 2009)

Dowdy said:


> *Exactly right on the money!*
> 
> The only thing keeping the housing market up is the grants which create artificial prices. When the grants go, then you'll see house prices return back to normality. Which will most likely mean a 30-50% drop in price.
> 
> These government grants are pretty much the definition of *INFLATION* - if a magic wand gives everyone 1 million dollars, markets will respond by increasing their prices to the new money in the system.




I actually think it causes a greater effect on housing prices than the grant price itself, because most people leverage to get their first house.

i.e that extra $14000, or $24000 for new properties ends up being part of a deposit that allows the buyer to borrow a lot more. just like margin lending with a big LVR, the amount of credit going into the property market is increased more than the cost of the grant. It is the leverage in bidding up asset values that makes the grant so powerful in driving up inflation per $. It allows people to leverage more (or in the case of FHB's allows more people to join the game).

The grants won't go. Most people are applauding it as a great move. The saddest thing about all this mess is that the whole financial system is tied to one class of asset. It really is that Australia has all its eggs in one basket. The fact that it can't fall; and that the financial system would crumple should it fall should have never had happened. An asset should be able to rise and fall like any asset class without propping up. Don't see first share buyers grants for example.


----------



## nomore4s (17 January 2009)

kincella said:


> Beej...the stats are against SBH to begin with....over 70% of the population are homeowners....and *another* 20% are also property investors....*thats a very compelling 90% prefer property*...whether its just a roof over the heads, lifestyle , investment or all of the above....






kincella said:


> *30% of the population are renters*.....govt provides about 10% of rental accommodation...leaving 20% private investors.....
> *one doubts too many renters would also be property investors*




Is it just me or do these figures not add up

70% own
Another 20% are investors (maybe 20% of the 70% are also investors?)
So 90% prefer property

But

30% rent
And 







> one doubts too many renters would also be property investors


----------



## robots (17 January 2009)

hello,

people rent, buy, rent and own all sorts no big deal

just a house or flat, but one may have a different colored roof, stone bench top or laminate bench top, tiles or lino, courtyard or acreage

its wonderful what the earth has to offer

go hawks

thankyou
robots


----------



## nomore4s (17 January 2009)

kincella said:


> one doubts too many renters would also be property investors




Also on this, you might be surprised.

We are now renters but also own an investment property in Hervey Bay atm. And I know a few others in similar positions.

There is more then one reason to rent.

In our case it gives us a bit of flexability incase we decide to move interstate at some stage.

Property prices are extremely high up here atm and with the current risks to the Aussie economy and therefore property prices to the downside we are quite happy to rent for awhile and see how things play out.

I have no doubt property is a good investment - I have previously made good money on property but atm I see no reason to jump back in.

If prices do fall it will provide a good opportunity for me as I'm positioned to take advantage of it. If they don't fall I haven't really lost anything as I will still be positioned to take advantage of any opportunities that come along but I just want to see how things play out for the next year or so.

We are on the verge of a global downturn like we have never seen before and I would like to be prepared for the worst even if it doesn't eventuate. The bulls carry on like you can never lose on property but if we do see things continue to deteriorate people will lose on property, I'm just trying to make sure I'm not one of them and am prepared for anything. Smart investing is about managing your risk imo.


----------



## lioness (17 January 2009)

Can I pose this question. In 6 months time I will be able to get  a 5 year % rate fixed loan between 4 and 4.5%(I work in a bank and get discounts).

With my high income(200K plus), I intend to buy 5 properties for approx 600K each in inner city areas in Melbourne within 5km of CBD and sit on them for 5 years. How can I lose?

They all will be cashflow positive from day 1 also(I have already checked the rents and they average around $600 per week), so no need to pay them off although I intend to build up cash reserves for tenancy vacancies anyway.

Why wouldn't I do this given in 1-2 years inflation will be out of control.

PS My principal residence is fully paid off and worth 1.2 million.

Any comments??


----------



## Glen48 (17 January 2009)

All good in theory except rents will come down as the true believers in R E want to hang on to their property until the prices rises again in 2020+ so they rent them out and live with their inlaws or share a larger house with other victims.


----------



## nomore4s (17 January 2009)

lioness said:


> Can I pose this question. In 6 months time I will be able to get  a 5 year % rate fixed loan between 4 and 4.5%(I work in a bank and get discounts).
> 
> With my high income(200K plus), I intend to buy 5 properties for approx 600K each in inner city areas in Melbourne within 5km of CBD and sit on them for 5 years. How can I lose?




lol, is this a loaded question or what.
Alot of it depends on personal circumstances imo. Factors like
- amount of savings & general financial position
- Job security
- Age and family situation
- Long term goals & plans
- Gearing level for the 5 properties.

If it comes off you make a killing if it doesn't well .......

As to how you can lose
- You lose your job and high income
- Property prices crash and you end up with negative equity after 5 years.
- Rent prices drop (probably unlikely atm)

All hypothetical but you did ask.

Make no mistake you can lose despite what the bulls say but like I said above you can also make a killing, risk to reward - something you need to be comfortable with.

But with such a high income you no doubt have a huge head start & advantage.


----------



## kincella (17 January 2009)

Lionesse....why jump in at the deep end first....why 5 now...start with one...and how safe is your job ???....have you saved the deposits ?? or are you using the equity in your home.....I am considered a bull on property, but I am not silly....I believe interest rates will go lower, and this year will be very unsettling for a lot of people....
I would be looking for bargains...and might buy one...then wait and see another 6 months....there is no rush...
you will always find a bargain if you look hard enough.....I missed one recently...about 70,000 below mv....turns out it was a nasty divorce..add a rogue agent and someone won and the others lost...
apparently people are now buying one bedrooms,,, to save money....and the industry believes that will set a trend....all the single people who prefer to live alone....they also believe the mc mansions are falling out of favour.

and answer to the others...my figures were out of whack...an alziemers moment perhaps....70% of the  population are home owners, 30% are renters...but of those 70% about 20% are also investors....the govt provides the other 10% of rental properties.....so 90% of the properties are held privately.....
I also know people who rent, but also own property....but not very many  do this...although I have not seen any studies...just assume it would be a low %...
 of the 20% people who own, and have one investment property,  the % who own multiple investment properties, reduces dramatically to less than 1% of the population....
most people I know also have one investment prop, and a few have multiple properties...like myself
cheers


----------



## lioness (17 January 2009)

Thanks nomore & kincella for your replies.

Yes, I intend not to jump and buy them all at once. I intend to buy up to 5 properties over the next 3 years. The reason being, to take advatnage of the lowest fixed % rates in Australia's history. I figure buying them over the next 3 years starting end of 2009(after prices have fallen), will average my purchase price down at the lowest point.

I don't have the deposits, I intend to use redraw. I already have one investment property with 60K equity.

Also, my wife used to earn 250K but is at home now with 2 kids, but she intends to go back to work in the next 3 months and will earn approximately 150K part time(3-4 days per week). So, I have her income as back up in case I lose my job. On this point I am not willing to say I MAY lose my job so I will not take any risks. Life goes on.

Any more thoughts for me???????


----------



## lioness (17 January 2009)

In fact the only way to lose is if house prices continue to fall after I have purchased them given they will be cash flow positive.

But I know my market very well as I have been watching prices for 2 years, so I know exactly what to pay and if not walk away.


----------



## kincella (17 January 2009)

lionesse....OK that sounds much better...am sure I have stated this on this forum before ...I was looking at property around Toorak Oct/ Nov 08 and am not saying prices came down...just lower value props on the market to what there usually is...last year early 08 would need min $500,000 for a 2bdr...this year may have picked one up for $400,000...different street, location, and definately not similar properties...one in Dec thought might go for 400,000...but sold for 600,000.... the market was there and snapping them up

another region  where I watch the market NSW/Vic border .....average house about 380,000-400.000.....from Mar 08....all the lower level props on the market and selling...1 bdr flats, fibro houses etc the real bottom of the market...and they were selling for higher prices than would normally fetch...all those sales dropped the median house prices down....but the normal houses were no longer on the market.....
then late Nov early Dec 08...something I consider was quite dramatic....they had sold all the bottom of the market....the usual were still missing....but now they were selling much higher priced properties...several on the market and sold,,,,where you might see only one house above the 2 mill mark...suddenly  there were 4-5....and other properties above the 400-500 mark were now selling.....the standard median house is still missing.....

so high flyers lost money in the markets and now selling up.....only explanation ?....the middle of the market is holding off, with rates coming down...those houses will go back on the market at higher prices.......and first home buyers are stuck with paying higher prices for lower value properties...
then again I could be out of whack......
thats 2 suburbs, 2 very different markets, different lifestyles, but similar results
I believe you can find a bargain at any time....but dont be fooled by the median prices you see,,,,if there is normally 30 sales a month...of high and low value props...thats fine....but if suddenly only 30 low priced props are selling....it changes the median value .....but the actual properties cannot be compared.....
you need to compare apples with apples...half hour a week on the realestate site..compare the properties for sale....specific suburbs..then compare the ones that sold ....the domain site also shows recent sales
cheers...and keep us posted how you fare


----------



## kincella (17 January 2009)

Ok lionesse...wasted my time on the last lengthy post....since you have done your homework and research....maybe some one else will benefit from my research...
so what if the prices go down....I believe they will return to the normal 10-15% growth rates as in the past....

sitting on 5....and reasonably sure there is another pot of gold waiting for me...within another 3-5 years


----------



## tech/a (17 January 2009)

lioness said:


> Can I pose this question. In 6 months time I will be able to get  a 5 year % rate fixed loan between 4 and 4.5%(I work in a bank and get discounts).
> 
> With my high income(200K plus), I intend to buy 5 properties for approx 600K each in inner city areas in Melbourne within 5km of CBD and sit on them for 5 years. How can I lose?
> 
> ...




Well-- If interest rates double you'll be snaffled.
Your $200k is around 100K taxed so you'll need $150k a year to service the debt.
Other than that I think you could do better than placing all your eggs into the CBD of Melbourne.


----------



## lioness (17 January 2009)

tech/a said:


> Well-- If interest rates double you'll be snaffled.
> Your $200k is around 100K taxed so you'll need $150k a year to service the debt.
> Other than that I think you could do better than placing all your eggs into the CBD of Melbourne.




Tech/a, you missed the whole point and most crucial point of my post.

I intend to lock in 4 properties on interest only loan for 5 years between 4-4.5% interest rates, so if interest rates double, it won't affect me. Then with the 5th property, keep this variable and then sell in 3-5 years later after achieving capital growth to pay down part of the remaining debt when it comes out of the fixed period. Get it?

Also 5km to the city is not the CBD of Melbourne, it is inner city, there is a huge difference in price and growth between the two. Also Melbourne has been forecast to take over Sydney's population growth by 2030.


----------



## kincella (17 January 2009)

LIONESSE...I agree with your plans...the only thing to add for consideration...what if...you found a bargain priced shop in Chapel St....
5 years ago maybe 500.000 recently 1 mill.....rents are better than residential...not strip shops...only CBD or Chapel st, maybe parts of High St, Armadale, and never shopping centers...not for us smaller players

the young ones are still down there spending their money....but the retailers are slashing prices.....am expecting some to close down....I could be wrong, but doubt it

expected fallout from the commercial sector...ie in the centros and bigger players that killed it with high debt.....may flow out into the smaller market.....just expecting some fallout

I found one 6 years ago..bargain priced....tenant on bargain basement rent...but lease due for renewal 2 years.....then brought the rent up to mv....doubled....use cap rates for commercial, its usually 1% lower than the bank rates...as interest rates come down so does the cap rate...divide the rent by say 5% is higher mv for the building....rates go up so does the cap rate...= lower mv ...but you probably know all this....
a lot of investors like self have been out there buying the single shops for the superfund....good returns and good growth


----------



## lioness (17 January 2009)

Thanks Kincella for the advice.

As for all the other whingers constantly downramping on here, they have gone into hiding as my factual posts have obviously stunned you all. 

Can anyone else shoot holes in my argument??

I doubt it.


----------



## SBH (17 January 2009)

lioness said:


> In fact the only way to lose is if house prices continue to fall after I have purchased them given they will be cash flow positive.
> 
> But I know my market very well as I have been watching prices for 2 years, so I know exactly what to pay and if not walk away.




LOL! you've downramped yourself here so I shouldn't bother. The credit orgy is over haven't you heard? You work in a bank you would think you would have noticed credit crunch written on a memo or email somewhere......
Anyway here's the story, the entire western world has been living on it's credit card for decades, now it is in default. Your poxy get rich scheme of buying 5 houses, doing nothing then selling for a profit never made sense now the world is waking up to that. I may as well be sayingvthis in ancient Greek for all you care because this does not compute with you bulls.... The hoax is up! I hope you realize before you pss all your money away


----------



## overlap (18 January 2009)

Highly recommend the link just posted by The Edge in this thread....

https://www.aussiestockforums.com/forums/showthread.php?t=14101

"The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong"

http://www.portfolio.com/news-marke...folio/2008/11/11/The-End-of-Wall-Streets-Boom

House prices are discussed about 1/4 way down into the article.


----------



## robots (18 January 2009)

hello,

some more fine opinions just like all of us, wonderful

this period is fantastic overlap, *st kilda up 14.8% Sept08 quarter*, everything still 7 or 8x average income for average house

not much has changed has it? and thats because we floating in the best country in the world, a step ahead of every other place where we make changes

we get guns out of society and get on with proper respectable life 

thankyou
robots


----------



## lioness (18 January 2009)

SBH said:


> LOL! you've downramped yourself here so I shouldn't bother. The credit orgy is over haven't you heard? You work in a bank you would think you would have noticed credit crunch written on a memo or email somewhere......
> Anyway here's the story, the entire western world has been living on it's credit card for decades, now it is in default. Your poxy get rich scheme of buying 5 houses, doing nothing then selling for a profit never made sense now the world is waking up to that. I may as well be sayingvthis in ancient Greek for all you care because this does not compute with you bulls.... The hoax is up! I hope you realize before you pss all your money away




My real estate agent just rang me as my investment property i coming up for lease again. It was $400 per week and he said put it up to $450 per week. So I did and the tenants accepted straight away. Property is inner city Melbourne(Carlton). Magnificent return now of 7% yield and cash flow positive. This property game is wonderful. 

I cannot lose when compared to shares which are down 45%. Will my Carlton property fall 45%? Not a hope in hell.


----------



## wayneL (18 January 2009)

lioness said:


> Will my Carlton property fall 45%? Not a hope in hell.



It might not.

But never say never. Look at what is happening in other anglo economies. UK is dwon about 20% in a bit over a year from the peak.

...and rents are coming down too.


----------



## lioness (18 January 2009)

wayneL said:


> It might not.
> 
> But never say never. Look at what is happening in other anglo economies. UK is dwon about 20% in a bit over a year from the peak.
> 
> ...and rents are coming down too.




Wayne, I am open to the belief of some fall, but nowhere near 45% as per the so called 'blue chips' of the stockmarket.

Further to this, there will be a fundamental shift away from shares for 5 years as too many have been burnt by so called 'blue-chips' never lose stocks like the banks. Expect another flight to property for perceived safety. 

*I repeat perceived safety.*


----------



## wayneL (18 January 2009)

lioness said:


> Wayne, I am open to the belief of some fall, but nowhere near 45% as per the so called 'blue chips' of the stockmarket.
> 
> Further to this, there will be a fundamental shift away from shares for 5 years as too many have been burnt by so called 'blue-chips' never lose stocks like the banks. Expect another flight to property for perceived safety.
> 
> *I repeat perceived safety.*




It ain't happening here.


----------



## robots (18 January 2009)

hello,

and the falls of US and UK property aint happening here man, isnt that strange different things happen around the world

st Kilda up 14.8% Sept08 Quarter, broady up melton up and a host of others

thankyou
robots


----------



## Glen48 (18 January 2009)

House sale in Brisbane down 28%, divorce due to financial pressure has doubled 15m gong into Pokies from the 10.4 all is rosy in paradise.
Those who have not sold are stuck with a fall can't say asset falling millstone around their neck.


----------



## robots (18 January 2009)

hello,

got a few brass one's left in a plastic bag might flip them to the street crew in Melbourne today

thankyou
robots


----------



## knocker (18 January 2009)

wayneL said:


> It ain't happening here.




I absolutely agree with what wayne is saying. The market ( stock and real estate) is stuffed big time. And people think that the colonies are immune lol
Everyone please listen to robots and keep throwing your money into australian realestate. I two years time ex-pats will come home to a smorgesboard:


----------



## kincella (18 January 2009)

Lioness is right...after I lost all that money on the tech wreck...admittedly houses were cheaper...but I started buying in Jun 2000...finished my spree in Aug 2002...could have bought more...but was too busy with what I had...a lot of people were doing the same thing...buying multiple properties....the media did not notice...too busy screaming about the tech wreck...it was not until Dec 03 and into Jun 04...that the rest of them woke up and ran into property...so I sold half at triple the prices paid....the market went back down and stagnated for nearly 3 years before going back up Dec 07

contrary to what some believe....others think the US and rest of the world follows Aus on property...we do not follow them....we have been the leaders in home ownership...so they look to see what we do

here are charts for world wide prices
http://www.globalpropertyguide.com/real-estate-house-prices/A


----------



## knocker (18 January 2009)

kincella said:


> Lioness is right...after I lost all that money on the tech wreck...admittedly houses were cheaper...but I started buying in Jun 2000...finished my spree in Aug 2002...could have bought more...but was too busy with what I had...a lot of people were doing the same thing...buying multiple properties....the media did not notice...too busy screaming about the tech wreck...it was not until Dec 03 and into Jun 04...that the rest of them woke up and ran into property...so I sold half at triple the prices paid....the market went back down and stagnated for nearly 3 years before going back up Dec 07
> 
> contrary to what some believe....others think the US and rest of the world follows Aus on property...we do not follow them....we have been the leaders in home ownership...so they look to see what we do
> 
> ...




lol some nice roses here today in sunny melbourne, pity few can smell them


----------



## tech/a (18 January 2009)

> The market ( stock and real estate) is stuffed big time




One mans catastrophe another's opportunity.


----------



## Sean K (18 January 2009)

tech/a said:


> One mans catastrophe another's opportunity.



Exactly Tech.

Licking my lips.


----------



## knocker (18 January 2009)

tech/a said:


> One mans catastrophe another's opportunity.




Hang on. Arn't you the property bull? Now you are doing a turncoat?


----------



## robots (18 January 2009)

hello,

awesome Melbourne:

http://www.domain.com.au/Public/Art...x&headline=House sale prices head north, west

what a situation, money renting rates down as well, this is fantastic knocker 

not just st kilda hitting it,

sorry, i know i know i have to wait it takes 6mths or 12mths after shonk market crash as thats what has happened before

thankyou
robots


----------



## tech/a (18 January 2009)

knocker said:


> Hang on. Arn't you the property bull? Now you are doing a turncoat?




More a cameleon.


----------



## knocker (18 January 2009)

tech/a said:


> More a cameleon.




Really? So please bestow us with more words of wisdom oh great oracle.


----------



## Sean K (18 January 2009)

knocker said:


> Really? So please bestow us with more words of wisdom oh great oracle.



LOL.

I think he's done OK the past few years.


----------



## gfresh (18 January 2009)

Nobody "follows" anybody in housing markets, economies follow global events.. housing can be attached to that. 

The doesn't put such a good picture on the "safe" Victoria story, despite the regular denial "it's only a resource problem in QLD and WA"...

http://www.theage.com.au/national/economists-defy-spring-street-recession-is-here-20090117-7jm4.html



> *National Australia Bank chief economist* Alan Oster said the State Government's predictions for the economy were far too upbeat, calling it "stupid" for standing by its promise to deliver a surplus equivalent to at least 1 per cent of the state economy.
> 
> "In a recession, that's stupid and I'm willing to say that's stupid," Mr Oster said.
> 
> ...




Anybody who also "loaded up" into the shock market in 2001/02 (but instead were too scared and went into property) would have also made double digit returns for many years also. In fact it was the exactly the same economic vehicle/conditions that drove the housing market to where it was... strange that.


----------



## tech/a (18 January 2009)

knocker said:


> Really? So please bestow us with more words of wisdom oh* great oracle*.




We've met before?


----------



## wayneL (18 January 2009)

tech/a said:


> One mans catastrophe another's opportunity.




Indeed.

But just like a stock downtrend, discerning when the catastrophe is opportunity can be a trap.


----------



## wayneL (18 January 2009)

lioness said:


> Wayne, I am open to the belief of some fall, but nowhere near 45% as per the so called 'blue chips' of the stockmarket.
> 
> Further to this, there will be a fundamental shift away from shares for 5 years as too many have been burnt by so called 'blue-chips' never lose stocks like the banks. Expect another flight to property for perceived safety.
> 
> *I repeat perceived safety.*




BTW, Dubai has apparently fallen 40-50% in less than 12 months.

http://www.homesoverseas.co.uk/news/Dubai_property_prices_halved/7186-1002


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## ericskeric (18 January 2009)

Hi,
I am from Adelaide but am looking to invest in melbourne market to support my daughter who will be moving there in the future. Thought I should look at doing something now if market is coming off the boil. And that is my problem. I don't want to get in if market is cooling. 
There is a lot of talk about markets coming off 10-20%. Has that already happening in Melbourne? Adelaide market is steadfast - nay rising slowly - hasn't missed a beat in 7 years.
Anyhow, I was looking at getting a unit around Huntingdale, Oakleigh, Ashwood, Chadstone, Murrumbeena etc.  Any recommendations as to which is a better area in that neck of the woods. Access to rail transport is a big consideration for me so proximity to a rail station is a priority.

Any comments most appreciated.


----------



## explod (18 January 2009)

ericskeric said:


> Hi,
> I am from Adelaide but am looking to invest in melbourne market to support my daughter who will be moving there in the future. Thought I should look at doing something now if market is coming off the boil. And that is my problem. I don't want to get in if market is cooling.
> There is a lot of talk about markets coming off 10-20%. Has that already happening in Melbourne? Adelaide market is steadfast - nay rising slowly - hasn't missed a beat in 7 years.
> Anyhow, I was looking at getting a unit around Huntingdale, Oakleigh, Ashwood, Chadstone, Murrumbeena etc.  Any recommendations as to which is a better area in that neck of the woods. Access to rail transport is a big consideration for me so proximity to a rail station is a priority.
> ...




Huntingdale would be my pick, will allways be a good investment there, but would wait till July before making a move, I think economics are going to hit real estate harder than in generations in the next three or four months.


----------



## kincella (18 January 2009)

Wayne...interesting......speculators were buying off the plans then flipping them within days....your link is  about those investors

and then there is the colliers report...talking about home owners, risen 56% for the year dropped 8% for the quarter....they have only had freehold property rights since 2002....and very unreliable data to track sales and records....

http://www.msnbc.msn.com/id/28633645/

then this headline..property slumps across 100 suburbs....but if you read the article..prices up 72% past 4 years,,,some suburbs up 36% in one year....and the losing suburbs lost 10-15%..... the media choose the worst part of the article for its headline grabbing BAD news......I know plenty of suburbs that I would not touch ....and you could find 2 houses in one street...one price up the other down..

http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=118791

the media wants house prices to come down...so they are only going to report as if prices were sliding.....just disregard any facts relative to the opposite, or the truth

just stating houses in dubai falling 50% is not the whole story,,,,that story is about speculators...and off the plan props......similar type of investor who plays the stockmarket......or high risk ,high reward games......
different to average property investor who holds for 10 years and earns rental income....and we have data going back 100 years...4 major groups monitor the data....
sorry if I appear picky....just bringing balance to the argument


----------



## ericskeric (18 January 2009)

explod said:


> Huntingdale would be my pick, will allways be a good investment there, but would wait till July before making a move, I think economics are going to hit real estate harder than in generations in the next three or four months.




Thanks for the comment explod. I am personally bearish on real estate but pospects for very low interest rtaes and limited building starts are compelling reason to buy. I suppose we need to wait and see if this global economic crisis is going to impact us here. If we have job losses ten real estate market will falter -me thinks. 
The reasonn I am especially cautious is that I have noticed Melbourne prices are so much higher than Adelaide - by about $100K from what i can see for comparable properties but twice the distance out from the CBD


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## kincella (18 January 2009)

you should not be buying or even contemplating buying if you are bearish on property.....
you need the right attitude and be comfortable in what you do...especially the housing market.....its a min 10 year investment to ride the dips and waves

would be easier and cheaper for your daughter to share...


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## ericskeric (18 January 2009)

Having the right attitude has nothing to do with house prices. House prices will/may dip and this will be, I am sure, completely independent on my attitude. Attitude towards housing as an investment is different. If you buy a property, I agree, the view must be long term because of the entry/exit fees as they currently stand.
Also, I might be bearish now but that is not to say my sentiment will not change. As indicated, lowering of interest rates are compelling reasons to buy. But as we have seen low interest rates are not a permanent given.
Personally, the biggest motivation to buy any real estate is the anticipation of high inflation. Inflation erodes the value of a dollar and it is better to invest in something real and tangible. If govts start to print money inflation will rise and this is what govts will most likely do in our current economic environment.
My request for assistance was two fold - 1. to get an idea of the better suburbs of those that i mentioned and 2. to get some feed back on whether the Melbourne market was in decline, static or rising. If you can help with these two questions that would be much appreciated.
(Ps . My daughter's circumstances are a little more complicated than what i ahve revealed)


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## robots (18 January 2009)

hello,

well st kilda up 14.8% fo the Sept08 Quarter so no decline there eric, plenty of others done well also

who knows where it goes brother, 

what a fine day 

thankyou
robots


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## MrBurns (18 January 2009)

MrBurns said:


> I'm thinking of buying an investment unit at Port Douglas, will return income and I can sneak a few weeks in per year for myself.
> 
> I think it's a little early as there will be stacks coming onto the market when it really hits the fan but does anyone have any idea of the market up there ?
> 
> ...




This answers my question, it will only get worse, how much is your propertry worth if you can't insure it ?



> North Queensland dumped by insurance provider
> 
> CHRIS QUAGLIATA
> 
> ...


----------



## robots (18 January 2009)

hello,

any other questions eric fire away, we all hear to help fellow man travel through time with ease

thankyou
robots


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## wayneL (19 January 2009)

kincella said:


> Wayne...interesting......speculators were buying off the plans then flipping them within days....your link is  about those investors
> 
> and then there is the colliers report...talking about home owners, risen 56% for the year dropped 8% for the quarter....they have only had freehold property rights since 2002....and very unreliable data to track sales and records....
> 
> ...




And you don't see some parallels with the Oz market?  However much I agree with your points about Dubai, the fact remains that it is a blue chip market that has fallen by the magic figure mentioned by lioness.

Therefore the potential for any market inflated by the credit bubble to fall by half remains and it cannot be argued that the Oz market is not at bubble levels. 

This recession still in the first stanza... particularly for Oz which has been shielded by the China/Olympics/commodity boom. Ozzies should never forget that this influence on the economy is only just starting post Olympics... only four months ago. It could be argued that Oz is lagging the rest of the angloshere by up to a year as a result.

I don't agree that the media wants prices down, at least not in the UK. Most journo's have been big into the BTL thing and have substantial portfolios. They are panicking and doing all they can to covertly (and sometime explicitly) ramp property.

There are continuously articles promulgating the emergence of a market bottom and have done so for at least 9 months.

Also in the interest of balance, agents are reporting an uptick in activity in the last couple weeks, so we'll see what happens from here.


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## knocker (19 January 2009)

MrBurns said:


> This answers my question, it will only get worse, how much is your propertry worth if you can't insure it ?




Hi Mr Burns. If you are buying a unit, there should be no problems about insurance. Your body corporate will cover all of this with there insurance i.e roof walls etc. All you have to do is worry about your contents if you have any. But as I have pointed out already, places like port douglas will suffer big time in the event of a combined king tide and a cyclone or worse a tsunami. cheers


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## Glen48 (19 January 2009)

Don't buy some thing that has been built in the last 5-10 yrs. Know of a unit in the middle of a new high rise with a leaky ceiling.


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## MrBurns (19 January 2009)

knocker said:


> Hi Mr Burns. If you are buying a unit, there should be no problems about insurance. Your body corporate will cover all of this with there insurance i.e roof walls etc. All you have to do is worry about your contents if you have any. But as I have pointed out already, places like port douglas will suffer big time in the event of a combined king tide and a cyclone or worse a tsunami. cheers




It may get to the stage where the body corporate cant get insurance or will have to pay a whopping premium, and this will get worse as time goes on.
Try to sell it in 10 years and see how you go, unless global warming has been proven to be like the Y2K bug, a beat up.


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## SBH (19 January 2009)

Property bulls its pretty clear your gambling will sink our entire economy just like it has in america.... maybe you should stay clear of reading the australian today if you want to keep your head in the sand

- Oz economy 'buggered'. Handouts may be a thing of the past very soon. We will be in a big deficit, other countries may want more for there buck if they lend us money, our interest rates would need to be cranked even as our property is going down. Thats very bad.

-Property in freefall. Prices decimated. (Their words about WA)

-NSW economy particular buggered. Declining at US style rate

-Overseas student numbers to decline (I dont believe it but its another one for the list!)


----------



## wayneL (19 January 2009)

SBH said:


> Property bulls its pretty clear your gambling will sink our entire economy just like it has in america.... maybe you should stay clear of reading the australian today if you want to keep your head in the sand
> 
> - Oz economy 'buggered'. Handouts may be a thing of the past very soon. We will be in a big deficit, other countries may want more for there buck if they lend us money, our interest rates would need to be cranked even as our property is going down. Thats very bad.
> 
> ...




Thanks for the heads up.

http://www.theaustralian.news.com.au/story/0,25197,24929833-2702,00.html


> THE West Australian property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties *plummeting 20 per cent* and the equivalent of more than two years' supply of homes flooding real estate agencies.




Thats almost half way to lioness's 45% figure in less than a year. 

... with years to go in this recession.


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## Beej (19 January 2009)

wayneL said:


> Thanks for the heads up.
> 
> http://www.theaustralian.news.com.au/story/0,25197,24929833-2702,00.html
> 
> ...




Fair enough - I actually just read that article and the Perth market certainly sounds pretty grim. Also you neglected to quote this part: 







> In Perth, house prices fell 4per cent in the December quarter, taking the yearly decline to 11 per cent.
> 
> The median price of a Perth house was $418,000, down from $473,000 at the peak of the West Australian housing boom in December 2007.



.....although no source for those figures are quoted. EDIT: Also note that the quarterly median can be skewed downwards if more cheaper and less expensive houses than "normal" are selling, as seems to be the case from that article.

However, I (and many other so called bulls) have always said that the WA/Perth, and to a lesser extent the SEQ markets, have clearly been over-heated by the mining economy/boom. You only have to consider that the Perth median house price passed the Sydney one for a while there in early 2007 to see things were getting way out of hand! 

Still waiting for some December median house price data for Melbourne/Vic and Sydney/NSW (which combined would represent over half the entire AU housing market), but I am still expecting these area's to have remained flat in the 4th quarter of 08. My view is based on my own experiences in the market during that period, plus the housing finance data for that quarter that we have already seen released. Will shall know very soon if I am right or wrong!

Beej


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## arco (19 January 2009)

Yet another Hervey Bay real estate agency - Caldwell Banker - closed it’s doors this week due to poor sales and no real sign of improvement on the horizon.

............................. the real estate market in Hervey Bay is in such a bad way that *some agents haven’t sold a house in six months.*


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## robots (19 January 2009)

hello,

aussie's BTL issue was around 03-04 and still plagues some people, man we way ahead of UK

just to follow up on Sinner's great reporting from the interest rate thread, rents up 3% in December making 14% for the year, man paradise 

and with IR's expected to hit 2-3% in the future this is awesome brothers, the online account crew are going to have to seriously look elsewhere, money renters large again

great couple of weeks coming up with the OzOpen kicking off today

thankyou
robots


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## wayneL (19 January 2009)

robots said:


> hello,
> 
> aussie's BTL issue was around 03-04 and still plagues some people, man we way ahead of UK
> 
> ...



Listen you property bulls. The UK Labour party is in dire straits and need some real proper spinmeisters to fool the UK public that all is fine and dandy. Your skills are needed over here. :


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## numbercruncher (19 January 2009)

Just another day in the GEC .....


Throw another Kangaroo on the Barbi mate


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## CoffeeKing (20 January 2009)

numbercruncher said:


> Just another day in the GEC .....
> 
> 
> Throw another Kangaroo on the Barbi mate




What happed to the Prawns, eh - are they going up in price???   LOL


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## Beej (20 January 2009)

wayneL said:


> Listen you property bulls. The UK Labour party is in dire straits and need some real proper spinmeisters to fool the UK public that all is fine and dandy. Your skills are needed over here. :




No thanks - to be perfectly honest I don't give a rats whats going on back in the land-of-the-low-grey-cloud-with-frequent-drizzle re property values! Before this new fangled internet thing exactly 100% of everyone else in Australia never gave a rats either..... Even now the only people who seem to care are frequenters of internet forums talking about property prices, and half of them don't even live here in Australia anymore!

When you have bought a 4 bedroom/3 bath house in Notting Hill or Kensington for less than AU$1M then I might become interested. In fact, even less than AU$1.5M! 

Beej


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## kincella (20 January 2009)

ok so even Eddie Macguire with all his money cannot buy the house he wants in Portsea.....so stuck with renting for $100,000 a year....The owner has owned the property for over 40 years.....
Moral to the story is....regardless of what the press say about house prices dropping...will drop, should drop, have to drop...whichever way you say it....means nothing at the end of the day....first of all you need a seller....and some houses will never be for sale....handed down through the generations...
Aahh.... Eddy from Broadmeadows, now Toorak, and trying to break into Portsea....
Eddy will be looking for a bargain from a stressed seller, but he might also suffer that other disease..named....'waiting for the price to come down'

http://www.news.com.au/heraldsun/story/0,21985,24935305-2862,00.html


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## wayneL (20 January 2009)

Beej said:


> No thanks - to be perfectly honest I don't give a rats whats going on back in the land-of-the-low-grey-cloud-with-frequent-drizzle re property values! Before this new fangled internet thing exactly 100% of everyone else in Australia never gave a rats either..... Even now the only people who seem to care are frequenters of internet forums talking about property prices, and half of them don't even live here in Australia anymore!
> 
> When you have bought a 4 bedroom/3 bath house in Notting Hill or Kensington for less than AU$1M then I might become interested. In fact, even less than AU$1.5M!
> 
> Beej




So you don't see the connection between the western economies; you don't see how other economies can be predictive of your own?

It's your money dude.


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## lioness (20 January 2009)

Take a look at this property, right near where I live.

Obviously prices are not falling inner city. A hefty price really for what you get. No outdoor space besides a deck.

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007498671&s_rid=buy:HaveYouConsidered

Doesn't look like property is falling to me. 

Robots, this area outperforms your St Kilda, go and check annual growth.


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## Beej (20 January 2009)

wayneL said:


> So you don't see the connection between the western economies; you don't see how other economies can be predictive of your own?
> 
> It's your money dude.




I think you are massively over-rating the connection with respect to the residential property market.... What does the average Aussie care about what a house costs in London or Manchester? There are many occasions when different countries R/E markets can and have moved in completely different directions/trends. The UK is one of the best examples. We can see that happening right now with the US and the UK in the doldrums for reasons of their own making. We feel the impact economically, but also in different ways and currently after 18 months of falls in the US/UK we are seeing nothing like that trend over here in residential property prices.

We have nothing like their credit rationing, we don't have anything like their foreclosure rates, or sub-prime lending stupidity, our banks are not collapsing, recessionary forces are gathering later due to the damping effect we enjoyed from the resources boom, which gives a good chance of a shorter time between decline and recovery, as any economic recovery will likely occur in-line with the other western economies, our exchange rate falling adds more damping to the system, and in an international context actually lowers the cost of our real estate anyway, etc etc. Particular regions here have specific issues (eg Perth, SEQ), but generally across the rest of the country the property market is OK - not flooded with property for sale or loads of forced sales and so on, FHB numbers increasing, which will feed through the chain over the next 6-12 months as it always does.

Economies are certainly linked yes by trade and the international finance system etc etc,no denying that! But large aspects of national economies can and do also march to their own tune despite the broader context, and this is seen historically repeatedly time and time again. Dogged assertions that house price falls in say the UK or the US automatically mean house prices will fall across the board in AU are dramatic, and can try to garner credibility through the air of "offshore expats no better than you yokles" and all that, but at the end of the day such assertions are overly simplistic and by no means gospel.

Beej


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## jwbroughton (20 January 2009)

Gday - new to the forum - am wanting to buy an appartment in the Melbourne CBD - 2 bed 1 car - is it worth waiting or should we jump in asap - our reason is 1/ for our children to have somewhere to live in 18 years time when they are in Uni - we live in the bush - and 2/investment over this time - and 3/ somewhere for us to experience melbourne when the kids have finished with it.

Any feedback welcome,

Thanks

Jeff


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## nomore4s (20 January 2009)

kincella said:


> ok so even Eddie Macguire with all his money cannot buy the house he wants in Portsea.....so stuck with renting for $100,000 a year....The owner has owned the property for over 40 years.....
> Moral to the story is....regardless of what the press say about house prices dropping...will drop, should drop, have to drop...whichever way you say it....means nothing at the end of the day....first of all you need a seller....and some houses will never be for sale....handed down through the generations...
> Aahh.... Eddy from Broadmeadows, now Toorak, and trying to break into Portsea....
> Eddy will be looking for a bargain from a stressed seller, but he might also suffer that other disease..named....'waiting for the price to come down'
> ...




rotflmao, so now you are drawing comparisons to Eddie and very high end properties to normal everyday workers and the property they can afford?

Lets be realistic.

Whether you property bulls want to admit it or not the risks to the downside are alot higher than normal for property atm. The economy is starting to show some serious cracks, overseas economies are continuing to deteriorate at alarming rates and even China the great saviour has slowed dramatically. This recession has the potential to be the worst recession we have seen in our lifetimes.

I see no harm in waiting to see how things play out over the next 12 months or so before jumping in, the upside atm appears very limited, so I doubt very much I'm going to miss the next boom like some of the bulls would have you believe.

In the current environment managing you debt & risk levels would appear the most prudent thing to do. As we have seen in both the US & UK "solid" assets can deflate in price very quickly after the bubble bursts and the thing that worries me is we are still at bubble levels when compared to the rest of the western world - a warning sign at the very least.

In both the US & UK there are plenty of stories coming out about families getting into alot of trouble with debt levels when 12 months ago they were meeting thier obligations with ease. Whether this happens in Oz or not is yet to be seen but being prepared for it seems prudent to me - either way you will be in a strong position when this mess is resolved.

IMO we are in a good position here in Oz as we have had a window into what could happen here, those who are not prepared and who have ignored the warning signs will only have themselves to blame if things do get as bad here as we have seen in the US & UK.


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## noirua (20 January 2009)

Beware my friends. Spain, who's property market has been hit the hardest in Europe, has seen prices fall by as much as 50% to 60% in some areas. Sale board production is the strongest industry in coastal cities and towns.


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## Beej (20 January 2009)

Nomore4s - those are reasonable comments. But what one should do all depends on your current circumstances right? Ie,

* if you are a current PPOR owner should you panic and sell and rent in anticipation of re-entering the market at a lower price? That would be a high risk strategy for sure and possibly a huge mistake! Rents could sky rocket, you could be forced into several expensive moves, you might not be able to buy what you had before when prices are supposedly lower, etc etc.

* If you currently own long term investment properties should you panic and sell them all? I think would depend to a large extent on the individual and their situation? Some might want to take something off the table, others might want to hold on - especially if they have positive cashflow in the current environment from there holdings? A few will lose their jobs/income and might have to sell, but I suspect there won't be as much as that as many expect.

* If you are a FHB looking to enter the market, and say you have a young family and are looking for the stability and security of owning your own home - should you buy now? Well you get generous government grants, little/no stamp duty, interest rates are low, and it is a buyers market, so are the downside risks really that great? What if your mortgage interest payment were going to be about the same as your current rent? Surely there is little downside risk there regardless of what happens to paper values in the short term?

* If you are purely a short term peculator who doesn't need or want to own a house for any other reason, then yes risks are currently to the downside, but there are still good opportunities because of the fear if you do your homework and have an appetite for the risk and possibly great reward in the medium/long term. So again really depends on your individual circumstances doesn't it?

Just trying to show that things are not so black and white.

Cheers,

Beej


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## kincella (20 January 2009)

I know of at least 4 prop bears on another forum...they all sold their props between 2000-2003..each said they had hit the highs of the market....were sitting on cash and would wait for the prices to drop to get back in........
of course they are still waiting for prices to go lower than their sale price......
they were way out on their calls...rental rates gone up, and all the costs of buying and selling are still there.... I call them HERO'S.....and still making excuses


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## nomore4s (20 January 2009)

Beej, I do agree. What action you need to take depends on your individual circumstances, investment timeframes and goals, as is the case with all investments.

Obviously someone with multiple properties with huge amounts of equity and a solid income stream is going to take different action to someone with a large mortgage on say a couple of properties and who is at risk of having thier income reduced during this econmic downturn.

Be prepared is all I'm saying, we've seen how quickly things can deteriorate once the rot sets in and we are lucky here to be able to set ourselves, just manage your risks. If it doesn't get as bad here great we will all be better off.


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## gfresh (20 January 2009)

Sharemarket is great for teaching you to take small losses, rather than large ones later  .. even in property I would say that could be valid if things get much worse. People in WA must be wondering that right about now. 

I think the comment about "this could be the worst recession in our lifetimes" is very true, and accurately shows the seriousness of what we are presently facing. This is no walk in the park, no early 2000's, the rate of contraction is already looking worse than the start of the 90's. 

What was the outlook like just 6 months ago, compared to what it is like now? It wasn't that long ago that people were completely denying job losses, still believing in the China story, still believing Australia would come out unharmed and all sorts of things that the bears were saying were b.s. 

If things are still moving downwards as they seem, 6 months could be many times worse than the situation now, and 12 months could see Australia in quite a different way. 

Already what seem to me like begging is coming out of industry groups "please, please help us, this is getting bad, and we've finally worked it out, we can see things getting much, much worse". 

http://www.theage.com.au/national/act-to-save-jobs-now-actu-20090120-7l6c.html

It's becoming more obvious, the d&g is spreading, it's not just fringe Keen characters, it's Access Economics, head economists of major banks - the ones who were talking it up 6 months ago. Even Mr Eastlake came out the other day saying "this is Depression like conditions for the US and UK".. and he's usually quite bullish.


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## sinner (20 January 2009)

Negative equity once again bites beyond those in poor credit:

http://www.nytimes.com/2009/01/20/business/economy/20builders.html?pagewanted=2&ref=business


> Dave Brown, one of this [Tempe, Az] city’s best-known home builders, had kept his head above water through the housing downturn, not missing a single interest payment on his loans.
> 
> Though Dave Brown's home-building firm had not missed a payment during the housing downturn, one of his banks suddenly demanded millions of dollars in additional collateral.
> 
> ...


----------



## robots (20 January 2009)

jwbroughton said:


> Gday - new to the forum - am wanting to buy an appartment in the Melbourne CBD - 2 bed 1 car - is it worth waiting or should we jump in asap - our reason is 1/ for our children to have somewhere to live in 18 years time when they are in Uni - we live in the bush - and 2/investment over this time - and 3/ somewhere for us to experience melbourne when the kids have finished with it.
> 
> Any feedback welcome,
> 
> ...




hello,

i would not go for a tower, look for low rise (5 or less levels) around south yarra, prahran, st kilda, nth melb, fitzroy etc

avoid lifts, some in southbank dont have lifts and dont buy of the plan, go for top floor if you can as body corp looks after you a lot better (less hassles)

if you have the cash then do as you please,

yes, lioness great area Fitzroy have been venturing there more often on the ironhorse recently, hope you killing it brother

thankyou
robots


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## Trevor_S (20 January 2009)

http://www.brisbanetimes.com.au/articles/2009/01/20/1232213610723.html



> LJ Hooker New Farm real-estate agent Julie Sowter said that at any given inspection, she is swamped with 30 to 40 people desperate to secure a long-term lease agreement.



...


> Property analyst Michael Matusik said rents rose an average 14 per cent in 2008 and will increase by at least another 7 per cent in the year ahead.



...


> Brisbane's one per cent vacancy rate means any available property is quickly snapped up




I thought this interesting, 



> However, a recent survey found the majority of prospective tenants consider price the least important criteria for the perfect home, with location and quality topping the list.




personally, for me price would be at the top of my list eg it would have to be $X or below for me to consider it, then take the best of the bunch I could get at the price I could afford.  I guess I don't understand how price is not the most important factor.


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## So_Cynical (20 January 2009)

Property market in free fall....from realestate.com.au

http://www.realestate.com.au/doc/Resources/News/wa-property-freefall.htm

The West Australian property market is being decimated following the evaporation of the 
resources boom, with values of $1 million-plus *properties plummeting 20 per cent* and 
the equivalent of more than two years' supply of homes flooding real estate agencies.

In Geraldton, *rents have slumped 8 per cent* and in the state's northwest fibro shacks 
that had been fetching rents of $1000 a week are sitting vacant as formerly high-paid 
mining executives face widespread retrenchment.


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## gfresh (20 January 2009)

Rubbish..  nobody I know actually has had any trouble in Brisbane in the last 12 months finding rentals.. People wanting to live in the "name" suburbs such as New Farm, Paddington, etc on a budget deserve what they get.

Bet you the people queing are looking for places under $300/wk


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## Beej (20 January 2009)

So_Cynical said:


> Property market in free fall....from realestate.com.au
> 
> http://www.realestate.com.au/doc/Resources/News/wa-property-freefall.htm




Already posted and discussed on the previous page dude!

Beej


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## lioness (20 January 2009)

robots said:


> hello,
> 
> i would not go for a tower, look for low rise (5 or less levels) around south yarra, prahran, st kilda, nth melb, fitzroy etc
> 
> ...




Cheers Robot, yes so far made a killing here and ready to snap another 4 up by end of 2010. With fixed rates coming down to 4% you *CANNOT* lose.


----------



## nomore4s (20 January 2009)

lioness said:


> With fixed rates coming down to 4% you *CANNOT* lose.




That's what people & corporations in the US & UK thought but they were obviously wrong.

That is a stupid comment imo, there is no such thing as a sure thing, when ever you use leverage there is always a risk.
The position you are in gives you an advantage but failing to acknowledge the risks and thinking you can't lose is asking for trouble in any market imo.

If this is the sort of risk management the banks have in place - and lets be honest this is the type of risk management banks worldwide have had in place for the last few years - none, then we are all screwed


----------



## doctorj (20 January 2009)

lioness;387896With fixed rates coming down to 4% you [B said:
			
		

> CANNOT[/B] lose.



Really?  That's a huge call.

What happened to Japanese property prices while they were at basically 0% interest?  How does suppy of land in Aus differ to Japan?

No such thing as a sure thing, least of all in this market.


----------



## juddy (20 January 2009)

quote from a poster on a different forum.

"AUS is the leader in the property market...and in fact both the UK and the US follow our leads....
I have seen charts to prove this...."

:bonk:


----------



## dodgers (20 January 2009)

juddy can you post the charts?

whilst this may be true for the last 15 years as china has become a superpower it will be less relevant in the short/medium term as china tanks


----------



## juddy (20 January 2009)

dodgers said:


> juddy can you post the charts?
> 
> whilst this may be true for the last 15 years as china has become a superpower it will be less relevant in the short/medium term as china tanks




no, that is a quote from that poster. He lurks somewhere here as well, maybe he can enlighten us.


----------



## 2BAD4U (20 January 2009)

lioness said:


> With fixed rates coming down to 4% you *CANNOT* lose.




Heck why stop at 4%, people seem to think we're heading for 2%.  But it wasn't that long ago we were being told double digit rates were on the way and people went and locked in their rates at 8%, and now they're crying because of the fees to break the contract (suffer in your jocks I say).

People will move on property when it is right for them. Lioness, if time, money and circumstances suit you then good luck.


----------



## robots (20 January 2009)

juddy said:


> no, that is a quote from that poster. He lurks somewhere here as well, maybe he can enlighten us.




hello,

maybe you can post the link to the post this person made on the other forum juddy,

i can enlighten you juddy that we still at 7-8x income to average price, rents pumping up, money renting rates coming down, nirvana

hang in there brothers aussieland is cruising, well done

thankyou
robots


----------



## juddy (20 January 2009)

robots said:


> hello,
> 
> maybe you can post the link to the post this person made on the other forum juddy,
> 
> ...




You agree that other property markets follow Australia then?


----------



## wayneL (21 January 2009)

Beej said:


> I think you are massively over-rating the connection with respect to the residential property market.... What does the average Aussie care about what a house costs in London or Manchester? There are many occasions when different countries R/E markets can and have moved in completely different directions/trends. The UK is one of the best examples. We can see that happening right now with the US and the UK in the doldrums for reasons of their own making. We feel the impact economically, but also in different ways and currently after 18 months of falls in the US/UK we are seeing nothing like that trend over here in residential property prices.
> 
> We have nothing like their credit rationing, we don't have anything like their foreclosure rates, or sub-prime lending stupidity, our banks are not collapsing, recessionary forces are gathering later due to the damping effect we enjoyed from the resources boom, which gives a good chance of a shorter time between decline and recovery, as any economic recovery will likely occur in-line with the other western economies, our exchange rate falling adds more damping to the system, and in an international context actually lowers the cost of our real estate anyway, etc etc. Particular regions here have specific issues (eg Perth, SEQ), but generally across the rest of the country the property market is OK - not flooded with property for sale or loads of forced sales and so on, FHB numbers increasing, which will feed through the chain over the next 6-12 months as it always does.
> 
> ...



The connection was rather obvious when credit and prices were booming, it was a anglo-saxon political-financial phenomenon.

Likewise the Oz economy is intrinsically linked to other anglo economies when there is a downturn. The Olympics served to delay the effects on Oz, because of commodity demand. Of course there are individual factors in each country, but property investors should pay close attention to London Manchester, New York and LA, in the same way that stock investors do.

Stock markets are linked.

Bond Markets/interest rates are linked.

GDP growth is linked.

Yet, you cannot see that property values are linked?

But, believe what you want, it's your money.


----------



## robots (21 January 2009)

hello,

exactly Wayne, its our money and we can do as we please with it, yes

i have said numerous times we miles ahead of these countries, i am not allowed to mention my view on why as I will get banned (just put an arnie action movie in the vhs and you will see why)

i am not interested on who leads who, many are just looking for another excuse

well done brothers money renting rates coming down in 2 weeks time this is utopia

thankyou
robots


----------



## wayneL (21 January 2009)

*Tech/A*

A while back you were asking me about yields over here. Here is the sort of deal that is turning up... up to ~9.75% gross yield (and tenant pays council tax) on asking prices. No stamp duty either at < £175,000.

http://www.ludlowthompson.com/338854


----------



## Beej (21 January 2009)

FYI to all, APM have recently updated their website with property sales data up to end Dec 08. I haven't seen any aggregate data for the whole 08 4th quarter released as yet, which I am eagerly awaiting, but it is interesting to look at some of the suburb by suburb information available there. (http://www.homepriceguide.com.au/snapshot/index.cfm?s_rid=APMHomePage:Demographics:Link)

One pertinent example: take a look at Mosman (postcode 2088) in Sydney, which is been referenced prominently in many negative newspaper articles as a prestige suburb currently suffering a big downturn in sales and prices. The latest data backs this view (in part) up showing that in the last 6 months the median house price has fallen by 20% (from $2.25M -> ~$1.8M). This is of course due in large part to a lack of sales of higher end properties ($3M/$4M/$5M etc) and a higher proportion than "normal" of lower priced properties (for that area), skewing the figures downwards somewhat.

However, the median price for UNITS in Mosman (and there are quite a few in the area) have actually RISEN by 2% over the same period ($527k -> $538k). This would seem to support other published data showing an increase in FHB numbers and more activity in Sydney in the lower/mid price ranges, plus rising rents are probably also a factor there. So an investor or OO holding a unit in a prestige suburb like Mosman would actually be quite happy with the prices holding up well during a down property market and rent on the up....

There are lot's of other interesting suburbs to look at. Both suburbs where I sold property last year show basically flat median price growth for houses up to Dec 08, but again units show a RISE of 21% in one of them! (probably some other factors at play there as well though). Likewise where I bought my new PPOR, there aren't any falls shown either - probably due to the fact that there is very little property actually on the market, plus 50% of homes in the area are owned outright with no mortgage (this and other demographic data is also available from that APM web site). So I expect prices there to continue to hold up well, and rise strongly in the long term.

A few lower priced suburbs I checked like Kingsgrove, Bankstown, Belmore show increased median house prices. Blacktown, Liverpool and similar have been basically flat - which is good considering they were under real pressure over the past couple of years as interest rates were ratcheting up - looks like they have stabalised despite the international/economic climate. Mid range suburbs like Ryde - houses down 5% but unit UP 7% ($307k -> $330k). Hornsby - houses UP 9% ($505k -> $550k), units UP 6% ($332k -> $353k).

Bottom line - if you are thinking of buying for any reason in the next N months or years, don't just judge the market by newspaper headlines - do your own research, especially for the particular area you are interested in buying in. The story may not be what the headlines and/or property bears here suggest...... The data I looked at also suggest that Sydney at least has held up pretty well (as expected) through to the end of 2008.

Cheers,

Beej


----------



## knocker (21 January 2009)

Beej said:


> FYI to all, APM have recently updated their website with property sales data up to end Dec 08. I haven't seen any aggregate data for the whole 08 4th quarter released as yet, which I am eagerly awaiting, but it is interesting to look at some of the suburb by suburb information available there. (http://www.homepriceguide.com.au/snapshot/index.cfm?s_rid=APMHomePage:Demographics:Link)
> 
> One pertinent example: take a look at Mosman (postcode 2088) in Sydney, which is been referenced prominently in many negative newspaper articles as a prestige suburb currently suffering a big downturn in sales and prices. The latest data backs this view (in part) up showing that in the last 6 months the median house price has fallen by 20% (from $2.25M -> ~$1.8M). This is of course due in large part to a lack of sales of higher end properties ($3M/$4M/$5M etc) and a higher proportion than "normal" of lower priced properties (for that area), skewing the figures downwards somewhat.
> 
> ...




What is you point? Wake up and smell the roses mate. Just because your so called reliable data says prices were stable last quarter means diddly squat. Might as well read the newspapers, or use them along with the other BS that is being published about realestate, in the dunny.


----------



## Beej (21 January 2009)

knocker said:


> What is you point? Wake up and smell the roses mate. Just because your so called reliable data says prices were stable last quarter means diddly squat. Might as well read the newspapers, or use them along with the other BS that is being published about realestate, in the dunny.




Thankyou for such an insightful and analytical response to my post! Very persuasive.....

Beej


----------



## knocker (21 January 2009)

yes it is about as cryptic as you initial post.


----------



## gfresh (21 January 2009)

I enjoyed it   I think it's probably fair to say the FHG has put a bit of a floor on the lower-end from falling too much (same in inner brisbane) for the moment.. BUT the question is whether it's the larger grant, lower interest rates, or a combination of both?

If it's the grant, then June that ceases, and February (more than likely) we will get our 1/1.5% drop and that will be "it" for rates too. From there, other than Rudd pulling out another housing rabbit (possible), the market will be left to whether it can sustain itself, or not.. and as we've seen in the UK and the US, recessionary forces seem to overpowering any interest rate cut movements.


----------



## gfresh (21 January 2009)

Some interesting charts on wages I've quickly done up.. total wages, including part-time + full time, which is probably the most important one. These are only nominal, not inflation adjusted. 

* From 2000, Queensland wages went from approx $600 -> $870 (45%)

* For NSW same period, wages went from approx $650 -> $910 (40%)

So it is probably right to argue that strong wage rises have supported higher housing prices. Conversely, house prices in QLD  have increased by much more than these figures (in most reasonable areas), so was that justifiable? Another question re: QLD - are these wages a bubble due to resources?? Are they sustainable?

Very interestingly, for NSW, wages have actually started to flatten off since mid-2007. Since 1983, we can see this has never happened for this length of time. This should be a big concern to NSW investors... how is a flattening, if not even reduction in wages going to support and large rises in prices if this trend continues for much longer?

I have a feeling there would be a bit of "padding" on these incomes over the last 8 years as well due to extra income from share portfolios, property income, bonuses and other such items when times are good. Which must be shrinking already.


----------



## Glen48 (21 January 2009)

Those 3,000 who use to work for Crazy Clarke's etc will be out today selling houses.
Few days time BHP and RIO workers homes going on the market.
Few days time more sellers .....


----------



## lioness (21 January 2009)

Glen48 said:


> Those 3,000 who use to work for Crazy Clarke's etc will be out today selling houses.
> Few days time BHP and RIO workers homes going on the market.
> Few days time more sellers .....




Yes, Glen, good thinking, wait for all the unemployed to dump their houses and buy them for 50% discounts. I am thinking the same as you, getting ready to load up over the next few years.

That was what you were thinking right? Or are you just thinking misery full stop?


----------



## knocker (21 January 2009)

So can anyone tell me what Australia does, aside from important foreign students et al? sell chucks of land and or dig it up? and now they can not even ek a living from farming because they have built to many houses. lol


----------



## knocker (21 January 2009)

lioness said:


> Yes, Glen, good thinking, wait for all the unemployed to dump their houses and buy them for 50% discounts. I am thinking the same as you, getting ready to load up over the next few years.
> 
> That was what you were thinking right? Or are you just thinking misery full stop?




be my  guest lioness. then what will you do when the bank comes after you? lol


----------



## nomore4s (21 January 2009)

knocker said:


> be my  guest lioness. then what will you do when the bank comes after you? lol




lol, get bailed out by the government.:

But you cannot lose, don't ya know


----------



## Beej (21 January 2009)

knocker said:


> So can anyone tell me what Australia does, aside from important foreign students et al? sell chucks of land and or dig it up? and now they can not even ek a living from farming because they have built to many houses. lol




That's right! Everyone in Oz just sits around making smart a*se comments on internet forums all the time and no one in the whole country ever does anything productive - you are a great example!! 

Beej


----------



## IFocus (21 January 2009)

Beej said:


> That's right! Everyone in Oz just sits around making smart a*se comments on internet forums all the time and no one in the whole country ever does anything productive - you are a great example!!
> 
> Beej




Here in the west where we do dig up dirt and ship it the BHP news today has really shaken a lot of cages unfortunately agriculture is also taking a dive income down 40% according to a headline the other day.

This all flows back to mortgage payments at some time in the future and it doesn't just stop at the WA border....its coming to a suburb near you soon I think


----------



## nomore4s (21 January 2009)

Probably been posted before but....

Just to reinforce what IFocus has just said.

Bankruptcies on the increase in WA, this article is from the 5th of Jan so with more mining jobs going expect it to keep increasing.

Alot of jobs starting to be shed pretty viciously now, as well as things like the Storm Finance debacle house prices could really start to come under pressure as our economy continues to deteriorate.

On an a side note - business up here while still plentiful it is now becoming harder to get paid, over the last few years we have very rarely had to chase money but now we are having to chase a lot of payments down - and it's not just us. A sure sign money is slowly drying up.


----------



## MrBurns (21 January 2009)

nomore4s said:


> Probably been posted before but....
> 
> Just to reinforce what IFocus has just said.
> 
> ...





And we're still only in January.........


----------



## 2BAD4U (21 January 2009)

IFocus said:


> Here in the west where we do dig up dirt and ship it the BHP news today has really shaken a lot of cages unfortunately agriculture is also taking a dive income down 40% according to a headline the other day.



Income may be down but so are input costs (grain, fuel, etc). This flows on to cheaper food.  Cheaper food, fuel and mortgage repayments puts money back in peoples pockets and takes the pressure off. I'm sure most of you know someone who 6-12 months ago were thinking of selling but have changed their minds now.

With regard to BHP, Ravensthorpe (and surrounding areas) will suffer declines in house prices, this won't necessarily have as big an impact in Perth, still plenty of work for trades people. Other states will be impacted upon slightly as many who escaped through the rabbit proof fence seeking those mythical big bucks, return home. Depends on what they did when they moved here. Did they sell up and were saving. Did they pay off their house over the last few years.

You also have to consider the one's that don't have property and blew it all on booze, cars and jet skis.  If you're in the market for a V8 ute or jet ski, there will be some cheap ones on the market soon.


----------



## Glen48 (21 January 2009)

Lioness,
50% off house prices you are game I will buy in when they get below that figure.
Just keep watching Patrick.net to find out when to buy back in and see what we have ahead of us.
Shopping centers are starting to close 3 week after the $10.4 B went in.
George Soros is quoting 90% so I am picking about 70-80% and will pay cash from the profit I make on Gold, if I can get it off my Wife that is. 
Then B.O. could preform a some magic trick/s....not


----------



## 2BAD4U (21 January 2009)

Glen48 said:


> George Soros is quoting 90% so I am picking about 70-80%




That means you could pick a unit for about $20k - $50k and a house for about $30k - $80k.  Yeah right. :screwy:

For that to occur you would basically have no demand for housing AT ALL.  No first home buyers, no investors, no people moving into their 2nd or 3rd property.  Your scenario means that people will no longer need the basic necessity of shelter.

_"But there's going to be mass unemployment and with negative equity people will be forced to sell." _OK, but they still have to live somewhere so investors start buying property (oops we have demand) and suddenly there are more renters on the market (but rents will fall remember). Based on those figures and rent of $250 / wk (becuse you seem to think that rents will fall) that means a return of between 16% - 65%.

Now with interest rates at 5% that means any property returning more than 5% net is a cash positive investment. So for your scenario to occur (no demand) every single person would ignore the opportunity to create an income stream..........something that just won't happen.

But hey, if you're right then I'll buy 100 houses and a 65% yield I'll make millions.


----------



## lioness (21 January 2009)

Glen48 said:


> Lioness,
> 50% off house prices you are game I will buy in when they get below that figure.
> Just keep watching Patrick.net to find out when to buy back in and see what we have ahead of us.
> Shopping centers are starting to close 3 week after the $10.4 B went in.
> ...




Glen, don't get carry away with that website, it is USA brainwash material. same rules dont apply here such as non recourse, no doc making up most of leverage, over supply etc etc. We have gone over all this. Expect a 30% fall and load up I say.


----------



## Glen48 (21 January 2009)

That's what is happening in USA and 09 is worse that 08. We owe more than USA per head but not as much as UK.
We have been living on borrowed time due to the Games.
Over 7,000 lost their jobs to day, that we know of,  3 weeks into the New Year and more bad news in the Morning.
The credit bubble gets every on who deals with Money any where in the World. 
We have to wait until 2014 before any sign of things improving.


----------



## MrBurns (21 January 2009)

Any more than 30% and you're looking at a real disaster here.
I think 30% would pull it up.


----------



## Glen48 (21 January 2009)

Sales in the city of Toronto are off 54 per cent in the first 15 days of 2009, while prices are down more than $40,000 for the average home. Homes in the  suburbs were not hit as hard, with sales down 47 per cent and prices off $26,000.
If this can happen in Toronto it can happen any where.
The credit bubble is not forgiving.


----------



## satanoperca (21 January 2009)

Hi,

While it seems extremely unlikely that we would see falls of more than 20%, 60% is not impossible. I would buy at a 10-20% fall if I felt the conditions where feasible for my own personal situation (i.e. inflation is controlled, unemployment was <8%, IR <8% and growth was > = inflation). I may not be willing to buy at a 60% reduction. Why? For this to occur the environment may have changed from wanting a roof over my head and the ability to find work to just surviving as we often see in war (deflation, IR rates 0, employment nowhere to be seen, growth <0%). One can always create feasible scenarios to provide credence to most statements, whether they come true or not is another thing.

Heavy price reduction across the board means lifestyles as we currently have would have to change severely. Will this happen, I don't now but the governments around the world are trying to sort credit/debt problem out so it must be kinda bad. While the issue of using tax payers money to prop up an outer control industry seems wrong. Using debt to inflate asset prices for short term gain is not feasible in the long run, if we all wanted to live in a great society like we have today.

Please no-one call me a newbie as has occurred in another forum when giving an opinion that it is not implausible for house prices to drop more than 20%. 

I admit I little about anything, but I would like to express an opinion and open it up to constructive criticism.


----------



## Beej (21 January 2009)

A credit bubble is only a bubble if a significant proportion of the money lent will never likely be paid back - al la US sub prime.

In Australia, our interest rates were very high by world standards while the US and even the UK had virtually free money for half a decade. I know - I spent considerable time in and did business in the US during this period and the conditions over there wrt to availability of finance were COMPLETELY different to the situation here. Consequently, as our interest rates drop, even with rising unemployment - short of absolute economic disaster - the odds of credit that came into existence in the last 10-15 years being repaid are actually increasing, rather than decreasing. This applies especially to credit associated with housing, rather than business finance. It's business loans in reality is where most credit associated risk currently lies in this country.

I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they? If they have no mortgage, even unemployment is manageable. If they have a mortgage and a job, loan servicing costs and living costs are falling and only going to get lower over the next year. There will be the odd forced sale but the wholesale crash many are looking for is still fantasy land.......Anyway, as soon as anyone has some significant AUSTRALIAN stats that prove me wrong please post them - I've been waiting for the past year nearly for that to happen so far nada of any significance, and plenty of stats/evidence to the contrary.

Cheers,

Beej


----------



## MrBurns (21 January 2009)

The prices will take around 2 years to retreat fully.
Some forced sales, other sales just as a matter of course but the prices wont be there, so they sell at market or not at all so the next house is valued down and so on.
Those with no mortgage dont care, why should they.
Rock bottom prices ? what's that ? the price is the market price, doesnt matter if you're buying and selling on the same market.


----------



## nomore4s (21 January 2009)

satanoperca said:


> Hi,
> 
> While it seems extremely unlikely that we would see falls of more than 20%, 60% is not impossible. I would buy at a 10-20% fall if I felt the conditions where feasible for my own personal situation (i.e. inflation is controlled, unemployment was <8%, IR <8% and growth was > = inflation). I may not be willing to buy at a 60% reduction. Why? For this to occur the environment may have changed from wanting a roof over my head and the ability to find work to just surviving as we often see in war (deflation, IR rates 0, employment nowhere to be seen, growth <0%). One can always create feasible scenarios to provide credence to most statements, whether they come true or not is another thing.
> 
> ...




I generally agree with your post. If we start to see falls greater than 50% across the board very few people will be in a postion to take advantage of it, we may all just be concerned with survival.

Alot will depend on how bad unemployment gets imo.


----------



## nomore4s (22 January 2009)

Beej, while your post has some merit, the fact is there has been a global credit bubble and saying that just because our default levels won't be as high as the US doesn't change this fact.
The fact Aussie banks in the last 6 or so months have raised thier provisions for bad debt by quite a bit should be a warning sign that not all is well, and shows the Aussie banks haven't been as strict with thier lending as they should have been. If unemployment continues to rise we will see an increase in default rates in Oz.

Also it won't just be an increase in supply that will have an effect on the property market but reduced demand as loans become harder to qualify for, credit has been extremely easy to get in the last few years but this is changing very rapidly.
Also bank valuations on property will continue to be lower as the banks become more conservative in thier estimates. This will mean you will have to have a larger deposit.
Eg - You want to buy @ $300,000 but bank values it @ $250,000 and will therefore only lend you 95% of $250,000 ($237,500) so instead of needing a $15,000 deposit you now need a $62,500 deposit.
This will also have an effect on the market imo.

But you are right about the fact we are yet to see this play out in Oz and we may get extremely lucky and not see it happen here but as more and more info comes out I feel that we will see things deteriorate badly in Oz.


----------



## Glen48 (22 January 2009)

If USA prices are down to $500 for a house and Counties are leasing their street to finance their ongoing cost why wont the same happen here?
USA un-employment is about 10 to 20% depending where you get your figures from.
Plus USA took out a loan over Xmas:
http://static.seekingalpha.com/uploads/2009/1/20/saupload_scary_2.jpg


----------



## So_Cynical (22 January 2009)

Beej said:


> I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they?




I wonder how many share holders sold to make the stock market crash 50%?..i reckon 
u only need 10 or 15% of any market to sell, to drive the price of anything lower.


----------



## wayneL (22 January 2009)

So_Cynical said:


> I wonder how many share holders sold to make the stock market crash 50%?..i reckon
> u only need 10 or 15% of any market to sell, to drive the price of anything lower.




Equally pertinent is that there are just as many shares on issue now as a year ago, therefore probably the same number of shareholders. All that has happened is that shares have changed hands at a lower price.


----------



## numbercruncher (22 January 2009)

Hello,


Hows the realestate "boom" going ?


Thankyou


----------



## prawn_86 (22 January 2009)

Beej said:


> I just don't see why you all think that everyone that owns property is suddenly going to decide to sell it a rock bottom price! Why would they?




This is the typical bull quote when things start to fall.

Look at almost any stock thread 18 months ago and you will see people saying things like, "I dont understand why someone is selling now when the fundamentals suggest the share is worth $X". It doesnt stop people selling just because the price has fallen, thats the beauty of a free market


----------



## knocker (22 January 2009)

numbercruncher said:


> Hello,
> 
> 
> Hows the realestate "boom" going ?
> ...




Hello,

Word is robots just overdosed in lovely St Kilda.

thankyou


----------



## Aussiejeff (22 January 2009)

Glen48 said:


> If USA prices are down to $500 for a house and Counties are leasing their street to finance their ongoing cost why wont the same happen here?
> USA un-employment is about 10 to 20% depending where you get your figures from.
> Plus USA took out a loan over Xmas:
> http://static.seekingalpha.com/uploads/2009/1/20/saupload_scary_2.jpg




Oh, poor child - you look a bit stressed. Here you go - puff on some of these new fangled Obama-Lite ciggies. They'll make you imagine everything is ok.

Feeling better now??

*coff*
*splutter*


----------



## knocker (22 January 2009)

Aussiejeff said:


> Oh, poor child - you look a bit stressed. Here you go - puff on some of these new fangled Obama-Lite ciggies. They'll make you imagine everything is ok.
> 
> Feeling better now??
> 
> ...




so that was what those 2 million people were doing in washington. lol
God bless america

p.s. you better pass some of the whacky tobacky to robots as well.


----------



## Glen48 (22 January 2009)

Why is when shares are high people sell yet don't with  R.E.?
If you don't want to sell that's your business  to me living in a home that you could of sold for say twice the price doesn't make sense.
You also have to look at buyers freezing because they don't know where the bottom is and as prices come down you will have an over shoot.
I saw some bloke complaining he has lost his job and just purchased an " investment" property there could be 2 houses on the market just there.


----------



## ROE (22 January 2009)

Glen48 said:


> Why is when shares are high people sell yet don't with  R.E.?
> If you don't want to sell that's your business  to me living in a home that you could of sold for say twice the price doesn't make sense.
> You also have to look at buyers freezing because they don't know where the bottom is and as prices come down you will have an over shoot.
> I saw some bloke complaining he has lost his job and just purchased an " investment" property there could be 2 houses on the market just there.




Uncle Warren taught me, only borrow when you are 100% sure you will win..with Negative Gearing doesn't sound like a 100% win to me.

but then again Uncle Warren theory on the helper, helping themselves is too true in the real world.


----------



## 2BAD4U (22 January 2009)

Glen48 said:


> Why is when shares are high people sell yet don't with  R.E.?



Simple. To some people their house is their castle and they wouldn't sell at any cost. They are not in it for the money.  Don't underestimate the human emotion and how attached some people are to their homes.

Secondly, when you sell shares you only have brokerage. When you sell a house there are agents fees, stamp duty, settlement fees, etc and these can add up to tens of thousands.  So if a home falls 20% you may actually be better of staying, because if you sell that could turn into a 40%+ loss.


----------



## wayneL (22 January 2009)

2BAD4U said:


> Simple. To some people their house is their castle and they wouldn't sell at any cost. They are not in it for the money.  Don't underestimate the human emotion and how attached some people are to their homes.
> 
> Secondly, when you sell shares you only have brokerage. When you sell a house there are agents fees, stamp duty, settlement fees, etc and these can add up to tens of thousands.  So if a home falls 20% you may actually be better of staying, because if you sell that could turn into a 40%+ loss.




Can someone please explain to me why RE is down 20% or more in the US and UK then?

Can someone explain to me why houses went down > 50% in the '30's?

Oh yeah! Excess leverage, overvaluation, unemployment and FORCED SALES!

Prices are set at the margins.


----------



## kincella (22 January 2009)

I know of at least 4 current posters on another forum...sold their props/homes between 2000 - 2003...each called it the high of the market and they were pretty happy, cashed up and would buy back much lower later...well the median price did  go lower for 04 and 05...but bounced back in 06 and 07....the index is back to zero for 08...but it has not dropped below zero like the US and UK
oh and the sellers are still renting and waiting for the lows...to get back in....I suspect they were singles....who would drag families through that situation ?


----------



## kincella (22 January 2009)

former RBA economist and property developer expects prices and rents to rise significantly by the end of this year.... that window of opportunity might start to close sooner than you think
http://www.yourmortgage.com.au/news/2797/default.aspx


----------



## wayneL (22 January 2009)

kincella said:


> former RBA economist, property developer and vested interest expects prices and rents to rise significantly by the end of this year.... that window of opportunity might start to close sooner than you think
> http://www.yourmortgage.com.au/news/2797/default.aspx




corrected for accuracy


----------



## nomore4s (22 January 2009)

lol Wayne, I was thinking the same thing when I saw the property developer bit, what's the bet he has a few developments under way atm


----------



## Beej (22 January 2009)

nomore4s said:


> Also bank valuations on property will continue to be lower as the banks become more conservative in thier estimates. This will mean you will have to have a larger deposit.
> Eg - You want to buy @ $300,000 but bank values it @ $250,000 and will therefore only lend you 95% of $250,000 ($237,500) so instead of needing a $15,000 deposit you now need a $62,500 deposit.
> This will also have an effect on the market imo.
> 
> But you are right about the fact we are yet to see this play out in Oz and we may get extremely lucky and not see it happen here but as more and more info comes out I feel that we will see things deteriorate badly in Oz.




On the valuation ratio point, there is some validity there for sure, but it is primarily an issue for FHBs, representing only about 15-25% of sales. People buying investment properties or 2nd/3rd step up the ladder homes usually have wads of equity and are always WELL above the banks requirements for deposit etc. Now, as we know, FHB numbers are currently INCREASING, as is the total amount of OO lending (ABS stats for Dec 08 quarter) - so they must be getting the money from somewhere, ie the banks must be lending to them happily at current values. QED, there is no evidence of the effect you are describing happening (yet?) here in Oz (as you acknowledge). Additionally, in Nov/Dec last year I had direct experience with bank valuations on 2 properties - one I was selling (needed valuation due to bridging finance requirements), where the valuation came in prior to sale at exactly the amount I ended up selling it for, plus one I purchased, where the banks valuation was HIGHER than what we paid.

So I'm not convinced at all it will become a big issue here.



So_Cynical said:


> I wonder how many share holders sold to make the stock market crash 50%?..i reckon
> u only need 10 or 15% of any market to sell, to drive the price of anything lower.






prawn_86 said:


> This is the typical bull quote when things start to fall.
> 
> Look at almost any stock thread 18 months ago and you will see people saying things like, "I dont understand why someone is selling now when the fundamentals suggest the share is worth $X". It doesnt stop people selling just because the price has fallen, thats the beauty of a free market




On both the above points, I've said it before and I'll say it again - Please repeat after me.... "The property market IS NOT the same as the sharemarket!" Others have already pointed out the emotional, non financially driven connection many people have to their homes, plus the higher buying/selling costs. Additionally, if you sell your shares, you don't then HAVE to go and rent them back at a SLIGHTLY lower cost than owning them! Further, shares are very "global" - huge holdings in our market were dumped by overseas institutions, funds etc etc that needed liquidity desperately because they are in deep doo doo. Most property is owned by people operating purely within our local economic context, so you don't get the o/s driven sell pressure that can spark the type of stock market decline we have just experienced.



numbercruncher said:


> Hello,
> Hows the realestate "boom" going ?




Well Mr Numbercruncher, I posted some numbers for you to crunch a couple of pages back. Many suburbs in Sydney have actually experienced solid median price growth over the second half of 2008 - especially units in prestige and well located suburbs, and houses in some lower priced and mid range area's. Additionally rents have risen by 10-20% over the past year, while interest costs have fallen by ~40%, meaning many investment properties turned cash flow positive as well. So if you bought well, even last year there was good money to made from residential property, and if you sold in one of those area's hoping for falls (and have been paying rising rent in the meantime) and are now looking to buy back in you might be in for a bit of a shock!!  Of course it all depends on the area/region being discussed though - I think you live in Perth right? Completely different situation there by the sounds, but then it did rocket up massively in the 2-3 years prior to 08 - did you get a piece of that action??

Cheers,

Beej


----------



## numbercruncher (22 January 2009)

/cough




> Additionally rents have risen by 10-20% over the past year




linklinklinklink ?


I live in Qld - all bad news here for permabulls - glad to hear your $2M mcmansion is mcboomin , how much would it rent out for matey ?


----------



## kincella (22 January 2009)

I think most of the angst is coming from WA and then QLD...both went 100.000 higher than Syd or Melb....even Hobart is higher.....
So where do you bears reside ?


----------



## Beej (22 January 2009)

numbercruncher said:


> /cough
> 
> linklinklinklink ?




http://www.smh.com.au/news/national/rents-up-65-a-week/2009/01/21/1232471395360.html



> WEEKLY rental prices for Sydney houses rose by almost $65 over the past 12 months, says a report from Australian Property Monitors. The median asking rent for houses in the city has climbed 16.9 per cent to $450 a week since December 2007




On my own PPOR, a conservative rental value estimate I got would place the potential rental yield at 4.5% of what I purchased the property for at the end of last year.

Beej


----------



## Beej (22 January 2009)

numbercruncher said:


> I live in Qld - all bad news here for permabulls -




Oh PS: Is it? I don't know the QLD market as well as I know Sydney, but I just checked a Brisvegas suburb where some friends of mine live up there (Holland Park) and the median house price there has gone up 3% ($518k -> $532k) from the 1st to the 2nd 6 months of 2008.

Cheers,

Beej


----------



## gfresh (22 January 2009)

QLD is starting to go down in the outer suburbs, even on the bottom end. Places that would have easily gone for $330k and got that quickly, are now listed at $300k for many weeks. Places that would have been listed for $400 6 months ago are creeping down to $375. Townhouses a-plenty, and I get the suspicion there aren't enough FHB to buy them all and keep the market afloat. 

What is also noticeable is houses that simply weren't available (at all!) in certain suburbs are coming onto the market in the $350-$400k mark.. Makes you wonder about those townhouses for $300k, with the extra body corporate costs associated.


----------



## gfresh (22 January 2009)

kincella said:


> former RBA economist and property developer expects prices and rents to rise significantly by the end of this year.... that window of opportunity might start to close sooner than you think




Well the fact he's a "property developer" of course means he has a reason to hope this would be the case. Here is a chart showing CPI vs rent index for several cities. 

What is interesting is the early 90's recession, where rent prices flattened right off after heavy rises in the previous years, as landlords were just happy to keep tenants, not squeeze them.

Also shown is Brisbane's "lost decade" of stagnation.. where rent was way below the rest of the country, but eventually ramped up to catch up. 10 years to hold a nonperforming asset is a long time!

Keep an eye on the CPI, even if the rent index is a component of this it's an interesting relationship.. if you're a bull you want to it to keep rising I would say. If it drops off, forget rent rises.

An article tucked away in the major newspaper also supports this view, but of course, we wouldn't that getting too much exposure on the front page would we 

http://www.theage.com.au/national/rent-rises-halted-20090121-7mrj.html



> LANDLORDS may have responded to the slowing economy by avoiding rent rises — taking pressure off tenants hit by double-digit percentage rises last financial year.
> 
> An Australian Property Monitors report said Melbourne house rents were stable in the six months to December 31, with the median asking price for houses unchanged at $350 a week. Units rose 1.6 per cent to a median of $315.
> 
> *It suggests a stark change from the rent hikes and cutthroat competition of the year before,* when reports of illegal rent "auctions" were rife and median house rents rose by about $50 a week, or 15 per cent.


----------



## MR. (22 January 2009)

I've got one......

When interest rates drop property prices rise!

That's why both "commercial and residencial" property is now tanking in the UK!  While interest rates in the past 6 months, have gone from 5% down to 1.5%.


----------



## numbercruncher (22 January 2009)

Beej said:


> On my own PPOR, a conservative rental value estimate I got would place the potential rental yield at 4.5% of what I purchased the property for at the end of last year.
> 
> Beej





Awesome stuff.


----------



## Beej (22 January 2009)

numbercruncher said:


> Awesome stuff.




Hmmm - don't forget that for a PPOR the rental return is effectively after tax, as you have to pay rent with after tax dollars. So 4.5% = 7.5%-8%pa gross for a medium/high income earner. And that effective return grows with inflation as the charts posted by gfresh show quite clearly. Plus any long term capital gains are icing on the cake and tax free as well!

Beej.


----------



## robots (22 January 2009)

hello,

great news there Gman, +1.6% for Melb units

this is awesome brothers, rents rise, money renting rates down how come this happens? I wouldnt have a clue

now, yes a Shonk market blue chip (WES) kindly announced a cut in dividend today, many others also cut how come this happens?

but the plain old vanilla real estate with no smoke and mirrors is just rolling on man

thankyou
robots


----------



## numbercruncher (22 January 2009)

Beej said:


> Hmmm - don't forget that for a PPOR the rental return is effectively after tax, as you have to pay rent with after tax dollars. So 4.5% = 7.5%-8%pa gross for a medium/high income earner.
> Beej.




That sounds like some sort of salesman spiel ....


"House prices too boom for ever!!" no longer getting them signing on the dotted line ?


----------



## juddy (22 January 2009)

If they do this, where does it end? I will not take responsibility for  poor risk management.

http://www.abc.net.au/news/stories/2009/01/22/2472016.htm?section=australia


----------



## tech/a (22 January 2009)

Many Gurus bought lots of properties in Port Pirie

You know where Zinifex resides.Mining boom = Property Boom.

Well seems Zinifex may not be operating in the future.

Mining failure = Property Failure.

There are some really high profile people exposed in these areas
Whyalla and Pt Augusta are others.---in SA


----------



## IFocus (22 January 2009)

kincella said:


> I know of at least 4 current posters on another forum...sold their props/homes between 2000 - 2003...each called it the high of the market ?




Here in the west everyone I knew was scrambling to buy property after the dot com blow up.

Keep in mind the conditions that contributed to the run down to 2003 (stock market) was not a fraction of the current global conditions.


----------



## numbercruncher (22 January 2009)

tech/a said:


> Mining failure = Property Failure.
> 
> There are some really high profile people *exposed* in these areas
> Whyalla and Pt Augusta are others.---in SA





haha got to love these dodgy gambles being referred to as "exposed" ....

BBQed high profile property gamblers are getting pretty common about the traps I see ?


----------



## robots (22 January 2009)

hello,

and then you have the others just plodding along kicking back enjoying life in all its glory as rents rise and prices rise,

oh, did i mention st kilda up 14.8% Sept08 Quarter

might get a doughnut with the coffee in the morning to celebrate the rental increase

nirvana

thankyou
robots


----------



## numbercruncher (22 January 2009)

Good to see you sneaking in some rent rises there Robi - more power to you man ! - I see your Melbourne peers arnt so inclined ....




> LANDLORDS may have responded to the slowing economy by avoiding rent rises ”” taking pressure off tenants hit by double-digit percentage rises last financial year.
> 
> An Australian Property Monitors report said Melbourne house rents were stable in the six months to December 31, with the median asking price for houses unchanged at $350 a week. Units rose 1.6 per cent to a median of $315.




http://www.theage.com.au/national/rent-rises-halted-20090121-7mrj.html


----------



## Mofra (22 January 2009)

*Pops in, sees the thread is still tracking the exact way it was weeks ago, says hi, leaves*


----------



## Trevor_S (22 January 2009)

robots said:


> oh, did i mention st kilda up 14.8% Sept08 Quarter




http://www.homepriceguide.com.au/sn...r Urban&region_code=0301&state=VIC&source=apm

*Median Units: St. Kilda. 6 Months to December 09 -5%*


----------



## wayneL (22 January 2009)

Trevor_S said:


> http://www.homepriceguide.com.au/sn...r Urban&region_code=0301&state=VIC&source=apm
> 
> *Median Units: St. Kilda. 6 Months to December 09 -5%*




...and houses down 11%

Oooooer! That's crash speed.


----------



## MrBurns (22 January 2009)

Trevor_S said:


> http://www.homepriceguide.com.au/sn...r Urban&region_code=0301&state=VIC&source=apm
> 
> *Median Units: St. Kilda. 6 Months to December 09 -5%*




Thats December 08 and you're right *DOWN 5% WOW*

Therefore Robots should adjust his posts to read - 

*oh, did i mention st kilda units down 5%  - 6 months to December 08'*


----------



## Trevor_S (22 January 2009)

MrBurns said:


> Thats December 08




Yes, you're correct, my mistake.  I apologise, it was not a prediction of the future 

That aside, if the six months period was down (-) 5% and Q3 was up 18% (as stated by Mr. Robots Esq.) then the Q4 median decrease must have been a real bitch, down (-) 23%


----------



## juddy (22 January 2009)

Hello,

:fan

Thankyou
Robots


----------



## wayneL (22 January 2009)

juddy said:


> Hello,
> 
> :fan
> 
> ...




Nah! It's a buying opportunity!


----------



## numbercruncher (22 January 2009)

Ooooh Robi looks like you will have to lower the rent on that damp mildew covered flea infested rental then ? might even have to tidy the place up a little to attract some hand out crew ? erm I mean tenants ...

Luckily Beej doesnt have these issues its like 10pc grossed up turbo boosted fuel injected wynns protected rentals down his way .. or something to that effect anyways ...


----------



## nunthewiser (23 January 2009)

Mofra said:


> *Pops in, sees the thread is still tracking the exact way it was weeks ago, says hi, leaves*




......... you know the funniest part tho


everyone still living in a house/? and stilll paying a mortgage /rent and still watching the stock market fall 50% while warming there cockles next to the fire in the house/? theyre paying for


amen


----------



## wayneL (23 January 2009)

nunthewiser said:


> ......... you know the funniest part tho
> 
> 
> everyone still living in a house/? and stilll paying a mortgage /rent and still watching the stock market fall 50% while warming there cockles next to the fire in the house/? theyre paying for
> ...



Some are paying.

Some are overpaying.


----------



## Indie (23 January 2009)

This thread should be in the commodities section under "Gold", it's amazing how blinkered the RE permabulls are. 

Everything the government does to prop up the false economy in housing is only a temporary delay of the inevitable. The housing market will crash and the rental market with it. The Aussie RE market cannot be sustained when the rest of the world economy is going down for a prolonged period. Employment, earnings, credit all come into play. I rate RE right along side banking and retail stocks as the worst investment you could make right now. Actually it's probably even worse since it traditionally requires an enormous amount of leverage which is the ultimate sin in a deflationary environment.


----------



## nunthewiser (23 January 2009)

wayneL said:


> Some are paying.
> 
> Some are overpaying.




oh indeed they are ........... but you may notice a funny thing here


most of the bulls left here are of the more "stayer" types that are not here for the "quick" real estate buck but to cash in on .........but there either homeowners doing there "thang" and enjoying this cheaper cash available .OR there prospective investors that are not ACXTUALLY buying but waiting .


personally bricks and mortar been very kind to me and can see the attraction in current days of smoke and mirrorsa offered elswhere


PS >>>>>>>> I AM NOT BUYING REAL ESTATE , have sold excess holdings BUT still believes that one cannot falter real estate as a long term holding


----------



## nunthewiser (23 January 2009)

would also like to say ............. for those that overextenede themselves with the fancy mortage and the fancy car to go with the fancy boat next to the maxed out credit card that paid part of the personal loan that was deposit for the holiday in fuji............



 i be waiting for that mortagee auction and cant say that i care for this current snowball you have dragged my assets thru 


avaniceday and buy ya place later


----------



## wayneL (23 January 2009)

nunthewiser said:


> oh indeed they are ........... but you may notice a funny thing here
> 
> 
> most of the bulls left here are of the more "stayer" types that are not here for the "quick" real estate buck but to cash in on .........but there either homeowners doing there "thang" and enjoying this cheaper cash available .OR there prospective investors that are not ACXTUALLY buying but waiting .
> ...



Sure! I think 99.9% agree with the general idea that RE is a great long term investment and handy as a spot to set up camp. I'm still holding stuff I bought 10 years ago and am not a seller (perhaps I should have been, but it's too late now for spec profits. I'm more of a yield investor). I'm still a buyer... at intrinsic value or under.

I just don't see RE at anything near intrinsic value. Some areas are getting closer over here, but still a ways to go.


----------



## BentRod (23 January 2009)

wayneL said:


> Some are praying.
> 
> Some are overpraying.



:bricks1:


----------



## nunthewiser (23 January 2009)

thats a decent mulloway in your av


----------



## BentRod (23 January 2009)

:topic

Cheers big ears (went 53lb)

ps...very disappointed Nun...dropped into your place (ASF Chat) to say Gday and was ignored. :

Cue back on topic....


----------



## robots (23 January 2009)

hello,

are you sure that is correct? gee wonder whats going on out there, i will wait for the REIV stats as they are always correct as HomePriceGuide have a vested interest

oh well, least we not back to 2005 levels like all the super funds getting around and the shonk exchange,

rents up 1.8%, will just save all the money that I dont have to put in the mortgage from all the falls in money renting rates, paradise

thankyou
robots


----------



## GumbyLearner (23 January 2009)

robots said:


> hello,
> 
> are you sure that is correct? gee wonder whats going on out there, i will wait for the REIV stats as they are always correct as HomePriceGuide have a vested interest
> 
> ...





Robocop

Great to see your still doing the rounds.

Not that there should be a Aussie Stock Forums Isolated to one suburb in whole of Australia thread (great objective analysis--->as long as your entertaining yourself! )

As long as you remain on the thread, IF and I say IF your property price gets smashed, just hang out and get slayed! Only time will tell! Its only fair to get what you give, RIGHT?


----------



## nomore4s (23 January 2009)

nunthewiser said:


> oh indeed they are ........... but you may notice a funny thing here
> 
> 
> most of the bulls left here are of the more "stayer" types that are not here for the "quick" real estate buck but to cash in on .........but there either homeowners doing there "thang" and enjoying this cheaper cash available .OR there prospective investors that are not ACXTUALLY buying but waiting .
> ...




lol, that is also the view of most of the bears, most acknowledge that property is a good long term investment but is generally overpriced atm.

Why are the bulls waiting I wonder? Same reason as the bears perhaps?


----------



## wayneL (23 January 2009)

robots said:


> hello,
> 
> are you sure that is correct? gee wonder whats going on out there, i will wait for the REIV stats as they are always correct as HomePriceGuide have a vested interest




BAHAHAHAHAHAHA!

...and REIV aren't a vested interest?

WAHAHAHAHAHAHA!


----------



## ROE (23 January 2009)

Now for 2 people quote..both property investors, who is the smart one 

"I always felt very secure and very safe with real estate. Real estate always appreciates. " Ivana Trump (Donal Trump's wife)


"I kind of hate to be the voice of doom, but I just can't see how prices can't go down. I think people have actually forgotten that property prices can decrease. There's this feeling that they just won't fall, but, of course, that's not true." Sarah Beeny.

Here is another one, they find reasons for when interest went up and now interest rate down must be good for property hahaha..

"Interest rates are going to go up because employment is going to go up. If employment goes up, then our apartments get filled. And if employment goes up, our office buildings get filled. The reality is that increased economic activity combined with increased interest rates is basically bullish for real estate."   Sam Zell


----------



## numbercruncher (23 January 2009)

Another bullish  property analyst in the Courier mail .....

Funny how they all come out of the woodwork as thousands of jobs losses are announced ...




> SUPERANNUATION balances are not the only thing taking a battering in the turmoil, there is also more gloom in the Brisbane property market.
> 
> Brisbane house prices could face a fall of up to *15 per cent* this year, according to a Gold Coast based property analyst.
> 
> Midwood Report author Bill Morris said the average price of homes in Brisbane had already fallen 5 per cent in the six months to December 2008.





http://www.news.com.au/couriermail/story/0,23739,24949022-3102,00.html


----------



## robots (23 January 2009)

GumbyLearner said:


> Robocop
> 
> Great to see your still doing the rounds.
> 
> ...




hello,

just back from tennis, another fantastic day and I can imagine not much interest in RE when you see whats going on with the shonk exchange

thats right Gumby, i have said previously I wouldnt have a clue what will happen and also I will cop it on the chin, 

might hit centrelink on Monday see if I can get any assistance i think the office is in Prahran, probably just sit in the corner staring at the walls over the weekend

thankyou
robots


----------



## kincella (24 January 2009)

robots,
tennis is terrific, Melb is terific, weather a bit hot for me...but otherwise its all good....
no worries about st kilda....or anywhere really....plenty of affordable houses around... in vic and nsw....the qld and wa markets went above these markets for median prices by over 100,000.....so there maybe some downside for awhile  in the mining states....but they will return and stabalise....mining and resources will come good again.....
the boom bust cycle always ends in tears for some....its part of the process, and then it will be forgotten again....in the meantime....some will need to sober up....reassess the future....and become more resourceful...its a good learning process...
I am a baby boomer....so have the 'been there and done that attitude'.... the learning experience, is the cream on the cake, and can prepare you for the next time......and there will always be a next time....
opportunites are there if you look for them....
in the meantime, knuckle down and do some hard work.....it will pay off in the end
cheers


----------



## Glen48 (24 January 2009)

The only reason Trump survived because he owed the Banks 900Million and they didn't want to bankrupt him he was lucky and came good.....who knows now.
Houses in Toronto have dropped 15% this Year not bad for 3 weeks and only 49 left.


----------



## Beej (24 January 2009)

Glen48 said:


> Houses in Toronto have dropped 15% this Year not bad for 3 weeks and only 49 left.




To paraphrase one your property bear poster compatriots: "linklinklinklink  link???" 

Cause I'd love to know how you measure a statistically significant across the board price drop like that in January over only 3 weeks! 

Beej


----------



## numbercruncher (24 January 2009)

Beej said:


> To paraphrase one your property bear poster compatriots: "linklinklinklink  link???"
> 
> Cause I'd love to know how you measure a statistically significant across the board price drop like that in January over only 3 weeks!
> 
> Beej





Hello,

Im currently very bearish on Aussie RE yes (actually most of the banana republics economy to be honest), but not a permabear in the same way that you are a permabull - most bears are more like realists, did yah ever notice ?

Fair call asking for a link 


Thankyou

numberbotics


----------



## robots (24 January 2009)

hello,

more great news out from the REIV:

http://www.reiv.com.au/news/Rental-homes-hard-to-find-in-Victoria

sensational, down to 1% and with money renting rates getting whacked in a week or so this is fabulous

rang the centrelink hotline today, they are currently considering my circumstances to see if can join the party on Newstart and mortgage assistance

thankyou
robots


----------



## singlefished (24 January 2009)

Beej said:


> To paraphrase one your property bear poster compatriots: "linklinklinklink  link???"
> 
> Cause I'd love to know how you measure a statistically significant across the board price drop like that in January over only 3 weeks!
> 
> Beej





Found this without too much effort...

http://toreal.blogs.com/toronto/2009/01/january-home-sales-down-50.html

This only says down 12% though... could be year on year I guess???


----------



## singlefished (24 January 2009)

robots said:


> hello,
> 
> more great news out from the REIV:
> 
> ...




Independent research paints a different picture with 3.9% vacancy rate for Melbourne...

http://www.sqmresearch.com.au/article.php?base=news&a=1


----------



## numbercruncher (24 January 2009)

robots said:


> hello,
> 
> more great news out from the REIV:
> 
> ...






Maybe your mate Enzo made some more errors ?


----------



## Beej (24 January 2009)

singlefished said:


> Found this without too much effort...
> 
> http://toreal.blogs.com/toronto/2009/01/january-home-sales-down-50.html
> 
> This only says down 12% though... could be year on year I guess???




From that link: 







> The median GTA price was $301,000 compared to 316,000 last year




So that in fact suggests a $15k MEDIAN price decline, year over year, from $316k = 4.7% in fact. As we all know, median, while not perfect and still subject to fluctuations based on the mix of sales in a particular sample, is more stable and a better indicator than the average price - which is what the 12% y/y figure in that article refers to. Also in AU we almost always talk median prices so we have to compare apples with apples.

So the facts seem to be a bit different to Glen48s assertion as follows: 







			
				Glen48 said:
			
		

> Houses in Toronto have dropped 15% this Year not bad for 3 weeks and only 49 left




Thanks for following up for Glen48 with a link proving that his statement was at best completely wrong and at worse an obvious attempt at downramping via the use of a dramatic made up statistic!

Cheers,

Beej


----------



## Glen48 (25 January 2009)

Sorry had it all wrong:
From Patrick.net
The Toronto Real Estate Board yesterday reported a meagre 888 sales in the first half of January, compared with 1,776 sales during the same period a year ago.

The average price of a home is also down, 9.5 per cent to $332,495, compared with last year's $367,574 – a $35,000 plunge.

"The economic situation in Canada has changed noticeably over the past year ... Toronto is not immune to this," TREB president Maureen O'Neill said.

"The GTA housing market has been impacted."

Realtors say a flurry of buying last January to escape Toronto's new land transfer tax that came into effect in February 2008 may have exaggerated the year-over-year drop.

Sales in the city of Toronto are off 54 per cent in the first 15 days of 2009, while prices are down more than $40,000 for the average home. Homes in the 905 suburbs were not hit as hard, with sales down 47 per cent and prices off $26,000.

There is no question this will be a difficult year for the housing market as well as the commercial real estate market.


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## Glen48 (25 January 2009)

How to make money in St.Kilda and see your house values rise 14.8%
From L A Times:

Tough economic times have spilled onto the streets of Venice, which has become a favorite place to park for scores of otherwise homeless people living in cars and campers. The practice has ignited a mini-uprising among residents living in the pricey coastal community.

The number of cars and recreational vehicles has swelled so much over the last year that Councilman Bill Rosendahl, who represents the city's coastal areas, has proposed creating special zones away from neighborhoods where people can sleep in their vehicles.

"The community has been going ballistic," Rosendahl said. "They can't park their own cars. Some of the folks who live in their cars and in campers defecate and urinate outside and create other issues of quality of life and health."

His proposal, similar to programs in Santa Barbara and Eugene, Ore., would allow the cars and recreational vehicles to park in select "municipal properties, parking lots of churches or community-based organizations, industrial areas and other areas that would have minimal impact on residential communities."

Current city laws prohibit sleeping in a car or RV on the street.

"Let's stop kidding ourselves," Rosendahl said. "People are living in their cars. . . . So let's deal with the reality. In this economic downturn, it's even increasing."

Up to 200 people are living in campers or cars in the Venice area, which has many residential areas where overnight parking is not restricted, the councilman said. As part of his proposal, which is expected to be heard by a council committee within the next few weeks, neighborhoods in Venice would have the option of restricting overnight parking to residents who live in apartments and houses.

However, some Venice residents said they feared that Rosendahl's plan might also designate certain residential streets in the beach-side community as RV zones.

"We don't believe the solution is turning residential areas into urban RV campgrounds," said Mark Ryavec, who heads the Venice Stakeholders Assn., which recently submitted to Mayor Antonio Villaraigosa and the council a petition with 237 signatures of residents opposed to Rosendahl's proposal.

Residents in parts of Venice have for years battled what they view as an incursion by RV dwellers. The tensions are particularly pronounced in and near the Oakwood section, a roughly one-square-mile area bounded by California Avenue, Lincoln Boulevard, Rose Avenue and Abbot Kinney Boulevard. Residents complain that some RV occupants defecate in alleys, party into the wee hours, and dump waste into gutters and storm drains.

Ryavec, co-chairman of a neighborhood council committee that is studying homelessness and RV living, said the panel has identified more than 20 "relatively isolated" sites in Rosendahl's 11th Council District that could each accommodate five to 10 RVs. They include an area across from the Dockweiler State Beach RV park, vacant rental-car lots in Westchester, and an RV and boat storage lot off Lincoln Boulevard. He said, however, that many RV dwellers "want to stay in Venice."

Terry, an RV dweller in Venice who spoke on the condition that her last name not be used because she feared retribution from residents, said more people have been forced to live in their vehicles because of the tough economy, the rash of condo conversions that have left many tenants without shelter and rules limiting overnight parking on certain streets in Santa Monica and Los Angeles' Westside.

Terry said Los Angeles police officers have proposed that she and others move their RVs to the area across from Dockweiler State Beach.

"That's 10 miles away," Terry said, as she exercised her dog near the Oakwood Recreation Center one recent evening. Her 1976 blue-and-white RV stood across the street. "These vehicles aren't going to make it down there."

She said such a move would be a hardship because her two teenage children attend school in the area; her daughter also works at a nearby restaurant. For the last three years, she and her children have lived in their car, a van and now the RV, which she said she bought for $850 when it was in fine working order.

Since then, she said, people that she suspects are Venice residents have sliced her tires, put gravel in her gasoline tank, stolen her son's clothes and dented the RV's door with clubs.

"We can't tell the police," she said, adding with a note of irony: "We're the criminals."

In Santa Barbara, another town along the California coast that has become a favorite locale for people living in vehicles, the city started an "RV Safe Parking" program four years ago as part of its outreach to the homeless.

Seventy-five people have received permits to participate in the program, parking their cars at night in various city and county lots, as well as some operated by churches. Under a city contract, the New Beginnings Counseling Center has an outreach worker check on participants at least twice a week, referring them to housing and job assistance programs as well as other services that cater to their financial, physical and mental well-being.

Participants are required to provide their own restroom facilities, either in an RV or a portable toilet if they have a car, said Gary Linker, executive director of New Beginnings.

They must also follow a list of rules, and there have only been a few complaints from nearby residents over the last four years, he said. Those who apply for the program -- there is a waiting list -- are interviewed by the outreach worker to make sure they qualify.

"We have to make sure people aren't traveling through on vacation. This isn't a KOA," Linker said.

Rosendahl said his proposal is limited to the coastal district he represents, since Venice has been "overwhelmed," but it directs the council to address the issue of RV and car dwellers on a district-by-district basis. He also emphasized that the measure was meant to "kick the process in gear," with the understanding that plenty of related issues still must be debated and resolved.

That includes whether to limit the RV zones to people who can prove they have roots in the area.

That became an issue in Ontario in 2007, when the city set up a secure "tent city" near the airport for the homeless, complete with bathroom and shower facilities.

When hundreds of people from outside the San Bernardino County city descended on the site, Ontario officials decided to limit it to people who could produce documents showing that they had lived in the city.

"There is not an easy answer," Rosendahl said. "But at least this raises the issue of homelessness to a higher level."


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## singlefished (25 January 2009)

Beej said:


> Thanks for following up for Glen48 with a link proving that his statement was at best completely wrong and at worse an obvious attempt at downramping via the use of a dramatic made up statistic!




Sorry, but I believe you've compared apples with oranges whilst in the midst of your knee jerk reaction to demonstrate that Torontos prices aren't quite falling as fast as has been mentioned.... and yet we still don't know what article or data Glen was referencing!!! (edit: We do now! This tennis is such a distraction...)

There was no figures quoted for City of Toronto which is clearly stated in the article as average price being down 12%.

Your calculations are using GTA figures. City of Toronto population constitutes less then half (40~45% I believe) of the GTA pop'n...

I suggest you go and whinge to the originators of the article about the accuracy of their data rather than shooting the messenger because you were too lazy to open up google and do your own research!

Anyway, I'm not posting to justify somebody elses statements ~ I was posting the link as I was curious about the data myself and this is what I found.

Cheers....


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## lioness (25 January 2009)

Glen48 said:


> Sorry had it all wrong:
> From Patrick.net
> The Toronto Real Estate Board yesterday reported a meagre 888 sales in the first half of January, compared with 1,776 sales during the same period a year ago.
> 
> ...




Glen,

Who gives a flying f**k about Toronto house pries and you are comparing this situation to St Kilda. Your credibility is dropping like a man without a parachute. Give it up, it is pathetic to read your posts. Do you expect to buy blue chip real estate for 50% discounts????? Get a life.


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## Beej (25 January 2009)

singlefished said:


> Sorry, but I believe you've compared apples with oranges whilst in the midst of your knee jerk reaction to demonstrate that Torontos prices aren't quite falling as fast as has been mentioned.... and yet we still don't know what article or data Glen was referencing!!! (edit: We do now! This tennis is such a distraction...)
> 
> There was no figures quoted for City of Toronto which is clearly stated in the article as average price being down 12%.
> 
> ...




I don't know why you are wriggling so much in Glen48s defence!  He tried to assert that Toronto house prices had dropped 15% in 3 weeks so far this year - an outlandish claim and clearly completely untrue. The article you posted provides a meaningful median price stat for the Greater Toronto Area (GTA), absolutely showing this, and median stats are the correct "apples to apples" stats to use (not average) when looking at any other market compared to ours in Oz.

Regardless, as with all international stats, they really have very little bearing on our local market here and it's current state anyway. If anything the fact that Toronto house prices held up pretty well through 2008 (-4.7%), while cities like Detroit in the US which are only about an hours drive away have seen massive falls (-20%+), shows how disconnected property markets in different countries can be! If Canada and the US can be so different, 2 countries which are geographical neighbors and linked economically far more than Oz is to the US, then it's clear how/why the PROPERTY market here pretty much marches to it's own tune.

Cheers,

Beej


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## knocker (25 January 2009)

Beej said:


> I don't know why you are wriggling so much in Glen48s defence!  He tried to assert that Toronto house prices had dropped 15% in 3 weeks so far this year - an outlandish claim and clearly completely untrue. The article you posted provides a meaningful median price stat for the Greater Toronto Area (GTA), absolutely showing this, and median stats are the correct "apples to apples" stats to use (not average) when looking at any other market compared to ours in Oz.
> 
> Regardless, as with all international stats, they really have very little bearing on our local market here and it's current state anyway. If anything the fact that Toronto house prices held up pretty well through 2008 (-4.7%), while cities like Detroit in the US which are only an hours drive away have seen massive falls (-20%+), shows how disconnected property markets in different countries can be! If Canada and the US can be so different, 2 countries which are geographical neighbors and linked economically far more than Oz is to the US, then it's clear how/why the PROPERTY market here pretty much marches to it's own tune.
> 
> ...




Hey beej, does the term NFI mean anything to you? Because your latest and greatest post is a reflection of your state of being. Please enlighten us all as to how and why you think the realestate market in Australia is immune from the problems being experienced by the rest of the world, including our good mates in Kiwi land.

Seriously I think you have been puffing too much stuff yet again. lol


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## robots (25 January 2009)

singlefished said:


> Independent research paints a different picture with 3.9% vacancy rate for Melbourne...
> 
> http://www.sqmresearch.com.au/article.php?base=news&a=1




hello,

believe whatever you like singlefished, i like Enzo as he replies to email's and dresses well and that demonstrates credibility

thankyou
robots


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## MrBurns (25 January 2009)

robots said:


> hello,
> 
> believe whatever you like singlefished, i like Enzo as he replies to email's and dresses well and that demonstrates credibility
> 
> ...




Try and get Enzo to sell your unit for 14.8% more than it was worth a few months ago.

Enzo Enzo where are you Enzo...............geez he's gone on a junket with KRudd to advise the world on real estate values and how if you interpret the figures correctly US real estate has not dropped 80% it's in fact gone up 200% using the same calculation method used to assess unit prices in St Kilda.


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## gfresh (25 January 2009)

Maybe individual articles are better off discussed / argued on the ASF property forum? it's becoming a mess in here.


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## Aussiejeff (25 January 2009)

gfresh said:


> Maybe individual articles are better off discussed / argued on the ASF property forum?* it's becoming a mess in here.*




I blame that old fart Mr Burns. He dribbles a lot...


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## knocker (25 January 2009)

gfresh said:


> Maybe individual articles are better off discussed / argued on the ASF property forum? it's becoming a mess in here.




What's the addy mate?


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## knocker (25 January 2009)

Aussiejeff said:


> I blame that old fart Mr Burns. He dribbles a lot...




I blame the choof all the bulls are smokin lol


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## MrBurns (25 January 2009)

Aussiejeff said:


> I blame that old fart Mr Burns. He dribbles a lot...




No wonder I'm dribbling, I'm still trying to work out how you can have a thread titled "House prices to keep rising for years" with 172 pages of posts when AU housing is obviously going to plummet over the edge, and has already started.


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## robots (25 January 2009)

MrBurns said:


> No wonder I'm dribbling, I'm still trying to work out how you can have a thread titled "House prices to keep rising for years" with 172 pages of posts when AU housing is obviously going to plummet over the edge, and has already started.




hello,

similar case with the thread "house prices to stagnate for years" when in fact they were booming,

how we going still at 7-8x income?

thankyou
robots


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## gfresh (25 January 2009)

knocker said:


> What's the addy mate?




www.aussiepropertyforums.com - setup by the same guy who runs this place. It's pretty bare at the moment, but easier to read individual points of discussion. Bulls and bears can have a field day with their own threads :robot2:


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## knocker (25 January 2009)

robots said:


> hello,
> 
> similar case with the thread "house prices to stagnate for years" when in fact they were booming,
> 
> ...




Except for robots comments. God knows what drugs he is on lol


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## MrBurns (25 January 2009)

robots said:


> hello,
> 
> similar case with the thread "house prices to stagnate for years" when in fact they were booming,
> 
> ...




You're living in the past robots, what matters now is all the buyers are out of work so they're not interested in participating in housing bubble bull**** any more, the parties over.
People will now actually have to *work *to get rich not just buy a place and watch the price go up weekly.

Pass the parcel is over.


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## knocker (25 January 2009)

gfresh said:


> www.aussiepropertyforums.com - setup by the same guy who runs this place. It's pretty bare at the moment, but easier to read individual points of discussion. Bulls and bears can have a field day with their own threads :robot2:




mmm as soon as i saw the thread for real estate agents i decided to give it a swerve. better fun here. lol


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## knocker (25 January 2009)

knocker said:


> mmm as soon as i saw the thread for real estate agents i decided to give it a swerve. better fun here. lol




here is the calibre of comments on that board:
 "This thread is dedicated to the hard working Estate Agents who drive Australias economy and housing industry. Let us know how you are going, if the market is good or tough in your area, whats working for you in marketing, whats working for you in gaining listings.. New in the industry let us know.. Need a hand / have a question post it here.. "

ROFLHO


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## MrBurns (25 January 2009)

knocker said:


> here is the calibre of comments on that board:
> "This thread is dedicated to the hard working Estate Agents who drive Australias economy and housing industry. Let us know how you are going, if the market is good or tough in your area, whats working for you in marketing, whats working for you in gaining listings.. New in the industry let us know.. Need a hand / have a question post it here.. "
> 
> ROFLHO




Fair go they are hard working, do you know how hard it is the sell a BMW these days ?, and the mental stress, I saw one agent being counseled by Enzo, he hadn't been able to con anyone for 2 weeks and was going through withdrawal.


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## robots (25 January 2009)

hello,

yeah we all finished Burns, oh well least i have my appointment at Centrelink on Monday

when Newstart & Mortgage Assistance kicks off it will be great, like I finally became a true brother with all the rest on ASF

thankyou
robots


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## MrBurns (25 January 2009)

robots said:


> hello,
> 
> yeah we all finished Burns, oh well least i have my appointment at Centrelink on Monday
> when Newstart & Mortgage Assistance kicks off it will be great, like I finally became a true brother with all the rest on ASF
> ...




The economy was bull**** anyway you could smell trouble a mile away, a good cleanout will do us good, house prices were bull****, I was told my house was worth $2M i never believed it though it may have been true at the time it always smacked of unrealistic boom value and there's only one thing that follows that and here it comes, no matter what KRudd tries to do about it, he cant keep the bailouts and grants going forever and when it stops the real crash will start, what you see now is only a warm up.

No problem unless you have a lot of debt.


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## knocker (25 January 2009)

MrBurns said:


> The economy was bull**** anyway you could smell trouble a mile away, a good cleanout will do us good, house prices were bull****, I was told my house was worth $2M i never believed it though it may have been true at the time it always smacked of unrealistic boom value and there's only one thing that follows that and here it comes, no matter what KRudd tries to do about it, he cant keep the bailouts and grants going forever and when it stops the real crash will start, what you see now is only a warm up.
> 
> No problem unless you have a lot of debt.




Won't be long now. KRuddys coffers will be nearly exhausted come budget time.. then what? lol


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## kincella (25 January 2009)

I love it how some of you compare the average australian house to detroit....
here are a couple of blogs on the net, for the reality of detroit....it probably is best compared to  humpys around /outside alice springs or darwin....

15 posted by Anonymous , January 8, 2009 9:55 AM 
@Technogeek It's not a one-off - houses really do go for that cheap, depending on the neighborhood. Detroit is my hometown, and my parents still live there (I went to Ann Arbor for University, met a nice girl, and i'm never going back.) 

What this doesn't say is that Detroit property taxes are really expensive; many of these homes have liens or other things you'd have to pay off. My parents live on a corner lot, and the 3 other corners at the intersection are all empty - and our neighborhood used to be nice, compared to what you could find a few blocks in any other direction. Houses that sit empty for more than a month or two often have their wiring and/or copper pipes stolen, followed by the siding or anything else that can be scrapped and sold. 

Renting them out isn't the best solution either, as most of the people looking to rent homes in Detroit are seeking to do so under Section 8 housing (a program where the government pays part of the rent for people who can't afford the full amount,) and while Section 8 is a valiant effort, it doesn't produce the most stable or trustworthy renters. We rent out the home my grandmother used to live in, and finding someone who doesn't move in, never pays rent, waits the mandatory eviction period and then leaves before the bailiff shows up is a little more difficult than you'd like it to be. 

#2 posted by Cupcake Faerie , January 8, 2009 9:24 AM 
It depends on just how much of an urban pioneer you want to be. My wife and I got on this bandwagon two years ago and bought a properties in Kalamazoo, Michigan for $29k and $20K respectively. We lived there for a little over a year before throwing in the towel ( being west coast people, it was just too weird/hostile/racially/class-wise to live there ) and moving to Chicago. We were lucky we could. Now we rent out the properties while we rent in Chicago. Michigan in particular has been *HARD* hit by the recession which has been going on a lot longer than the media would have you believe.Granted, there were some very cool people living in Kzoo, but there were almost all affiliated with the university (WMU). What schizophrenic town!

 or read heaps more here
http://www.boingboing.net/2009/01/08/house-prices-plummet.html

if thats your cup of tea.....why dont you go over there and buy a cheap house


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## Glen48 (25 January 2009)

House prices all over the World are connected because we need money to buy them, money all over the World is connected because of the credit bubble.
No one knows the true figure house prices went up or down over the past 6-7 years because of the credit bubble.
Once the credit bubble is fully deflated  any one with large debit's will be in trouble. 
Houses are now just another consumerable item, the same as having a Boat with a 75MM hole in the bottom and you with a cup bailing it out doomed to go down.


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## Beej (25 January 2009)

I just think it is funny how one the bears got caught out trying to BS everyone, and now that has started a frenzy of time wasting nothing posts from a whole bunch of them basically saying _"We know best and even though the great crash hasn't happened yet it will you-will-all-see-you-are-all-idiots you've all been smokin weed or something"_ etc etc. Complete waste of time and space. Really gives me confidence to take what they have to say seriously and factor their views/opinions into important and life effecting personal financial decisions - NOT!

I'll get interested again in what the bears have to say when someone can post some meaningful AUSTRALIAN property market statistics that support their argument. At least such posts are informative and add to the picture, whatever ones personal view may be.

Beej


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## MrBurns (25 January 2009)

Beej said:


> I just think it is funny how one the bears got caught out trying to BS everyone, and now that has started a frenzy of time wasting nothing posts from a whole bunch of them basically saying _"We know best and even though the great crash hasn't happened yet it will you-will-all-see-you-are-all-idiots you've all been smokin weed or something"_ etc etc. Complete waste of time and space. Really gives me confidence to take what they have to say seriously and factor their views/opinions into important and life effecting personal financial decisions - NOT!
> 
> I'll get interested again in what the bears have to say when someone can post some meaningful AUSTRALIAN property market statistics that support their argument. At least such posts are informative and add to the picture, whatever ones personal view may be.
> 
> Beej




VICTORIAN property values have plummeted about $40 billion in the past six months. 

http://www.news.com.au/business/money/story/0,28323,24882746-5013951,00.html

Plenty more to come, stay tuned.


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## kincella (25 January 2009)

beej....we know who we suspect to be smoking dope though....all those outlandish and ridiculous statements they make....
and here is a blog from the detroit blogs.....

#3 posted by t3knomanser , January 8, 2009 9:31 AM 
@Brad S. : Or Cleveland. 

I moved to Pittsburgh about 20 months ago, and I've been stunned by the fact that somehow, they missed the bubble. Property prices in the city have stayed pretty much the same with little bumps and drops. I did see a 4BR place in my neighborhood for $200K, which is about half the price for other 4BRs; I'm assuming it must be a dump or next to falling over.

Perils of living in the trendy hoity toity neighborhood: rent is cheap if you don't mind small, buying is expensive even if you buy small.


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## Beej (25 January 2009)

MrBurns said:


> VICTORIAN property values have plummeted about $40 billion in the past six months.
> 
> http://www.news.com.au/business/money/story/0,28323,24882746-5013951,00.html
> 
> Plenty more to come, stay tuned.




Thanks you Mr Burns - interesting article. I note that it is basically saying that since the last peak in Melbourne mid 2008, median prices have fallen about 5% from $450k -> $427k. This would seem to be an accurate statistic. What's the year/year figure? Probably about flat I would expect. I also note the same article points out the following: 







> However, other suburbs, including Fitzroy and Beaconsfield, jumped 20 per cent.




Ie, if you had bought in those area's in Melbourne, there was still good money to be made, even in the short term. I don't know those area's and don't know why they may be bucking the trend, or if it is statistical anomaly, but I see the same opportunities when I look at specific area's in the Sydney market (as I posted in detail a few pages back). This year is going to provide many more such opportunities I believe.

Cheers,

Beej


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## kincella (25 January 2009)

OK I have found houses in OZ that may be remotely comparable to Detroit....but the govt has to spend $225,000 per house to bring it up to scratch.....(total waste of taxpayers money again, as the house will be trashed again)
.....................................................................................................
Taxpayers could face a bill of about $1 billion to replace or upgrade more than 2000 dilapidated houses in remote WA indigenous communities, including many homes that have been abandoned. 

In a scathing report based on an audit of Aboriginal housing, the Department of Housing and Works has condemned successive governments for adopting a “build and abandon” policy in outposts, claiming that homes had been constructed without a program or budget for maintenance. 

The department acknowledged that Aboriginal tenants had contributed to the debacle, stating there was now an epidemic of abandoned houses in indigenous communities that were so run-down they posed health and safety risks. 

The result was an enormous bill for taxpayers, equating to about $225,000 to bring each house up to standard. 

http://www.thewest.com.au/default.aspx?MenuID=146&ContentID=112392


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## kincella (25 January 2009)

beej,
 Beaconsfield is way out in the woods past Berwick...and Fitzroy is close to the city....similar to St Kilda, although not as nice, a lot cheaper...and
 old 'workers cottages', trendy pubs and very bohemian...imo....last time I was there on a Sunday brunch...saw an old drunk peeing in the shop door.... 

 beaconsfield has a variety of houses...small farms etc... so only a few sales can change the median yet give no indication of what an average house price is, in that area
on the commonwealth bank site...shows all suburbs mentioned as too few sales to make it reliable
http://pvg.webcentral.com.au/propertyValueGuideChart.asp


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## knocker (25 January 2009)

Beej said:


> I just think it is funny how one the bulls got caught out trying to BS everyone, and now that has started a frenzy of time wasting nothing posts from a whole bunch of them basically saying _"We know best and even though the great crash hasn't happened yet it will you-will-all-see-you-are-all-idiots you've all been smokin weed or something"_ etc etc. Complete waste of time and space. Really gives me confidence to take what they have to say seriously and factor their views/opinions into important and life effecting personal financial decisions - NOT!
> 
> I'll get interested again in what the bears have to say when someone can post some meaningful AUSTRALIAN property market statistics that support their argument. At least such posts are informative and add to the picture, whatever ones personal view may be.
> 
> Beej




I agree


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## cwamit (25 January 2009)

sorry no charts just common sense as to why i think house prices will have a correction in some areas of Australia..

i can only speak for my area and frankly its the only place that concerns me anyhow being a potential buyer of property.

if property wasn't overpriced we would not  need to have a first home owners grant. for the average income,  homes have become less and less affordable. supply and demand always comes back to affordability , the family that looses one job makes the house repayments less affordable to the point of being unfordable. there is a demand for  houses, in fact a huge demand but not at current prices.

 its assumed lower interest rates make a 500k loan cheaper. but does it?  the lower our interest rates the lower out dollar goes, the higher the costs of living become (fuel prices for example), negating the savings for the tight budgeted family.  

 our currency is understood to be a high risk currency , it declines when our goods are less needed, of course our exports become cheaper and hence helps keeps our commodities competitive but its the amount of commodities/industrials that can be sold that is the factor to viability of  an *industries workforce*, not the price of what that industry receives, this for example is obviously shown in the reduction of staff/contractors on mine sites, with years of ramping up production  scale of efficiency goes out the window once demand regardless of price, gets out sync. 

why have homes become so expensive, the mining  boom in sections of the country has fueled the demand for houses. due in part from a shifting population which creates hotspots of real estate bubbles and also due in part to the enrichment of the stock market that eventualy flows into the enrichment  of the housemarket because of risk disinvestment of the stockmarket to the  safer holdings of property ,  house prices are connected to the stock market as much as connected to localized supply and demand issues, but there is a difference where risk disinvestment in the stock market is undertaken when the stock market is booming and therefore debt of property purchased in the period of stock boom can be minimal and therefore in difficult times the need to sell isn't necessarily there , as opposed to the property hotspots created from the supply and demand issues,  once the boom is over jobs are lost, and the supply demand ratio is flipped over. 

it would be a rose colored (blind) investor  to say that the property growth of the past several years wasn't connected to the commodities boom, the supply and demand issues of the time was connected to localized booms as well as enrichment of the stock market. 


in boom times of stockmarkets there is also greater borrowing (margin calls) to trade in the share market, when the sharemarket drops this leaves highly leveraged borrowers with debt problems which is usually borrowed on the back of held property value, so this in some ways negates the investor that gained from the stock market and reinvested into the property market for a risk management perspective as opposed to the person that borrowed on existing property  to invest in the booming stockmarket on the back of rising property values, its this small percentage of investor that not only can exacerbate  the stock price crashing  but also has potential ramifications on the property market in the future through loss of equity of the debt originally lost in the stockmarket to potential negative equity.

are houses affordable  for the average person/family or just a few?

we have the wages boom in some sections of the work force, workers in the mining and construction industry are obviously the most to loose in the current situation, mine closures and developments are being put on hold. with the wages that have grown in the past years in this sector its made margins slimmer for mining companies in tough times. yet the opposing force of high wages has been the ability of  those in the industry to purchase not just a home but also investment properties. we have not been in a boom for long.. and wage growth in these sectors have not been  around for long either, at least not in context of the average house/investment loan lifespan. its  my presumption  to say many workers in these industries have mortgages as demographically speaking these  industries attract young people and  with the high income came the ability for the higher affordability of house prices, or for those in the industries for a longer time  than others, the higher affordability of an investment property.


unlike other countries where there is an acute oversupply brought on by a  bubble in the real estate market, our bubble of property is more complex as it is brought on by the bubble of affluence in boom times, creating not an over supply of property but by an under supply of affordable property and hence the home owners grant is in existence to artificially correct this issue, the government should be saving the money for far more productive means to the economy and in effect allowing the house prices to come down making it truly affordable with a natural correction of house prices since now times of affluence is over.. i don't see this happening because the government is too preoccupied with a housing slump and higher unemployment stemming from the housing sector which is only being postponed not prevented anyhow because the negative factors of the global economy is far too strong.

in some places that have been unaffected by the boom times to  see increases in property values but in an overall context house are set to drop in my very humble opinion.


----------



## kincella (25 January 2009)

HYPERINFLATION  coming soon ???
 and why it can be good for you, if you have property and debt


Many Germans gained from the hyperinflation. People with property were able to ride out the storm, while those with debts or mortgages saw their value disappear and their debt payments effectively end. Businesses were able to borrow money, spend it on new machinery, and then pay back virtually nothing to the banks. Bankruptcies became almost unknown. In 1913 around 10,000 German firms went out of business due to their debts. In 1923 the figure was less than 200. The speed with which Germans had to spend their money meant that demand in the shops was actually higher than before the period of hyperinflation. In response to this companies employed more workers, and unemployment effectively ended by 1923. Banking jobs, for example, rose from 100,000 in 1913 to 375,000 in 1923. Companies opened new factories to supply the high demands of Germans desperate to part with their cash. The German government also benefited in at least one way. During World War I the government had borrowed vast sums to finance the war effort. As the hyperinflation rose, the government saw its debts being wiped out.

*****. A new currency, the Rentenmark, backed by land and property was created. The new government led by Stresemann realised the mistakes made in the past and tried to solve them. Each Rentenmark was exchangeable for 1 trillion old marks with a limit of 2.4 billion Rentenmarks to be issued. The government also cut its expenditure, partly by sacking around 700,000 employees. However, reparations remained a problem.

In April 1924 the US government brokered a deal with Streseman known as the Dawes Plan, a scheme initiated by US republican politician Charles Dawes to help Germany pay off its enormous war debts. This reduced Germany's annual payments to more manageable levels, and arranged for the Germans to receive loans of 800 million gold marks from banks and businesses in the USA and Europe. In August 1924 the Rentenmark was replaced with a new Reichsmark of equal value. The new currency had backing from gold so inspired confidence. Taxes were raised and by 1925 the German government actually had a surplus. The Pact of Locarno (1925) settled the frontiers between Germany, France, and Belgium.

http://www.tiscali.co.uk/reference/encyclopaedia/hutchinson/m0006106.html


----------



## SBH (25 January 2009)

Beej said:


> I just think it is funny how one the bears got caught out trying to BS everyone, and now that has started a frenzy of time wasting nothing posts from a whole bunch of them basically saying _"We know best and even though the great crash hasn't happened yet it will you-will-all-see-you-are-all-idiots you've all been smokin weed or something"_ etc etc. Complete waste of time and space. Really gives me confidence to take what they have to say seriously and factor their views/opinions into important and life effecting personal financial decisions - NOT!
> 
> I'll get interested again in what the bears have to say when someone can post some meaningful AUSTRALIAN property market statistics that support their argument. At least such posts are informative and add to the picture, whatever ones personal view may be.
> 
> Beej




AUSTRALIA is part of the world. The bits of the world that are most closely related to us are stuffed... including japan, china, US and UK, UK with a possible IMF bailout on the way! Unbelievable times. 

Most statistics are bullsht anyway as you probably know.. and when China hits recession will you really need to look at Australian (REIA/Rudd) statistics to know where house prices are going? It should be pretty obvious.


----------



## Glen48 (25 January 2009)

If the RBA drops rate by .5% thing are not to bad any thing over is means hit the panic button and buy in St Kilda.


----------



## knocker (25 January 2009)

Glen48 said:


> If the RBA drops rate by .5% thing are not to bad any thing over is means hit the panic button and buy in St Kilda.



Hello

Why bother buying? Just shack up with robots and his druggy mates. lol

Thank you 

robknocker


----------



## robots (25 January 2009)

knocker said:


> Hello
> 
> Why bother buying? Just shack up with robots and his druggy mates. lol
> 
> ...




hello,

as long as you have a full bag of goof balls knocker the door is open, 

will probably have to get another set of bunk bed's from Harvey's joint, the living room is getting tight but they should fit

thankyou
robots


----------



## lioness (25 January 2009)

Property prices, rents set to soar by the second half of 2009
21/01/2009


With predictions of a looming economic recession and escalating unemployment rates, many property buyers are scared of venturing into the property market even as interest rates fall to record lows and bargains begin to emerge.

However, the current buying opportunity may end sooner than you think when the property market recovers towards the end of this year, according to a property expert.

Malcolm Reid, a property developer and a former economist for the Reserve Bank of Australia and the Australian Post Office, said that, after a sluggish performance in the beginning of the year, property prices will rise again, significantly.

"As an economist who follows many economic sources each month in the USA, UK and Australia and all the property issues in Australia, I am completely convinced that the second half of 2009 will see an enormous rise in most residential rents and prices after a mild low in the first half. As usual, it will take all but the hardened property investors and respected property forecasters by surprise," he said.

He noted that rents have risen strongly throughout 2008 because of a fundamental imbalance between rental accommodation sought and the supply of such accommodation, especially for Melbourne apartments near the CBD, Docklands and inner suburbs.

"Population, as the main driver in rents and property prices, is expanding rapidly, especially in Melbourne. New births are booming - partly due to incentives - and immigration/internal net migration is the strongest in years and forecast to continue as far as the eye can see. We need approximately 170,000 additional accommodation units per annum to satisfy this growing demand. 

"Our building industry at full stretch has rarely achieved this figure. The poor sentiment has caused many developers to delay, defer or completely abandon proposed projects, so supply is falling further and further behind demand for rental properties.  

"Due to the inevitable long lead times, rents MUST continue strongly for a minimum of two to three years."

With interest rates falling rapidly to all-time-low levels, Reid said investors can now selectively buy at positive cash flows. "Many smaller investors have been scared off the stock market - understandably - and will enter the property investment market as soon as it seems to have stabilised. Markets always turn before the stats are there to prove it. The best property commentators are almost universally bullish now about the Australian property market after a certain amount of mortgagee sales in the first half."

PS Fitzroy North outperforms St Kilda year in year out!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


----------



## knocker (25 January 2009)

lioness said:


> Property prices, rents set to soar by the second half of 2009
> 21/01/2009
> 
> 
> ...




More words of wisdom from of all things a property developer.lol What do you expect him to say? The truth?


----------



## knocker (25 January 2009)

robots said:


> hello,
> 
> as long as you have a full bag of goof balls knocker the door is open,
> 
> ...




Hello,

Think I might knock that offer back lol

thankyou

Roboknocker


----------



## robots (25 January 2009)

hello,




yes great effort lioness, super funds and asx back down to 2004 levels and some on he shonk exchange down to +10yr levels,

anything in fitzroy nth down to those levels lioness? any rents been cut or slashed, any land disappeared of the planet 

keep bumping up the rents brother, rents still very very cheap and have enormous scope for growth

ps. look at 06-08, when that great thread "house prices to stagnate for years" was going strong, I can see why it got banned, just too embarrassing for some (in the motherland?)

thankyou
robots


----------



## MrBurns (25 January 2009)

lioness said:


> Property prices, rents set to soar by the second half of 2009
> 21/01/2009
> Malcolm Reid, a property developer *and a former economist for the Reserve Bank of Australia and the Australian Post Office*, said that, after a sluggish performance in the beginning of the year, property prices will rise again, significantly.




Just goes to show you what sort of tossers con their way into Govt positions, cant find reference to him on Google anywhere, which is a bit sus if he's who he says he is.


----------



## sinner (25 January 2009)

lioness said:


> Malcolm Reid, a property developer and a former economist for the Reserve Bank of Australia and the Australian Post Office, said that, after a sluggish performance in the beginning of the year, property prices will rise again, significantly.




Vested interest spruiks again!

Does Mr Reid do this at the beginning of every year to ensure good sales or something?

Here are the start of 2008 spruiks from Mr Reid, hopefully we will have to wait till 2010 to hear from him saying the same thing over and over.

http://www.yourmortgage.com.au/news/2125/default.aspx
A repackage of original article by Mr Reid: http://www.aabglobal.com/blogs/mich...lbourne-s-properties-will-keep-on-rising.aspx

and a *REBUTTAL*
http://bubblepedia.net.au/tiki-index.php?page=House Prices Double Every X Years



> A particularly humorous inability to calculate the exponential function comes from Malcolm Reid:
> 
> 
> 
> ...




Thankyou for the rebuttal, bubblepedia. Who would listen to Malcom Reid after viewing his poor maths?


----------



## IFocus (25 January 2009)

lioness said:


> Property prices, rents set to soar by the second half of 2009
> 21/01/2009
> 
> 
> ...





Fascinating Lioness I have just finished reading the latest Frontline Weekly Newsletter from John Mauldin where he discusses how intractable the credit crisis is in the US / Europe and how and why credit expansion wont becoming any time soon.

It would appear that Malcolm Reid (economist?) is not interested in how the global scene could feed back into the Oz economy affecting incomes, confidence etc. Regardless prices will soar.

If this is to be the case then we really are "special" an island nation protected, Melbourne being its epicenter.

Mean while here in Perth (we are not "special) unsold housing stock continues to remain well beyond the mean average but its OK because rents are rising and vacancy remains low head west and grab a bargin.

http://reiwa.com/research/listings-rental-trends.cfm


----------



## sinner (25 January 2009)

I forgot to mention, Mr Reid recommends investors leverage their current home to get the 10-20% needed for their next property! You know, rather than saving!

Maybe he could go and work for Storm Financial.

It all makes sense, as long as your investment timeframe is 900 years.


----------



## Trevor_S (25 January 2009)

IFocus said:


> Mean while here in Perth (we are not "special) unsold housing stock continues to remain well beyond the mean average but its OK because rents are rising and vacancy remains low head west and grab a bargin.




http://business.watoday.com.au/busi...he-way-up-a-rush-back-down-20090123-7oom.html

A wage of $60,000 in WA to be a motorcycle courier ?!? 



> MICHAEL SMITH moved 4000 kilometres across Australia in July to earn $120,000 as a blaster. Now the 30-year-old explosives expert is a motorcycle courier making *half* his former wage.




What I found interesting was this bit



> Caught in the downturn, Mr Smith, the motorcycle courier, is contemplating selling two houses he bought with borrowed money unless he can find another high-paying mining job. "I've applied for everything, but a lot of the mining work is frozen now."


----------



## juddy (25 January 2009)

"Caught in the downturn, Mr Smith, the motorcycle courier, is contemplating selling two houses he bought with borrowed money unless he can find another high-paying mining job. "I've applied for everything, but a lot of the mining work is frozen now."

Hmmmm...didn't that Passive fellow tell us investors would be the last to sell?


----------



## knocker (25 January 2009)

juddy said:


> "Caught in the downturn, Mr Smith, the motorcycle courier, is contemplating selling two houses he bought with borrowed money unless he can find another high-paying mining job. "I've applied for everything, but a lot of the mining work is frozen now."
> 
> Hmmmm...didn't that Passive fellow tell us investors would be the last to sell?



My nephew was works as a paper boy at a newsagent. Some guy who also delivers papers was boasting, 2 years back, about how he was on the dole delivered papers early morning and his wife had kids and he had a house and an investment property all on borrowed money lol
what a classic. must be one of robots mates.


----------



## robots (25 January 2009)

knocker said:


> My nephew was works as a paper boy at a newsagent. Some guy who also delivers papers was boasting, 2 years back, about how he was on the dole delivered papers early morning and his wife had kids and he had a house and an investment property all on borrowed money lol
> what a classic. must be one of robots mates.




hello,

what gear do you think the paper delivery man is on Knocker? goof balls?

thankyou
robots


----------



## lioness (25 January 2009)

robots said:


> hello,
> 
> View attachment 27529
> 
> ...




Hi Robots,

I need some advice from you or anyone on here please.

My tenant rang me direct to ask why my rent has gone up to $425 per week. I explained to him the usual inflation blah blah etc. I have dealt with him directly on a few issues and we have a very good undestanding.

In fact my real estate agent told me to put it up to $450 per week, but they are very good tenants and have been there for 2 years. So he wants me to accept $415 as a discount. I also could lock him in for 2 years as he wants to stay on for that long, but if rents rise I would do myself a disadvanatge. 

I am now thinking why should I bring it down to $415 as my agent told me he is getting up to 70 groups of people going through inspections for rentals in Fitzroy North and these places are renovated 10-15 years ago and my is in good condition.

Any thoughts anyone on what I should accept or tell him bad luck pay up?

I think landlords hold all the cards at the moment???


----------



## MrBurns (25 January 2009)

lioness said:


> Hi Robots,
> 
> I need some advice from you or anyone on here please.
> 
> ...




Ok I was in real estate for 20 years (commercial/industrial)so here's my take.

Yes you could get a higher rental but that would involve some vacancy time and letting fees.

Also you dont know who you will get next time.

My advice, even in a hot marjet, is to keep the good tenant and take a slight discount, make sure they know how generous you are being and they will pay on time every month.

In short a good tenent is worth a discount, as you will have less vacancy, less letting fees and less trouble.

My bill is in the mail.


----------



## Glen48 (25 January 2009)

Agree lock em in and hope they don't loose their job/s.
 I see on Ch 10 news a bloke purchased on the  G.Coast a house for 9m down from a valuation mid last yr of 14M and not long ago it was valued at 17M not that's a good investment beats Storm hands down.
Wonder what the new owner would get for it by next W.end?


----------



## lioness (25 January 2009)

MrBurns said:


> Ok I was in real estate for 20 years (commercial/industrial)so here's my take.
> 
> Yes you could get a higher rental but that would involve some vacancy time and letting fees.
> 
> ...




Hi Burns,

I had also came to that conclusion. Good advice and thanks.

Now this forum is becoming worthwhile.

More talk on topic and less fluff.:iagree:


----------



## MrBurns (25 January 2009)

lioness said:


> Hi Burns,
> 
> I had also came to that conclusion. Good advice and thanks.
> 
> ...




Not only is it in your interests but it's more human . it's not good for the soul to screw good people for a few dollars if it's not nessessary. Good luck.


----------



## numbercruncher (26 January 2009)

lioness said:


> More talk on topic and less fluff.:iagree:





" House prices to keep rising for years " - is not happening ....


----------



## numbercruncher (26 January 2009)

MrBurns said:


> Not only is it in your interests but it's more human . it's not good for the soul to screw good people for a few dollars if it's not nessessary. Good luck.





Nicest thing one of the " House prices to keep rising for years " crew have said for the entire thread. I dont think your compratriots agree though.


----------



## numbercruncher (26 January 2009)

Hello


Some more price crash hippies hitting the headlines.


Thankyou.




> AUSTRALIA is home to three of the most "severely unaffordable housing markets" studied by an international group that predicts the housing bubble here is yet to burst.






> The public policy group Demographia, which conducted the study, said affordability in Australia was worsening relative to Britain, Ireland and New Zealand, where prices had recently collapsed.
> 
> Australia would be next, it said. "Sooner or later, the inherent instability that characterises virtually all bubbles will lead to house price declines in Australia."






> Alan Moran, director of the deregulation unit at the Institute of Public Affairs, said house prices may have collapsed in Australia over the past few months.
> 
> But affordability was a problem, he said. "*Adjusted for inflation, the average house price in Australia is now more than twice what it was 20 years ago*."




http://www.smh.com.au/news/national/housing-bubble-yet-to-burst/2009/01/25/1232818248039.html


Never mind 20 years ago, try 10 ......


----------



## Beej (26 January 2009)

numbercruncher said:


> Never mind 20 years ago, try 10 ......




I think that stat may be a little exaggerated/misleading, but of course it does also show why property is such a good investment!

Adjusted for inflation, Australian "real" wages have increased by how much over the same period? About 60% or so isn't it?..... The number of dual income households has increased by how much over the same period? Interest rates over the past 20 years have been on average about half what they were over the preceding 20 year period. Inflation over the past 20 years has been on average about half what it was over the preceding 20 year period. The average house in Oz has increased in size and amenity by about 50% over the past 20 years. All these factors have contributed to strong property price rises over that time that have outstripped the raw CPI rate yes.

Will these factors continue to drive house price rises in unison for the next 20 years? Unlikely, but I don't see that as meaning we HAVE to have a great house price crash. Rather I think the average/median house price growth will be slower over the next 20 years, through a combination of increased building/availability of entry/lower priced housing, as well as a general moderation in price growth to something closer to CPI for established homes, all depending on the specific area of course.

I also think that rents will continue to grow in real terms here over the next 20 years until they are closer to the levels paid in countries like the UK and the US - one thing that people always gloss over is how LOW our rents are here by world standards, even though our house prices are high.

I also always note that these types of stats/studies ignore units. The facts are that many city dwellers start out in units nowadays as their first home (much like is the case in some of the favourite comparable cities often cited  here in Europe and the UK). I think that if unit prices are looked at by the same study you would find the price growth has not been as dramatic for them - so essentially houses have, and will continue to, become more exclusive for all us coastal city dwelling aussies.

And just another quote from the same article which I find interesting: 







> But an economist for CommSec, Savanth Sebastian, said falling interest rates and the first-home buyer's grant would help keep prices steady.
> 
> "We are not going to see dramatic falls this year," he said.
> 
> "*In November we had more home buyers signing on the dotted line for mortgages than in the past year* … It really suggests that if employment holds up, the housing sector is set to see some strong growth over the next couple of years."




The increased FHBs WILL be enabling sales volume/turnover/prices to pick up further up the ladder and it will be starting to happen right now - but won't show up in price stats until we get the Q1 and Q2 figures for this year. Q4 figures for last year will confirm the increased activity in FHB price ranges and that median prices have stabalised, even grown, any many area's where those type of properties are prevelant. As is normal, watch Sydney and Melbourne in particular for this as those 2 cities lead the markets here in AU.

EDIT: PS: The guy in the article who made the "doubled in real terms over 20- years" statement also says this: 







> Like Demographia, Mr Moran favours reducing the regulations that govern building in Australia.
> 
> "The reason Australia is so expensive is because of the regulatory-induced supply shortage that has pushed up the price of land permitted to be used for housing."




So bottom line until that issue is addressed even this guy admits that reduced supply and increasing demand will continue to keep/push prices higher. This supports my view stated above about how ultimately average price growth will be moderated in part through increased building/availability of cheaper housing.

PPS: Happy Australia Day to all!!!

Cheers,

Beej


----------



## numbercruncher (26 January 2009)

Hello


You waffle so much salesman spiel that it makes me dizzy.

The RE bubble is crashing along with the worlds economy, no matter how much sugar and spice you sprinkle on it.

Your lucky that the Labor party bubble lovers are proping it up, slowing the demise a little.

Funny how things pan out, Turnbull reckons he would let it burn.


Thankyou.


----------



## Beej (26 January 2009)

numbercruncher said:


> You waffle so much salesman spiel that it makes me dizzy.




Apologies if my posts stretch you a little intellectually - I put a lot of effort into creating content that contains facts, arguments and reasoned opinion - yes. They sit in sharp contrast to the drivel that constitutes most of your posts......Hopefully most others reading this thread gain more from my posts than you are able to!


----------



## numbercruncher (26 January 2009)

Dont worry Beej your house (and Robis) arnt losing value, thats all that matters mate.


----------



## Geoff (26 January 2009)

numbercruncher said:


> Your lucky that the Labor party bubble lovers are proping it up, slowing the demise a little.
> 
> Funny how things pan out, Turnbull reckons he would let it burn.




Market forces will get their way in the end.  If you pour money into the economy you blow out foreign debt and eventually your economy goes down the ****ter anyway.

All Labor are doing is delaying the inevitable and putting us in bad shape for the recovery.  Maybe we'll get a softer ride down but that's about it.


----------



## Glen48 (26 January 2009)

Ch 7 news House valued at 17M owner wanted 14M went to auction he got 9M.
Penthouse on G.C paid 2.5 M sold for 700K .
Luck only the high prices house are collapsing eeehh?


----------



## numbercruncher (26 January 2009)

Yes "pent up demand" and Gov incentives have slowed the entry level price crash a little, day of reckoning draws near ...


----------



## numbercruncher (26 January 2009)

Plenty of RE gamblers getting smoked in mining towns.




> TIMES are tough throughout the Australian mining industry.
> 
> In recent weeks, a seemingly endless stream of cutbacks and closures - from the smallest miners to the world's largest, BHP Billiton - have rocked regional towns around the country.
> 
> A collapse in commodity prices and demand is responsible for what *industry veterans have deemed the most rapid switch from boom to bust in mining history.*






> Newly minted mining towns such as Hopetoun, Western Australia - near the site of the Ravensthorpe nickel laterite operation BHP decided to close last week - have *never* experienced this sort of instant *devastation*.




http://business.smh.com.au/business/boom-to-bust-in-mining-town-20090125-7phb.html


----------



## Aussiejeff (26 January 2009)

numbercruncher said:


> Yes "pent up demand" and Gov incentives have slowed the entry level price crash a little, day of reckoning draws near ...




With interest rates about to hit all time lows, is there not just a teeny-weeny bit of danger in hooking zillions of first home buyers up with monster mortgages?

I mean, what happens when hyper-inflation hits and interest rates sky rocket?

If you have 1,000's now just being able to afford to sign up for a new home at today's & tomorrows rates (let's speculate 4-5% on average by mid 2009?), what happens when the rates soar rapidly to 9-10%? (pure speculation as to when but possibly in as little as 2 years time).

Will many of those who jump in now be able to afford rapidly increasing monthly repayments?

I'm sure Brother Robots can enlighten me...


----------



## numbercruncher (26 January 2009)

Heya AJ - hows that foot fairing mate ?


Yes a spike in Interest rates would hurt em hard ....


Nearly all the papers over Australias bubble as shown by demographis today ....




> An international housing affordability survey has rated all of Australia's major capital cities as severely unaffordable housing markets.
> 
> Australia now has some of the most expensive housing in the world.
> 
> ...




http://www.abc.net.au/news/stories/2009/01/26/2474087.htm


----------



## overlap (26 January 2009)

Apparently Oz isn't so bad after all. It should be noted that affordable, expensive and over-valued are different things.

http://www.abc.net.au/news/stories/2009/01/26/2474283.htm



> A leading property analyst says a survey, which rates Australia as having some of the world's most expensive housing markets, does not take a large enough sample of countries into account.
> 
> The fifth annual Demographia International Housing Affordability Survey ranks the Sunshine and Gold Coasts in Queensland, and Sydney in New South Wales, among the five least affordable housing markets.
> 
> ...


----------



## numbercruncher (26 January 2009)

> "If we included most of the first world, we would have been in a situation where we *probably* would have been in the middle of the road, *perhaps *getting towards the high end, but certainly not at or near the very top in *my opinion*," he said.





Hilarious !!!


Why doesnt the bludger get off his backside and actually compile a study instead of Guessing ???


----------



## roofa (26 January 2009)

Aussiejeff said:


> With interest rates about to hit all time lows, is there not just a teeny-weeny bit of danger in hooking zillions of first home buyers up with monster mortgages?
> 
> I mean, what happens when hyper-inflation hits and interest rates sky rocket?
> 
> ...






I'd be suprised if the majority didn't lock in long term if they felt any danger of not being able to service the debt.


----------



## kincella (26 January 2009)

just to keep some things real....heres a list of melb suburbs...auctions on 13.12.08...lists each burb and the price sold etc....roughly half sold....all prices....cheapies to over millions....something for everyone out there....
real people with real money buying and selling.....not listening to the naysayers on this site...too busy doing something about a roof over their heads....moving on...whatever

from the domain site...pick your state and check it out

http://www.homepriceguide.com.au/saturday_auction_results/melbourne_domain.pdf


----------



## numbercruncher (26 January 2009)

Hello Kincella,


Yes I see clearly " roughly half sold " , prices down as well huh .... not adding much to the " House prices to keep rising for years " theory ?


Thankyou.


----------



## kincella (26 January 2009)

you are guessing the prices are down...they could be up...those little one bdrs? ...
a suburb I watch, they have been paying top dollar for the little awful things out there...just because they are cheap...
and some props are up 300% over the past couple of years...whats 5% here or there then...
I am not talking about half mill or one mill dollar props....or the one that sold for 10 mill...turned down offer of 13-14 mill months ago....
but I know of a 200,000 prop thats now worth over a mill....but not for sale...it may come on the market for 2 mill some time in the future


----------



## Glen48 (26 January 2009)

It appears Wives are turning up at their husbands work place with the soon to be Ex husbands belongings and tell the poor bloke it is all over...how many more Houses will that put on the market??


----------



## numbercruncher (26 January 2009)

kincella said:


> but I know of a 200,000 prop thats now worth over a mill....but not for sale...it may come on the market for 2 mill some time in the future





As we huddle around the BBQ to tell fishing stories .....


----------



## Glen48 (26 January 2009)

It is not worth 1 mill until it is sold for that amount, then you will know what it is worth.


----------



## kincella (26 January 2009)

glen,  I know what its worth,.......easy to compare, its not like rolling the dice and where the number lands is the price.....the history charts can guide you to future prices.....I did not say when it was purchased, it could have been held for 20 odd years, or more....
also know the cost of another prop for 12,000 in 1970, now land value alone is 1 mill.....40 years on....long time to wait,,, sorry living in the family home....

a lot of city folk have been in that situation....then sold and gone to tree or sea change areas, buy similar prop for a third of the price and have a heap of cash for those rainy days...

above examples were just modest props, nothing fancy, in fact quite ordinary

you cannot see where the prices of houses will go in the future can you ????

hint look at the history....ps talking aus props...not japan or iceland etc


----------



## nunthewiser (26 January 2009)

LOL sunshine and lollipops


blessya


----------



## Beej (26 January 2009)

Glen48 said:


> Ch 7 news House valued at 17M owner wanted 14M went to auction he got 9M.
> Penthouse on G.C paid 2.5 M sold for 700K .
> Luck only the high prices house are collapsing eeehh?






Glen48 said:


> It appears Wives are turning up at their husbands work place with the soon to be Ex husbands belongings and tell the poor bloke it is all over...how many more Houses will that put on the market??




Are these stats/stories as accurate as your proven completely wrong/false Toronto stats??

Was just chatting to various friends/folks at a nice Australia Day BBQ today - one friend of a friend selling a terrace in trendy water-side inner west suburb looking for ~$1.6M+ - first weekend on the market this weekend 39 groups inspected the property.... Another couple at the BBQ just bought a house on north shore, going to knock it down and build a new house - been their goal/dream for years, now going through with it because interest rates are low, they saved their money already etc and the numbers now stack up - why would they wait any longer? Same BBQ, one friends partner works at one of the big four in the 100% LVR mortgage department! (Thought they were all extinct according to everyone here???) They said business is booming - never been more volume for them - according to this guy they are very careful about credit checks, income checks, valuations etc etc and their default rate is currently running at < 0.5%, with any risk to the bank of losses covered by the mortgage insurance still, and everything still going strong. Most of their funding is from local sources, some o/s component. Some tightness from the o/s side but still money around and certainly no major credit crunch/freeze according to this person - with AU seen by o/s as a low risk market even in the current environment and even for the 100% LVR loan market.

Life goes on folks, people still buying selling property (in Sydney at least) every week. Watch this space - Sydney leads the AU market - mark my words. There is no great crash.

Beej


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## Glen48 (26 January 2009)

Kincella 
If you want to stand in front of an oncoming Forest fire that's your business. me I saw it coming and ran.
Home owners will be able to start bleating soon about how the Feds should have warned them house prices would dive or complain the FHO set them up in a trap or want the ATO to bail them out just like the suckers in Storm.


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## So_Cynical (26 January 2009)

kincella said:


> glen,  I know what its worth,.......easy to compare, its not like rolling the dice and where the number lands is the price.....the history charts can guide you to future prices.




No kincella...that's just not true.

9 years ago i was living in a small country town NSW...i went to an auction
for a little 2 bedroom ex commission house, fair/good condition...replacement 
value...u know to buy the block and build the same house $55000 > $65000

I was the only real buyer at the auction and the house was "on the market"
got it for $27000...any house is worth exactly what some one will pay for it 
on any given day.


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## juddy (26 January 2009)

Glen48 said:


> Kincella
> complain the FHO set them up in a trap or want the ATO to bail them out just like the suckers in Storm.




Interesting point. The government did expect people to go and spend the FHG as it was part of the 'stimulus package' so what is their level of responsibilty when things go pear-shaped.


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## singlefished (27 January 2009)

Glen48 said:


> Ch 7 news House valued at 17M owner wanted 14M went to auction he got 9M




*Gold Coast beachfront home drops $5.5m in a few months*

http://www.news.com.au/couriermail/story/0,23739,24961513-5011140,00.html


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## robots (27 January 2009)

hello,

sorry brothers, at the BDO yesterday on a free ride like the bludger's writing those articles Number, crikey I joined the handout crew for a day

what a day, 30+, Louis Christopher still not responding to email's which totally reveals the vested interest he has in the discussion, spruiker

paradise man can wait for the next 40+ years to roll on

thankyou
robots


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## nunthewiser (27 January 2009)

robots said:


> hello,
> 
> sorry brothers, at the BDO yesterday on a free ride like the bludger's writing those articles Number, crikey I joined the handout crew for a day
> 
> ...




Gday m8 .........yep im in the handout crew too ...got given free tix to the "raggamuffin festival" in perth on saturday just gone......... simply awesome 

no discussions about falling house prices there , only free love and funny odours wafting through the air

i might email "speech "from arrested developmement and ask him what he thinks about all this so called econimical crisis that some seem to be having 

me ,im just bumbling along doing my thing 


have a great day


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## Glen48 (27 January 2009)

I realise this is not part of OZ any is not connected to the credit bubble which won't effect OZ....not

The economic crisis has opened up opportunities for apartment tenants. The inventory of vacant apartments is expanding, and rents are dropping quickly in major metros across the country.

For renters with leases about to expire, it's time to negotiate. Landlords are working extra hard these days to keep units filled.

More from BusinessWeek.com:

• Rents Drop Nationwide as Vacancies Spike

• The Best and Worst Housing Markets of 2008

• How Much Home You Can Buy for $500,000

Of course, your ability to hold on to an apartment””especially a luxury unit””depends on how secure you feel about your own job. Americans lost about 2.6 million jobs in 2008 (mostly in the final quarter of the year) and are likely to lose millions more this year. They are losing money on stocks and other investments and are cutting back on costs by downsizing and moving in with family members or roommates as they hunker down for a deep recession.

Landlords, as a result, are forced to offer discounts to fill vacancies. Apartment vacancies spiked in September after the collapse of Lehman Brothers and the eruption of the financial crisis.

Go for a Long Lease

"If you've got job, it's a great time to be a renter and to sign the longest lease possible," said Ron Johnsey, president of Axiometrics.com, a Dallas apartment data company.

BusinessWeek.com worked with Axiometrics to come up with a list of 25 large metros where rent declines accelerated most at the end of 2008. In Salt Lake City, where the economy had been holding up better than most cities, effective rents (including landlord concessions) fell 2.3% in the fourth quarter compared with the previous quarter. By comparison, rents were climbing 3.3% in the fourth quarter of 2007.

The New York metro area, including New York City and its New York and northern New Jersey suburbs, saw a 3.7% drop-off in effective rents in the fourth quarter (compared with a 0.5% increase in the fourth quarter of 2007), according to Axiometrics, which surveys landlords across the nation once a month.

The situation has changed dramatically in the expensive Manhattan market, where tenants are suddenly in control. The layoffs on Wall Street have forced landlords to cut rents; offer one, two, or even three months' free rent; and pay the broker fee that the tenant would otherwise pay (often 12% of the annual rent).

Luxury High-Rises Hard Hit

Vacancies are rising most in the high-end doorman buildings, particularly in the Financial District, said Daniel Baum, chief operating officer for the Real Estate Group NY, a residential sales and rental brokerage firm. But rents are falling all across Manhattan, in all price categories, he said. Some landlords have dropped rents as much as 20% to lure tenants, he said.

"The luxury high-rise market, especially new construction, is the one taking the worst hit," Baum said. "There's a building offering three months' free rent in the Financial District."

Victor Calanog, chief economist for apartment research firm Reis said landlords nationwide are more motivated to cut rents than they were after the previous recession at the beginning of this decade. Landlords now are under pressure to keep tenants because vacancies are higher than they were in 2000 and so are the debt payments they need to cover. Too many vacancies, and some landlords are likely to face foreclosure, he said.

"I've never seen this kind of acceleration in decline," Calanog said. "It's somewhat sobering."


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## Aussiejeff (28 January 2009)

More houses being sold is great news, right?

But not for some....



> *[size=+1]California Home Prices Fell 42% in December as Slump Worsened[/size]*
> 
> By Daniel Taub
> 
> ...




Glad I don't live in "I'll Be Back" Land


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## numbercruncher (28 January 2009)

Ooooh lala ....

Wish you didnt provide an official article though, Beej would of demanded that falls of this magnitude are "impossible" ....


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## wayneL (28 January 2009)

Aussiejeff said:


> More houses being sold is great news, right?
> 
> But not for some....
> 
> ...




42%??

Is that correct??


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## Aussiejeff (28 January 2009)

wayneL said:


> 42%??
> 
> Is that correct??




Would appear so, mate!

There is an update to the earlier story. Here's the link... 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_GHuixiR3Pk&refer=home

Like OZ, RE bulls in the US are now claiming this is great news and will help many new first home buyers to get mortgaged to the hilt.


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## Judd (28 January 2009)

And Bloomberg probably gets its information from this site

www.realtytrac.com

Only for those who like looking at horror movies (I prefer light comedy such as Othello


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## Aussiejeff (28 January 2009)

Judd said:


> And Bloomberg probably gets its information from this site
> 
> www.realtytrac.com
> 
> Only for those who like looking at horror movies (I prefer light comedy such as Othello




*qeasy*

I looked for 5 mins and was violently ill all over my keyboard....


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## Beej (28 January 2009)

Aussiejeff said:


> More houses being sold is great news, right?
> 
> But not for some....
> 
> Glad I don't live in "I'll Be Back" Land




Interesting article - thanks for posting AussieJeff! I lived and worked in California for a little while, so I am familiar with the place and it's housing market (in some area's anyway) quite well. 

In terms of the relevance (or not) of the situation over there to Australia, I note that the article states that *236,000  homes were foreclosed in CA through 2008*. It also states sales volume at an annualised rate of 544,580, but that includes a big jump in Dec, so the actual number of houses sold would be less, probably closer to the previous Decembers annualised rate of ~300,000. Either way, that means that somewhere *between 45% -> 80% of 2008 CA home sales were forced foreclosure sales!!!!!*

The article also states that it's "typical" for a foreclosure sale to go for 25% under market (historically). So, given that AT LEAST HALF of all CA house sales in 2008, and maybe as many as 80%, were foreclosure sales, is it any wonder prices have fallen by 40+%????

My point is that those big falls have been driven PRIMARILY by the sub-prime crisis, the resulting HUGE and unprecedented volume of forced foreclosure sales , and of course the resulting deep recession the US currently finds itself in (ironically triggered by the whole sub-prime mess in the first place).

What is the foreclosure rate in Australia? It is TINY by comparison! Unless we saw foreclosure rates here approach the massive volumes being seen in the US, we will not - repeat WILL NOT, and can not see price falls here of that magnitude.

Finally, I note that the quoted price fall is median year-over-year (not just in one month as the headline suggests). But it is happening in the US, which fortunately is not the country that we live in, and the property market here is holding up just fine - even showing good price growth in many area's of Sydney and Melbourne in particular through 2008. Interest rates getting cheaper by the month, petrol, food etc getting cheaper = easier and easier for mortgage holders here to make payments. 

Remember everything is worse in the US in this type of situation - they had virtually free money for half a decade, they have large numbers of VERY low income earners who were given sub-prime loans to buy houses - these very same workers are all currently losing their jobs, with no redundancy provisions, no welfare safety net etc etc. They have non recourse loans so folks can just walk away and send their keys back to their bank (who might be going bankrupt anyway!).

PS: Here's another article with similar, but also a broader range of stats: http://www.google.com/hostednews/ap/article/ALeqM5h_DkmV9N0qyf2vfd5bqwsVnBh0JgD95RSUA80

One interesting quote is: 







> The housing market is being driven by bargain hunters snapping up bank-owned foreclosure properties, which accounted for 58 percent of existing homes sold last month, up from 24 percent a year earlier.
> 
> "The processing of these distressed properties is almost reaching a frenzied level," said John Karevoll, a DataQuick analyst. "Many of the banks just want to get these properties off their books. People are flocking to buy these foreclosure properties."




So in true American style, one man's misery has become another's opportunity!

Thank goodness we live in AUSTRALIA!

Cheers,

Beej


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## dirty_harry (28 January 2009)

- Any asset is ultimately worth what it can return. Have you guys worked out the P/E ratio of a house in Gold Coast, Sydney or Melbourne these days? Be sure to subtract your costs like depreciation, rates and land tax from the rental yield.
- You can buy energy, farmland, etc on the stock market right now at huge discounts and single digit PE's, so for me the comparison is clear. 
- Houses in Florida for example can be had for US$250,000 down from US$900,000 with water channel frontage like the Gold Coast. So if I had to choose between Florida right now or Gold Coast I would choose Florida. 
- the housing market crashed 3 years after the stock market in '87 last time.
- housing is a real asset - a good investment long term but it's all a question of valuation.


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## kincella (28 January 2009)

beej, about 10 Dec 08 I called cba about their home loans....10 mins later they had approved me for refinancing (my current lender was not passing on the rate cuts), just got the paperwork in the mail....6 weeks.....kidding they are not inundated with work....I was told by another on another site early Dec that the banks were so busy it was taking them 4 weeks min to process,,,and big back logs...
so they have offered me 5.14% and more rate cuts to come...only months ago I was paying almost 10%...

oh and pleased you put the perspective into the arguments about the american con job houses......some of them are in all black suburbs,,,totally trashed, and drug dealers in  every 3 rd house...nice neighbourhood !
most of us would not consider it ....similar to living in the long grass in Darwin or the alice...or any other shanty town in the middle of nothing....
kidding they try to compare it to Melb...
ggggggrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
cheers


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## aleckara (28 January 2009)

I think the main reason why houses haven't started falling at a faster rate is simply due to the FHB, courtesy of the Rudd government. Ironically a lot of young people voted for him.

More government intervention here:

http://www.theaustralian.news.com.au/business/story/0,28124,24973301-25658,00.html

The simple truth is that governments have vested interests in property being unaffordable, and the financial system is tied to the value of housing. Most credit in circulation is backed by a secured mortgage on land, so land is the weak point. The truth of the matter is that all the money we have borrowed is in housing so if it goes down our country leans towards insolvency.

The situation should have never reached this point where there is this conflict of interest where inflation of housing is bad, and deflation of housing is worse. 

The daily reckonining has posted a table on housing affordability. http://www.dailyreckoning.com.au/au...verely-and-seriously-unaffordable/2009/01/27/

Governments will do anything to stop it from falling. I was bearish on housing but now I'm starting to realise that the Government would probably even print money to stop the fall if it had to. With our government housing can't really go down in the long term.


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## knocker (28 January 2009)

aleckara said:


> I think the main reason why houses haven't started falling at a faster rate is simply due to the FHB, courtesy of the Rudd government. Ironically a lot of young people voted for him.
> 
> More government intervention here:
> 
> ...




So in  real terms housing does go down, because our dollar is headed for banana republic status, so your average 400000$ home will be worth as much as the aussie dollar which could be anything from 40 to 50 Us cents. lol

Meanwhile fuel rises, food rises every rises.

Good luck


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## knocker (28 January 2009)

kincella said:


> beej, about 10 Dec 08 I called cba about their home loans....10 mins later they had approved me for refinancing (my current lender was not passing on the rate cuts), just got the paperwork in the mail....6 weeks.....kidding they are not inundated with work....I was told by another on another site early Dec that the banks were so busy it was taking them 4 weeks min to process,,,and big back logs...
> so they have offered me 5.14% and more rate cuts to come...only months ago I was paying almost 10%...
> 
> oh and pleased you put the perspective into the arguments about the american con job houses......some of them are in all black suburbs,,,totally trashed, and drug dealers in  every 3 rd house...nice neighbourhood !
> ...




Not like our mates Robots St Kilda hey. No drug dealers there ROFLMAO


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## Trevor_S (28 January 2009)

kincella said:


> oh and pleased you put the perspective into the arguments about the american con job houses......some of them are in all black suburbs,,,totally trashed, and drug dealers in  every 3 rd house...nice neighbourhood !




black suburbs, what does that mean, painted black cross on the door, "bring out your dead" kinda thing ?  I thought racism was dieing out, apparently not ?  

Anyway, these guys look pretty "white", if that is important to you ?



The Growing Foreclosure Crisis

But I have to fess up, I have always been a property bear, for decades.  Sure, I have made money of selling several IP's but I don't understand the hysterical value people attach to housing and the assumption that it could never go down.  The P/E's based on rental returns have always left me looking elsewhere for somewhere to put my money.  With commercial property, I have always been outbid locally by southerners who were happy with 5% net returns when I was looking for 10% - 11% net, I guess they, like those with houses, simply assumed prices will alwya go up and they can cash in on the bigger fool theory.  Perhaps they are right   but because I can't get my head around it, I mostly stay away.


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## knocker (28 January 2009)

Trevor_S said:


> black suburbs, what does that mean, painted black cross on the door, "bring out your dead" kinda thing ?  I thought racism was dieing out, apparently not ?
> 
> Anyway, these guys look pretty "white", if that is important to you ?
> 
> ...




So how does it all work mate? Net returns and all that stuff? does it really mean anything in these tImes?


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## MR. (28 January 2009)

kincella said:


> beej, about 10 Dec 08 I called cba about their home loans....10 mins later they had approved me for refinancing (my current lender was not passing on the rate cuts), just got the paperwork in the mail....6 weeks.....kidding they are not inundated with work....I was told by another on another site early Dec that the banks were so busy it was taking them 4 weeks min to process,,,and big back logs...
> so they have offered me 5.14% and more rate cuts to come...only months ago I was paying almost 10%...




So CBA is taking in term deposits of (5% 3mths) or another (5.5% 3 years) and loaning it back out at 5.14%

Term deposits holders would be glad the citizens of Australia via the Gov' are backing term deposits with CBA!  ????


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## aleckara (28 January 2009)

knocker said:


> So in  real terms housing does go down, because our dollar is headed for banana republic status, so your average 400000$ home will be worth as much as the aussie dollar which could be anything from 40 to 50 Us cents. lol
> 
> Meanwhile fuel rises, food rises every rises.
> 
> Good luck




Well for one I don't think they would do print money. They would shift spending towards housing in the first instance, inflating housing compared to everything else (which has been happening for years anyway in the private sector - most money is dedicated to housing so housing inflation > normal inflation). Or you could say a scarcity of housing relative to the money induced demand. The demand has dried up but the government is trying to stimulate it.

I'm just saying that the nominal value of housing is not likely to fall. Real value - it's been doing that for a while. It's the one asset that you can invest in where the taxpayer will take some slack on the downsides. No wonder everyone thinks it is risk free. Depends on how powerful the government is to stop the other forces.


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## gfresh (28 January 2009)

aleckara said:


> The simple truth is that governments have vested interests in property being unaffordable, and the financial system is tied to the value of housing. Most credit in circulation is backed by a secured mortgage on land, so land is the weak point. The truth of the matter is that all the money we have borrowed is in housing so if it goes down our country leans towards insolvency.
> 
> ...
> 
> Governments will do anything to stop it from falling. I was bearish on housing but now I'm starting to realise that the Government would probably even print money to stop the fall if it had to. With our government housing can't really go down in the long term.




Ain't that the truth! Australian economy is much too tied to housing, housing taxes, and construction to let it fall any significant extent. With only a few banks here (and shrinking), wouldn't take too many falls, and it would quickly bring down the entire banking system, and probably the rest of the economy (very quickly) at the same time. I guess having 12 months lead time in observations on the US and the UK has allowed them to see the cycle play out if left to itself. 

It's now becoming pretty obvious the Government will do absolutely everything it can to keep the market propped up. I think we'll see a lot more over the coming 12 months, many of which will anger a lot of people. But in the end, as has been discussed, they don't care about them, 70% own their own property.. it's about keeping them happy. 

Even if people begin to go into negative equity, with the bank guarantee, Rudd has really got the banks by the balls now to apply pressure there as well. There will be extended payment periods, probably specific home-owner tax breaks, all sorts of crazy things might come to keep people in their homes during a recession. Gillard was hinting as much last night on the 7:30 report. 

RBA already printing lots of money and other support ..More than likely exactly the same result as the early 2000's.. too much stimulus leading to rapid inflation and the market overshooting itself in later years. 

As a result, in the long-run we'll have a country in which owning a home anywhere centrally located is nigh impossible, and wealthy generational landlords will lease to lifetime tenants.

It's don't think it's right, but probably the way Australia will head, if not already getting there.


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## kincella (28 January 2009)

MR...neighbour fixed 500,000 at 8.5% for 5 years Oct 08 on deposits with cba and wbc....had it all with wbc....friends suggested she split it....she is more than happy...had a mill...she lives off the interest

and inherited an investment prop in sth yarra, tenant been there for 30 years...neighbour suggests she will sell it when tenant dies or moves .....could not handle the stress of doing anything with it....
agent been looking after it all these years...all she has to do is wait for the cheque each month
btw...thought the banks were borrowing overseas, 30 days or less at 2% etc


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## prawn_86 (28 January 2009)

kincella said:


> btw...thought the banks were borrowing overseas, 30 days or less at 2% etc




this is a common misconception about how the banking system works. Generally banks borrow from the RBA. 

If they do borrow from overseas, at a lower % than here, then foreign exchange risk comes into it. Forex rates take into account the interest differentials between currencies, so therefore there is no use of the banks borrowing from overseas (not from a lending perspective at least).


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## MR. (28 January 2009)

kincella said:


> MR...neighbour fixed 500,000 at 8.5% for 5 years Oct 08 on deposits with cba and wbc




In Oct08 the CBA would have still been lending funds out at 5 year fixed rates with the books balancing!  The rates I posted are the terms and rates quoted to me Friday just gone.  So whats happening here?  You have an existing loan and they are offering you 5.14% to come over to the CBA but will accept deposits at 3 years 5.5%. 

If they are short of deposits (from AUS) they sure still aren't going to lose any market share!   

Later we will be saying "didn't you see the writting on the wall"  

Prawn thanks for your imput on the forex.


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## kincella (28 January 2009)

so the current theme of this thread is...the govt will do anything for housing !
lets look outside the square, and consider other motives in this recession period.....
instead of all that money going into the banks coffers each month on loan repayments....a rate cuts gives money back to the consumers....to spend as they wish....ie consuming...retail therapy.....keeps everyone in a job....
and when people have jobs...they are usually happy.....
after 18 months of rate rises...each month, never waiting to guage the result...people had no money left to spend...discretionary spending....
now finally...hello...anyone home....they wake up....no money left to spend ...
its not about the housing per se.....its about the high interest rates....and no money left in the kitty for ordinary families....
a rate  cut of 2% is needed now...and then people can afford to spend....and that will save a lot of jobs.........same goes for china...
money sitting in the banks is lazy money....and only good for the heads at the banks...huge pay checks and bonuses for a select few

we need fast trains, roads and freeways,...hospitals and a heap  of other infrastructure for now and the future.....thats where money should be going...
cheers


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## Trevor_S (28 January 2009)

kincella said:


> money sitting in the banks is lazy money....and only good for the heads at the banks...huge pay checks and bonuses for a select few




What ?  Money sitting in the bank is able to be used to loan out for ... housing... along with a plethora of other things.    Deposits are a saught after source of finance.



kincella said:


> we need fast trains, roads and freeways,...hospitals and a heap  of other infrastructure for now and the future.....thats where money should be going...




If you think that will happen, buy LEI


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## MR. (28 January 2009)

MR. said:


> In Oct08 the CBA would have still been lending funds out at 5 year fixed rates with the books balancing!  The rates I posted are the terms and rates quoted to me Friday just gone.  So whats happening here?  You have an existing loan and they are offering you 5.14% to come over to the CBA but will accept deposits at 3 years 5.5%.




Loan fixed rates from the CBA: 

http://www.commbank.com.au/personal/apply-online/download-printed-forms/home-loan-update-002842.pdf

Is there any money left over?

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

I believe rates shouldn't drop below 3%.  What's the point.  Look where it got the USA.  NO MORE DEBT.....


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## jet328 (28 January 2009)

prawn_86 said:


> this is a common misconception about how the banking system works. Generally banks borrow from the RBA.
> 
> If they do borrow from overseas, at a lower % than here, then foreign exchange risk comes into it. Forex rates take into account the interest differentials between currencies, so therefore there is no use of the banks borrowing from overseas (not from a lending perspective at least).




I think you've got this the wrong way round.
Generally central banks discourage banks from borrowing from the central bank. eg last year you would have kept hearing 'the fed has lowered the discount window' at the height of the liquidity issues. The discount rate is higher than the reserve/cash rate so that banks borrow from each other and not the fed. It is only normally used in emergencies

The RBA/fed sets the cash rate by intervening in the overnight money markets to push up or down the cash rate

The reason the banks borrow from overseas is that Australians demand significantly more credit that there is supply. Therefore they have to get the funds from overseas eg. all the major banks have been selling bonds in the US lately
In regards to the exchange rate, its the lender who takes the forex risk not the banks. This was one of the advantages of floating the AUD. Think Japanese carry trade


----------



## numbercruncher (28 January 2009)

kincella said:


> ......some of them are in all black suburbs,,,






Are Yellow, brown , white suburbs better investments ?


----------



## prawn_86 (28 January 2009)

jet328 said:


> I think you've got this the wrong way round.
> Generally central banks discourage banks from borrowing from the central bank. eg last year you would have kept hearing 'the fed has lowered the discount window' at the height of the liquidity issues. The discount rate is higher than the reserve/cash rate so that banks borrow from each other and not the fed. It is only normally used in emergencies
> 
> The RBA/fed sets the cash rate by intervening in the overnight money markets to push up or down the cash rate
> ...





Yes sorry perhaps i wasnt as clear as i should have been. The way i understand it is the banks borrow from each other, through their clearance/dealer accounts with the RBA. But i am by no means an expert on the matter.

And then banks do borrow from overseas, but not in the way which was implied by kincella. IE - banks dont borrow from Japan @ 2% and lend here at 5%, because you can only borrow Yen at 2% (or whatever) and then you need to convert it to AUD to lend, so there is FX risk present. And the FX rate takes into account the interest difference between 2 countries (if it doesnt, arb bots step in quickly  )


----------



## numbercruncher (28 January 2009)

kincella said:


> so the current theme of this thread is...the govt will do anything for housing !





The Gov is out of money and rapidly going down the gurgler .....


----------



## kincella (28 January 2009)

no they dont run out of money....they just print a whole lot more...which in turn devalues your existing dollars.....
no need to borrow it and have to pay interest...just print it...


----------



## numbercruncher (28 January 2009)

kincella said:


> no they dont run out of money....they just print a whole lot more...which in turn devalues your existing dollars.....
> no need to borrow it and have to pay interest...just print it...





Hello,


linklinklinklink ....

The Australian Government prints money ? and then they just spend as much as they want on whatever they want ?

House prices to rise forever ?


----------



## knocker (28 January 2009)

numbercruncher said:


> Hello,
> 
> 
> linklinklinklink ....
> ...




I can not believe how much **** polies are talking on tv tonight.lol
Oh no China is going down and low and behold the mining industry is sinking. lol
Anyone with half a brain cell could have told you this was going to happen two years ago. No pity for the dumbass public that believe the krudd about property going up, Australia is insulated from recession bla bla blah.

Some guy on the 7:30 report telling how he spent all his money during the good times while working in the mines and now he is unemployed blah blah blah

What a crock Australian society has become.


----------



## aleckara (28 January 2009)

jet328 said:


> The reason the banks borrow from overseas is that Australians demand significantly more credit that there is supply. Therefore they have to get the funds from overseas eg. all the major banks have been selling bonds in the US lately
> In regards to the exchange rate, its the lender who takes the forex risk not the banks. This was one of the advantages of floating the AUD. Think Japanese carry trade





People don't realise that every little bit of money (both dollars and credit) is circulating around our economic system even if we have already given that dollar to an overseas investor. Why? Because the $AU is only really useful in Australia. The best way to think about it generally is that the money never really leaves Australia, just the owner may not be Australian.

So all credit therefore must come from the RBA. Our financial system encourages you to invest in anything, whether it be the money market securities (i.e indirectly the interest you get in your savings account), or assets.  The only difference here is how much of the money supply circulating is owned by foreigners. The financial system does a good job of allowing us to use other people's money (via debt) by giving people large incentives to never really pull their "cash" out (i.e the "risk free rate"). It's why a country can for a short period of time keep importing without producing anything.

The one part I found interesting in this quote though is that it made me think that despite our "so-called" high interest rates recently they were in fact too low. The fact that there is more demand for money than for saving it probably meant that the housing bubble is a credit driven government led pheonoma rather than a real demand for housing. The best way for housing to be sustainable would be non-government controlled interest rates (market forces) that balance saving with investment. It would lower the debt that people would have on their house (as they can't borrow as much) while giving them an incentive to actually save and not borrow for a house (i.e the interest rate is higher). Each generation would be forced to save for their investment stopping the robbing of future generations via debt. After all saving represents work in the past, and if instead of throwing money into the problem at the same level of housing stock, we throw work into it instead.

But no the government really does believe that the long term is really just lots of 3-4 year election short term cycles.

Edit: Prawn the interest rate hedging setups dont' really factor in the FX rate per se. What they factor in is the converging force over time. i.e if the AUD was 90c and its interest rate is higher than the US by 3% this tells you that the market expects the aud will depreciate by 3% in a year to the US according to interest rate parity theory.


----------



## robots (28 January 2009)

aleckara said:


> The one part I found interesting in this quote though is that it made me think that despite our "so-called" high interest rates recently they were in fact too low. The fact that there is more demand for money than for saving it probably meant that the housing bubble is a credit driven government led pheonoma rather than a real demand for housing. *The best way for housing to be sustainable would be non-government controlled interest rates (market forces) that balance saving with investment. It would lower the debt that people would have on their house (as they can't borrow as much) while giving them an incentive to actually save and not borrow for a house (i.e the interest rate is higher). Each generation would be forced to save for their investment stopping the robbing of future generations via debt. After all saving represents work in the past, and if instead of throwing money into the problem at the same level of housing stock, we throw work into it instead.
> *
> But no the government really does believe that the long term is really just lots of 3-4 year election short term cycles.
> 
> Edit: Prawn the interest rate hedging setups dont' really factor in the FX rate per se. What they factor in is the converging force over time. i.e if the AUD was 90c and its interest rate is higher than the US by 3% this tells you that the market expects the aud will depreciate by 3% in a year to the US according to interest rate parity theory.




hello,

whats the problem with housing at the moment? 

plenty out there to buy we are told as realestate.com.au is busting at the seams, plenty out there to rent Louis Christopher informs us

any problem then?

what a day, mid thirties, hit work early this morning keeping the country going

thankyou
robots


----------



## knocker (28 January 2009)

robots said:


> hello,
> 
> whats the problem with housing at the moment?
> 
> ...




hello

Well robots

I guess if you are on ice then 43 would come down to mid thirties.lol

thankyou


----------



## robots (28 January 2009)

hello,

yeah that bag of arctic sure changed the day

thankyou
robots


----------



## lusk (28 January 2009)

kincella said:


> no they dont run out of money....they just print a whole lot more...which in turn devalues your existing dollars.....
> no need to borrow it and have to pay interest...just print it...





Yes print like no tomorrow and everything will be alright. Maybe you should read a bit of history about fiat money and how many systems have collapsed using it. Those old fools who wrote the US constitution may have actually know something back then.


----------



## knocker (28 January 2009)

robots said:


> hello,
> 
> yeah that bag of arctic sure changed the day
> 
> ...




hello

also good to see you hitting up. Keep it up champ lol

thankyou


----------



## robots (28 January 2009)

hello,

thanks man, yeah keep plodding along travelling through time and helping out the economy along the way 

paradise

ps. anybody heard from chops, hope all's well 

thankyou
robots


----------



## kincella (29 January 2009)

16 Shops in Lorne sold prior to auction
for a return of 5.5 -6%
thats a massive amount for a small town...prices from 300,000 to 1 million on a return of about 5%....damn how did I miss that one....trinity sold them...
some lucky investors out there..
.................................................. ...........................

Mr Castran said the success of the sale pointed to investors returning to blue chip commercial property in the current economic turmoil. 

"What we are seeing is people hesitant to buy shares or park their money in the bank where they get no strong returns," Mr Castran said. 

"They are using super funds to purchase quality commercial stock, especially in the $500,000 to $1 million bracket." Mr Castran said buyers were a mix of existing tenants and Melbourne investors. 

He said demand had been fuelled by no further commercial subdivisions being developed in Lorne, which is above the beachfront Great Ocean Road. 

http://www.theaustralian.news.com.au...-36418,00.html


----------



## kincella (29 January 2009)

800 houses in townsville...could be on the market...after storm financials collapse.....
how sad for the owners...
but this should create fire sales and bring the prices down....
small community hit by some greedy and stupid players
http://www.theaustralian.news.com.au/business/story/0,28124,24977694-25658,00.html


----------



## MrBurns (29 January 2009)

kincella said:


> 16 Shops in Lorne sold prior to auction
> for a return of 5.5 -6%
> thats a massive amount for a small town...prices from 300,000 to 1 million on a return of about 5%....damn how did I miss that one....trinity sold them...
> some lucky investors out there..
> ...




Lorne is seasonal only, watch the rents tumble and/or tenants leave/go broke when winter rolls around, not to mention the _global economic crisis._

Investment unit in Qld is better , good all year round and people will holiday at home rather than go overseas AND you can sneak a couple of weeks in per year for yourself AND the returns are as good or better than what you've quoted.


----------



## GumbyLearner (29 January 2009)

kincella said:


> 800 houses in townsville...could be on the market...after storm financials collapse.....
> how sad for the owners...
> but this should create fire sales and bring the prices down....
> small community hit by some greedy and stupid players
> http://www.theaustralian.news.com.au/business/story/0,28124,24977694-25658,00.html




Very sad.

Just keep an eye out for the vulture funds.


----------



## kincella (29 January 2009)

due to our mild weather down here....Lorne is almost a year round option....know of people who purchased resi units at the beginning of the cumberland resort....let as serviced apartments....rented all year round...earning over 25,000 pa each ( thats over 7 years ago ??? what they are now)...he had 5 ...paid about 150,000 each....
almost no vacancies ever.....
but commercial usually takes a different investor....and they are not buying a shop that runs for a month....
oh and in these times...people travel locally and in oz...rather than overseas....so it will probably be even hotter down there....
note the median price of houses over 1.3 mill....
its a pretty place....but I dont like the ocean...prefer the protected bay side
from memory...Lorne is like Portsea...its the cashed up people from Melb, its their playground
where do you reside burns ??? see the article about townsville


----------



## MrBurns (29 January 2009)

kincella said:


> due to our mild weather down here....Lorne is almost a year round option....know of people who purchased resi units at the beginning of the cumberland resort....let as serviced apartments....rented all year round...earning over 25,000 pa each ( thats over 7 years ago ??? what they are now)...he had 5 ...paid about 150,000 each....
> almost no vacancies ever.....
> but commercial usually takes a different investor....and they are not buying a shop that runs for a month....
> oh and in these times...people travel locally and in oz...rather than overseas....so it will probably be even hotter down there....
> ...




I'm in Melbourne, I was a commercial real estate agent for 20 years.

Lorne , well any holiday place other then Qld would worry me, though I dont know the market down there perhaps I should take a drive.

In any case strip shopping is a worry at the best of times and in this economic climate too dangerous for me.

Port Douglas is ok all year round because it's tropical, an investment unit there is looking good, just have to wait another 6 months I reckon till the prices drop, might be longer though.


----------



## kincella (29 January 2009)

its the wet season in Qld now....Oct to Mar or later....flooded half the time...the heat and the wet would drive me nuts...then the dunghi fever now...
brother has been up to rocky in 2004 and again 2006...went up in may...first year they said it was the coldest in 100 years...2nd time it was the wettest in 100 years
he is a former qld er...blah blah the sun, surf and fishing...he is never going back now'
and they are waiting for the tsunami...to hit anytime...its overdue...
all a bit nervous....last year sister heard the radio with tsunami warning....did not drive to work,,,kept going, went up into the hills for the day....


----------



## kincella (29 January 2009)

reserve bank of NZ cut rates buy 1.5...now 3.5

woo hoo good news for all...but why do we have to wait till next week
that 2% cut is looking good...do they have the gutz to do it now...or wait longer until more jobs are lost

http://www.news.com.au/business/story/0,27753,24978518-31037,00.html 

--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ? 

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller


----------



## gav (29 January 2009)

I have a friend who owns an IP in Lorne. He tried selling mid last year when the tenants who had occupied the property for 5yrs moved out.  Property was on the market for the SAME PRICE he paid for it more than 10 years ago, and after 3 months there was not even one serious enquiry!!  Fortunately for him, he has now at least found someone to rent it.

According to home price guide, Lorne houses are down *25%* from the 6 months to Dec 08.  Region is only down 5%

For Lorne Units, there isn't enough data (ie. not enough sales), however the region is down 12%, so I wouldn't be surprised if Lorne units fared even worse than its houses.

There isn't enough data to post the clearance of auctions for 6 months to Dec 08, however for the 6 months to June 08 it was 36%


----------



## MrBurns (29 January 2009)

gav said:


> I have a friend who owns an IP in Lorne. He tried selling mid last year when the tenants who had occupied the property for 5yrs moved out.  Property was on the market for the SAME PRICE he paid for it more than 10 years ago, and after 3 months there was not even one serious enquiry!!  Fortunately for him, he has now at least found someone to rent it.
> 
> According to home price guide, Lorne houses are down *25%* from the 6 months to Dec 08.  Region is only down 5%
> 
> ...





Holiday places are the first to go in a downturn and this will be a huge dowturn.


----------



## MrBurns (29 January 2009)

kincella said:


> its the wet season in Qld now....Oct to Mar or later....flooded half the time...the heat and the wet would drive me nuts...then the dunghi fever now...
> brother has been up to rocky in 2004 and again 2006...went up in may...first year they said it was the coldest in 100 years...2nd time it was the wettest in 100 years
> he is a former qld er...blah blah the sun, surf and fishing...he is never going back now'
> and they are waiting for the tsunami...to hit anytime...its overdue...
> all a bit nervous....last year sister heard the radio with tsunami warning....did not drive to work,,,kept going, went up into the hills for the day....




Geez there's no where to go I think I'll just withdraw the lot and sniff it up my nose with robots.


----------



## nunthewiser (29 January 2009)

MrBurns said:


> Holiday places are the first to go in a downturn and this will be a huge dowturn.




yep........................ do have my eye on the apollo bay area .BUT not opening both to look proper for at LEAST a year 


we havent even seen the beginning of this downturn proper yet in my view .

but hey im always happy reading about sunshine and lollipops posted here on a daily basis


----------



## numbercruncher (29 January 2009)

nunthewiser said:


> but hey im always happy reading about sunshine and lollipops posted here on a daily basis





haha yes this thread is about the only place on the net to get some positive spin ..... (aka lies and damned lies)

Everywhere else on the net deals wth reality .....


----------



## Beej (29 January 2009)

Meanwhile, out in the real world: "Rent price rises at 20-year high":

http://www.news.com.au/business/story/0,27753,24977706-462,00.html



> RENTS have recorded their highest increase since 1988 amid fears the rental crisis will only get worse as the impact of the global recession takes hold.
> 
> Latest figures from the Australian Bureau of Statistics show the annual rate of growth in rents across the country has jumped to 8.4 per cent in the year to last month, up 2 per cent from 2007, The Australian reported.
> 
> ...




Cheers,

Beej


----------



## nunthewiser (29 January 2009)

Beej said:


> Meanwhile, out in the real world: "Rent price rises at 20-year high":
> 
> http://www.news.com.au/business/story/0,27753,24977706-462,00.html
> 
> ...




yes beej .in a sunshine and lollipop world .prices ALWAYS go up ..never correct or plunge 

gawd i love a sunburnt country


----------



## numbercruncher (29 January 2009)

kincella said:


> 800 houses in townsville...could be on the market...after storm financials collapse.....
> how sad for the owners...
> but this should create fire sales and bring the prices down....
> small community hit by some greedy and stupid players
> http://www.theaustralian.news.com.au/business/story/0,28124,24977694-25658,00.html





Its that age old adage " the greedy become the needy " .......

All the lemmings were sucked in with such crazy concepts as " you have a lazy balance sheet " ........ 

Lock up the ring leaders and charge the "victims" with financial negligence and muppetry ....

People should have to be licensed to take out debt and sit through education seminars about its destructive force (and benefits) ....

Moral of the story, if your going to play with fire atleast do it with a seperate legal entity such as a company ...... 

House prices to boom forever ? pray for Quantative easing permabulls !


----------



## MrBurns (29 January 2009)

Beej said:


> Meanwhile, out in the real world: "Rent price rises at 20-year high":
> http://www.news.com.au/business/story/0,27753,24977706-462,00.html
> Cheers,
> 
> Beej




Meanwhile in the actual real world friend of mine just rented at the same price they would have a year ago, nice house and they have a dog.

Ivanhoe somewhere not out in the sticks....... no problem.

Just sold at 5% less than he would have got previously, will be waiting up to 2years to buy back in. Good timing.


----------



## gfresh (29 January 2009)

Beej said:


> Meanwhile, out in the real world: "Rent price rises at 20-year high":




spin, spin, spin.. Not for me  

Anyhow, interest rates will be soon so low, entry level properties will be $100-$150 more than renting. 

For a couple, $330k 2br unit will cost them $400/wk clear. Now if two people can't afford $200/wk each they have some serious problems with basic finances


----------



## Pommiegranite (29 January 2009)

kincella said:


> reserve bank of NZ cut rates buy 1.5...now 3.5
> 
> woo hoo good news for all...but why do we have to wait till next week
> that 2% cut is looking good...do they have the gutz to do it now...or wait longer until more jobs are lost
> ...




Only the seriously naive aren't questioning why interest rates are being cut.


----------



## Glen48 (29 January 2009)

6 Pubs a day in UK are closing, time to write yourself a poison pen letter and eat it.


----------



## Trevor_S (29 January 2009)

kincella said:


> 800 houses in townsville...could be on the market...after storm financials collapse.....
> http://www.theaustralian.news.com.au/business/story/0,28124,24977694-25658,00.html




Hyperbole is the word that springs to mind reading this article.  

Being the perennial property bear  that I am, I keep looking for signs of housing decline, forced sales etc (I live in Townsville) nothing obvious to me (yet !), houses are still way overpriced (IMO of course) and renting is hellish expensive (IMO of course), place next door to mine was renting for $550, I nearly fell over, I expected it to be $350 ! Tenant just moved out and I see it's for sale now, and next door (other side from me) to the local member and Minister for the Dept of Natural Resources as well  (and his yappy freakin' dog !)   That aside, all this talk of distressed housing will probably have lots of people out expecting low prices, and possibly driving prices up further !

Townsville is very unaffordable, and not just in my opinion

http://www.townsvillebulletin.com.au/article/2009/01/21/34065_investor.html



> TOWNSVILLE has been named among most unaffordable places in which to live in Australia.




so it could do with a wake up call in that respect eg things like this (a friend works there & lives in Townsville !) happening.  Yes, I have made money from my IPs up here over the years, just could never figure out why there was so much capital gain, no value was ever add'd.  I am used to having to work hard in my business (or in a job before that), to add value to the business, buying a house, then doing nothing and seeing capital appreciation above CPI always seem'd odd to me.

When it rains up here though it is WARM.. was out swimming on the Aus. Day long weekend in a local creek (swimming hole)









in the midst of a "storm" (pun intended !)  beautiful and very surreal.


----------



## nunthewiser (29 January 2009)

is that you in the photo trev ?


----------



## gav (29 January 2009)

Trevor_S said:


> Hyperbole is the word that springs to mind reading this article.
> 
> Being the perennial property bear  that I am, I keep looking for signs of housing decline, forced sales etc (I live in Townsville) nothing obvious to me (yet !), houses are still way overpriced (IMO of course) and renting is hellish expensive (IMO of course), place next door to mine was renting for $550, I nearly fell over, I expected it to be $350 ! Tenant just moved out and I see it's for sale now, and next door (other side from me) to the local member and Minister for the Dept of Natural Resources as well  (and his yappy freakin' dog !)   That aside, all this talk of distressed housing will probably have lots of people out expecting low prices, and possibly driving prices up further !
> 
> ...




One of the large factors for places like Townsville and Darwin being over-priced is the large Defence Force communities.  None of the single ones want to live on base, they want a little bit of "freedom", and they get that by renting.  Plus the govt chips in for their rent too.  From 2004 to late 2006 I was renting a small apartment with one of the guys from my unit.  Rent was $300 per week ($150 each), and the gov't gave us $80 of that.  If we had served for 6 or more years we would have received more, and familes received more too. 

Fast forward 2 and a half years, rent in that same apartment building is $550-600!!!


----------



## arco (29 January 2009)

I was sent this by a real estate agent - amazing

.

*House, unit sales tumble *
The number of houses and units sold in Brisbane over the past year has plunged 28%, the worst in the country, Residexresearch reveals, while sales nationally fell 16%.  First home buyers virtually disappeared from the market, but developer incentives, falling interest rates and government grant increases had seen some recovery in the market sector.  Almost 5500 home buyers took up the first homeowners grant in its first full month of operation, starting in mid-October.

The Courier-Mail, Page 27, 17- 18 January 2009 

*
Property market in free fall *
The WA property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties plummeting 20% and the equivalent of more than two years' supply of homes flooding real estate agencies. In Geraldton, rents have slumped 8%, and in the northwest, fibro shacks that had been fetching rents of $1,000 a week are sitting vacant as mining 
executives face retrenchment. Perth houses fell 4% in the December quarter, taking the yearly decline to 11%. The median price of a Perth house was $418,000, down from $473,000 at the peak of the west Australian housing boom in  December 2007. House prices are expected to fall 
further.

www.theaustralian.com.au  19 Jan 2009


----------



## numbercruncher (29 January 2009)

But .... but ..... didnt Oztraaaalian realestate only go up ??


----------



## robots (29 January 2009)

hello,

another great day, mid thirties

kicked off early to beat the heat again and keep the economy going, putting in a bit extra with like the money box crew taking time out,

fantastic news Beej on the rents, hopefully another 10% this year who knows but with the development issue in could be more great news in 12mths time

thankyou
robots


----------



## Glen48 (29 January 2009)

Maybe like Storm victims home owners should demand a Fed Bailout for not knowing house prices go up as DOWN.


----------



## 2BAD4U (29 January 2009)

Only heard the tail end of a story on the radio today but they were saying one of the big problems with QLD (and especially the Gold Coast) was the purchase of units off the plan. It was something like 1300 constructed and only 36(ish) have been settled.  The rest remain unsold or will be forced sales.  People can't meet the requirements for settlement now they are completed.  This will drag down the QLD median price.

And no I haven't turned into a bear.


----------



## numbercruncher (29 January 2009)

> And no I haven't turned into a bear.





Might be becoming a realist though huh ?


----------



## 2BAD4U (29 January 2009)

Nope.  I have too much fun poking the bears and waking them up.


----------



## GumbyLearner (29 January 2009)

numbercruncher said:


> But .... but ..... didnt Oztraaaalian realestate only go up ??




Precisely NC.

Bubble -> POP!!!!!!!!!!!!!


----------



## wayneL (29 January 2009)

Meanwhile in the UK:

If you follow the hypothesis that Ostriylia will follow the trend of England... that Oz is a few months behind in the cycle (and I think that's a reasonable hypothesis), then brace yourself for falling rents.

Looks like I'll be moving from Cheltenham to Londinium, and am looking around the Wimbledon area for a place to rent.

The *first* thing the Letting agents say is "ignore the list price, we can get you in for less". They say that places going for £1400 pcm last year are renting at £1150 - £1200.

I offered £1400 on a place that was listed at £1650... the LL (a first timer and accidental LL) knocked it back, but the agent thinks they're nuts. "Reality will hit them sooner or later... £is about right at the moment" is what he said. Reckons last year they could have gotten £1700 easily.

That's happening all over the country right now. LLs sticking to their price are having BIIIIIIIG voids,

Oz LLs should prepare for that possibility.


----------



## robots (29 January 2009)

wayneL said:


> Meanwhile in the UK:
> 
> If you follow the hypothesis that Ostriylia will follow the trend of England... that Oz is a few months behind in the cycle (and I think that's a reasonable hypothesis), then brace yourself for falling rents.
> 
> ...






hello,

link link link.... otherwise really just more spruik talk (sounds familiar, dont take it personally)

thankyou
robots


----------



## MrBurns (29 January 2009)

robots said:


> hello,
> 
> link link link.... otherwise really just more spruik talk (sounds familiar, dont take it personally)
> 
> ...




He's not quoting evidence just an experience , there is no link.


----------



## robots (29 January 2009)

wayneL said:


> Meanwhile in the UK:
> 
> If you follow the hypothesis that Ostriylia will follow the trend of England... that Oz is a few months behind in the cycle (and I think that's a reasonable hypothesis), then brace yourself for falling rents.
> 
> ...




hello,

considering the sensitivity of the issue, and no doubt BTL will be the first article Wayne will pull up, which is not a lot different to buying a new product

no worries man

thankyou
robots


----------



## wayneL (29 January 2009)

robots said:


> hello,
> 
> link link link.... otherwise really just more spruik talk (sounds familiar, dont take it personally)
> 
> ...




Here ya go


----------



## wayneL (29 January 2009)

Here is a recent story on it:

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=325156



> London rents post record declines
> By Lorna Bourke | 00:01:00 | 07 January 2009
> The New Year starts with some depressing news for landlords with rents for prime central London properties falling 10% over the past three months, the largest quarterly decline since 1995.  According to property consultants, Knight Frank, rents have now fallen for three consecutive quarters, by a total of 12%, taking rents back to the level last seen in March 2007.
> The figures would look worse were it not for the fact that property values are also falling fast so rental yields in prime central London are continuing to rise and now stand at 4.2%, compared with 3.9% a year ago....


----------



## shaunQ (29 January 2009)

2BAD4U said:


> Only heard the tail end of a story on the radio today but they were saying one of the big problems with QLD (and especially the Gold Coast) was the purchase of units off the plan. It was something like 1300 constructed and only 36(ish) have been settled.  The rest remain unsold or will be forced sales.  People can't meet the requirements for settlement now they are completed.  This will drag down the QLD median price.




Within 10 kms I can name 10 estates midway through. No real price movement though, just extras. The remainder of the market seems stable but on edge, if these all rush on it, combined with the increasing unemployment it could be devastating.


----------



## robots (29 January 2009)

hello,

vested interest, gee it all sounds so familiar

thankyou
robots


----------



## wayneL (29 January 2009)

robots said:


> hello,
> 
> considering the sensitivity of the issue, and no doubt BTL will be the first article Wayne will pull up, which is not a lot different to buying a new product
> 
> ...




'bot

In case you didn't realize, BTL stands for *B*uy *T*o *L*et which is the process of buying residential property in order to rent it out for money. 

BTL(England) = IP(Australia)

How is that somehow not relevant to the argument? What's the difference?


----------



## numbercruncher (29 January 2009)

New releaase from ABS ....... raises a Q or 2 ....



> "Between 1986 and 2006, the number of private dwellings in Australia increased by 45% (or 2.6 million dwellings), while the number of people living in private dwellings increased by substantially less at 28%. "




http://www.abs.gov.au/ausstats/abs@.nsf/MediaRealesesByCatalogue/C9B7D8423519C6F7CA25754C0025E098?OpenDocument


----------



## wayneL (29 January 2009)

robots said:


> hello,
> 
> vested interest, gee it all sounds so familiar
> 
> ...


----------



## robots (29 January 2009)

wayneL said:


> 'bot
> 
> In case you didn't realize, BTL stands for *B*uy *T*o *L*et which is the process of buying residential property in order to rent it out for money.
> 
> ...




hello,

BTL is very much packaged, promoted as an Off the Plan, New Apartment, New Product, multi-story, gold coast unit etc etc 

and therefore $ for a developer, promoter etc and has shown to be very ordinary as an investment

sure that has changed in the UK with the issues at hand (ie more existing stock is "packaged")and similarly things changed here back in 03-05 after the likes of Kaye, Central Equity, Meriton etc

thanks, top effort

have a great day

thankyou
robots


----------



## wayneL (29 January 2009)

robots said:


> hello,
> 
> BTL is very much packaged, promoted as an Off the Plan, New Apartment, New Product, multi-story, gold coast unit etc etc
> 
> ...



Wrong.

To be certain, BTL has been packaged up as you describe by many "entrepreneurs", but BTL is simply the purchase of property to let out... any residential property; from London flats, to country estates.

My 2 BTLs are 4 bedroom houses in a village in Somerset. Not bought off the plan, not flats, not even bought from a developer... just pain old second hand houses. Yet they are still BTL.

Why?

I *B*ought *T*o *L*et.


----------



## dirty_harry (29 January 2009)

numbercruncher said:


> Are Yellow, brown , white suburbs better investments ?




Political correctness should not get in the way of stating the facts.
Unfortunately he is quite correct, for example the median price in Detroit is around $10,000. I wonder why. If you want to live in fantasy land you could buy a house in Somalia, Congo, Sierra Leone, Zimbabwe, Nigeria, Chad, or Sudan. 
Good luck.


----------



## 2BAD4U (29 January 2009)

numbercruncher said:


> New releaase from ABS ....... raises a Q or 2



I'll see your Q or 2 and raise you an A or 2:



> The higher rate of growth in housing stock can be linked to the steady decline in the average number of people per occupied private dwelling, from 4.5 persons in 1911 to 2.51 in 2006. A range of demographic, economic and social changes are associated with this decline. Families having on average fewer children, and a decreasing prevalence of multigenerational households, have been strong drivers of smaller average household sizes. More recently, smaller average household size has also been attributed to an increase in lone person and couple only households.2 The growth in lone person and couple only households is explored further in ‘Living arrangements overview’, p. 60–72.
> 
> Another factor in the greater growth in dwelling numbers compared with the population has been the general increase from 1911 to 2006 in the proportion of private dwellings that were unoccupied on Census Night (from 4% to 10% of private dwellings). This growth does not necessarily mean a greater proportion of homes are not being lived in, but is more likely to have occurred due to changes in lifestyles and increasing affluence. Some houses may be unoccupied as they are second or holiday homes; alternatively, houses may be temporarily vacant due to the occupants being away on business or vacations, or at other people's homes on Census Night. In 2006 the proportion of unoccupied dwellings was higher in rural areas (22% of dwellings unoccupied in Bounded Localities and 16% in Rural Balance) than in the rest of Australia.




linklinklink.....link


----------



## 2BAD4U (29 January 2009)

If you have the time and want to brush up on why the Australian banking system is different to the rest of the world then read THIS .
Basically if our banks are still lending it will stimulate the housing market (and Mr.Swan and KRUDD are stimulating :alcohol, if foreign banks aren't lending and having to foreclose at greater levels then this will have adverse effects on housing.

And the final word goes to Swanee:



> Treasurer Wayne Swan said yesterday: "Supporting the construction industry, boosting it and boosting demand generally, of which construction is a significant part", was a *"very high priority"* for the Government


----------



## MR. (30 January 2009)

http://compareshares.com.au/case39.php

According to the study of 265 markets across *Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States *– the Sunshine Coast in Queensland takes out the number one spot as the most unaffordable place to buy a home, closely followed by the Gold Coast in third spot and Sydney in fifth. Bundaberg in Queensland, Adelaide, Melbourne, Mandurah and Woollongong also feature in the top 20.  

-----------
8/20 for Australia.  
St Kilda might still have room to move up yet!
Now what's happening in the real world?


----------



## dirty_harry (30 January 2009)

I think house prices probably will come down around Australia. However one very important thing to consider is that we have no property taxes (except land tax for investment properties). Property tax in the US is around 1.5% of the value per year depending on the state, i.e. a 2mill house would have taxes of 30,000/yr. Compared to this our council rates are trivial. Similar around Europe. In Australia we have high entry and exit costs like stamp duty, but relatively low holding costs if it's your primary residence. This supports relatively higher prices.


----------



## numbercruncher (30 January 2009)

dirty_harry said:


> Political correctness should not get in the way of stating the facts.
> Unfortunately he is quite correct, for example the median price in Detroit is around $10,000. I wonder why. If you want to live in fantasy land you could buy a house in Somalia, Congo, Sierra Leone, Zimbabwe, Nigeria, Chad, or Sudan.
> Good luck.






??? wtf ....

We talk suburbs and you bring up countries and a city .... always changing the goal posts ...

Im not sure what your saying .... is it that detroits median is 10k because of black people ?? Because realists would say it because of a collapsed Auto industry and mass exodus of people from the _city_ regardless of colour ...

But Australian permabulls live in an altered reality so nothing you guys say surprises me anymore ....

And yes I do realise that some suburbs have depressed prices because they become ethnic ghettos etc ....


----------



## numbercruncher (30 January 2009)

2BAD4U said:


> I'll see your Q or 2 and raise you an A or 2:
> 
> 
> 
> linklinklink.....link





Awesome your article compares 1911 to 2006 mine compares 1986 to 2006.

Keep up the good work ....

House prices to boom forever.

The Global economic crisis does not exist.

My neighbour will not lose his job.

Kangaroos are our saviour.


----------



## Aussiejeff (30 January 2009)

numbercruncher said:


> Awesome your article compares 1911 to 2006 mine compares 1986 to 2006.
> 
> Keep up the good work ....
> 
> ...




I thought *Koala* skins were more valuable? 

PS: Can ride for up to 2 hours and walk for up to 1 hour now Numbs. Actually managed to walk up and down the fairly steep 300m hill behind our suburb the other day. Could feel the tendons and ligaments stre-e-tching! Hows your gammy pin?


----------



## wayneL (30 January 2009)

> Treasurer Wayne Swan said yesterday: "Supporting the construction industry, boosting it and boosting demand generally, of which construction is a significant part", was a "very high priority" for the Government




So basically, the construction industry cannot survive on its own merits; it needs taxpayer funds to support it.

hmmmm, what's that telling us?


----------



## numbercruncher (30 January 2009)

wayneL said:


> So basically, the construction industry cannot survive on its own merits; it needs taxpayer funds to support it.
> 
> hmmmm, what's that telling us?





Exactly .... and it seems Swan song is suggesting the Government pulls on both ends of the string .... how they plan to do that is anyones guess but it sounds expensive .... perhaps they can let the failing hospital system completely collapse so they can build more empty shopping centres, factories etc ???




> Supporting the construction industry, boosting it and boosting demand


----------



## numbercruncher (30 January 2009)

Aussiejeff said:


> I thought *Koala* skins were more valuable?
> 
> PS: Can ride for up to 2 hours and walk for up to 1 hour now Numbs. Actually managed to walk up and down the fairly steep 300m hill behind our suburb the other day. Could feel the tendons and ligaments stre-e-tching! Hows your gammy pin?





Oh yes I forgot about those pesky lil Koalas  dont see them often these days, Robi is probably turning them into Lattes or something ... 


Awesome news on the foot m8, must be geting close to 100pc seen your doing hills ? I cant do (steep) hills yet but improving rapidly , should be close to as good as ill get in about 8 weeks, the bone has healed now ....


----------



## numbercruncher (30 January 2009)

The golden child WA seems to be getting a hammering !!



> THE West Australian property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties plummeting 20 per cent and the equivalent of *more than two years' supply of homes flooding real estate agencies*.





http://www.theaustralian.news.com.au/story/0,25197,24929833-2702,00.html


Kincella and Harry how could this happen ? Did the good people of WA use to much tanning lotion ?


----------



## Aussiejeff (30 January 2009)

numbercruncher said:


> Exactly .... and it seems Swan song is suggesting the Government pulls on both ends of the string .... how they plan to do that is anyones guess but it sounds expensive .... perhaps they can let the failing hospital system completely collapse so they can build more empty shopping centres, factories etc ???




Gummint is starting to look like a one-armed juggler with 50 balls in the air - and that one arm looks like it is getting a bit tired..... 

A growing number of analysts seem to be suggesting that the scale of the problem means Oz's miniscule economy is looking just a wee bit more fragile and parlous than the eternal she'll-bounce-back-soon-don't-miss-the-bargain-now optimists might spout.


aj


----------



## dirty_harry (30 January 2009)

numbercruncher said:


> ??? wtf ....
> 
> We talk suburbs and you bring up countries and a city .... always changing the goal posts ...
> 
> ...




Detroit started it's decline after the black riots in the 70's after which many companies pulled out. Yes the auto industry is collapsing but it hasn't yet completely due to ongoing bail outs, so things could get much worse in future years. There are many suburbs in big cities in the US that are close to no go areas unfortunately which is sad but it is a fact. As for WA looks like some retracement of the mining boom house prices, but I don't expect the median prices to come down to 10,000. Also I don't expect WA to deteriorate so much for there to be drive by shootings and drugs on each 2nd corner. Hopefully anyway at least !!


----------



## 2BAD4U (30 January 2009)

numbercruncher said:


> Awesome your article compares 1911 to 2006 mine compares 1986 to 2006.



Ummmm......My article was the overview of yours FROM THE SAME SOURCE providing more of a detailed explaination of the figures rather than just the one piece you decided to latch on to.

Just consider me your compass, pointing you in the right direction, in these misguided times.


----------



## numbercruncher (30 January 2009)

Hello,


" House prices to keep rising for years " - Still no proof since this thread started a year ago.

Nice lush wet and green up here in the Gold Coast hinterland today. Might stop in the Tea house for some detox and watch the world go by. Nirvana.

Thankyou...

Numberbots.


----------



## Beej (30 January 2009)

wayneL said:


> Meanwhile in the UK:
> I offered £1400 on a place that was listed at £1650... the LL (a first timer and accidental LL) knocked it back, but the agent thinks they're nuts. "Reality will hit them sooner or later... £is about right at the moment" is what he said. Reckons last year they could have gotten £1700 easily.
> 
> Oz LLs should prepare for that possibility.




I'd be more than happy to prepare for rental prices and yields equivalent to the UK/London, even with 25% falls over there! That would equate to some unbelievable rental price growth here in Oz........

Eg - what were you going to get for £1400/month? A 2 bed flat? That's about AU$720/week! A friend of mine in London years ago was paying £450/week (AU$1000/week) for a 3 bed flat in Islington.....

So if AU property market is going to be the same as UK be careful what you wish for..... Or are they actually different in many respects for various reasons after all??? 



numbercruncher said:


> New releaase from ABS ....... raises a Q or 2 ....
> 
> http://www.abs.gov.au/ausstats/abs@.nsf/MediaRealesesByCatalogue/C9B7D8423519C6F7CA25754C0025E098?OpenDocument




As already covered by other posts, that's an interesting paper and what it really shows are demographic, lifestyle, and living standard changes/improvements over this time. How many people live in your house NC??  Do you REALLY wish for a regression of living standards across the board?

Cheers,

Beej


----------



## kincella (30 January 2009)

couple of points..
nc said no proof of rising house prices.....
here is st kilda for you...+ 10%.....there are plenty of suburbs that have risen
http://pvg.webcentral.com.au/propertyValueGuideChart.asp

and
heard on bbc radio this morning....the unofficial message from swan...and he was heard to say...he has 400 points to play with...being the difference between our rate of 4.25 and the US rate of .25.....
thats what he said when he addressed whatever meeting in the US last week...
wish they were brave enough to drop it 2% now....there has been nothing but bad news from all sectors so far...and its only going to get worse
cheers


----------



## MrBurns (30 January 2009)

kincella said:


> couple of points..
> nc said no proof of rising house prices.....
> here is st kilda for you...+ 10%.....there are plenty of suburbs that have risen
> http://pvg.webcentral.com.au/propertyValueGuideChart.asp
> ...




Gee dont you feel just great having Swan as treasurer at this particular point in history


----------



## gfresh (30 January 2009)

Banks still have to obtain that funding be able to offer it to consumers at those low rates for it to have any impact...

What's the *real* interest rate in the US to actually borrow a property? You would think with 0% interest rates I'd be somewhere near 2% right? It's not  It's more like 5-6% link: http://www.bankrate.com/

If rates were to go down to 3.x% from our banks, I think we'd almost have the cheapest bank interest rates *in the world*. That can't be too good for landlords either... same price to buy as rent


----------



## gfresh (30 January 2009)

According to my lovely spreadsheet.. assuming 4.0% variable rate, mortgage payments would be $342 with a pithy $5k down on a $330k property. That's only $42 more than rent goes for in my area for those priced properties. 

But house prices to crash 50% ? not looking likely for the bottom of the market..


----------



## kincella (30 January 2009)

2 cents worth...current govt....meeting, thinking, working on it....but nothing is actually happening.....swan is a goof....and it shows

cba current offer 5.14 variable rate.


----------



## wayneL (30 January 2009)

Beej said:


> Eg - what were you going to get for £1400/month? A 2 bed flat? That's about AU$720/week! A friend of mine in London years ago was paying £450/week (AU$1000/week) for a 3 bed flat in Islington.....
> 
> Beej



Yep a two bed flat....

.... in a portered and gated mansion block with underground parking, right across the road and overlooking the Wimbledon common, 5 minutes walk from The Championships. Two bathrooms (marble) and big rooms.

And worth mentioning that these particular flats have been selling for about £500,000. (last sale mid 2008)

That's value dude.


----------



## nunthewiser (30 January 2009)

wayneL said:


> Yep a two bed flat....
> 
> .... in a portered and gated mansion block with underground parking, right across the road and overlooking the Wimbledon common, 5 minutes walk from The Championships. Two bathrooms (marble) and big rooms.
> 
> ...




could always shack up with the wombles and share the cost


----------



## singlefished (30 January 2009)

Ooops...

*Vic house prices dropped 10pc in 2008: REIV*
Friday January 30, 2009, 12:50 pm

http://au.biz.yahoo.com/090130/31/24avo.html


----------



## kotim (30 January 2009)

The world is coming to an end, at least a financial end for a lot of people.  The lower the interest rates the worse that follows.  It is as simple as that.  Lets say interest rates get down to 3-4% (conceivable in the next 6 months) for borrowing purposes.  The problem is that people borrow the maximum or thereabout, that is human nature, so imagine what is going to happen when eventually the bottom occurs as a whole and the world starts growing again and interest rates start going up again.  Imagine the devastation of interest rates going from 4% to 6% or in other words a 50% increase in repayments.  Most people do not fix interest rates.

So we are setting ourselves up for many years of relatively low or no growth with a lot of years of floating about.

So far we have seen a 5-10% average fall in house prices, so if we don’t see substantial falls in house prices in the next 6 months then people are going to be borrowing money for relatively all time high house prices with all time low interest rates.

So we are left with two scenarios.  We hit a bottom and start to see good growth, which will in  some form or another lead to interest rate rises, or we don’t see much interest rate increases because there is not much growth, in other words a much longer term recession type economy.


----------



## IFocus (30 January 2009)

wayneL said:


> So basically, the construction industry cannot survive on its own merits; it needs taxpayer funds to support it.
> 
> hmmmm, what's that telling us?




LOL WayneL 

Desperation but no one is listening, the thought that the Government can actually replace a functioning boom economy with the equivalence of throwing a couple of coins around..............well it's not currently working any where else.

Fortunately we haven't seen the full blow torch here yet and hopefully we wont but then that's a lot of hopeyium


----------



## gfresh (30 January 2009)

> Vic house prices dropped 10pc in 2008: REIV




REIV admits defeat!! Who would have thunk it..We cannot spruik no more cap'in Enzo  


Oh my.. keeps getting worse doesn't it on the Crashcoast.. 

http://www.theaustralian.news.com.au/business/story/0,28124,24976946-25658,00.html

another: http://www.goldcoast.com.au/article/2009/01/29/43795_gold-coast-business.html



> He said his experience was that on cheaper properties, financiers were taking what they could get, *but for those in the millions, they were not prepared to sell at such a substantially reduced price.*
> 
> Dean Dransfield, of the consultancy firm Dransfield Hotels & Resorts, said mezzanine financiers were active in the Southport area.
> 
> ...




Well guess what, you're going to have to.. 



> Figures from the Midwood Queensland Investment Report, for the November quarter of 2008, show there were *2777 new high-rise apartments for sale*, compared with 1780 in the previous quarter. *But there had been only 113 sales in that quarter* compared to 394 during the same time in the previous year.




So at current rate it's going to take 6 years to sell them all . Now *those* properties are the sorts to easily drop 50%


----------



## ROE (30 January 2009)

singlefished said:


> Ooops...
> 
> *Vic house prices dropped 10pc in 2008: REIV*
> Friday January 30, 2009, 12:50 pm
> ...





Nah cant be right house price double every 7 years 
-ve cash flow is real good for you in the long run.
It's fashionable to be into negative gears cos everyone is doing it.


----------



## Beej (30 January 2009)

singlefished said:


> Ooops...
> 
> *Vic house prices dropped 10pc in 2008: REIV*
> Friday January 30, 2009, 12:50 pm
> ...




Most of that fall is "old news" - actual REIV release is here: http://www.reiv.com.au/news/details.asp?NewsID=736

Records a 0.9% median price fall from Sep08 -> Dec08 quarter ($430k -> $426k). Looks more like the market down there is stabalising, as opposed to showing accelerating decline as many have been expecting....especially given higher proportional volumes of sales of lower priced house sales compared to "normal". Units held up a bit better with a 5.2% y/y decline and a 1.1% Sep08->Dec08 decline.

Cheers,

Beej


----------



## robots (30 January 2009)

hello,

yeah what a mess Beej, down 10% for the year,

what a bunch of hypocrites, the REIV is the source now, fantastic

looks like the thread title is genuine Number, see sig

thankyou
robots


----------



## singlefished (30 January 2009)

Beej said:


> Most of that fall is "old news" - actual REIV release is here: http://www.reiv.com.au/news/details.asp?NewsID=736
> 
> Records a 0.9% median price fall from Sep08 -> Dec08 quarter ($430k -> $426k). Looks more like the market down there is stabalising, as opposed to showing accelerating decline as many have been expecting....especially given higher proportional volumes of sales of lower priced house sales compared to "normal". Units held up a bit better with a 5.2% y/y decline and a 1.1% Sep08->Dec08 decline.
> 
> ...





Looks to me more like its going to get a fair bit worse... these "drops across the board" were last year when the recession wasn't such a looming issue.

With the propsect of higher unemployment and the ongoing financial issues during a recession scenario, I fully expect prices to continue dropping instead of this stabilising picture you're trying to paint.

As to how fast these assets will drop I cannot comment, nobody really knows how deep and severe the recession will ultimately be.


----------



## dirty_harry (30 January 2009)

You guys need to be careful when assuming interest rates will be low if there is a huge downturn. Australian banks get about half (more or less) of their capital from depositors but need to raise the other half from offshore bond markets on an ongoing basis. This is why there has been a slight disconnect between the official reductions and mortage rate reductions, and why the non bank lenders have been wiped out. So far it's not such a big disconnect and the govt guarantees have helped. But certain forecasters are saying the bond market in the US is the last big bubble, so it's possible to have a nightmare scenario of stagflation with recession, inflation and high interest rates. Rental yields around the world like central Europe where the wasn't really a bubble are usually around 8% long term. I would say if you can get around that in an average suburb in a large Australian city then that would be a reasonable long term investment. It was there in '95, '96 so I'd say wait for now, and don't live in denial.


----------



## robots (30 January 2009)

wayneL said:


> So basically, the construction industry cannot survive on its own merits; it needs taxpayer funds to support it.
> 
> hmmmm, what's that telling us?




hello,

so? all the other industries like farmers, farmers, motor vehicle makers, manufacturing and all the rest getting benefits

just more sour grapes for most really, the great divide on and on (only an opinion, dont take it personally)

thankyou
robots


----------



## kincella (30 January 2009)

in the US homeowners get a tax deduction on interest rates....how good is that...there is a cut off point...not talking about rental props either

guys, sitting here in Melb sweating....that the fires wont take out the electricity lines...which supply 2/3rds of our electricity.....

no water,...huge drought, massive fires, heat, train problems.....and now a blackout.....are we in vic or some 3rd world country ????
apparently unions behind the train fiasco....
but the lack of water....unbelievable....4 helicopters fighting the fires to stop burning electricity lines...


----------



## gfresh (30 January 2009)

Yup, reading the paper down there.. seems pretty bad right now. These are the sorts of things that the government has neglected to spend money on these for YEARS (even when I used to live there, there were these issues), and sure enough, eventually it all comes to a head. Surely building another power station and/or improving the public transport would create thousands of jobs? Instead it goes on Christmas hand-outs which are now gone into the wind. 

Back onto Southport, mentioned onto that article.. Just had a look on rea, it's looking like it's going to become a real blood-bath there. Southport is hardly a  very desirable suburb of the Gold Coast... and at the moment in the suburb there is *over 1000 properties* listed. A few 1 bedrooms approaching very low 200's.. *unthinkable* 12 months ago. 

Rentals as well under $350/wk: 114 listed. 12 months ago when I was half-looking there, there was literally 12 properties listed in that price range. Shows how quickly the market can turn completely around being the whole "undersupply of rentals" to a massive oversupply. People must be leaving. 

Upper Coomera, which has been mentioned previously is getting much worse with stale listings. Close to  500 properties listed.

Hope Island is good for a chuckle.. 100's there, once "the place" to be on the Goldcoast.. $900k-$2m: 196 properties listed!

You may think "so what, that's not much".. but remember the Goldcoast is a place of 500k permanent residents. 

I suspected buying on the Goldcoast even 12 months ago was shaky, now it's really in dire straights in several suburbs. Massive falls in median prices aren't far away, unless people start swarming over the border.


----------



## Glen48 (30 January 2009)

With all the Storm Victims putting their homes on the market there will be blood.


----------



## So_Cynical (30 January 2009)

robots said:


> hello,
> 
> so? all the other industries like farmers, farmers, motor vehicle makers, manufacturing and all the rest getting benefits
> 
> ...




Robots your ignorance is showing...farmers and manufacturing...getting handouts, please explain.


----------



## numbercruncher (30 January 2009)

singlefished said:


> Ooops...
> 
> *Vic house prices dropped 10pc in 2008: REIV*
> Friday January 30, 2009, 12:50 pm
> ...





More spruiking I bet its 15pc down atleast v.....


----------



## Trevor_S (31 January 2009)

Glen48 said:


> With all the Storm Victims putting their homes on the market there will be blood.




That's one point of view...

and here's another ...
Townsville housing strain omen 



> Developers cited sluggish sales as the reason for scrapping a handful of projects. They included the Lancini Group's 204-apartment Springbank Urban Village and Hedley Group's high-rise T2 tower.
> 
> But with 1800 new dwellings required to house the nearly 4500 residents expected to move to Townsville this year, Ms Griffiths warned that the established housing market will have to absorb the spill-over of new residents.
> 
> "If the volume of development stock hitting the market does start to taper off over the next two to five years, Townsville could be facing a real shortage of properties," Ms Griffiths said.


----------



## robots (31 January 2009)

hello,

http://business.theage.com.au/business/renters-face-tax-hit-20090130-7u1v.html

what a fantastic idea, renters have got plenty apparently so shouldnt be a bid deal, what do you think?

thankyou
robots


----------



## robots (31 January 2009)

robots said:


> hello,
> 
> http://business.theage.com.au/business/renters-face-tax-hit-20090130-7u1v.html
> 
> ...




hello,

yes robots I think that is a great idea, many property owners provide amazing infrastructure for people of society and its probably a good move in the right direction

we should support people doing these sorts of things and put it back to a user pays scenario

keep up the good work robots i always enjoy your posts

regards
robi


----------



## MrBurns (31 January 2009)

robots said:


> hello,
> 
> yes robots I think that is a great idea, many property owners provide amazing infrastructure for people of society and its probably a good move in the right direction
> 
> ...




Must have bought some bad weed


----------



## arco (31 January 2009)

Trevor_S said:


> That's one point of view...
> 
> and here's another ...
> Townsville housing strain omen




I just had a look on realestate.com.au (up to $500k) - 1,482 properties match your search criteria . 

*Wheres the shortage?*

406 more if you go to 1mil (1,888 properties match your search criteria)


----------



## Trevor_S (31 January 2009)

arco said:


> Wheres the shortage?




1800 new homes are needed each year, in a small city like Townsville. Development has slowed, considerably, if the article I linked to is to be believed... I highlighted (below) the bit you might have missed. If 1800 are needed and nothing like that is being built, something has to give... prices go up and rents go up... one assumes.



> If the volume of development stock hitting the market does start to taper off over the next *two to five years*, Townsville could be facing a real shortage of properties


----------



## xoa (31 January 2009)

Double-digit % price falls are great news for ordinary Aussies, but there's still much further to fall. Every city and large town in Australia is still severely unaffordable by objective measures.

By the time all is finished, thousands of property speculators will lose their shirts and be forced to work for a living.


----------



## robots (31 January 2009)

xoa said:


> Double-digit % price falls are great news for ordinary Aussies, but there's still much further to fall. Every city and large town in Australia is still severely unaffordable by objective measures.
> 
> *By the time all is finished, thousands of property speculators will lose their shirts and be forced to work for a living.*




hello,

i hope you are helping your parents from losing their shirts xao? 

maybe need to impart some wisdom, wouldnt want the inheritance to get walloped

i wonder if it will happen to the good ol' property investor or just the speculators

thankyou
robots


----------



## Santoro (31 January 2009)

Some people here are having to many hand shandies....watch house prices over the next 6-12 months...continuing the overall trend over the last few months...down.


----------



## knocker (31 January 2009)

MrBurns said:


> Must have bought some bad weed




lol Must have been a bad hit, or maybe that combo weed/ice he's on ROFLMAO


----------



## knocker (31 January 2009)

robots said:


> hello,
> 
> i hope you are helping your parents from losing their shirts xao?
> 
> ...




Oh dear cracking a barney over St Albans now. Is that where your supplier lives?


----------



## nunthewiser (31 January 2009)

knocker said:


> lol Must have been a bad hit, or maybe that combo weed/ice he's on ROFLMAO






knocker said:


> Oh dear cracking a barney over St Albans now. Is that where your supplier lives?




mmmmm You seem to have a bit of an obsession with young robots m8 


anything i can help with ?
we at the convent are very sympathetic listeners if you need a friend to turn to

P.S just wondering when you will get round to answering my querie in the people revolt thread also


----------



## MrBurns (31 January 2009)

Hey robots is this you and a friend cruising St Kilda ?

http://www.youtube.com/watch?v=4ozk7fnKilU


----------



## boundless (31 January 2009)

People who own property are basically idiots. Baa Baa follow the rest of the rest of the sheep chasing the so called "Australian Dream"

What a joke!

Don't you realise that housing affordability is the worst in the world and house prices are just about to drop 50%.

You are idiots - well and truly!:


----------



## MrBurns (31 January 2009)

boundless said:


> People who own property are basically idiots. Baa Baa follow the rest of the rest of the sheep chasing the so called "Australian Dream"
> 
> What a joke!
> 
> ...




Nice to hear from you, can I call you "less" for short.
The playschool forum is somewhere else as you should be.


----------



## knocker (31 January 2009)

nunthewiser said:


> mmmmm You seem to have a bit of an obsession with young robots m8
> 
> 
> anything i can help with ?
> ...




m8? Um what are you on about? Or should I say on?


----------



## robots (31 January 2009)

hello,

top effort nun, keep the joint honest man

i like the Easyrider mold a bit more Mr Burns, just helping out ASF along with all other kings here

thankyou
robots


----------



## boundless (31 January 2009)

MrBurns said:


> Nice to hear from you, can I call you "less" for short.
> The playschool forum is somewhere else as you should be.




Don't come crying back in this forum when you lose your home.

Ha Ha I'll laugh when that happens!


----------



## Largesse (31 January 2009)

i wouldve posted this from my newly formed aussiepropertyforums.com account but activity is still building over there.... and i want a faster response.

my question is in regards to First Home Owner grants/bonus/boosts/whatevers.

scenario: i'm looking to buy my first place. will be looking to buy in the next 6 months. but i graduate from uni midyear and intend to go o/s for the second half of '09. Will i be able to buy my first house go away for 6 months while renting the place out and still claim the first homeowner grant?

TIA

Large


----------



## agathos (31 January 2009)

Hi everyone in the House price to keep rising for years..........

Now that someone brought up the price of properties in Queensland,
I wanted to share a little piece of information:

The best and biggest Malaysian and Singaporean Hotel & Property developers actually EXITED the Queensland market 26 months ago, way before everyone get caught................

I guess if anyone has any inside information like this, share it around
While it may not be 100% accurate, it may give another piece of puzzle in this giant maze of the Property price MAZE. 

Just like the Raventhorpe and Hopetourn town in Western Australia that was drenched out of hope when BHP whacked 1800 staff with the pinky .......

I am sure the INNEr circle of people must have known something..........

I use to learn that the very conservative but money making Fortune 500 companies in the USA use to gauge the response of consumers at the petrol stations........are people buying less ? more? branded stuff? plain vanilla no frills brands?

It just gives a hint of the people on the street and help business get a grip on reality..................

Reality sometimes can cause a *HARD LANDING *for a generation born with silver spoon, perpetual super increase, "ever lasting" property price boom, .....................

Wake up
Shake up
Get up

get REALLLLLLLLLLLLLLLLLLLLLL...........agathos. 

As for me, I will carry lunch box to work, and read my financial review the cheap skate way (in the public library with free air con).


----------



## professor_frink (31 January 2009)

boundless said:


> Don't come crying back in this forum when you lose your home.
> 
> Ha Ha I'll laugh when that happens!




Toning it down would be a good idea


----------



## MrBurns (31 January 2009)

robots said:


> hello,
> top effort nun, keep the joint honest man
> i like the Easyrider mold a bit more Mr Burns, just helping out ASF along with all other kings here
> thankyou
> robots




All in good fun robots, I love that clip


----------



## Beej (31 January 2009)

boundless said:


> Don't you realise that housing affordability is the worst in the world and house prices are just about to drop 50%.




Immature personal abuse aside, re the above - really?

See: http://www.smh.com.au/news/national...urt-the-hardest/2009/01/30/1232818725628.html

While some of the most expensive suburbs in Sydney (with median prices above $1.5M) have clearly been under pressure, (not many Macquarie/B&B etc executives currently in the market), the over-all Sydney median price was essentially flat over the last quarter, and if you look at the break-down by area you can see that ALL the lower and medium priced area's of Sydney (ie where most FHBs shop) saw price GROWTH over the Dec quarter. 

For now price falls are done in Sydney at least - I don't think we will see a return to boom times anytime soon, but there WILL NOT be price falls of 40-50% like the dreamer above seems to think  



Largesse said:


> i wouldve posted this from my newly formed aussiepropertyforums.com account but activity is still building over there.... and i want a faster response.
> 
> my question is in regards to First Home Owner grants/bonus/boosts/whatevers.
> 
> ...




Check the goverment websites to be sure, but I believe you are entitled to the grant as long as you move in within 12 months of purchase.

Cheers,

Beej


----------



## nunthewiser (31 January 2009)

knocker said:


> m8? Um what are you on about? Or should I say on?




um all of your latest posts seem to be attacking robots , in the "people revolt"thread you reckond robots and beej made you ill

like i said darl . why the obsession ?? is it a poster name thing or is it there opinions you cant deal with hence your constant attacking of the poster

p.s no i am not on anything as you asked , i was genuinely concerned for your mental wellbeing


----------



## boundless (31 January 2009)

Beej said:


> , but there WILL NOT be price falls of 40-50% like the dreamer above seems to think
> 
> Beej




Get your head out of the sand!!


----------



## nunthewiser (31 January 2009)

Personally think that 40% falls and more are not out of the question actually , already seeing some suburbs 20% off there median highs and thats WITHOUT unemployment hitting the ground properly yet...

please dont call me a dreamer tho beej as im just a nun with an ear to the ground


----------



## numbercruncher (31 January 2009)

Beej said:


> but there WILL NOT be price falls





Ah huh ....


----------



## Beej (31 January 2009)

nunthewiser said:


> Personally think that 40% falls and more are not out of the question actually , already seeing some suburbs 20% off there median highs and thats WITHOUT unemployment hitting the ground properly yet...
> 
> please dont call me a dreamer tho beej as im just a nun with an ear to the ground




OK - but there is a BIG difference between talking about what could happen in  "some suburbs" vs making a blanket prediction about the entire national market.



numbercruncher said:


> Ah huh ....




If you are going to quote me at least quote me properly NC..... I said "but there WILL NOT be price falls of 40-50%" not "but there WILL NOT be price falls".

Did you actually read the article I posted the link to? Maybe looking at the data and commenting on it would make your posts more useful for us all? If you look at the figures, to bring this all back on topic - you might note that the majority of Sydney areas saw price INCREASES of around 1-1.5% during the last quarter. They were also the area's in the lower and middle price ranges (~$350k - ~$650k median). How does this data fit with bearish views re "certain" further falls in the market of up to 50%?

Cheers,

Beej


----------



## robots (31 January 2009)

Largesse said:


> i wouldve posted this from my newly formed aussiepropertyforums.com account but activity is still building over there.... and i want a faster response.
> 
> my question is in regards to First Home Owner grants/bonus/boosts/whatevers.
> 
> ...




hello,

largesse, I am pretty sure you have to live in the joint within 12mths from purchase, check your local gov body

just type in first home owners grant into Yahoo

so you would be fine, no worries here Mr Burns, the joint is rocking again tonite with everybody putting in 

yes any other questions fire away, ASF members helping out

thankyou
robots


----------



## nunthewiser (31 January 2009)

You must live in the house for 12 months minimum , Also if one sells the house within the 12 months there is penaltys....

this is from my nephew who is currently buying his first home with the fhob

perhaps check out the site


----------



## Beej (31 January 2009)

nunthewiser said:


> perhaps check out the site




FYI this is from http://www.facs.gov.au/internet/facsinternet.nsf/family/ess_fhob_info.htm



> To be eligible for the Boost, you must enter into a contract to purchase an existing home, construct or purchase a new home or buy 'off the plan' between 14 October 2008 and 30 June 2009 inclusive, and:
> 
> * be at least 18 years of age
> * be an Australian citizen or permanent resident
> ...




Cheers,

Beej


----------



## nunthewiser (31 January 2009)

Beej said:


> FYI this is from http://www.facs.gov.au/internet/facsinternet.nsf/family/ess_fhob_info.htm
> 
> 
> 
> ...




cool , i just yelled out to the young bloke and thats what he told me  , now i will show him this...........is this oz wide or varys state to state ?


----------



## robots (31 January 2009)

hello,

top effort Beej, I think there maybe some tweaking at state level on the grants

local gov revenue offices are the best places to get the info

what a great night, 

this deflation thing is fantastic I picked up 3 slices of pizza for $5 instead of 2 slices today at the Sth Melb market, paradise

thankyou
robots


----------



## Beej (31 January 2009)

nunthewiser said:


> cool , i just yelled out to the young bloke and thats what he told me  , now i will show him this...........is this oz wide or varys state to state ?




It's a commonwealth program so should be same rules oz wide?

Stamp duty exemptions/concessions vary from state to state though - in NSW I think a FHB pays zero stamp duty on a purchases up to $500k, and then a graduated discounted stamp duty rate up to $600k, at which point they decide that you must be riich enough to pay the full amount. I don't know if those amounts are indexed in any way though?

Cheers,

Beej


----------



## MrBurns (31 January 2009)

robots said:


> this deflation thing is fantastic I picked up 3 slices of pizza for $5 instead of 2 slices today at the Sth Melb market, paradise
> thankyou
> robots




Now there's a leading ecomomc indicator


----------



## MrBurns (31 January 2009)

> live in the home for a continuous period of at least 6 months, commencing within 12 months after completion or settlement.




So let me get this straight, you could buy a place for your child, let them live in in it for the first 6 months then let it out ?

How would they find out if you didnt comply and just let the place out ?


----------



## numbercruncher (31 January 2009)

Beej said:


> If you are going to quote me at least quote me properly NC..... I said "but there WILL NOT be price falls of 40-50%" not "but there WILL NOT be price falls".





Hello ...

Nice day to go fishing .....


So you agree there will be price falls ?


----------



## knocker (31 January 2009)

nunthewiser said:


> um all of your latest posts seem to be attacking robots , in the "people revolt"thread you reckond robots and beej made you ill
> 
> like i said darl . why the obsession ?? is it a poster name thing or is it there opinions you cant deal with hence your constant attacking of the poster
> 
> p.s no i am not on anything as you asked , i was genuinely concerned for your mental wellbeing




Ok well how about I knock you for posting absolute drivel?


----------



## nunthewiser (31 January 2009)

knocker said:


> Ok well how about I knock you for posting absolute drivel?




"knock" me ??? uh ?? whats that mean darl?


----------



## lusk (31 January 2009)

MrBurns said:


> So let me get this straight, you could buy a place for your child, let them live in in it for the first 6 months then let it out ?
> 
> How would they find out if you didnt comply and just let the place out ?




Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.


----------



## MrBurns (31 January 2009)

lusk said:


> Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.




Ok thanx for that.


----------



## knocker (31 January 2009)

lusk said:


> Had a mate busted that tried to do the dodgy. He even let the place sit for 6 months but they looked at the services and he didn't have bills for electricty or gas in his name and had to pay the FHB grant back.




I guess you could get some people to house sit... keep the bills in your name and adjust the rent accordingly. In the Uk they have prepaid cards for electricty... do they have them here for utilities?


----------



## MrBurns (31 January 2009)

knocker said:


> I guess you could get some people to house sit... keep the bills in your name and adjust the rent accordingly. In the Uk they have prepaid cards for electricty... do they have them here for utilities?




I'm sure you could get round it if you wanted to, you just have to be aware that they ARE checking and you wont be able to get any rent return for the first 6 months so that takes what ? say $7k or $8K off the benefit you get from the grants.


----------



## Bill M (1 February 2009)

On Friday I got an alert from realestate.com about a new property on the market. It was very cheap for my area, 239K for a 35 year old tiny 1 bedroom flat in a beach side Sydney suburb. I said to my wife let's take a look. On arrival there would have been a least 12 people waiting to inspect this unit. During the 5 minute inspection another 5 people arrived.

I asked the agent how much rent the unit was getting. It was leased for $220 per week but he said it was light and $250 p/w was more in line with current rentals. The place only had a open air car space, share laundry, no balcony and needed new carpet and kitchen. It wouldn't have been more than 35 square meters.

This is the type of demand we have here, this unit without doubt will be sold by the end of the week. My wife and I backed off because I'm **** scared of getting into debt again, this could work against me I don't know. I can't speak for the rest of Australia but in my area there no let up in demand.


----------



## So_Cynical (1 February 2009)

My mums house has been on the market for about 4 weeks (60 meters from the ocean, big country town south of Perth)....no inquires no lookers, nothing, no interest at all....she hasn't dropped the price.....yet.


----------



## numbercruncher (1 February 2009)

So_Cynical said:


> My mums house has been on the market for about 4 weeks (60 meters from the ocean, big country town south of Perth)....no inquires no lookers, nothing, no interest at all....she hasn't dropped the price.....yet.





We are so oversupplied with realestate and with the economy diving and guest workers fleeing its set to slide much further into the abyss ....


----------



## roofa (1 February 2009)

Bill M said:


> This is the type of demand we have here, this unit without doubt will be sold by the end of the week.  I can't speak for the rest of Australia but in my area there no let up in demand.





Got any house examples Bill?
The FHB grant is holding up the bottom end of the market very well, currently.


----------



## wayneL (1 February 2009)

Beej said:


> For now price falls are done in Sydney at least - I don't think we will see a return to boom times anytime soon, but there WILL NOT be price falls of 40-50% like the dreamer above seems to think




The thing is Beej, we don't know yet how far this recession is going. Standing in the street and looking around, it would seem highly unlikely that 40-50% falls are likely... particularly in nominal terms.

But there are still poisons in the mud, just waiting to hatch out and waist more capital. In the 30's depression, housing (which was similarly overvalued) actually fell a looooong way... over 50%.

I'm not saying this is a great depression II yet, but it's possible and it is "possible" that some housing does fall 40-50% over the next few years, Nobody can say prices "WILL NOT" fall by _x_ amount, because we don't know what's over the horizon.

I think any business person not playing ostrich, should be running a few if/then scenarios. What if housing falls 20 - 30 - 40 - 50% from here? Very few people would have believed $40 oil and $1.40 copper in 2009, but there the prices are, just staring us in the face.

These are "interesting times" and I'm betting that they will get one hell of a lot more "interesting" than any of us would really like.

I have a very small IP pf, only 2 houses that I never intended selling and they are close to being paid off. With the benefit of hindsite, I'm wishing I did flog them a year ago.

I've annoyingly bearish on this site for years, perhaps this site's biggest bear, but now it's happened, it's actually far worse than even I had imagined and the game is still only in the first chukka.


----------



## MrBurns (1 February 2009)

wayneL said:


> I have a very small IP pf, only 2 houses that I never intended selling and they are close to being paid off. With the benefit of hindsite, I'm wishing I did flog them a year ago.
> .




Dont sell, even if you'd sold a year ago it's not easy to get back in, then there's stamp duty and all the BS. Prices will take years to really drop, so if the rent pays the motrtgages keep them, I guarantee that in years to come you'll be glad.

BUT If there is doubt over the ability to sevice the debt, get out now there's still time as it will get a lot worse in the next year or two.


----------



## wayneL (1 February 2009)

MrBurns said:


> Dont sell, even if you'd sold a year ago it's not easy to get back in, then there's stamp duty and all the BS. Prices will take years to really drop, so if the rent pays the motrtgages keep them, I guarantee that in years to come you'll be glad.



Agree, just lamenting the paper loss... the 2007 "value" I always considered illusory anyway.


----------



## kotim (1 February 2009)

There is not an excess of people relative to houseing, gnererally speaking, how many times have people got to be told before they think properly about it.  Sure in the very best areas there will always be a "shortage" because of the high desireability, however in the scheme of things there are very few of these places relatively.

When we were in the boom and people were investing in property it was the average mum and dad who were buying 2nd third and fourth properties, let alone the property devleopers etc etc.

Now who was moving into these places that people were having built for their investments.  Well besides foreigners coming into this country, it comes down to relocation and then mainly people who were normally sharing places, living with parents etc etc.  

Now we simply go back to less people relocating and more to the point more people going back to a sharing arrangments whether it be with family or friends.

It is as simple as that.

I will give you an example, I bought a house in Townsville in the early 90's part way through the boom, house prices were going up and rent was going up, and then the boom stopped around 1993 give or take.  I was getting $210.00 dollars a week back in  1992 for the house which I had paid 113 grand and 15 months later was worth 150 grand.

Anyway by 2002 My 210 dollar a week rent had fallen to 175 a week.

The saem scenario wil happen again, it all comes down to degrees.

When the current young generation that never experienced 1987 and before get over what is happening now they will understand the consequences of excess.

If anyone is willing to do the investigation you will find that many an analyst are stating that there are many trillions of dollars of credit that still have to be unwound around the world, with so far only a measly 1 trillion or so.  Until just about all of that credit is unwound, you cannot have real good growth again.

Some areas of property without doubt are gong to see falls of 50 or greater adn some areas will only see 5-10%.  I personally all ready know of places that have fallen 30% and they have a lot more to fall.  

It all comes down to perspective and about what decisions were made when investing int he first place, those who made the better decisions will be less affected and those who made the worst decisions will pay a far greater price.


----------



## kincella (3 February 2009)

oh dear...the kids got another freebie today...2500 towards the insulation..so with interest rate drops of 1% on the average 250,000 loan thats another 2500...so 5000 in one day.....
now they can afford to spend another $$$$$$ on that house.....
plus another 2500 in rate cuts next month..


----------



## Bill M (3 February 2009)

roofa said:


> Got any house examples Bill?
> The FHB grant is holding up the bottom end of the market very well, currently.



House prices aren't quite so hot. My friend had a full duplex (upstairs home and the downstairs home) for sale and didn't get many people coming through. It was on the market for 1.2M. I've been going to open for inspections for 2 Months now and anything between 300K and 400K is sold within 2 weeks. Most of the buyers were investors, people in the over 50's group, not many FHB's. 

The majority of investors just want to buy something in this price bracket, rent it out and get regular income. Cash getting 3 and 4% is not much chop for self funded retirees and with sharemarkets imploding I can understand why they want the security of real estate. Beachside suburbs that are walking distance to beaches, clubs, supermarkets and transport will always be in demand, cheers.


----------



## sinner (3 February 2009)

So far, those who claim property prices will coninue upwards have done little to address several key factors:

1. Cheap credit obtained on the international wholesale debt markets by Aussie banks is GONE. This was the fuel for the property boom. Now the fuel is gone, how will Aussie banks be able to fund so much lending?
2. Australian household debt is 177% of GDP and this ratio is climbing fast as Australian manufacturing index declines for the 8th straight month. This is almost a world record level of debt:GDP ratio, and is simply unsustainable. Take a look at Japan for this week to get an idea of what happens when you go crazy on debt:GDP.
3. Another debt ratio closely related to point 1, net foreign liabilities (the majority of our net foreign liabilities are in real estate) is standing at roughly 60% of GDP (and rocketing upwards). As a country, we will have to generate 4% of GDP to continue our liabilities, twice the current required payment of the US.
4. No real productivity growth in 10 years of boom time.
5. Official Australian jobless figures at a 2 year high, 4.5%. Does anyone think unemployment is going down from here? The manufacturing index continues to decline, and manufacturing accounts for 10% of GDP and a full one tenth of our workforce. Can you imagine what the real estate sector will look like if manufacturing declines by half? These won't be the low end homes like kincella mentions or the high end homes in high end suburbs. These will be blue collar defaults.
6. Government spending continues to ratchet up far beyond the scope of any possible budget deficit. The latest package of $42bn will push us deep into the budget red and impede any further assistance from the Government for property speculators. We should expect no long term help from our shrinking trade surplus.
7. Future growth depends wholly on employment and cheap credit. Any supply side issues have now been taken out of the picture by the short sighted policies of the current government, who obviously did not learn from the US that stimulating construction and providing cheap credit can only lead to trouble in the long run (no matter how AAA-good things look in the short term).


----------



## knocker (3 February 2009)

kincella said:


> oh dear...the kids got another freebie today...2500 towards the insulation..so with interest rate drops of 1% on the average 250,000 loan thats another 2500...so 5000 in one day.....
> now they can afford to spend another $$$$$$ on that house.....
> plus another 2500 in rate cuts next month..




so how many houses in this country are un insulated? If they are already insulated what are you going to do? Remove the old stuff and install new? Glue it to the outside? or maybe just use it on a new home? lol what a joke


----------



## ROE (3 February 2009)

Bill M said:


> House prices aren't quite so hot. My friend had a full duplex (upstairs home and the downstairs home) for sale and didn't get many people coming through. It was on the market for 1.2M. I've been going to open for inspections for 2 Months now and anything between 300K and 400K is sold within 2 weeks. Most of the buyers were investors, people in the over 50's group, not many FHB's.
> 
> The majority of investors just want to buy something in this price bracket, rent it out and get regular income. Cash getting 3 and 4% is not much chop for self funded retirees and with sharemarkets imploding I can understand why they want the security of real estate. Beachside suburbs that are walking distance to beaches, clubs, supermarkets and transport will always be in demand, cheers.




Obviously these people don't know what government bonds is .. and as close to risk free as you can get

1 Year bond 7.5... 
5 years bond for 6.25%

want to go longer?
10 Year bond 5.25%
15 Years bond 5.75%

and if they done any research they notice average yield on govies bonds is around 6% through out any man life time


----------



## Bill M (3 February 2009)

ROE said:


> Obviously these people don't know what government bonds is .. and as close to risk free as you can get
> 
> 1 Year bond 7.5...
> 5 years bond for 6.25%
> ...




ROE, you are distorting the facts. Coupon yield and "real" yield are 2 different things.

From THIS LINK today: "Three-year government bonds fell 11 points to 97.01 for an implied yield of 2.99 per cent."

Then look at the real yields here from the RBA's website, not real good.


----------



## wayneL (3 February 2009)

Bill M said:


> ROE, you are distorting the facts. Coupon yield and "real" yield are 2 different things.
> 
> From THIS LINK today: "Three-year government bonds fell 11 points to 97.01 for an implied yield of 2.99 per cent."
> 
> Then look at the real yields here from the RBA's website, not real good.




...not to mention capital risk.


----------



## MR. (3 February 2009)

wayneL said:


> ...not to mention capital risk.




Ahhh ...... but ......... what investment does not risk one's capital?


----------



## GumbyLearner (3 February 2009)

MR. said:


> Ahhh ...... but ......... what investment does not risk one's capital?




your own backyard!
Of course unless your a moron who doesnt know how to grow your own veggies/fruit.


----------



## wayneL (3 February 2009)

MR. said:


> Ahhh ...... but ......... what investment does not risk one's capital?




Depends whether we are talking real or nominal.

Bond risks are both real and nominal. If gu'mint needs to start attracting funds via increasing interest rates (a real possibility... and sooner than many might imagine), bond capital values will take it where the sun don't shine.


----------



## wayneL (3 February 2009)

GumbyLearner said:


> your own backyard!
> Of course unless your a moron who doesnt know how to grow your own veggies/fruit.




Sweat Equity! The "fruit" of one's own labour.... bewdiful.

(sorry for the pathetic little pun )


----------



## MR. (3 February 2009)

GumbyLearner said:


> your own backyard!
> Of course unless your a moron who doesnt know how to grow your own veggies/fruit.




 "What you talkin bout Willis?" your own backyard????



wayneL said:


> Depends whether we are talking real or nominal.
> 
> Bond risks are both real and nominal. If gu'mint needs to start attracting funds via increasing interest rates (a real possibility... and sooner than many might imagine), bond capital values will take it where the sun don't shine.




Heard it before.....  
Yeah it will happen, but not "just" yet....


----------



## wayneL (3 February 2009)

MR. said:


> Heard it before.....
> Yeah it will happen, but not "just" yet....




Doesn't matter.

Bonds still carry capital risk, whereas term deposits do not (ignoring default risk etc{which applies to just about freakin' everything atm}).

I'm not saying this is a bad thing or a good thing, it just is. Where there is capital risk, there is the possibility of _x_ sigma occurrences which can snatch capital straight from your wallet before you can say Jack Robinson.

Just something folks should be aware of.


----------



## nunthewiser (3 February 2009)

wayneL said:


> Doesn't matter.
> 
> Bonds still carry capital risk, whereas term deposits do not (ignoring default risk etc{which applies to just about freakin' everything atm}).
> 
> ...




well aware 

has anyone mentioned the intrest rate danger on bonds ? re intrest rates moving the wrong way ?


----------



## nunthewiser (3 February 2009)

sorry just scrolled back ..onya wayne


----------



## Beej (4 February 2009)

ROE said:
			
		

> Obviously these people don't know what government bonds is




Great little set of posts! So it seems that unlike ROE, we DO all now know what a government bond actually is (if we didn't already before)  Thanks to WayneL, Bill M and co for some good info!

Cheers,

Beej


----------



## lioness (4 February 2009)

Robots and pro property owners,

You will disappointed with me, but I am dumping my rental property in Brunswick.

Just signed the docs and it is now getting ready to be sold.

I will let you know how it goes as it will be a good indication of the first home buyers market. It is worth around 500K.

I will keep you all updated on it.

This property is cash flow positive by the way(just), but I am taking the profit and going to cash and waiting for falls.

I now expect falls of up to 30-50% in the next 3 years.

The agents I spoke to also fear the same, they are secretly telling me the party is over.


----------



## kincella (4 February 2009)

wow, what a turnaround...only last week or so you told us you were going to buy several props....
I would not take the word of a RE agent...frankly.....
what changed your mind ???


----------



## lioness (4 February 2009)

kincella said:


> wow, what a turnaround...only last week or so you told us you were going to buy several props....
> I would not take the word of a RE agent...frankly.....
> what changed your mind ???




To be honest, yes I have turned around. What has changed my mind is my job security is at risk and I want to be debt free in this tsunami.

Secondly the property is strata titled and is deteriorating as I am not allowed to improve the outside at all. I want to be able to control inside and outside.

Thirdly, I expect no growth for the next 3-5 years and don't wish to keep the bank rich and fourthly wish to cashed up for buying opps as other people's misery in the next 2 years.


----------



## knocker (4 February 2009)

lioness said:


> Robots and pro property owners,
> 
> You will disappointed with me, but I am dumping my rental property in Brunswick.
> 
> ...




No the party has just begun. lol Why listen to realestate agents? Smart people are already moving in!! Good luck with your poor timing and decision.


----------



## lioness (4 February 2009)

knocker said:


> No the party has just begun. lol Why listen to realestate agents? Smart people are already moving in!! Good luck with your poor timing and decision.




Kncoker, I don't listen to real estate agents. If you expect prices to average incomes which are at 7 times already to go to 9,10 times in the worst credit crunch, then good luck.

Will I miss out selling now?? Maybe miss out on 5% growth MAXIMUM, so better to lock in profit. You also don't understand strata property obviously. I dont want to hold this type anymore.


----------



## knocker (4 February 2009)

lioness said:


> Kncoker, I don't listen to real estate agents. If you expect prices to average incomes which are at 7 times already to go to 9,10 times in the worst credit crunch, then good luck.
> 
> Will I miss out selling now?? Maybe miss out on 5% growth MAXIMUM, so better to lock in profit. You also don't understand strata property obviously. I dont want to hold this type anymore.




Fair enough. But only months back you were a bigtime property bull/guru, slagging off us bears. Times change don't they


----------



## MR. (4 February 2009)

wayneL said:


> Doesn't matter.
> 
> Bonds still carry capital risk, whereas term deposits do not (ignoring default risk etc{which applies to just about freakin' everything atm}).
> 
> ...




Wayne,
"doesn't matter"  It appears I don't understand!   ???

Capital risk: are we still talking about Government bonds?  There is most certainly capital risk for corporate bonds.  

If the government guaranteed bonds are "not" traded/sold before their maturity, isn't your nominal capital still guaranteed?  I can only assume you speak of selling the bond before maturity?  
So then risk is just inflation? 

Deduct (tax paid) inflation from the small return and left is your real gain. 
(if any ofcoarse) Hold until mature!

Otherwise it troubles me as what you are talking about exactly!
It's all part of learning!  
with thanks.
MR.


----------



## gfresh (4 February 2009)

lioness said:


> I will let you know how it goes as it will be a good indication of the first home buyers market. It is worth around 500K.




Don't tell my brother, he bought last year in Brunswick for just above $600k  He did well on the last place he had in Brunswick East which went from around $300->450k in 5 years or so, which I think got them motivated to take on a bit more. It's a decent area though, not sure it will "crash", but if you are in it for the capital gains, could be a long wait.


----------



## MR. (4 February 2009)

lioness said:


> I now expect falls of up to 30-50% in the next 3 years.
> 
> The agents I spoke to also fear the same, they are secretly telling me the party is over.




That is very interesting and will add, because the agent who sold my property appeared to have a similar outlook. Jobs and all!
(Which appeared not to help my mind set!) but then again.

Two months later she now tells me that her daughter has just bought a unit?
What the?
If that...... then..... but......  she said...... (which didn't help) 

Everyone loves a bargain perhaps! Can't help themselves?
I have no idea! ........ except


----------



## kincella (4 February 2009)

the agents like a quick sale....I know several..due to dealings with them...
when I bought those 10 props between 2000 and 2002....they thought the GST would stop everyone from buying....they had lost a bit of money in the sharemarket and were positively gloomy about property.....but I gave excuses, house for brother...or daughter etc...
I believe they did not have a clue....nor again when I was selling between 2003 and 2004....they were a bit excited about all the city people who had sold houses and were heading for tree changes...cashed up buyers
again I gave an excuse to sell....never once mentioned I had tripled my money on the deal.....told them I needed to fund another project....
have an agent looking after commercial props....he has done a lot of money in the stock market....and again  are rather gloomy.....


----------



## knocker (4 February 2009)

kincella said:


> the agents like a quick sale....I know several..due to dealings with them...
> when I bought those 10 props between 2000 and 2002....they thought the GST would stop everyone from buying....they had lost a bit of money in the sharemarket and were positively gloomy about property.....but I gave excuses, house for brother...or daughter etc...
> I believe they did not have a clue....nor again when I was selling between 2003 and 2004....they were a bit excited about all the city people who had sold houses and were heading for tree changes...cashed up buyers
> again I gave an excuse to sell....never once mentioned I had tripled my money on the deal.....told them I needed to fund another project....
> have an agent looking after commercial props....he has done a lot of money in the stock market....and again  are rather gloomy.....




So when selling aproperty how does it work? You give the agent a fee up front? OR IS IT AN ONGOING THING UNTIL FINALLY YOU CAPITULATE?


----------



## kincella (4 February 2009)

knocker...you dont know how it works.....you never bought or sold a property ??


----------



## knocker (4 February 2009)

kincella said:


> knocker...you dont know how it works.....you never bought or sold a property ??




Bought some years ago. Never sold. Don't know what all the big deal is about owning houses. Over rated if you ask me.


----------



## numbercruncher (4 February 2009)

I see all you pesky southerners sucked into Gold Coast realestate are getting smoked, first its was 10pc price drops last year and now this enlightening news ......



> At least 4000 new apartments are still unsold in Queensland and most of them are believed to have fallen into the hands of their financiers.




awwww that learn yahs to gamble eh ?



> Mortgagee sales remain prominent on the Gold Coast, where 1383 new high-rise apartments were for sale in the November quarter. Only 37 were sold in the three-month period.




Queensland beautiful one day perfect the next ? nirvana ?

http://www.theaustralian.news.com.au/business/story/0,,24976946-25658,00.html

Dont worry Kincella, Beej and Robi - your blokes houses/apartments are booming, no pesky commoner could ever afford to purchase them from you ....


----------



## robots (4 February 2009)

hello,

go for it lioness, you can do as you please man

i am comfortable hanging on for the ride, you might like red shoes i might like white shoes, 

its all only debate and discussion, australia is still king man and keep living large 

thankyou
robots


----------



## knocker (4 February 2009)

numbercruncher said:


> I see all you pesky southerners sucked into Gold Coast realestate are getting smoked, first its was 10pc price drops last year and now this enlightening news ......
> 
> 
> 
> ...




I reckon our mate KRudd should turn the place into an expensive housing commision rather than fork out the 900 odd bucks lol


----------



## Mofra (4 February 2009)

numbercruncher said:


> I see all you pesky southerners sucked into Gold Coast realestate are getting smoked, first its was 10pc price drops last year and now this enlightening news ......



Have to wonder how many of those are stupid developments where the developers didn't liaise with LMI on whether the apartments were acceptable for their purposes - once GE & PMI say no, you lose a fair portion of your market (including fully securitised lenders having to walk away from the deal).

I know of about 400 of that number and I'm staggered a developer could be so stupid.


----------



## wayneL (4 February 2009)

MR. said:


> Wayne,
> "doesn't matter"  It appears I don't understand!   ???
> 
> Capital risk: are we still talking about Government bonds?  There is most certainly capital risk for corporate bonds.
> ...




Bonds have a set "coupon" interest rate. As "real" interest rates fluctuate the value of the bond fluctuates.

For instance to buy a bond right now, because interest rates are lower than coupon rates, you would have to pay more than the face value of the bond, only to be redeemed the actual face value at maturity... a capital loss.

You can of course get capital gains as well, but we're talking about certainty here.

Pull up any chart of any government bond product and you will see this. The folks who bought gu'mint bonds in a panic at the beginning of this year are facing losses.

See http://stockcharts.com/h-sc/ui?s=tlt

The value moves around just like a stock.

It's the reason bonds are such highly traded instruments.


----------



## Glen48 (4 February 2009)

Even the White House has dropped 23 M in value, not that B O could afford to make the mortgage payments.


----------



## Aussiejeff (5 February 2009)

Hmmm. The Oz Property Trust sector got absolutely SMASHED yesterday.

Would someone like to explain to me why this sector is now so "on the nose" and what ramifications this significant sell-off over the last few months in that sector might have with regard to the future of both commercial & private RE developments?


Chiz,


aj


----------



## dirty_harry (5 February 2009)

Good question. The market seems to be pricing in the end of the world and/or cap rates going well over 10%. If this actually happens then you'd better hide out somewhere and grow potatoes. However if governments manage to reflate the system with their money printing and handouts, property trusts could reinflate dramatically, because property is after all a hard asset. It's just a question of valuation.


----------



## robots (5 February 2009)

hello,

http://business.theage.com.au/business/housing-stimulus-is-working-broker-20090205-7yjz.html

3 FHB's i know have entered in the past 3mths

one going from St Kilda to Caroline Springs (healthcare worker)

one going from Mornington to Frankston (young couple early twenties, building worker)

one going from pMelbourne to sMelbourne (late twenties, government worker high roller)

bloody hell, whats going on I thought banks weren't lending with all three getting finance easy

oh well cheer up brothers, keep rocking

thankyou
robots


----------



## MR. (5 February 2009)

wayneL said:


> Bonds still carry capital risk, whereas term deposits do not (ignoring default risk.)






MR. said:


> Capital risk: are we still talking about Government bonds?  There is most certainly capital risk for corporate bonds.
> 
> If the government guaranteed bonds are "not" traded/sold before their maturity, isn't your nominal capital still guaranteed?  I can only assume you speak of selling the bond before maturity?
> So then risk is just inflation?






wayneL said:


> Bonds have a set "coupon" interest rate. As "real" interest rates fluctuate the value of the bond fluctuates.
> 
> For instance to buy a bond right now, because interest rates are lower than coupon rates, you would have to pay more than the face value of the bond, only to be redeemed the actual face value at maturity... a capital loss.




Ok...  we are on the same track!
Depends what we intend on doing with the bond.

If you bought the bond "new", when released, and it was held for its full term the bond "doesn't" lose any capital value just like a term deposit. 
(apart from any inflation to be deducted)

To explain: 
If we bought an existing bond (today) we will pay higher than face value because the bond may have been issued when the interest rates were 7% and now are 3%.  The bond is calculated and sold taking that higher interest rate on the bond into account with the number of years remaining. (7% - 3% = 4%)   So the bond is sold in round terms 4% higher than the actual value of the bond. It makes the traded bond on parr with current interest rates being 3%. From then on the holder is basically getting the 3% on their outlay until mature. No actual "capital" or "outlay" would be lost.

Now what Wayne is saying if the bond was sold/traded before maturity and the going interest rate was say 10% that same bond needs to be calculated to take the bond rate all the way up to 10%.  The bond "outlay" when bought (new or not) was calculated at 3% interest. (3% - 10% = -7%) by the number of years left until maturity.  
CAPITAL LOSS....

Capital is lost because unless you reduce your bond "capital" or "outlay" to make the sale attractive you will not sell the bond with 3% interest when the going rate was 10%.  

To back track:


wayneL said:


> For instance to buy a bond right now, because interest rates are lower than coupon rates, you would have to pay more than the face value of the bond, only to be redeemed the actual face value at maturity... a capital loss.



Yes,  but during that time the bond was held the interest was at a/the higher rate, (than the market rate at the time of purchase.)  The actual "outlay" is not a capital Loss but the face value is as you say.   



wayneL said:


> You can of course get capital gains as well, but we're talking about certainty here.
> 
> The value moves around just like a stock.
> 
> It's the reason bonds are such highly traded instruments.





Thanks Wayne for your response. 

"talking about certainty here"..........?  When do you think?


----------



## noirua (5 February 2009)

The UK's largest mortgage lender the Halifax has reported a 1.9% rise in house prices during January.

The group said it is important to not place too much emphasis on any one month's figures, but added market activity may be stabilising.


----------



## Trevor_S (6 February 2009)

Gold Coast prices on the up 

http://www.brisbanetimes.com.au/new...ian-house-price/2009/02/05/1233423369334.html



> The Gold Coast has long been home to some of the state's highest median prices and, despite recent media attention suggesting otherwise, little has changed.
> 
> Mermaid Beach's median increased by 9 per cent to $1.3 million last year, based on 55 home sales. At Surfers Paradise, there was a modest 2 per cent jump to $1.27 million.


----------



## knocker (6 February 2009)

noirua said:


> The UK's largest mortgage lender the Halifax has reported a 1.9% rise in house prices during January.
> 
> The group said it is important to not place too much emphasis on any one month's figures, but added market activity may be stabilising.




Only because there variable is at 4% and gov gives concessions to house less than 170000. THink it is a just a blip on the radar


----------



## knocker (6 February 2009)

Trevor_S said:


> Gold Coast prices on the up
> 
> http://www.brisbanetimes.com.au/new...ian-house-price/2009/02/05/1233423369334.html




Ah yes the reputable Brisbane Times ROFLMAO


----------



## knocker (6 February 2009)

robots said:


> hello,
> 
> http://business.theage.com.au/business/housing-stimulus-is-working-broker-20090205-7yjz.html
> 
> ...




lol nice moves for them mornington to frankston rofl, and even your beloved StKilledHer is better than Caroline springs.

Keep the good work up champ lol


----------



## numbercruncher (6 February 2009)

> 3 FHB's i know have entered in the past 3mths





That would mean 3 non-fhbs pushed the eject button and laughed all the way to the bank ??


----------



## knocker (6 February 2009)

numbercruncher said:


> That would mean 3 non-fhbs pushed the eject button and laughed all the way to the bank ??




lol classic mate


----------



## numbercruncher (6 February 2009)

Trevor_S said:


> Gold Coast prices on the up
> 
> http://www.brisbanetimes.com.au/new...ian-house-price/2009/02/05/1233423369334.html




LOL - you spruiker !

That article says nothing of the sort - it claims price rises in 2 of the most desirable GC suburbs is about all ....

Its no different than me showing 2 suburbs that are down and claiming GC prices crashing .....

Which incidentally they did by over 9pc average on the GC last year ......





> House prices to keep rising for years




no proof yet sorry permabulls ...... let me know when the masters of the universe start a quantative easing campaign and ill again join the lil merry go round ...


----------



## gfresh (6 February 2009)

a) Rochedale is in Brisbane, about 50km from the Goldcoast

b) A whole 55 sales for Mermaid Beach for the whole of 2007..  That's fantastic, but there is presently around 300 properties listed in Mermaid Beach. At that rate, it's going to take 6 years to clear them all  You might want to also pull it up on the map, it's also a small strip some 2km x 1km across.


----------



## numbercruncher (6 February 2009)

gfresh said:


> a) Rochedale is in Brisbane, about 50km from the Goldcoast
> 
> b) A whole 55 sales for Mermaid Beach for the whole of 2007..  That's fantastic, but there is presently around 300 properties listed in Mermaid Beach. At that rate, it's going to take 6 years to clear them all  You might want to also pull it up on the map, it's also a small strip some 2km x 1km across.





Exactly .....


The other GC suburbs they mentioned is Surfers which is currently flooded with apartments forsale .... I read yesterday some 3000 forsale across the GC and only like 30 sold last quarter of last year ...


----------



## Beej (6 February 2009)

> *Demand for mortgages jumps after RBA cuts interest rate*
> 
> THE latest interest-rate cut and recent improvements to the first-homebuyer's grant have prompted a surge in demand for mortgages over the past two days, according to brokers.
> 
> ...




From http://www.news.com.au/business/money/story/0,28323,25015773-14327,00.html

Cheers,

Beej


----------



## Pommiegranite (6 February 2009)

Beej said:


> From http://www.news.com.au/business/money/story/0,28323,25015773-14327,00.html
> 
> Cheers,
> 
> Beej




...another spruik from those with vested interests.:sleeping:

I wonder what Rudd is worried about? I guess he doesn't get his info from news.com.au.


----------



## Beej (6 February 2009)

Pommiegranite said:


> ...another spruik from those with vested interests.:sleeping:
> 
> I wonder what Rudd is worried about? I guess he doesn't get his info from news.com.au.




And that is such a boringly predicable response that we see over and over again here to any data that does not support the most bearish property views. Yawn.

Do you dispute the AFG figures presented re the mortgage take up of FHBs? Do you think they are just making those up??? Got any data you can present that would show a different picture re FHB mortgage take up rate and thus show some sort of justification for your easy dismissal of the AFG data?

Beej


----------



## Pommiegranite (6 February 2009)

Beej said:


> And that is such a boringly predicable response that we see over and over again here to any data that does not support the most bearish property views. Yawn.
> 
> Do you dispute the AFG figures presented re the mortgage take up of FHBs? Do you think they are just making those up??? Got any data you can present that would show a different picture re FHB mortgage take up rate and thus show some sort of justification for your easy dismissal of the AFG data?
> 
> Beej




Beej, infact it is your post is a primo example of someone who is either:

(i)reading into articles to support their own views
OR 
(ii)genuinly fooled by the 'clever' journalism.

First the article grabs attention by stating "One mortgage website said it had seen a 250 per cent increase in *inquiries,* which are now numbering between 3000 and 4000 a day" (I believe they are counting website hitrates).

Then once you have been grabbed, it goes onto say that mortgage sales are upto 25.8% from December 21.2%. Hardly massive! Should we even be surprised by this stat? Even if it is true, I would go as far to say that it is a very disappointing increase for those in the RE industry.


----------



## Beej (6 February 2009)

Pommiegranite said:


> Beej, infact it is your post is a primo example of someone who is either:
> 
> (i)reading into articles to support their own views
> OR
> (ii)genuinly fooled by the 'clever' journalism.




LOL - wrong on both counts - you didn't notice that the part of the article I quoted was the factual, relevant part? (I ignored the other bit as it is of little relevance as you point out). 




> Then once you have been grabbed, it goes onto say that mortgage sales are upto 25.8% from December 21.2%. Hardly massive! Should we even be surprised by this stat? Even if it is true, I would go as far to say that it is a very disappointing increase for those in the RE industry.




Again, as for your easy discounting/dismissal of that factual part - see your point (i) above - a real stretch there to claim that ongoing evidence of increased FHB activity is in anyway "disappointing" to those in RE industry, or to those like me who have a "less negative" view on property than those like yourself  It's hard to argue/show that a great property crash is underway when data like this keeps coming out isn't it???

PS: I still note that you cannot actually dispute the figures (while still subtely suggesting they are untrue), and that all you can do is merely harp on about the motives of those publishing them and label them as spruikers etc....

Beej


----------



## dhukka (6 February 2009)

Beej said:


> From http://www.news.com.au/business/money/story/0,28323,25015773-14327,00.html
> 
> Cheers,
> 
> Beej




I've come to expect better of you beej than just to quote articles without any explanation. The article is poorly written and argued at best and at worst a pathetic spruiking attempt.  

The percentage of FHB's as a percentage of total mortgage sales has risen by 4 percentage points but that is a meaningless statistic unless you know the total number of mortgage sales. 

For the sake of round numbers lets say there were 100 mortgage sales in December of which 21 (or 21%) were FHB's. Then in January total mortgage sales fell to 80 of which 20 were FHB's (or 25%). Thus the number of mortgage sales to FHB's can actually go down and the percentage of FHB's can go up if the total number of mortgages falls. Thus it is a meaningless statistic without the total number.     

I would not be surprised to learn that the total number of mortgage sales went up in January and thus the FHB component is a significant increase given the cuts in interest rates and house prices going south, however this article does not provide the evidence to draw that conclusion.


----------



## Beej (6 February 2009)

dhukka said:


> I've come to expect better of you beej than just to quote articles without any explanation. The article is poorly written and argued at best and at worst a pathetic spruiking attempt.
> 
> The percentage of FHB's as a percentage of total mortgage sales has risen by 4 percentage points but that is a meaningless statistic unless you know the total number of mortgage sales.
> 
> ...




Dhukka - yes a valid criticism. As you state the implication of the article, and the more general expectation based on other data we have seen (eg ABS etc), is that the proportional FHB number rise would be matched by a rise in total numbers as well. You are right that the article I posted does not prove this, but it does add to the total picture. I just posted it, and highlighted the part I thought was interesting - I didn't write it!

Cheers,

Beej


----------



## arco (6 February 2009)

.
A visit to realestate.com.au will show whats really going on.

*Houses selling slowly *
Homeowners are struggling to sell houses and units, despite slashing asking prices by more than 15%. It is now taking almost seven weeks for the average house to sell, with low interest rates and growing rents having failed to inspire buyers. The Brisbane local government area recorded a 21.4% decrease in house sale figures from 3361 to 2643, according to preliminary data from the Real Estate Institute of Queensland. A comparison of the six months to December 2008 with the previous six months shows a 36% fall in the number of house sales from 6666 to 4242.

The Courier-Mail, Page 25, 24-25 January 2009


----------



## robots (6 February 2009)

hello,

what a load of rubbish:

http://www.theage.com.au/national/unimaginable-situation-for-highflyer-20090205-7yzv.html

oh well, buy a house or unit otherwise it is a big deal isnt it?

thankyou
robots


----------



## knocker (6 February 2009)

robots said:


> hello,
> 
> what a load of rubbish:
> 
> ...




Have some bad weed Robi? Not like you to be so un-symapathetic about the plight of your fellow Victorians, especially seeing as they are trying to live close to the action there in inner Melbourne. lol


----------



## gfresh (6 February 2009)

Knock yourself out with the AFG raw data (charts at bottom of PDF's): http://corporate.afgonline.com.au/news/FEB09-MORTGAGEINDEX


----------



## dhukka (6 February 2009)

Beej said:


> Dhukka - yes a valid criticism. As you state the implication of the article, and the more general expectation based on other data we have seen (eg ABS etc), is that the proportional FHB number rise would be matched by a rise in total numbers as well. You are right that the article I posted does not prove this, but it does add to the total picture. I just posted it, and highlighted the part I thought was interesting - I didn't write it!
> 
> Cheers,
> 
> Beej




Well there you go beej, that's why it pays to have a look behind the numbers. Mortgage sales actually fell *-11%* in January according to AFG numbers.  FHB's rose approximately *8%*. Refi's and property investors hit new 12 month lows. 

So the best you can say is that FHB's are propping up sales and prices as non-FHB's and investors shy away.


----------



## Beej (6 February 2009)

dhukka said:


> Well there you go beej, that's why it pays to have a look behind the numbers. Mortgage sales actually fell *-11%* in January according to AFG numbers.  FHB's rose approximately *8%*. Refi's and property investors hit new 12 month lows.
> 
> So the best you can say is that FHB's are propping up sales and prices as non-FHB's and investors shy away.




So as you say *FHB absolute numbers UP 8.25% Dec 08 -> Jan 09*, without any seasonal adjusting (Jan would normally be a "slow" month for property sales).

No one (well at least I'm not) is claiming we are in the middle of the next price boom! Far from it - sales volumes in most states are down on a year ago hence the fall in total buyer numbers. However, FHB numbers rising is a leading indicator - it's feeding the bottom of the property ladder, and it all flows up from that base. It is showing the government subsidy plus low interest rates are having a major impact. If FHB numbers were continuing to fall then I would see more meat on the "prices to fall for years" argument. As it stands, the ongoing chain of data showing increasing FHB activity is setting the market up for a good support level that IMO will see prices continue to stabalise, ready for an upswing when economic times improve. The timing of this (and the probability) hinges on how bad (or not) and long this recession/downturn LOCALLY turns out to be.

Cheers,

Beej


----------



## dhukka (6 February 2009)

Beej said:


> So as you say *FHB absolute numbers UP 8.25% Dec 08 -> Jan 09*, without any seasonal adjusting (Jan would normally be a "slow" month for property sales).
> 
> No one (well at least I'm not) is claiming we are in the middle of the next price boom! Far from it - sales volumes in most states are down on a year ago hence the fall in total buyer numbers. However, FHB numbers rising is a leading indicator - it's feeding the bottom of the property ladder, and it all flows up from that base. It is showing the government subsidy plus low interest rates are having a major impact. If FHB numbers were continuing to fall then I would see more meat on the "prices to fall for years" argument. As it stands, the ongoing chain of data showing increasing FHB activity is setting the market up for a good support level that IMO will see prices continue to stabalise, ready for an upswing when economic times improve. The timing of this (and the probability) hinges on how bad (or not) and long this recession/downturn LOCALLY turns out to be.
> 
> ...




I think you need to read that release again beej, January sales according to AFG are usually stronger;



> Overall sales of mortgages fell from $2.2 billion in December to $1.9 billion in January. While January sales have tended to be higher than December in the past – in January 2008 by 2.8% - last month’s slew of bad economic news saw more buyers staying at home. However yesterday’s rate cut announced by RBA, and $42 billion Government spending package is expected to stimulate increased activity in February and March.




Stabilizing housing prices is a stretch, despite the increased activity from FHB's, they are not able to offset the decline in overall sales. FHB's are cushioning the declines would be more appropriate.


----------



## robots (6 February 2009)

hello,

oh yeah knocker, hydroponic weed, goof balls, arctic, hammer

all loaded up for Sunday, slab of ruskie's in the shopping trolley its gonna be huge 

dont forget meet up out the front of the light shop on the corner of Alma Rd and Brighton Rd, 1pm Sunday (for those with a bit of intestinal fortitude)

look for guy in blue shirt, long blonde hair denim jeans

thankyou
robots


----------



## knocker (6 February 2009)

robots said:


> hello,
> 
> oh yeah knocker, hydroponic weed, goof balls, arctic, hammer
> 
> ...




hello

Can I invite my uniformed mates?

thankyou


----------



## nunthewiser (6 February 2009)

LOL . whats a "goof ball" ?


----------



## nunthewiser (6 February 2009)

that was a pretty wimpy answer knocker


----------



## robots (6 February 2009)

knocker said:


> hello
> 
> Can I invite my uniformed mates?
> 
> thankyou




hello,

anybody can come, i doubt you will be there though 

thankyou
robots


----------



## knocker (6 February 2009)

nunthewiser said:


> LOL . whats a "goof ball" ?




Something full of liquid drug. Come on you should know about this being one of Robis bum chums.


----------



## robots (6 February 2009)

nunthewiser said:


> LOL . whats a "goof ball" ?




hello,

e's

thankyou
robots


----------



## knocker (6 February 2009)

nunthewiser said:


> that was a pretty wimpy answer knocker




Please learn to spell. WHIMP.


----------



## nunthewiser (6 February 2009)

knocker said:


> Please learn to spell. WHIMP.




OK my spelling is rather shocking ...instead of wimp .........insert "limp wristed" 


thankyou


----------



## nunthewiser (6 February 2009)

Doesent look like he meeting you for a beer robots 


funny that


----------



## robots (6 February 2009)

nunthewiser said:


> Doesent look like he meeting you for a beer robots
> 
> 
> funny that




hello,

all the more for the 3182 crew,

life goes on Nun, will keep a couple of spares in the backpack just in case on Sunday, 

400,000 expected with the angels, jackson jackson, tex perkins performing

luna park

what a day 

thankyou
robots


----------



## gav (6 February 2009)

Hello Robots, how long will you be there for? I finish work just up the road at 3pm.


----------



## robots (6 February 2009)

hello,

will be floating around the joint all day long, i can reconvene at the light shop later in the day

thankyou
robots


----------



## knocker (6 February 2009)

robots said:


> hello,
> 
> will be floating around the joint all day long, i can reconvene at the light shop later in the day
> 
> ...




And wtf has this to do with housing?


----------



## nunthewiser (7 February 2009)

knocker said:


> Something full of liquid drug. Come on you should know about this being one of Robis bum chums.






knocker said:


> Please learn to spell. WHIMP.






knocker said:


> And wtf has this to do with housing?




just as much as your posts it would seem darl


----------



## Julia (7 February 2009)

knocker said:


> Please learn to spell. WHIMP.



Actually, Nun was quite correct with his spelling:

From 'English for Students'"



> The original and still by far the most common spelling of this common bit of slang meaning “weakling, coward,” is “wimp.”
> 
> 
> If you use the much less common “whimp” instead people may regard you as a little wimpy.


----------



## robots (8 February 2009)

hello,

"copying is a form of flattery"

I know the UK its a fairly miserable place so many there probably need a fair bit of inspiration, 

purveyors of originality will continue carrying on

thankyou
robots


----------



## robots (9 February 2009)

hello,

you been spot on Beej:

http://www.theaustralian.news.com.au/business/story/0,28124,25026303-25658,00.html

top effort man, great research i guess from being down on the ground putting in the hard yards

have a great day

thankyou
robots


----------



## Beej (9 February 2009)

robots said:


> hello,
> 
> you been spot on Beej:
> 
> ...




Thanks for posting robots - interesting! Early days still though, and I note that most of the action is still in the lower price ranges. 96 properties sold is about half the typical volume for a busy spring weekend, however it is a decent number for this time of year.

For anyone that is interested in looking at what actually sold for what, here is the link to the auction results for Sydney from the weekend: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf (You can click in the address of any sold property and it brings up the domain.com.au advert for the property).

PS: There is a house in there just around the corner from my PPOR that sold prior to auction less than 2 weeks after listing.

Cheers,

Beej


----------



## amy997 (9 February 2009)

If you take a close look at whats actually selling you'll see its only properties at the lower end of the market. Sales of properties over $1m have fallen off a cliff.

Last Saturday at auction only 10 places that sold went for more than $1m, i don't know the total number sold i didn't count but it was well over 100. This Saturday just past only 6 sold for over $1m at auction and another 5 for over $1m by private treaty. Total numbers sold this Saturday were less than half the usual number.

This is data for Sydney only and it comes from the sun herald which gets its numbers from domain.com.au.

Also a high clearance rate is normal for this time of year. Clearance rates are cyclical for unknown reasons low in spring and high in late summer. This was part of an article in the property section of the Sun Herald on Sunday which stated that unless they remain high for the next 6-8 weeks and and past then the high clerance rate this Saturday is meaningless.


----------



## gfresh (11 February 2009)

Some positive news for those looking for it.. Looks like the slide in housing finance commitments has slowed. I wouldn't call it "bottomed" until a couple more months, but prior history shows it's a positive sign.

http://abs.gov.au/AUSSTATS/abs@.nsf/Lookup/5609.0Main+Features1Dec 2008?OpenDocument


----------



## Beej (11 February 2009)

A much nicer looking chart there gfresh, especially compared to how that one looked half way through last year! 

Cheers,

Beej


----------



## numbercruncher (11 February 2009)

More good news for the permabulls ....



> The dire state of the New South Wales property sector has claimed three more building companies in the last few days, just a week after 20-year-old builder Wincrest collapsed with $12 million in debts.




http://www.smartcompany.com.au/Free-Articles/The-Briefing/20090211-Three-more-builders-collapse-in-NSW-.html

I mean the permas way of thinking is Less builders = less houses being built = more demand for existing stock = prices to the moon/pluto/mars ? ie/ demand is the ultimate fundamental be damned with any other rules of the game ??


----------



## sinner (11 February 2009)

Except London has already shown demand barely makes a difference once prices start to slip.


----------



## Pommiegranite (11 February 2009)

sinner said:


> Except London has already shown demand barely makes a difference once prices start to slip.




Yes Sinner, but don't get caught in the trap of using the word 'demand', when it comes to property. 'Consider' would be a better choice of word.


----------



## Beej (11 February 2009)

sinner said:


> Except London has already shown demand barely makes a difference once prices start to slip.




Isn't the issue in the UK more that potential buyers are simply unable to get finance due to their banking crisis? A problem we don't seem to be having in this fair land, as demonstrated clearly by these latest housing finance stats.... and therefore demand does in fact matter?

FYI more comment/analysis on the rise in dwelling finance approvals: http://business.smh.com.au/business/rate-cuts-boost-home-loan-approvals-20090211-845k.html

Some selected snippets from the article:



> *Rate cuts boost home loan approvals*
> 
> Home-loan approvals gained in December as consumers warmed to lower interest rates and Government packages aimed at helping people buy houses.
> 
> ...




Cheers,

Beej


----------



## aleckara (11 February 2009)

Beej said:


> Isn't the issue in the UK more that potential buyers are simply unable to get finance due to their banking crisis? A problem we don't seem to be having in this fair land, as demonstrated clearly by these latest housing finance stats.... and therefore demand does in fact matter?
> 
> FYI more comment/analysis on the rise in dwelling finance approvals: http://business.smh.com.au/business/rate-cuts-boost-home-loan-approvals-20090211-845k.html
> 
> ...




In other words as the debt burden of our nation increases the interest rate has to go lower and lower just to get consumers to keep spending and to prop up the housing industry keeping the game of musical chairs alive until people hit a recession at 0% interest rates. The government seems to have full control of the housing market in other words and it is severely manipulated for the governments own ends.

Hate to say it but it looks like a complete robbery of savers with the Government using housing as an excuse to do so just to keep the housing market alive with the money coming out of savers pockets. The only fundamental on housing therefore seems to be credit and the ability of the masses to borrow, even if there is enough housing per person people will just buy as an investment and the taxpayer will subsidise the rental returns (hence negative gearing). Either way the housing market goes the government has a plan to get more borrowings into the market. The government just wants money via borrowings to keep flowing in and I'm slowly realising that every little policy it has done leans to this effect. So either the saver or taxpayer is paying the borrower/speculator.

Wow this sounds like a big Ponzi scheme doesn't it? Expect the contributors don't even have a choice - the system is designed to make them contribute either via inflation, reduced saving returns or via their taxes. Something is seriously wrong with the picture here in Australia.


----------



## robots (11 February 2009)

aleckara said:


> In other words as the debt burden of our nation increases the interest rate has to go lower and lower just to get consumers to keep spending and to prop up the housing industry keeping the game of musical chairs alive until people hit a recession at 0% interest rates. The government seems to have full control of the housing market in other words and it is severely manipulated for the governments own ends.
> 
> Hate to say it but it looks like a complete Roby of savers with the Government using housing as an excuse to do so just to keep the housing market alive with the money coming out of savers pockets. The only fundamental on housing therefore seems to be credit and the ability of the masses to borrow, even if there is enough housing per person people will just buy as an investment and the taxpayer will subsidise the rental returns (hence negative gearing). Either way the housing market goes the government has a plan to get more borrowings into the market. The government just wants money via borrowings to keep flowing in and I'm slowly realising that every little policy it has done leans to this effect. So either the saver or taxpayer is paying the borrower/speculator.
> 
> *Wow this sounds like a big Ponzi scheme doesn't it? Expect the contributors don't even have a choice - the system is designed to make them contribute either via inflation, reduced saving returns or via their taxes. Something is seriously wrong with the picture here in Australia.*




hello,

nothing wrong here in Australia, you have the CHOICE to buy or rent,

and many here reckon renting is heaps better off, so i would say plenty of options available for everyone,

you can always save up and buy a place, easy

thankyou
robots


----------



## singlefished (11 February 2009)

Beej said:


> FYI more comment/analysis on the rise in dwelling finance approvals: http://business.smh.com.au/business/rate-cuts-boost-home-loan-approvals-20090211-845k.html
> 
> Some selected snippets from the article:
> 
> ...





I'll match that and raise you two....


*"This is the only flicker of life and it's on life support from the first home buyers scheme," Mr Roberts said.*

*"A deepening economic downturn and the potential for unemployment to rise sharply will no doubt choke off property market activity to some extent," he said.*

*Housing Industry Association (HIA) chief economist, Dr Harley Dale, said December's figures camouflaged the downturn in the building industry, namely in the `trade up' and investor markets.*

http://au.biz.yahoo.com/090211/2/24jfv.html


----------



## joeyr46 (11 February 2009)

Beej said:


> A much nicer looking chart there gfresh, especially compared to how that one looked half way through last year!
> 
> Cheers,
> 
> Beej




That is not very bullish at this stage gone below previous low after a perfect 5 wave count looks like a rally for sure but that may be all


----------



## Bill M (11 February 2009)

robots said:


> hello,
> 
> nothing wrong here in Australia, you have the CHOICE to buy or rent,
> 
> ...



hello robots old chum, you are dead right in what you say. I did a bit of a run on the weekend up to the central coast NSW (about a 1 hour north of Sydney). Really beautiful brick houses in top suburbs can be bought there for 300K. My mates house is 4 br 2 story brick and only 7 years old, he bought it for 335K 2 Months ago. That's really good considering it's only an hour from Sydney.

Meanwhile another mate is renting a house for $650 p/w in Sydney. Why would anyone in their right mind be renting for $650 when you can buy for $550 (assuming 300K loan at 6.5%)? As you say there are options, I would take the owning my own home option any day and save a $100.


----------



## lioness (11 February 2009)

aleckara said:


> In other words as the debt burden of our nation increases the interest rate has to go lower and lower just to get consumers to keep spending and to prop up the housing industry keeping the game of musical chairs alive until people hit a recession at 0% interest rates. The government seems to have full control of the housing market in other words and it is severely manipulated for the governments own ends.
> 
> Hate to say it but it looks like a complete Roby of savers with the Government using housing as an excuse to do so just to keep the housing market alive with the money coming out of savers pockets. The only fundamental on housing therefore seems to be credit and the ability of the masses to borrow, even if there is enough housing per person people will just buy as an investment and the taxpayer will subsidise the rental returns (hence negative gearing). Either way the housing market goes the government has a plan to get more borrowings into the market. The government just wants money via borrowings to keep flowing in and I'm slowly realising that every little policy it has done leans to this effect. So either the saver or taxpayer is paying the borrower/speculator.
> 
> Wow this sounds like a big Ponzi scheme doesn't it? Expect the contributors don't even have a choice - the system is designed to make them contribute either via inflation, reduced saving returns or via their taxes. Something is seriously wrong with the picture here in Australia.




Aleckara,

Nailed it here you have. I just woke up to this a few years ago. This country is built on property not shares and the govt will do anything to keep the music going, BUT the deflationary spiral about to be unleashed will kill property up to 50% discounts coming even in inner city. Don't get sucked in to this cheap finance they offer as they want us to be debt slaves to capitalism forever. Problem is if deflation wins, capital values decrease for 10 years plus as per Japan found out.


----------



## Bill M (11 February 2009)

At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.

Anyhow he challenges anyone to buy a house anywhere in *AUSTRALIA* and try and LOSE money in 10 years time, worth a look, here is the link and click on Gerry Harvey, it is 9.45 minutes into the interview where he makes that statement:

http://www.abc.net.au/4corners/special_eds/20090209/gfc/


----------



## MrBurns (11 February 2009)

Bill M said:


> At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.
> 
> Anyhow he challenges anyone to buy a house anywhere in *AUSTRALIA* and try and LOSE money in 10 years time, worth a look, here is the link and click on Gerry Harvey, it is 9.45 minutes into the interview where he makes that statement:
> 
> http://www.abc.net.au/4corners/special_eds/20090209/gfc/




Add purchase costs and holding costs deduct rent and add management fees - you'd be suprised how much you would lose. UNLESS there's a nice bit of inflation going on.

Gerry Harvey is a bit of a cowboy, like the bloke down the pub.


----------



## grace (11 February 2009)

Bill M said:


> At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.
> 
> Anyhow he challenges anyone to buy a house anywhere in *AUSTRALIA* and try and LOSE money in 10 years time




And I also heard Gerry Harvey say that as the governments are printing more money, there will be more money to be spent, and that must be good for the country......mmm.......can't agree with you sorry Gerry.  He should talk to someone who lives in Zimbabwe and see if they agree!


----------



## Bill M (11 February 2009)

grace said:


> And I also heard Gerry Harvey say that as the governments are printing more money, there will be more money to be spent, and that must be good for the country......mmm.......can't agree with you sorry Gerry.  He should talk to someone who lives in Zimbabwe and see if they agree!



Some economists have also argued that the printing of $$$ word wide is only replacing what has been lost so there won't be inflation. I don't know, 2 camps right now, one in deflation mode and one in inflation mode. I don't care, all I know is I buy a house and then rent it out and I have income, nothing has changed there.


----------



## shaunQ (11 February 2009)

Bill M said:


> hello robots old chum, you are dead right in what you say. I did a bit of a run on the weekend up to the central coast NSW (about a 1 hour north of Sydney). Really beautiful brick houses in top suburbs can be bought there for 300K. My mates house is 4 br 2 story brick and only 7 years old, he bought it for 335K 2 Months ago. That's really good considering it's only an hour from Sydney.




yeah, used to live near Woy Woy. My parents bought a house there $120K about 15 years ago, sold it for $220K about about 7 years ago. Reckon its on a downturn now - unemployment will hit the coast hard - too much pot.


----------



## Julia (11 February 2009)

MrBurns said:


> Gerry Harvey is a bit of a cowboy, like the bloke down the pub.






grace said:


> And I also heard Gerry Harvey say that as the governments are printing more money, there will be more money to be spent, and that must be good for the country......mmm.......can't agree with you sorry Gerry.  He should talk to someone who lives in Zimbabwe and see if they agree!



I remember a radio interview with GH about a year ago when he predicted that we in Australia would suffer no fall out from the American sub-prime stuff.
I surely wouldn't be making any decisions based on his opinions.


----------



## Bill M (11 February 2009)

shaunQ said:


> yeah, used to live near Woy Woy. My parents bought a house there $120K about 15 years ago, sold it for $220K about about 7 years ago. Reckon its on a downturn now - unemployment will hit the coast hard - too much pot.




You are right mate, lots of property on the market there right now. Honestly I'm thinking about getting out of Sydney, getting older and just want piece and quiet at much lower prices. By the way where did your folks go? Not much cheap stuff left after central coast? I found CC very good price wise?


----------



## singlefished (11 February 2009)

Bill M said:


> At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.
> 
> Anyhow he challenges anyone to buy a house anywhere in *AUSTRALIA* and try and LOSE money in 10 years time, worth a look, here is the link and click on Gerry Harvey, it is 9.45 minutes into the interview where he makes that statement:
> 
> http://www.abc.net.au/4corners/special_eds/20090209/gfc/




Old Gerry has lost over a 1.5 billion in recent times.... he kept on buying all the way to the bottom last year and admitted he didn't even see it coming.... all the way down.... just like yourself if I remember correctly???

He's certainly done well for himself in the business world, no denying that, but he's certainly proved himself to be no economic guru whose advice you should be following during these troubled times....


----------



## Bill M (11 February 2009)

singlefished said:


> he kept on buying all the way to the bottom last year and admitted he didn't even see it coming.... all the way down.... just like yourself if I remember correctly???



I'm still buying mate, how can I say no to rights issues at substantial discounts? But that has nothing to do with real estate.


----------



## 2BAD4U (11 February 2009)

lioness said:


> I just woke up to this a few years ago.



But only a month or 2 ago you were telling us how you were going to spend millions on property. 



lioness said:


> property up to 50% discounts coming



Ok so if we have property fall by 50% what happens to new homes??

Median house price of about $150k??? So either land is free, all the builders go bust or we buy the land and the government builds a house for us.  If established homes are 50% cheaper then no one will build new houses because they will be more expensive than established. Do you seriously believe this will happen? And if you do believe it, what will happen when the massive shortage of housing becomes a problem.

People who say we are going to have falls of 50% are so full of crap or blinded by fear more than a kangaroo in a spot light.

Also, you can't compare Japan to Australia. Do some research on what they call a home, some people in Australia have bigger dog kennels.

And on the deflation front, what happens when all the cheap labour dries up in China? When the Chinese people start demanding higher wages and better quality of working life?  It's already happening.  No more cheap imported goods and suddenly these cheap imports that have been holding inflation back are gone.


Bill M, I'm with you.  I'm still making money from property and have no intention of selling so what do I care what value all these alarmists put on my houses.

What about unemployment, what about negative equity, what about falling rents, what are your real returns, blah, blah, blah, blah.  You bears are a bunch of sooks, stick to your shares which are much safer.


----------



## singlefished (11 February 2009)

Bill M said:


> I'm still buying mate, how can I say no to rights issues at substantial discounts? But that has nothing to do with real estate.




Brave man!!!

CBA may be the first to cut their divvies I think I read earlier today...

Share market / Property market, 2 different beasts that cannot be comparitively compared in my opinion... but, they are certainly both related in-so-far-as they are both investments vessels subject to prevailing market conditions and sentiment.

Just note though, if Gerry is predicting property to stay alive combined with this *"Mother of all BOOOMS"* he's predicting, expect at least 60% falls in property values based on his track record so far


----------



## 2BAD4U (12 February 2009)

singlefished said:


> ... but, they are certainly both related in-so-far-as they are both investments vessels...




Not so, shares are purely investment.  A houses primary use is for shelter not investment.  It is the emotion attached to owning home that a lot of people misunderestimate (to quote George W).  Shares fall in value and people will panic and sell, this doesn't happen with housing to the same level.  The situation has to be much more dire before someone hits the panic button on a house.

How many of you have sold shares because they were going down, but how many of you are still in your house?


----------



## Tysonboss1 (12 February 2009)

As most people who have read my posts here would know I own a decent amount of property, and believe property plays an important part in any long-term investment strategy.

I still believe property plays an important role when combined with stocks and business assets,.

However I have switched my strategy completely and am now leveraging 100% of my free cashflow into the stockmarket at 50% LVR. I am a longterm investor by nature and I think if you are looking for solid returns over the next 3 - 7 years then the share market is where it will be.

I am not selling any of my property because my portfolio is cash flow positive any way, but all fresh cash flow is heading straight into the market.

the only property investment I will consider in the next couple of years will be if I decide to buy my own home, or if I get the chance to buy my business premises, outside that I won't buy anything.

I don't think there will be a massive down turn, probably just stagnation and I think the share market will offer better yields and prospect for much better capital growth.

I have been wrong many times before though.


----------



## singlefished (12 February 2009)

2BAD4U said:


> Not so, shares are purely investment.  A houses primary use is for shelter not investment. It is the emotion attached to owning home that a lot of people misunderestimate (to quote George W).




Incorrect. Are you not aware that some people buy additional property other than their PPOR purely for investment purposes and have no intention of ever living in it? What about people who buy land with no intention of building and are hoping for long term capital appreciation....




> Shares fall in value and people will panic and sell, this doesn't happen with housing to the same level.  The situation has to be much more dire before someone hits the panic button on a house.
> 
> How many of you have sold shares because they were going down, but how many of you are still in your house?




Perhaps you misread my earlier posting. I noted that the two entities *cannot* be directly compared as you have so correctly pointed out.


----------



## 2BAD4U (12 February 2009)

singlefished said:


> Incorrect. Are you not aware that some people buy additional property other than their PPOR purely for investment purposes and have no intention of ever living in it? What about people who buy land with no intention of building and are hoping for long term capital appreciation....




I am one of those people, so obviously I don't disagree that property can be used for investment.

What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter.  This is what I believe to be the most significant difference between the two.  The emotion attached to each is very different which is why (as we agree  ) they can't be compared to each other.


----------



## So_Cynical (12 February 2009)

2BAD4U said:


> I am one of those people, so obviously I don't disagree that property can be used for investment.
> 
> What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter.




So if u own 2 houses the primary purpose of both is shelter. :bs:

Mate i used to own 2 houses and my primary reason for having 
those houses was money...making it and locking it up.


----------



## 2BAD4U (12 February 2009)

You miss the point.  Most people only own one property and the primary purpose is shelter not investment.


----------



## singlefished (12 February 2009)

2BAD4U said:


> I am one of those people, so obviously I don't disagree that property can be used for investment.
> 
> What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter.  This is what I believe to be the most significant difference between the two.  The emotion attached to each is very different which is why (as we agree  ) they can't be compared to each other.




I think the primary *USE* of a property is to provide shelter.... you don't have to own it for it to provide that shelter.

Is not the primary purpose of a share to demonstrate that you own "x" amount of a particular company/business?

And is the primary purpose of owning the deeds to a property not to demonstrate that you own "x" amount of that particular property?

In both asset classes the reason to purchase is to gain ownership (or part ownership) of that particular entity for whatever reasons, and whether living in your asset is an option or not that is neither here nor there. They are both investments at the end of the day with both requiring an outlay of $$$$ to facilitate the purchase.

My _unemotional_  anyway


----------



## lioness (12 February 2009)

Bill M said:


> At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.
> 
> Anyhow he challenges anyone to buy a house anywhere in *AUSTRALIA* and try and LOSE money in 10 years time, worth a look, here is the link and click on Gerry Harvey, it is 9.45 minutes into the interview where he makes that statement:
> 
> http://www.abc.net.au/4corners/special_eds/20090209/gfc/




How naive are you?? Gerry wants everyone to borrow to their eyeballs and put 24 months interest free furniture that he sells and home appliances he sells into their house to keep his business model going.

His company will falll off the cliff in the next 2 years when property collapses 50%.


----------



## Bill M (12 February 2009)

lioness said:


> How naive are you??
> 
> His company will falll off the cliff in the next 2 years when property collapses 50%.



He said it not me. I've heard these 50% property collapse doomsday comments for decades and it's never happened, keep on dreaming.


----------



## baroosh (12 February 2009)

the uk can send over 500 thousand poles 500 thousand albainians 100 thousand slovaks 100.00 thousand bulgarians plus 100.000 mixed ethnics that will give your ecomomy a boost plus it will drain of a few million bucks of tax payers money







moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...


----------



## Trevor_S (12 February 2009)

Bill M said:


> You are right mate, lots of property on the market there right now. Honestly I'm thinking about getting out of Sydney, getting older and just want piece and quiet at much lower prices.




LOL.. I have been looking to Tasmania for similar reasons.

I have been buying shares again, started again in Nov/Dec. 2008, before that I had stopped buying in mid 2007 some time.  I guess I believe my shares will be worth much more in 10 - 20 years time.  I am only really interested in growing strong dividends over the years, sensible capital appreciation comes from that in my experience.  Of course in these difficult times, who the hell knows, I could have got it completely wrong 

and I am a terrible landlord even though I have made decent money on property over the years and have one IP left.


----------



## Bill M (12 February 2009)

Hello Trevor_S, I noticed a post of yours back earlier about your ideas on the sharemarket and I am in exactly the same boat as you. At the moment I am gradually accumulating good stocks that are paying good dividends. I am also accumulating 2 ASX index funds to get better diversification.

Anyhow getting back to real estate, your signature shows you are in Townsville? That's a bit radical going from a hot tropical climate to Tassie isn't it? You like the cold that much do you? Good luck anyway, it's nice to cash in on an expensive property and buy a cheaper and better one, cheers.


----------



## Trevor_S (12 February 2009)

singlefished said:


> CBA may be the first to cut their divvies I think I read earlier today...




CBA poised to emerge market victor



> Deposits have been surging, mortgage broker fees cut, non-bank lenders are falling away, smaller banks have been acquired, and those left are finding it tougher to compete on pricing.
> 
> Commonwealth has been one of the biggest gainers of the so-called flight to quality, growing its loans book at more than twice the amount of the market. Deposit growth has been running 1.5 times greater.
> 
> Flagging a potential dividend cut, Commonwealth has warned the banking environment is likely to get tougher before things start to improve. Profits will remain under pressure as bad debts pile up, funding costs squeeze margins, and an economy teetering on recession will cut the pace of earnings.




If you buy the above story, with mid - long term profitability assured... short term divvy cuts are a near certainty...  but then fixed interest has PLUMENETED and rents appear t be coming down or are stable.  

and tucked away in the article and more relevant to the topic



> Signs of life remain in the mortgage market. Housing finance figures in December rose nearly 5 per cent, a material improvement on the average 25 per cent decline over the previous six months.




Me, I am a proponent of stagnating housing prices for 3 - 5 years, with small drops, maybe 10 - 15% in places and the odd standout that cycles up and down like a yo yo eg Gold Coast, and while anything can happen with housing, eg UK / USA etc I don't see it being repeated here... and I happen to think housing is still way overpiced.

Some people in hear seem to have forgotten what the Stock market is truly there for, to allow business to get capital to provide jobs for the majority.   If owners like me (and other here) aren't topping up companies when they need it like eg Wesfarmers, then Bunnings, Coles, Officeworks goes bankrupt and closes, then 1000's of jobs go and what impact does that have on housing in particular and the economy in general ?



Bill M said:


> that are paying good dividends. I am also accumulating 2 ASX index funds to get better diversification.




Similar here.  I would be interested in what you are buying... though that's probably best reserved for another thread.  I have been fairly staid, BHP, WOW, LEI, WBC.  I also top up on a LIC (ARGO) for the same reasons you use an index fund, extra diversification, just not a big fan of unlisted funds, they always seem to suffer liquidity issues when people want to sell.   We may be wrong, noting is for certain.



Bill M said:


> You like the cold that much do you?




or more so sick of the heat and humidity... as long as I don't have to work in the cold, being semi retired and should be retired in about 12 months (at 43) that won't be an issue. I love NZ and Tassie, I had given serious thought to moving to NZ as well, Rotorua in particular....  I love the outdoors; hiking, mountain bike riding, kayaking, camping etc



Bill M said:


> Good luck anyway, it's nice to cash in on an expensive property and buy a cheaper and better one, cheers.




I will keep up here and pay with cash down there for a PPOR, rent out up here... gives me an excuse to come back up annually, see friends and use the trip as a deduction.  I hope to fly down for a few weeks in May, start looking seriously.


----------



## gfresh (12 February 2009)

I think Westpac (now Australia's largest bank) will compete hard against CBA coming out of this, and it's going to be a good battle up the top for borrowers. Not many would be aware westpac is the 9th largest bank in the world now?  http://www.theaustralian.news.com.au/story/0,25197,24961870-643,00.html

I don't think that many believed CBA/other banks would keep paying 8-10% yields forever.. It just doesn't happen historically. A cut to 5-6% (or a "massive 37% fall in dividend!!" if you want the headline) still is returning many times more than they are in their deposit accounts. 

I'm starting to buy back into shares also ...And I'm actually becoming more encouraged with the "it's going to get worse", "it will take years for the market to recover", even the major media now saying "this is the worst since the great depression" blah, blah in the media every single day - I'm starting to think it must be reaching the bottom soon. 

Fear is playing nicely into your hands if you're looking to move out of the rental market also.. some thinking "what happens if it does get much worse", "what if I don't sell now, I'll never get a good price", "maybe, just maybe they are right, maybe property is overvalued", "maybe I should reduce my holdings somewhat and pay down debt". I'm seeing some nice houses listed at attractive prices that simply weren't listed there 12-24 months ago. That fear won't and can't last that much longer, people become blase' about it.


----------



## Lancelot (12 February 2009)

lioness said:


> How naive are you??




I could ask you the same question with your one eyed perma bear speculation



> His company will falll off the cliff in the next 2 years when property collapses 50%.


----------



## kincella (12 February 2009)

I was pretty sus about lionesse to begin with...came on here saying they would buy 5-6 houses, asking for our thoughts.....then next thing...selling the house..due to ..whatever...and now suddenly a bear...
or was he always a bear.....


----------



## robots (12 February 2009)

hello,

whats happened to the colonel from England, WayneL? havent heard from him for a while

hope all's well, 

suit pressed in a day and LOE in about 14-20 days, again!

thankyou
robots


----------



## numbercruncher (14 February 2009)

More breaking news on Australias booming RE market ....

Looks like the days of buying a house and a surfboard being the road to riches are over ?



> I have a friend who fixed 75% of his $500 000 mortage 1 year ago at 7.83%.He fixed it for 5 years with one of the big 4 banks. Now he is about to lose his job , *the investment property he bought recently has lost over 25% of his value *and the bank is asking him 34k to get out of the fixed part of his loan.
> Is there something he could do to get out of this bad situation ?
> 
> Cheers




https://www.aussiestockforums.com/forums/showthread.php?t=14384

nirvana ?


----------



## joeyr46 (14 February 2009)

Bill M said:


> He said it not me. I've heard these 50% property collapse doomsday comments for decades and it's never happened, keep on dreaming.




Bank assets are really someone else's debt property has gone up in price (not necessarily value) because of credit inflation (not the same as inflation) and some inflation over the years. Credit contraction is currently underway here as well as overseas so this time prices could fall substantially (not value) the house will still be there. If you doubt credit contraction underway already look at interest rates if there is demand for money the price (interest rates) goes up when the price goes down the demand isn't there. Also ask wholesalers how there getting paid at the moment and most will tell you slower than last year .Another sign of impending deflation the slowing down of volatility of money.Another thing to think about we got into this mess by using too much credit so how is giving more credit out as in stmulus package going to help. Long term this wil end and then will be a brilliant opportunity but at much lower prices 50% may be too much or it could even be too little but certainly much lower than were we are right now


----------



## joeyr46 (14 February 2009)

Bill M I am not a permabear have been buying and selling houses up till last year but they are too illiquid now although I believe that we are going to have one last rally in the next 8 to 12 months, but that is not backed up by evidence as per my previous post only personal believe


----------



## Bill M (14 February 2009)

joeyr46, I tend to deal with facts in my area and the way things are here. I have no interest of over supplied American or UK property. You talk about too many things like, "too much credit", "too illiquid", "deflation", wholesalers and so on but none of this has any effect of property being sold right now and in my area. 

The buyers are still about and credit is flowing to all those who are worthy of getting it. I have no debt what soever and we could get 300K credit easy if we wanted it. Lets face it, these days an average working couple can earn a 100K combined income quite easily and they can get credit easily as long as the deposit is there.

You talk about liquidity, that's just not right. Properties that are priced correctly still sell within 2 and 4 weeks time. However I might add that there are some silly owners out there. I went and saw a nice 2 br unit 4 weeks ago, it was on the market at 449K. Now the sold sticker is on the sign and another sign is up along side it for another unit. The new one is on the market for 550K, guess what? no takers and it is still available. Why would I pay 550K when the neighbour just sold for 449K? Needless to say this property probably won't sell. Other than gross mispricing pretty much everything under 500K is still being sold.


----------



## robots (15 February 2009)

hello,

more great news out there fellow brothers:

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

what a day, 70% clearance rate this is great stuff Kincella

most likely people sitting on a little bit of money leftover from failed sharemarket/cfd/option bets realising where its at

Lioness may have second thoughts, but oh well, still down with the crew

thankyou
robots


----------



## lioness (15 February 2009)

robots said:


> hello,
> 
> more great news out there fellow brothers:
> 
> ...




Robots, I am here and watching

No, I am out of here, take my profits and lock in the cash. Thankfull my property is smack bang in the first home buyers market up to $550K. They can have it and load themselves up to their eyeballs in debt. I will wish them luck paying it off for the next 15 years!!!!!! HAHA

I will reenter but not before 2-3 years have expired for maximum pain to be inflicted. Watch deflation kill everything including property in the next 2 years.

Unemployment will reach 30% in the USA and 10% plus here in the next 2 years. Then I will rock up with my wads of cash and offer 30% off the asking price and wait and wait until the vendors beg and scream to take their rental properties off their hands for such a discount.

Patience is a virtue here.


----------



## wayneL (15 February 2009)

robots said:


> hello,
> 
> whats happened to the colonel from England, WayneL? havent heard from him for a while
> 
> ...




All's well. Just moving house and a couple of other things taking up my time. 

Thanks


----------



## kincella (15 February 2009)

89% clearance rates for sydney for 600,000 and below... as per my post on the falling houses thread....
whoo hoo

its a window of opportunity....low interest rates 4-5% and cooling of house prices....its a bit hard to resist....

http://www.smh.com.au/national/slow-then-steady-on-housing-20090213-8769.html


----------



## gav (15 February 2009)

Seaford units up *15.3%* in the Dec 08 quarter, and up *24%* since the Jun 08 quarter.

http://realestateview.com.au/portal/...ford&state=vic


----------



## robots (15 February 2009)

gav said:


> Seaford units up *15.3%* in the Dec 08 quarter, and up *24%* since the Jun 08 quarter.
> 
> http://realestateview.com.au/portal/...ford&state=vic




hello,

fantastic result Gav, 15.3% in the Dec 08 quarter amazing

great suburb right on the water there with a very nice beach behind the tea-tree, nice bakery on the highway

probably similar right through bonbeach, chelsea, edithvale and aspendale

45-50 min train ride to the city

nirvana everywhere

thankyou
robots


----------



## UBIQUITOUS (15 February 2009)

gav said:


> Seaford units up *15.3%* in the Dec 08 quarter, and up *24%* since the Jun 08 quarter.
> 
> http://realestateview.com.au/portal/...ford&state=vic





Arff..Arff..!!! Looks like it was removed. I wonder why:




> *Code 404 - Page Not Found*
> 
> The page you are looking for might have been removed, had its name changed, or is temporarily unavailable.
> If you typed the page address in the address bar make sure that it is spelled correctly.
> ...


----------



## robots (15 February 2009)

hello,

thats okay man, have some of Bonbeach:

http://www.realestateview.com.au/po...tydata&search=1&suburbname=bonbeach&state=vic

similar result for the Dec08 Quarter, paradise Numbercruncher

and probably some great rent increases for the year as well

the title is rolling on man

thankyou
robots


----------



## robots (15 February 2009)

hello,

gee look at that the page is fixed:

http://www.realestateview.com.au/po...rtydata&search=1&suburbname=seaford&state=vic

utopia

thankyou
robots


----------



## explod (15 February 2009)

robots said:


> hello,
> 
> thats okay man, have some of Bonbeach:
> 
> ...




Anyway Sept quarter is past and no longer relevant if you want to stay ahead of the pack.   Anecdotal from agents here on the Mornington Peninsula is falling prices all round (including Seaford).   A bit of support round the 300 to 400k due to FHBG but otherwise very risky business till a bit more plays out in the financials.   With money supply those going in now could get swept aside when interest rates have to go in the other direction and governments can say what they like, it is free capitalism that controls banks and interest rates.  Remember the banana republic, 18% rates and it will happen again.


Not saying get out, just saying it is a time to stand and watch what happens.


----------



## explod (15 February 2009)

December quarter, slip of the month, working on scabble with the missus.  Out of investment property at the moment so relaxing time in any case.

Have another beer Robots

thank you

Explod


----------



## So_Cynical (15 February 2009)

robots said:


> hello,
> 
> thats okay man, have some of Bonbeach:
> 
> ...




Yep all's well in Bonbeach with prices like this. 

PS Station St BV 5rm $180,000


----------



## robots (15 February 2009)

explod said:


> December quarter, slip of the month, working on scabble with the missus.  Out of investment property at the moment so relaxing time in any case.
> 
> Have another beer Robots
> 
> ...




hello,

on the red cordial at the moment, better than the v's too

i am just plodding along as well Explod, fantastic

thankyou
robots


----------



## robots (15 February 2009)

So_Cynical said:


> Yep all's well in Bonbeach with prices like this.
> 
> PS Station St BV 5rm $180,000




hello,

so much for affordability issue's so_cynical, propaganda from the socialist crew who want everything for free

yeah just hand everything over to the bludgers in society, 

thankyou
robots


----------



## robots (15 February 2009)

hello,

so just to expand on so_cynical's info:

180k, 5rm Brick Veneer, station st Bonbeach

couple on average income, so 100k combined, less deposit say 20k, WOW thats 1.6x income, yes thats right

i know i know i know, no one has a job everyone is going to be unemployed by 2010

thankyou
robots


----------



## shaunQ (15 February 2009)

Absolutely. This ones only $97,000 - Can picture my 4 kids living by the beach in this sea side mansion... ?

http://www.realestate.com.au/cgi-bi...r=&cc=&c=27886723&s=vic&snf=rbs&tm=1234695708

But it _is_ Victoria, so beaches aren't that popular are they?


----------



## gav (16 February 2009)

robots said:


> hello,
> 
> fantastic result Gav, 15.3% in the Dec 08 quarter amazing
> 
> ...




Thank-you Robots 

Since the page has been updated, the annual change is 15.3%, with the Dec 08 quarter up *17.6%*

There are bargains out there for those who seek...


----------



## So_Cynical (16 February 2009)

shaunQ said:


> Absolutely. This ones only $97,000 - Can picture my 4 kids living by the beach in this sea side mansion... ?
> 
> http://www.realestate.com.au/cgi-bi...r=&cc=&c=27886723&s=vic&snf=rbs&tm=1234695708
> 
> But it _is_ Victoria, so beaches aren't that popular are they?




Nothing wrong with the beaches in that area, Seaford - Carrum - Chelsea etc, i grew 
up there and have many fond memory's of summer on the beach....lived right across 
the Hwy, 3 minute walk to the water....esky in hand  It gets hot in Melb for at least 
7 or 8 weeks in Summer.


----------



## Bill M (16 February 2009)

So_Cynical said:


> Yep all's well in Bonbeach with prices like this.
> 
> PS Station St BV 5rm $180,000




Gee you guys are lucky there in Melbourne. We would be lucky to buy a 1br unit in a dodgy suburb over here for that. Those prices in seaside suburbs won't last forever.


----------



## theasxgorilla (16 February 2009)

Bill M said:


> You talk about liquidity, that's just not right. Properties that are priced correctly still sell within 2 and 4 weeks time.




What you describe, without saying it, is that you can always create a market for your property by dropping the price.  A property can be correctly priced and yet no market exists for that property.  Then it becomes a matter of time to find the right buyer.  Its not at all like trading shares.  Property is  not liquid and therein lies opportunity.


----------



## kincella (16 February 2009)

I did a quick search on the realestate site for bonbeach....most were way over the 550k price...and the 97.000 was a beach box....so 180k is not an average price
 the fhb  range has been turning over in a week....and there is an average of 4 weeks at least in some suburbs....bit different to shares...probably due to the hundreds of thousands of dollars involved, compared to the average punter with only a few thousand to play with shares.....
the bigger investment should take a bit more thinking time....hence the delay in turning over....
and settlement is usually at least 30 days....so do the agents report the date of the contract or settlement date..as the date sold ???
cheers


----------



## Bill M (16 February 2009)

theasxgorilla said:


> What you describe, without saying it, is that you can always create a market for your property by dropping the price.  A property can be correctly priced and yet no market exists for that property.  Then it becomes a matter of time to find the right buyer.  Its not at all like trading shares.  Property is  not liquid and therein lies opportunity.




What I was saying for example is that I know for a fact that nearly all 2 br units in my area sell for between 350K and 450K. The shabby tiny ones sell for 350K and nice, bigger, newer ones sell for 450K and therefore those units are priced correctly and will sell within 2 to 4 weeks. Then along comes Mr hopeful and he wants 550K for his unit and nobody buys it because he has incorrectly priced his unit. If the property is priced correctly then there is a very strong market in my suburb. 

The liquidity aspect is as kincella suggests. A property can be sold in a week but there is a 2 Month contract to sit out before you get your money. It isn't as liquid as shares but it is still liquid.


----------



## Beej (16 February 2009)

kincella said:


> o do the agents report the date of the contract or settlement date..as the date sold ???
> cheers




They report the sale at contract exchange, not settlement (which as you state can be a fair time after exchange - usually 6 weeks in NSW).

PS: Re all the activity in lower FHB type price ranges, what many people aren't thinking about is what happens to the money from those sales in the following couple of quarters. Watch the numbers, both price growth and volume. Activity in the next couple of tiers will pick up on the next 2 quarters - especially in Sydney.

Cheers,

Beej


----------



## Beej (16 February 2009)

FYI - Sydney Auction clearance rate a healthy 73% last weekend - see http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf.

Also, ABS lending finance stats for Dec 08 out: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument



> HOUSING FINANCE FOR OWNER OCCUPATION
> 
> * The total value of owner occupied housing commitments excluding alterations and additions increased in trend terms (up 1.7%) and the seasonally adjusted series rose 7.1%.




Also another interesting article: http://www.news.com.au/business/money/story/0,28323,25060007-5013951,00.html - "Investment properties making a comeback" - talks about neutral/positively geared rental property becoming available in Sydney and Melbourne, plus the increase in buyer activity so far this year.

Cheers,

Beej


----------



## robots (16 February 2009)

hello hello,

mr louis must be feeling a bit crook to pen this:

http://www.theaustralian.news.com.au/business/story/0,28124,25059396-25658,00.html

oh well, things are always changing,

another great day on the planet

thankyou
robots


----------



## Bill M (16 February 2009)

Yes Robots you are right. Here is some more evidence of a booming market here on the Northern Beaches in Sydney which is what I've been trying to tell the doomsdayers. Little supply and hundreds of buyers, 80 people through one unit in a day! Why would anyone rent when you can buy for less or the same money?

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

FIRST-HOME buyers are out in force on the peninsula with anything under $500,000 being snapped up. 

*according to Wilma Goudappel of L.J. Hooker Freshwater who had 80 groups inspect a unit in Foam St, Freshwater. *

“I was showing an unrenovated unit in Manly to people renting in the block and it turned out their repayments would be the same as the rent they were paying,” she said. 

Full article here, click here.


----------



## MrBurns (16 February 2009)

Spoke to an agent today, prices in Kew Vic down at least 25%


----------



## numbercruncher (16 February 2009)

> according to Wilma Goudappel of L.J. Hooker


----------



## Bill M (16 February 2009)

numbercruncher said:


>




I know this area like the back of my hand, that report it is 100% correct. I'm there weekend after weekend watching what's going on. It is when people start talking about 50% crashes then they are just kidding themselves. Now is probably the best time ever to get set with real estate, lowest interest rates in 45 years and rents are higher than mortgage repayments for the same property. Good luck renting


----------



## shaunQ (16 February 2009)

Bill M said:


> Now is probably the best time ever to get set with real estate, lowest interest rates in 45 years and rents are higher than mortgage repayments for the same property. Good luck renting




Actually the thought just occurred to me - that your saying _now _is the time to buy - and the bulls keep talking about how we've bottomed - but hang on - what was meant to have caused this property stress? The interest rates moving up to 8%? So we have 6 months of 8% interest rates and the _whole _market collapsed? I mean, nothing has really happened in Australia to property  (yet) so why have we had any impact if everything is so dandy?


----------



## Bill M (16 February 2009)

shaunQ said:


> Actually the thought just occurred to me - that your saying _now _is the time to buy - and the bulls keep talking about how we've bottomed - but hang on - what was meant to have caused this property stress? The interest rates moving up to 8%? So we have 6 months of 8% interest rates and the _whole _market collapsed? I mean, nothing has really happened in Australia to property  (yet) so why have we had any impact if everything is so dandy?




I don't know what bulls you are talking about. Nothing has changed in my area, the demand for property was there 30 years ago, 2 years ago, last year and now. The reason I say now is the best time is because interest rates are at 45 year lows, never seen before in my life time. Locking in a home loan at 6% is as good as I have ever seen. The market in my area has always been buoyant and has never collapsed so I don't know what you are talking about there. I will stress again I am talking about my area, Sydney beach side suburbs and I don't know anything about other towns/suburbs around the country.


----------



## sinner (16 February 2009)

Bill M said:


> The market in my area has always been buoyant and has never collapsed




Great quote considering your signature.


----------



## So_Cynical (16 February 2009)

Bill M said:


> I don't know what bulls you are talking about. Nothing has changed in my area, the demand for property was there 30 years ago, 2 years ago, last year and now. The reason I say now is the best time is because interest rates are at 45 year lows, never seen before in my life time. Locking in a home loan at 6% is as good as I have ever seen. The market in my area has always been buoyant and has never collapsed so I don't know what you are talking about there. *I will stress again I am talking about my area, Sydney beach side suburbs* and I don't know anything about other towns/suburbs around the country.




Sydney beaches immune to price falls...i think not Bill, assuming u would call that area 
the top 10% of the market...I know i do.

http://www.news.com.au/business/money/story/0,28323,25060007-5013951,00.html

_QUOTE_
According to property research group RP Data, the median price of the the *top 10 per 
cent of properties, based on price, slumped in Sydney*, Melbourne and Brisbane last 
year as financial markets worsened.

*Sydney was hardest hit, with the top 10 per cent of properties slumping in value by 
19.5 per cent*, from an average $1.6 million to $1.29million.


----------



## theasxgorilla (17 February 2009)

Bill M said:


> The liquidity aspect is as kincella suggests. A property can be sold in a week but there is a 2 Month contract to sit out before you get your money. It isn't as liquid as shares but it is still liquid.




I don't agree, but I'm only pointing it out for the sake of discussion, not to be a prat.

Not only is it not liquid, but the transaction costs mean that immediately, straight off the bat you have a gapping deficit to claw back if you plan on flipping before that inevitable "keep rising for years thing" kicks in and makes your dreams come true.


----------



## numbercruncher (17 February 2009)

theasxgorilla said:


> I don't agree, but I'm only pointing it out for the sake of discussion, not to be a prat.
> 
> Not only is it not liquid, but the transaction costs mean that immediately, straight off the bat you have a gapping deficit to claw back if you plan on flipping before that inevitable "keep rising for years thing" kicks in and makes your dreams come true.





Precisely ......

Your average NSW 500k IP needs circa 10pc growth just to break even .... big ask .... and after a few years of 3 to 4pc yield and 6pc + interest rates even ghastlier .....


----------



## Bill M (17 February 2009)

So_Cynical said:


> Sydney beaches immune to price falls...i think not Bill, assuming u would call that area
> the top 10% of the market...I know i do.
> 
> http://www.news.com.au/business/money/story/0,28323,25060007-5013951,00.html
> ...




Out of my league SC, I'm only talking about the units priced in the 300K to 500K bracket, nothing has changed there. Properties in the Millions of $$ are of no interest to me, I just don't follow that market.


----------



## Bill M (17 February 2009)

numbercruncher said:


> Precisely ......
> 
> Your average NSW 500k IP needs circa 10pc growth just to break even .... big ask .... and after a few years of 3 to 4pc yield and 6pc + interest rates even ghastlier .....




Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.


----------



## kincella (17 February 2009)

Bill, I agree with you....and would think most in this forum would be in a similar range.....
most of my IP's are in the regional areas, so the bracket drops down further...300 - 400 range
I have friends who may have paid less than 200k for the toorak props back in the 90's, and those props were selling for 800k in 2007
I did see some bargains here selling for 400 which a year earlier were min 500 for a 2bdr...actually they were listed in that range and sold very quickly...then with the dec rate predicated to drop again..another prop was advertised at 450, but sold at auction for 600k....it was very nice, much nicer than the 500k prices of a year earlier
Toorak has its share of high flyers, so I expected some drops with forced selling due to margin calls and the financial crisis....nothing here seems to stay for sale for very long at all...its snapped up very quickly.....
like you I am not interested in the million dollar props....although I did notice Eddy Mcguire paid 11 million for a Toorak prop in Nov....


----------



## Beej (17 February 2009)

Bill M said:


> Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.




What's more is that $124800 saved is money you would have otherwise had to earn AFTER TAX - which means if you are in the 40% (+1.5% medicare) marginal tax bracket, that you saved $213k BEFORE TAX that otherwise would have been blown in rent.

Cheers,

Beej


----------



## theasxgorilla (17 February 2009)

Bill M said:


> Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.




Then of course you need to evaluate your investment as a ROI, preferably annualised.  I'd be willing to bet you've done extremely well without even seeing those figures.  Property has done extremely well during the past 6 years.  I don't even know where your unit is...I could throw a dart at the continent and hit a spot where that is likely to hold true.


----------



## Robert25 (18 February 2009)

This is an example of some of the manipulation that has gone on in the media:

The Australian ran a story last week about "Mum ready to go shopping for second home", with all the usual pro-property ranting. Anyway it turns out that this "mum" was Kirsten Friedli, who works in marketing for the local real estate agent and was clearly being dishonest and deceptive. 

Is there any way that The Australian could not have known that they were dealing with a real estate agent?

Original story: http://www.theaustralian.news.com.au/story/0,25197,25005486-25658,00.html 
A Blog post about it: http://www.whocrashedtheeconomy.com/?p=350


----------



## nomore4s (18 February 2009)

Robert25 said:


> This is an example of some of the manipulation that has gone on in the media:
> 
> The Australian ran a story last week about "Mum ready to go shopping for second home", with all the usual pro-property ranting. Anyway it turns out that this "mum" was Kirsten Friedli, who works in marketing for the local real estate agent and was clearly being dishonest and deceptive.




rotflmao, at least she was doing her job as marketing manager.



> What is just as worrying as the misleading articles, is what will happen when Real Estate agents stop buying houses? It appears they are the only ones keeping the market afloat.



I love this quote from the blog - gold


----------



## robots (18 February 2009)

hello,

another great day on the cards, anyone know how the DOW went last session?

just more real estate bashing by those from the poverty pack, the poor vs the rich, the great divide, those who do the hard yards vs those with the handout from the socialist crew

isnt renting the way to go, such enormous interest in other people's lives

fabulous, 

thankyou
robots


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## kincella (18 February 2009)

robots....you are sharp this morning....

the dow finished down about 3%...it was down 4% at one stage.....but recovered !

oh and the RBA report out yesterday showed housing Australia wide lost 3% last year.....we know how that works, the good houses were up, and the rubbish was down....but overall not a bad result for the worst year ever.

Lets not discuss the stock market...some stocks down 99% and the overall market down 50% ?? or some awful figure.

Safe haven required....cannot see much improvement in the stock market this year...what with all the newbies in government....and learning as they go.


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## gfresh (18 February 2009)

sigh.. the stock market is *the* leading indicator for the economy.. and all the market is telling us is that the economy globally is still going to continue getting worse, and that INCLUDES factors that influence housing!! The two are not separated 

Expectations of economic "recovery" for late 09 will be pushed back to early 2010, and then late 2010 at this rate.. that's a long time for little to no growth in house prices for those that care about these things. For investors, their money would be just as well off in the bank earning close to 0% interest compared to property that is not going up anytime fast.

When you see the stock market recover then you can relax in the knowledge that property may also start making capital gains once again. Until then... keep waiting.


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## kincella (18 February 2009)

gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
some of us investors will never go back into the stock market....ever again...

I posted this on another site today..........................

anyone checked out the stockmarket lately ???? down another 76 points today....finish another !% in the red
ppt gone from 60 to 25 in a year a loss of about 60%
...profits down 84% and they were some of the gurus of that market.....
hohohoho
and the prop market lost 3% of an average 450k property in the same period.....

lose 60% of your investment in a year on one of the best performing stocks...
or lose 3% on a solid bricks and mortar asset....
can anyone see why we like the props over all other investments ?? 

--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ? 

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell


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## nomore4s (18 February 2009)

kincella said:


> gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
> some of us investors will never go back into the stock market....ever again...
> 
> I posted this on another site today..........................
> ...




So let me get this straight - you will never invest in the stock market again? The market has gone down 60% but you aren't seeing that as an eventual buying opp? IMO this crash will eventually provide a amazing investment opportunity to set up a long term portfolio that will provide an income stream for years to come.
I'm not sure how you can compare property vs shares in such a basic way - they both have pros and cons and if managed in the right way and with correct risk management procedures can be very profitable.

This post to me highlights why you like property over all other investments - because property has boomed in recent times and you've made easy money by virtually sitting back and doing nothing but other investments that actually require good risk and money management are all too hard, lol what a joke.
Well I hope for your sake you are correct and property doesn't tank so you can continue to sit back and tell everyone how good you are and how stupid everyone else is for investing in the stockmarket. If property does tank don't cry when the bears start rubbing your face in it because you don't seem to mind rubbing other peoples faces in the stockmarket crash.

There is money to be made in both the stockmarket and property markets imo, and at the moment in my view the stockmarket is approaching value but the property market is still overvalued. This doesn't mean it will crash it just means the risks are higher than normal for property. 



> lose 60% of your investment in a year on one of the best performing stocks...



Only if you were stupid enough to hold all the way down. People with good risk & money management have lost nowhere near that in fact some of them have actually made money


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## Junior (18 February 2009)

kincella said:


> gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
> some of us investors will never go back into the stock market....ever again...
> 
> I posted this on another site today..........................
> ...




If you suddenly needed some cash and went to sell your property:

a)  Would it sell for 3% less than it would have 12 months ago?
b)  How long would it take to find a buyer who is willing to pay what you are aiming to sell it for?
c)  How much would it cost you to sell?

It's not as simple as saying 'the property market only dropped 3% last year'.  Most of the drop was at the end of the year, there is bugger-all liquidity in the market and in all likelihood the market will continue to fall for at least 12-18 months.  Obviously the sharemarket has experienced a far more devastating fall, but at least there's high liquidity, low brokerage and you know the exact value of your shareholdings at any given point in time.


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## UBIQUITOUS (18 February 2009)

kincella said:


> gfresh....its not as simple as that...IMO.....*stock market is just another form of gambling*





You cannot be an expert on the merits of investing in one asset class if you do not have the slightest idea about the merits of investing in other asset classes.

You're about to learn a VERY expensive lesson.


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## kincella (18 February 2009)

been in the property market for over 20 years....and the stock market for 10 years....have enough cash  to cover me for about 4 years.....
never lost on property...but lost on the stocks....
go back into stocks.??? why ...I dont trust anyone to manage anything on my behalf...
let alone my money
oh and as for the properties....it can be a lot of hard work to get them to where they are now.....its not a buy and sit back forever ...
in fact the income and hard work from property is like having a second job....
now they are set up....its provided some early retirement funding

and the interest rate cuts have taken about 18,000 off the running costs...thats like having another income...but am expecting to get cuts up to 30,000 pa by the time its done.....thats like half a small wage in itself
cheers


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## UBIQUITOUS (18 February 2009)

kincella said:


> been in the property market for over 20 years....and the stock market for 10 years....have enough cash to cover me for about 4 years.....
> never lost on property...but lost on the stocks....
> go back into stocks.??? *why ...I dont trust anyone to manage anything on my behalf...*
> let alone my money




..and nor should you!! It would be the same as allowing someone to make the decision to buy and sell properties on your behalf, because 'house prices always go up'. Its ludicrous isn't it?

However, if you had the same skills in choosing stocks as you do with property, then you would find that your stocks portfolio would outperform your property portfolio.


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## kincella (18 February 2009)

oh dear...heading into a recession...and this group picked the last 3 since the 70's.....that may give some a clue as to where stocks will head for the next few years....
and sitting on property is getting a whole lot cheaper....with interest rates heading down to 3% or less
...............................................................................................
westpac melbourne institute,,,predicting a recession 
and rate cut down to 2%....
supposedly this index has predicted the past 3 down turns since 1970
extract again from westpac......

"We expect it to further reduce rates with the overnight cash rate eventually moving to 2 per cent by mid-2009.''


http://www.news.com.au/business/story/0,27753,25072365-462,00.html


--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ? 

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell to the inexperienced.


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## Taltan (18 February 2009)

Kincella I think you need to be less arrogant towards those that have lost on the stock market and remember the following:-
- I doubt property has only fallen 3% as volumes have decreased and I imagine if you tried to sell your property you would find yourslef down a lot more than 3% after transaction costs. Remember property is highly illiquid which puts a stop on rapid falls (and rises)
- Buying shares in Westfield or Mirvac is an investment in property. Whilst you lose control its fair to say Mr Lowy has a better understanding and access to economies of scale than most of us
- Comparing the average price of shares with average house prices is not a fair comparision. The figures for house prices are distorted because when people renovate their house they spend time and money improving their asset. The 3% drop is probably a 10% rise in renovated properties and a 5% loss in standing properties.
- The stellar performance f property over the last 10 years is largely due to a mix of govt subsidies and ineptitude. In 1999 the govt halved CGT, in 2000 it introduced the FHOG and in 2008 it increased it. All this whilst state govts put red tape all over land releases and stopped spending on infrastructure thus limiting most of us to live around 5 main CBD's. As the budget goes into the red its hard to see why these subsidies would be increased.
- The stock market is the best forecaster of the future state of the economy so I am confident in saying that as unemployment rises property will fall a lot further.


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## kincella (18 February 2009)

Taltan....but I am on a property thread/forum...not a stock thread....so thats why we talk about houses......I have lost a lot of money on the stockmarket....like most people.....so comparing a prop investment with the likes of a top 50 company like PPT....is fair in my opinion...
the house price charts have risen from about $12,000 in 1970 to over $300,000 today...thats 40 years....house prices did not suddenly go up.....its been a steady rise over that period....
as for arrogance....have a look at the replies to my post....


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## Trevor_S (18 February 2009)

kincella said:


> oh dear...heading into a recession...and this group picked the last 3 since the 70's.....that may give some a clue as to where stocks will head for the next few years....
> and sitting on property is getting a whole lot cheaper....with interest rates heading down to 3% or less




Correct me if I am wrong, you seem to be inferring that the stockmarket will be down for years, interest rates are are low and will go lower, you expect any lowering to be passed onto you thus resulting in "more savings" for you, as an in-debt "property investor", that recession and the rest of the economy is in the toilet and is a done deal but property is good to go ?  

Is the above synopsis how you are looking at things ? 

If so, in affect you are saying for your property outlook to be correct, property prices and rental returns will decouple from the rest of the economy and still produce excellent rents and CG regardless of what the rest of the economy is doing ?


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## kincella (18 February 2009)

as an example...the tech wreck crash of early 2000, so I took what I had left in the market and looked for something safer.....I found some very cheap properties...started buying Jun 2000...finished with the last big one..a commercial prop in jun 2002....no one else was interested...

they had taken money from property and put it into the market and the tech wreck...

it was not until about 03/04 when everyone else started getting into property, that I sold a couple of mine....I had intended holding for 10 years but when the prices  tripled it was too much of a temptation.....still holding some of them...but I bought when prices were low, no one was interested...got all the flack at the time........similar debates to now!

in a nutshell.... a lot of people manage their own affairs...so at the time property was not hot...and neither were stocks...so they go looking for something safer.....property looked cheap, and safer than stocks

I am seeing the same thing today....they need to park their money somewhere..and the property market has come down from the highs of 2004..
term deposit rates are not looking good either.....which leaves property...
I dont mind debating the question....I could just go about it all quietly like I did in 2000....picking up some bargains....waiting for the rest to follow a couple of years later....

after living through the turmoils since the 1970's...there will be a recovery at some stage in the future....and I will be ready for it again...
here are the house price graphs....notice the peak on the left graph in 2004...then flat again for 2 years...another peak in 07 but not as high as 04
and I bought in 2000
http://www.globalpropertyguide.com/real-estate-house-prices/A


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## Trevor_S (18 February 2009)

kincella said:


> as an example...the tech wreck crash of early 2000, so I took what I had left in the market and looked for something safer.....




Seems to me with that story shows your not particularly good at picking shares to invest in, perhaps in retrospect an index fund or LIC might have been best for you?


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## kincella (18 February 2009)

actually I have done quite well with shares over the years....and did take about a third off the table in Dec 07...and the rest by mid 08...and watched them fall further since then....

I have not calculated the gains made over the year...but just looked at the selling price when I dumped the rest of them....so losses will not be as high..for tax purposes....I just dont like losing any money, no matter how small

I do not like LIC or any of the investment trusts... I prefer to manage as much as I can myself...hence the property portfolio....I have complete control over it...
I can buy the best shares and they still dive....
I dont need a lesson in investing...but thanks anyway


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## Beej (18 February 2009)

Trevor_S said:


> Seems to me with that story shows your not particularly good at picking shares to invest in, perhaps in retrospect an index fund or LIC might have been best for you?




I am mostly staying out of this aspect of the debate (IMO shares play an equally important role in any comprehensive investment strategy as any other asset class, despite the potential volatility).

However, the above statement is a little condescending don't you think? The current market burned many experienced players - the ferocity and depth of the sell off of what were previously considered solid blue chip shares of well managed, well positioned companies caught all but the most active and disciplined traders out - and just about all long term buy and hold investors. This did not necessarily reflect directly on their stock picking abilities!

I have been burned by this stock market simply by being in a very diversified SMA type set-up  But what can you do? Made me wish I was still day trading through the whole thing to be honest, as I would have been able to cut my losses much sooner at the very minimum, but, c'est las vie!

Cheers,

Beej


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## UBIQUITOUS (18 February 2009)

Beej said:


> I have been burned by this stock market simply by being in a very diversified SMA type set-up
> Beej




So let me get this right:

If you guys buy hold a property, you're prepared to hold it through troughs, as the trend is up et etc

However, if its shares which you have bought, you are not prepared to hold through any troughs, and would rather crytalize a loss, and whinge about how you got burned by the stockmarket.

At best its double standards. At worst it just a plain inability to understand & apply your successes from the property market, into the stock market.

I really do suggest you read some books on value investing.


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## Beej (18 February 2009)

UBIQUITOUS said:


> So let me get this right:
> 
> If you guys buy hold a property, you're prepared to hold it through troughs, as the trend is up et etc
> 
> However, if its shares which you have bought, you are not prepared to hold through any troughs, and would rather crytalize a loss, and whinge about how you got burned by the stockmarket.




No - property markets and stock markets are VERY different (as I am sure you know). The volatility of the stock market is far greater, the costs of buying and selling are far lower. What's more an individual stock you hold can easily become absolutely worthless (ABC, B&B etc) - to manage this risk you have to either be more active with controlling potential losses and/or have greater diversification than with property. An individual property cannot really become worthless (assuming you are insured and there are no nuclear wars etc). Also one property I would always hold is my PPOR (you can't buy your PPOR on the stock market and live in it), so there are lifestyle/practical factors there as well.

I've certainly taken profits from both stock and property investments in the past - that's how I paid for my current PPOR and my car for example (I won't tell you guys what I drive - you'll be jealous! ). I've also crystalised losses on the stock market when need be, but have not as yet had to crystalise any loss from a property investment, as the market hasn't really provided a situation where that was ever close to occurring.

Nowadays, (if not actively trading - which I did for a year a few years ago), I do run pretty much a buy and hold strategy with the stock market, through a managed portfolio basis - there are personal reasons I have to do this. In this market, given how things have turned out, I think in hindsight it would have been better to have gotten out last year sometime and be on the sidelines at the moment - but as I did not do that, I still hold reasonably significant equity positions. Fortunately those are very diversified and the dividends have been continuing to flow quite strongly, so at this point I'm just going to let those investments ride out with a long term view on them, and still expect them to provide decent returns at some point in the (possibly distant!) future. But I am glad I do not/did not have all my eggs in that particular basket 

Cheers,

Beej


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## robots (18 February 2009)

hello,

great day, nice 25 degrees in melbourne city

yeap, plenty of us have no idea ubiquitous but in for the long haul for our own circumstances AND providing a roof over the head for others in the community

being part of the community and helping out and if some gains come along then off we go, fantastic

well done to those doing this in society,

thankyou
robots


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## robots (18 February 2009)

hello,

actually, P investors are very similar to Bill Gates and Buffet, Philanthropist's:

http://en.wikipedia.org/wiki/Philanthropy

gee amazing

thankyou
robots


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## kincella (18 February 2009)

Nice day to you to Robots....its getting a bit warmer here in Toorak...might have to turn the air on......

One needs a bit of stamina in the current climate....but getting  tired of the arguing that goes on....but thats par for the course....had similar arguments back in 2000....and look what my props have done since then....whooshka

One thing that sticks in my mind...is the percentage of wealthy people compared to the masses.....its miniscule...between 5-10%  are wealthy and they own 90%of the worlds wealth..... meaning the other 90% of the popuation only holds 10% of the wealth.....you can understand why....

Might have to get out of the office and smell the roses....the roses around my prop that is....or one of my other props.....most have a couple of beds of roses....


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## robots (18 February 2009)

hello,

well done Kincella, often spend all day cycling around your neighbourhood admiring the architecture and construction that happens, awesome

still a lot of "master craftsman" working on sites in Toorak, Malvern, Sth Yarra etc and to watch them at it is just beautiful

thankyou
robots


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## Glen48 (18 February 2009)

House prices to keep rising for years.......until 2009!!!!


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## singlefished (18 February 2009)

robots said:


> hello,
> 
> actually, P investors are very similar to Bill Gates and Buffet, Philanthropist's:
> 
> ...




To be a philanthropist you'd be letting your tenants reside in your IP for free... or more likely just be giving the property away to somebody who needs it.

I do realize that prices are coming down though so you'll probably feel like _you're giving it away_ when the time comes to sell up and crystalize your losses.

Did you actually read the article you posted??? First sentence quoted below:



> Philanthropy is the act of donating money, goods, services, time and/or effort to support a socially beneficial cause, with a defined objective and *with no financial or material reward to the donor*.


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## robots (18 February 2009)

hello,

yeap, thats us singlefished

we letting people use property for only a fraction of the cost apparently, helping out in society

surely it doesnt have to be all or nothing, many philantropists are doing *"what they can"*, for the cause

thankyou
robots


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## kincella (18 February 2009)

Hi Robots...yes it is lovely here...absolutely my favourite spot on earth....and so close to everything that matters to me.....
there are a couple of ugly little sets of units down in Williams Rd heading south between Toorak and Malvern Rds....very neglected...but ripe for a  developer to keep an eye on...and pick up in this market....
otherwise some beautiful buildings here.....
someone bought the whole block of 1970's cream brick  uglys...so looking forward to seeing what they do with them

I note on the realestate site...an agent has a unit down in Kensington Rd, Sth Yarra listed as a Toorak property... thats pretty cheeky

cheers


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## singlefished (18 February 2009)

robots said:


> hello,
> 
> yeap, thats us singlefished
> 
> ...




So if you're "positively geared" from day one until the time you sell then that means that the tennant is actually the Philanthropist and the investor is the beneficiary of the free property no?


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## robots (18 February 2009)

hello,

yeap, bloody hell never thought of it that way singlefished

we all putting in for society by the looks of it, i take back all my comments about the handout crew

yes Kincella, pretty cheeky from that agent 

thankyou
robots


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## kincella (18 February 2009)

to make matters worse...we hardly put up any money ourselves...we use OPM..other peoples money....the tenant gets the roof over his head...(thats my contribution to the human society) and later sell the thing for a profit...which fills up my bank account with cash......

some of that cash I use to support other family members...its a big extended family out there for me to look after

I do use some of those profits to donate to the various animal societies, and the rental income contributes to regular monthly payments to 3 of them... the kidney society is the only human one....since my brother died of a kidney disease less than a year ago..he was only 61


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## Nosferatu (19 February 2009)

So_Cynical said:


> Sydney beaches immune to price falls...i think not Bill, assuming u would call that area
> the top 10% of the market...I know i do.
> 
> http://www.news.com.au/business/money/story/0,28323,25060007-5013951,00.html
> ...




You can't say the whole of the Northern Beaches is the top 10% of the Sydney market. Northern Beaches is a big area and most Northern Beaches suburbs have a median price of around $800K.

Top end of the market would be places like Vaucluse, Point Piper etc.

On the Northern Beaches you could call Palm Beach and Whale Beach 'top 10%' and I agree those suburbs are definitely down about 20% (to a median of around $2M now) but most of the Northern Beaches suburbs are just filled with normal working people living in normal houses priced close to the $800K median.

My observations of the current Northern Beaches market...

- Bottom end (up to $600K) selling like hotcakes. Prices rising strongly.

- Mid range ($600K-$1M) steady sales. Prices flat or rising slowly (~5%). 

- Upper range ($1M-$1.5M). Very slow. Houses sitting on the market for ages. Prices flat or down slightly (~5%). Vendors mainly holding out. Have noticed a slight pickup in this range since January with more sales starting to go through.

- Top End (Palm Beach etc. $1.5M+). Dead. Nobody is buying. Prices down 20%.

My existing properties would be in the mid-range. I am planning to upgrade to a new top-end PPOR at substantial discount in the next few months.

According to Residex, the overall Northern Beaches median increased over 2008. One of the very few Sydney region to do so.

Cheers,

Shadow.


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## Bill M (19 February 2009)

Nosferatu said:


> My observations of the current Northern Beaches market...
> 
> - *Bottom end (up to $600K) selling like hotcakes. Prices rising strongly.*
> 
> ...




Cheers for that, 100% correct, same as what I've been trying to tell ASF members but you put it much more nicely. It gets pretty squeezy in those 1 br units on a Saturday when agents are conducting an open for inspection. So many buyers, so little supply. A unit in Foam St Freshwater had 80 groups through in a day, busier than Pitt St.

Ahhh another nice day on the Northern Beaches, sun is out and I'm off for my walk...:walker:


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## Beej (19 February 2009)

Nosferatu said:


> You can't say the whole of the Northern Beaches is the top 10% of the Sydney market. Northern Beaches is a big area and most Northern Beaches suburbs have a median price of around $800K.
> 
> ......




Yep - Shadow (and Bill M) what you describe is almost exactly what I have seen happening on the lower and upper North Shore, and I suspect based on the stats etc is the story right over Sydney. 

The mid range and upper range (as you have defined them) will start to pick up soon as all the action in the lower price ranges (being driven by the return of FHBs to the market) flows through in the next few months and people like yourself who actually watch the market see the opportunity and upgrade PPORs. I think the top end will struggle for a while given the amount of wealth destruction impacting the top end of town at the moment, and things won't really recover there until the economy picks up again in the future - but when that happens, watch that top end market sky rocket!

A couple of auctions coming up in my suburb over the next 2 weekends in the $1.2M-$1.5M+ range, so will get a good feel for the market by attending those and seeing how many buyers are around, if they sell, and what prices are achieved. This is an area with a ~$1.4M median house price according to APM, so is a good indicator of what is going on in the "upper range" market in Sydney. Prior to this lot, one house was listed in January and sold prior to auction after only 2 weeks on the market for ~$1.2M (price seemed about right for what it was)....

As I have stated before, Sydney will lead any market change in AU - it's been basically flat since 2004 (while there was supposedly this great free credit driven bubble going on - didn't seem to be blowing in Sydney). Meanwhile Perth, SEQ etc went ballistic, and even Melbourne saw some huge increases - I think that's why most of the bears here are sand gropers and banana benders (plus a few mexicans to boot). It's hard not imagine a correction is due when you see such large increases in prices over a short period of time - and maybe in those area's this will happen, but in Sydney it won't IMO.

Cheers,

Beej


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## Robert25 (19 February 2009)

Robert25 said:


> This is an example of some of the manipulation that has gone on in the media:
> 
> The Australian ran a story last week about "Mum ready to go shopping for second home", with all the usual pro-property ranting. Anyway it turns out that this "mum" was Kirsten Friedli, who works in marketing for the local real estate agent and was clearly being dishonest and deceptive.
> 
> ...




Her facebook profile has also been uncovered:


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## Trevor_S (19 February 2009)

Beej said:


> However, the above statement is a little condescending don't you think?




No not really.. he was saying he got burnt over the "tech wreck" and that was what I was referring to in my quote.  Losing money then is like saying I got busted for speeding by going fast in front of the Police.  If people were buying shares at PE's of high double digits, on companies with no or negative earnings, and pie in the sky promises, one has to wonder at their ability to pick shares and I actually thought I was being helpful by recommending a LIC.  No condescension was involved at all.



Beej said:


> The current market burned many experienced players




Indeed but once again that's not what he was talking about originally and not what my quote was in reference to.. that aside, some of us were simply accumulating cash for the last 18-24 months or so waiting for the overpriced market to correct, while people at STORM (for example) where pushing prices through the roof, albeit it corrected a whole crap load more quickly and to a greater depth then I expected, as you rightly point out.



Beej said:


> I have been burned by this stock market simply by being in a very diversified SMA type set-up  But what can you do? Made me wish I was still day trading through the whole thing to be honest, as I would have been able to cut my losses much sooner at the very minimum, but, c'est las vie!




Day trading is a magic art that is of no interest to me.  I understand I am not smart enough to beat the market so I don't attmept to, best of luck to others that try.

I haven't lost a cent, as I have not realised any gains (eg all my BHP portfolio is in the black)  or loss's (some ANZ and some WBC for example).  At the moment I have no real intention of selling for at least another 20 years. 

I asked my friends who sold out and took the CG hit, what  they intend to do.. invariably their response is to leave it as cash...  it will be 3% soon... do they intend to invest in shares again I ask ? Absolutely, when the market recovers... when is that, ?ranges between 4000  and 6000 points apparently... so.. they sold out of good shares, some made a decent CG, some lost, some came out about even,  those that made a CG took the tax hit on that, then are happy to park it in cash and buy back in (with less of an investment as they lost lots of their capital to tax) at about the same price they sold out for..that makes no sense to me what so ever but apparently that makes me the insane one   "They" could be right, it might take 10 years before we see a return to where we were but I will have earned dividends way above what they are earning in interest in the mean time and have no need of the capital...

Your one of the guys I pay read on here by the way  (no condescending again) I value your input and discussion, even if sometimes I don't agree with you.  

I have made money out of both shares and property over the decades but I will never understand residential property (I like making cash and negative gearing is a anathema to me, and I seem to never find residential properties that are positively geared that appeal), it makes me nervous and is  mostly why I avoid it... (only one IP left out of 4 owned)  below sums up why I don't "get it"



no use investing on something you don't understand.  As to commercial property, I have always been outbid by southerners (normally Syndey siders who bid site unseen) on local commercial property where I was looking at 10-11% nett returns and they were happy with 6% (lucky local landlords I guess who sold  ) so while I tried in the past to dip my toes, I never got anywhere and decided to use my capital to expand my business instead.


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## GumbyLearner (19 February 2009)

A tough time to invest in real estate. 

http://www.dailymail.co.uk/news/wor...39million-deposit-worlds-expensive-house.html


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## Adam A (19 February 2009)

Adam A said:


> I,m very suspicious of any real estate reporting in any newspapers
> I think a lot of it is loaded with self interest. In my local area a full page colour add cost $4000.00 for one issue
> Ive also noticed that my colour section of the real estate  in my local rag, has dropped quite a lot in quantity of adds in the months prior to christmas.
> 
> ...




Bit of an update for people
Both properties still not sold even with further reductions (northern beaches location)
Id be interested to know re northern beaches sales under $600.000 if the current sellers are ppr upgrading or investers getting out and offloading to fhb


----------



## kincella (20 February 2009)

to each his own...
I bought a commercial that was returning 10%...on very cheap rent...fixed that......mv was double that amount, anyway there were some stuff ups, it was a bargain, agent had no idea, I have no intention of selling...hand it down to the kids
in the meantime..earning 5% on combined resi and commercial props...100,000pa ....which meant I could semi retire earlier....
I am in the group that does not care about returns on resi...its the capital growth....and the tenants pay the holding costs....
other little props I bought, when everyone else was still in negative mode, and sold when everyone started buying....returned about 400,000 cash in the bank, after paying back the loans....not bad for a couple of years passive income.....


----------



## MrBurns (20 February 2009)

kincella said:


> to each his own...
> I bought a commercial that was returning 10%...on very cheap rent...fixed that......mv was double that amount, anyway there were some stuff ups, it was a bargain, agent had no idea, I have no intention of selling...hand it down to the kids
> in the meantime..earning 5% on combined resi and commercial props...100,000pa ....which meant I could semi retire earlier....
> I am in the group that does not care about returns on resi...its the capital growth....and the tenants pay the holding costs....
> other little props I bought, when everyone else was still in negative mode, and sold when everyone started buying....returned about 400,000 cash in the bank, after paying back the loans....not bad for a couple of years passive income.....




I was in a syndicate years ago, I got out, they went broke for a while when the crash of the early 90's took hold.

Mainly office buildings refurbishment , strata then sell off.

I'm very conservative they weren't.

I should be out looking for deals now but feel it's too early, what do you think ?


----------



## kincella (20 February 2009)

I think you should start looking now, who knows how long it will take to find the right prop....now is the time to keep an eye out, with everyone panicking...when bargains may turn up...and the agents are fried....depressed, like rabbits stunned by the glare of headlights

property trusts are in trouble with all the borrowing...so you might find something to suit in a sell off
who knows how long this thing will last...but anytime within a year or so, and you have to get it right

took me 5 years to find the property I wanted...well it was the location more than anything...and then I missed out on another 2...terrific bargain prices...
had my eye off the ball...a lot of props in that area had been handed down from generations to generations....hardly ever on the market...

I am only interested in retail shops....not offices...not strip shops (low rents)
main st locations...or bigger well known areas like chapel st, bridge road, not swan st etc
was one in chapel st for 500.000 about 5 years ago..same today would be double that amount....self funded retirees and dyo superfunds have been in that market past 10 years...offering competition...


----------



## MrBurns (20 February 2009)

I sold so many bargains when I was an agent, oh well thats in the past.

I tend to look at the big picture too closely, I feel that if it hits the fan ( I think it has already) business won't be able to pay the current rents so returns and prices will go backward.

I always will only buy location, never a tenant or a lease, you have to say to yourself "if this was vacant could I find a tenant?". If the answer isnt an immediate "yes" then forget it.

Good luck with yours


----------



## kincella (20 February 2009)

chapel st is gen Y territory, and tourists..plenty of traffic...small shops...
been as busy as ever down there lately....shops have big discounts...
good idea to keep watch on that spot.....since gen y live at home..no mortgage...
in Melb they change the offices to resi and back again depending on the economy...just never liked offices...aka small business...and they can panick and close up shop quickly...
have to go out and have a look...see if there are any closing down sales...
I do not like Toorak Rd either....or anywhere its a clearway...very damaging to business
you have been in the game..so you know what to look for...were you only selling commercial...did you ever buy commercial ??? thought the agents get the good ones for themselves ???


----------



## MrBurns (20 February 2009)

kincella said:


> chapel st is gen Y territory, and tourists..plenty of traffic...small shops...
> been as busy as ever down there lately....shops have big discounts...
> good idea to keep watch on that spot.....since gen y live at home..no mortgage...
> in Melb they change the offices to resi and back again depending on the economy...just never liked offices...aka small business...and they can panick and close up shop quickly...
> ...




Was in commercial for over 20 years.

Bought some but you cant buy your own listings so had to be careful, also had the agent mentality when I saw a good one I was on the phone to clients without thinking of ME. Thinking more of the commission than the big picture.

Not keen on strip retail thats the first to go in a downturn even Burke Rd Camberwell gets the shakes every now and again.

You have to buy something with an edge to to, when I was in the syndicate we had millions of dollars in office blocks and industrial but there had to be a development edge, borrowed the lot even stamp duty and refurbishment costs, had no money in many times but knew the outcome would be profitable so there wasnt a problem. I got out when I saw their confidence was over the top, they thought they were invincible.

Different story these days but I might start looking again, just talking about it has got my interest up again.


----------



## kincella (20 February 2009)

I think Burke rd is very different to Chapel st, its an older different market...so I would really want a bargain there to tempt me, prefer chapel st any day...and little hiccups are ok...

are you retired, still have a licence...get into the game again part time...or just find something for your self..

there was a place I was interested in..right price and location, and it was vacant...just what I wanted...then the agent leased it at a low rent to some PC guys..tied it up for 10 years.....I totally lost interest...the tenants were totally unsuited to that particular location, and to be tied up for so long...grrrr

I could have taken the risk that the tenant would fall over within 3 years....but interest rates were rising and the rent would not have covered even an interest only loan....


----------



## MrBurns (20 February 2009)

kincella said:


> I think Burke rd is very different to Chapel st, its an older different market...so I would really want a bargain there to tempt me, prefer chapel st any day...and little hiccups are ok...
> 
> are you retired, still have a licence...get into the game again part time...or just find something for your self..
> 
> ...




Still got the license, retired I guess, but still want to earn money somehow instead of relying on 4% interest in the bank


----------



## Bill M (20 February 2009)

More news from the Northern Beaches. 
------------


*Buyers crowd into Collaroy*

BUYERS have descended on Collaroy and Collaroy Plateau this month with people fighting for property and agents rushed off their feet.

"We had 38 groups through, four active buyers and it was a race to buy with no building or pest reports, no cooling off and the first one with a cheque on my desk,’’ he said. 

FULL STORY HERE


----------



## UBIQUITOUS (20 February 2009)

Bill M said:


> More news from the Northern Beaches.
> ------------
> 
> 
> ...




It would appear RE agents are taking to written English literature classes in desperation.

http://www.travismorien.com/FAQ/realestate/reliars.htm



> As well as "the run" you also get the infamous "BUY NOW!!!" and "BUY THIS!!!" advertorials in papers, where regardless of where in the cycle we are, and whatever the property is like, glowing marketing hype extols the probably non-existent virtues of the market right now being the ideal time to buy and this property being the ultimate investment opportunity. There is very little truth in advertising in real estate, you have to be very cautious when reading anything written by a real estate agent. The market is always "booming" and now is always the "last chance" and this is always a "once-in-a-lifetime opportunity". You cannot rely on real estate agents to provide any kind of realistic unbiased analysis. They make their money convincing people who thought they were happy where they were to tell their homes, and people who actually wanted something quite different to buy them.


----------



## Beej (20 February 2009)

UBIQUITOUS said:


> It would appear RE agents are taking to written English literature classes in desperation.
> 
> http://www.travismorien.com/FAQ/realestate/reliars.htm




Except the originally referenced article contains information on specific, verifiable property sales (with addresses). So if you doubt the veracity of those, by all means check and PROVE your assertion that the article is nothing but RE marketing BS.

Cheers,

Beej


----------



## UBIQUITOUS (20 February 2009)

Beej said:


> Except the originally referenced article contains information on specific, verifiable property sales (with addresses). So if you doubt the veracity of those, by all means check and PROVE your assertion that the article is nothing but RE marketing BS.
> 
> Cheers,
> 
> Beej




If it walks like a duck, quacks like a duck, looks like a duck.......


----------



## Glen48 (20 February 2009)

Here is some more who should have purchased in St.Kilda:
http://i.dailymail.co.uk/i/pix/2009/02/18/article-1148887-0390B97F000005DC-465_468x349_popup.jpg
From Patrick.net


----------



## nomore4s (20 February 2009)

UBIQUITOUS said:


> If it walks like a duck, quacks like a duck, looks like a duck.......




it's a swan, according to the RE agents :


----------



## robots (20 February 2009)

hello,

wow, what another fantastic day 25 degrees sun out and shining bright for all of us

went for bicycle ride along the Elwood and Brighton foreshore what a splendid area being enjoyed by many, had a couple of cafe latte's at Brighton, very very nice, utopia

oh well at least some can keep attacking real estate agents, as we still at 7x income to average price, rents up, interest rates down and property prices plodding along,

thankyou
robots


----------



## Fleeta (20 February 2009)

Do you work Robots? Or do you just hang out and enjoy the weather? I think alot more people will be able to enjoy the sunshine in Melbourne now that they are unemployed. Will house prices be able to stand up without this demand...


----------



## robots (20 February 2009)

hello,

yes i work, but to me its just life rolling on (the easiest way of making $ for our existence)

finished early afternoon so detoured and went on a luxurious ride down along the foreshore track

flipped 2-bob to some guy out the front of Coles St Kilda muttering things very similar to what Glen48 writes 

kevin07 is keeping the country rolling on but its up to the people man

thankyou
robots


----------



## Adam A (20 February 2009)

Drove thru a northern beaches suburb today (dee why ) noticed two major real estate offices up for lease?

I guess there moving to bigger premises


----------



## Beej (20 February 2009)

robots said:


> flipped 2-bob to some guy out the front of Coles St Kilda muttering things very similar to what Glen48 writes




ROTFL! Now THAT was funny!! Love your work man 

Beej


----------



## numbercruncher (21 February 2009)

I see Qld is going mental still - " House prices to keep rising for years " ??




> Bligh Government forecasts budget deficit of $1.5bn
> UPDATE: Sean Parnell | February 20, 2009
> Article from: The Australian
> 
> ...




http://www.theaustralian.news.com.au/story/0,25197,25081882-601,00.html

Luckily a few permabulls in here are still making truckloads of $$$ flipping and slicin' n dicin and stuff or this thread would be dead ! good onyahs !

On a side note looks like QLD is roooted ! mexicans may as well head off home now ?


----------



## Bill M (21 February 2009)

UBIQUITOUS said:


> It would appear RE agents are taking to written English literature classes in desperation.
> 
> http://www.travismorien.com/FAQ/realestate/reliars.htm




Nice try, now lets expose Travis Morien the writer of that article.

Travis Morien is a Financial Planer and owns a company called *"Australian Independent Financial Advisers Pty"*

http://travismorien.com/

I wonder how he is explaining 50% losses in his clients share portfolios.


----------



## Mofra (21 February 2009)

numbercruncher said:


> On a side note looks like QLD is roooted ! mexicans may as well head off home now ?



That'd only help the Melb market, but remember; every time a Victorian chooses to move to Queensland, it increases the average IQ of _both_ states


----------



## Page (21 February 2009)

Friends I do not know much about the real sector I keep some what knowledge about forex.


----------



## Beej (21 February 2009)

Sydney auction clearance rate 68% on strong volume this weekend: 156/229 properties sold. median price $593,500 - also higher than recent trends, pulled up by a few higher priced properties starting to sell again (several $1.5M+ and a couple of $2M+ sales in there this week).

http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

That's 3 weekends in a row now with ~70%+ auction clearance rates in Sydney.....

Cheers,

Beej


----------



## robots (21 February 2009)

hello,

fantastic news Beej,

same thing happening here in Melbourne:

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

76% clearance rate, WOW, thats several weekends of great results

i cant believe it, how the good times just plod along

thankyou
robots


----------



## knocker (21 February 2009)

robots said:


> hello,
> 
> fantastic news Beej,
> 
> ...




Hello,

Lets face it you don't know if you are Arthur or marthur. Go back to the other property thread and post more drivle there lol


----------



## sinner (21 February 2009)

I have noticed some great clearance rates in my areas RE monthly mag as well, that is until I looked at the numbers and noticed there was only 3 auctions!

What a useful indicator...


----------



## Glen48 (21 February 2009)

Robots:
Flipping 2 bob in St Killder is a good way to massage the ego and show of your wealth with house prices rising at 14.8% PA ( per Avo) you would be like a Rat with a Gold tooth ($1005 per OZ) top Hat and a Silver top cane you could be mistaken for the Mare.
I will keep glued to the TV looking for an update on your progress and in the next series on Underbelly.
Did you check the Mental health of the man involved?
Did you listen to what he was saying?
Having a spare 2 bob to flip in a depression shows Krudds massaging the economy is working.
Keep up the God work


----------



## So_Cynical (21 February 2009)

Beej said:


> Sydney auction clearance rate 68% on strong volume this weekend: 156/229 properties sold. median price $593,500 - also higher than recent trends, pulled up by a few higher priced properties starting to sell again (several $1.5M+ and a couple of $2M+ sales in there this week).
> 
> http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> ...




So Beej are there no distressed vendors selling at auction? high clearance rates indicate 
a 100% health market? ..have a look at the place below and tell me the vendor wasn't 
distressed in some way.

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007548293#

$445,000 for a 1 bedroom renovated terrace in Annandale (inner west Sydney)

And OMG have a look at this in Avalon 

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007549043#

Original 3 bedroom house, 150 meters from the water for 650K


----------



## Beej (21 February 2009)

So_Cynical said:


> So Beej are there no distressed vendors selling at auction? high clearance rates indicate
> a 100% health market? ..have a look at the place below and tell me the vendor wasn't
> distressed in some way.
> 
> ...




For sure there are some bargains around at the moment if you jump on them - that Annandale one is interesting, but is a tiny, TINY house, on virtually no land, in unrennovated condition - could have been full of termites, about to fall down - who knows? You'd have to go and look at it. $700k+ buys you a pretty nice renovated 2 bed house in Annandale with yard, parking etc....

That Avalon house was passed in by the way (if you read the auction results fully) - they want $800k+ for it - so didn't sell for $650k, that was probably just a cheeky low ball bid at the auction.

Cheers,

Beej


----------



## cashcow (21 February 2009)

So_Cynical said:


> And OMG have a look at this in Avalon
> 
> http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007549043#
> 
> Original 3 bedroom house, 150 meters from the water for 650K




Eh?  Says in excess of 800K ..?


----------



## Bill M (21 February 2009)

Just a couple of things SC, the Annandale property looks to have been 1 big house in the past split into 3. Note the fence directly to the right of the metre box, different roof, different property. Also seems like there is no back yard as such. 445K for a 1 br terrace in Annandale is too over priced for me I would rather a 1 br unit in Manly on the beach for that money. How do you know it was a stressed sale? I think it was over priced myself, not my idea of a good suburb.

To Avalon, that is an old timber home, not many people like old Timber homes in need of renovation. However without a doubt the land must be worth 800K on it's own. No wonder the owners didn't sell, neither would I. A lot of people go to auctions hoping to grab a bargain, personally I would only go private treaty myself, I am not surprised it was passed in for 650K.


----------



## So_Cynical (21 February 2009)

Bill M said:


> Just a couple of things SC, the Annandale property looks to have been 1 big house in the past split into 3. Note the fence directly to the right of the metre box, different roof, different property. Also seems like there is no back yard as such. 445K for a 1 br terrace in Annandale is too over priced for me I would rather a 1 br unit in Manly on the beach for that money. How do you know it was a stressed sale? I think it was over priced myself, not my idea of a good suburb.
> 
> To Avalon, that is an old timber home, not many people like old Timber homes in need of renovation. However without a doubt the land must be worth 800K on it's own. No wonder the owners didn't sell, neither would I. A lot of people go to auctions hoping to grab a bargain, personally I would only go private treaty myself, I am not surprised it was passed in for 650K.




Oh com on Annandale is a great suburb, ive done a lot of work there, beautiful 
old terraces, quiet streets, real character...and that one is part renovated.

Distressed with a capitol D...im starting to wonder if u real estate guys actually 
know a bargain when u see one....u must live a wonderful life Bill.


----------



## Bill M (21 February 2009)

So_Cynical said:


> Oh com on Annandale is a great suburb, ive done a lot of work there, beautiful
> old terraces, quiet streets, real character...and that one is part renovated.



You are under the Sydney airports flight path. No beaches and you got grubby Parramatta road which is so ugly. I am a beach guy, like outdoors and exercising, the sun and the surf and we have the best Rugby League team in Australia "Manly". Now I'm going over to the Music thread to see if I can post the song "Eagle Rock."



> ...u must live a wonderful life Bill



I'm not complaining, I got all the cafes, beaches, transport, supermarkets, clubs and everything within walking distance from me, must be what keeps all the house prices up.


----------



## singlefished (22 February 2009)

Bill M said:


> ....must be what keeps all the house prices up.




Sydney's northern beaches have been "belted", with values generally 20 per cent lower than they were a year ago, according to Ray White's Noel Nicholson. 

http://www.theaustralian.news.com.au/business/story/0,28124,25087007-5018055,00.html


----------



## robots (22 February 2009)

hello,

he had the same mental aliments as me Glen48, it was all listed on his sign just underneath the "do you have any spare change"

i hope his path changes now for the future, i could see the spring in his step as he packed up his belongings, thru the sign in the bin

last I saw of him was entering an employment agency in St Kilda as they even had a sign up "workers wanted"

fantastic, life in all its glory

thankyou
robots


----------



## robots (22 February 2009)

hello,

word out brothers:

http://www.news.com.au/heraldsun/story/0,21985,25088225-2862,00.html

we on, enjoy your walk today

thankyou
robots


----------



## Bill M (22 February 2009)

singlefished said:


> Sydney's northern beaches have been "belted", with values generally 20 per cent lower than they were a year ago, according to Ray White's Noel Nicholson.
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,25087007-5018055,00.html




Hello singlefished, this has all been explained before. Those properties that went down 20% are in the Million $$ bracket far out of my reach and as such I don't evaluate that market. However the 500K and below market is very active and most units are sold very quickly. Right now people can still buy a house in Western Sydney for 300K, according to this next article. Also economists are predicting a 5 to 6% rise in properties in that under 500K bracket.
--------

"Economists say prices will rise by five or six per cent in Sydney suburbs where the median house price is below half-a-million dollars thanks to demand by first-time buyers." http://www.news.com.au/dailytelegraph/story/0,22049,25088378-5013110,00.html


----------



## Beej (22 February 2009)

singlefished said:


> Sydney's northern beaches have been "belted", with values generally 20 per cent lower than they were a year ago, according to Ray White's Noel Nicholson.
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,25087007-5018055,00.html




*Yawn* - discussed ad nauseum - the doom and gloom articles focus on the top end properties/suburbs (Palm Beach, Vauclause, Point Piper(!!) etc) and the multi-multi million $ properties. That article uses ONE northern beaches example - a Palm Beach property that was supposedly worth $17M 3 years ago (valuation only) but was sold for $12M - wow bargain for all! And you extrapolate that all northern beaches property has "been belted"??

Read the contributions from people here that actually live in and are active in the more general Sydney northern beaches suburb markets, plus look at the median stats for suburbs other than Palm Beach and you can see what is going on more broadly plus in the price ranges of more relevance to most. Even look at the auction results I posted - some strong auction sales just last weekend in Manly, Balgowlah, Seaforth etc etc.

Anyway - everyone is welcome to believe whatever they want to believe, rely on alarmist newspaper articles etc if you like, or to go out and find out for yourself.

Cheers,

Beej


----------



## sinner (22 February 2009)

Not sure what you heard about Western Sydney, Bill M but I doubt it is reflected in reality.

There is essentially no homes for sale on Domain in WS under 300,000 except for a single 1br place in Blacktown.

If you want an apartment it is a different story, this market is so overdeveloped, there are soooooo many apartments and townhouses (condensed living) offerings on the markets by developers who have bought up this land expecting to make a buck. Doesn't really look like anyone is buying them either.

So, what happens in June when the FHOG dies out? Is Ruddbank gonna spend some more of my money to prop up the industry?


----------



## Beej (22 February 2009)

sinner said:


> Not sure what you heard about Western Sydney, Bill M but I doubt it is reflected in reality.
> 
> There is essentially no homes for sale on Domain in WS under 300,000 except for a single 1br place in Blacktown.




Que??? I see *180 houses for sale priced between $200k and $300k* in the Penrith/Liverpool and Cantebury/Bankstown area's just from a simple seach:

http://www.domain.com.au/Public/Sea...es=House&from=200000&to=300000&sort=price-asc

(There's the odd unit pops up probably because of incorrect category/listing, but 99% of the those results are houses).

Oh and *331 houses for sale between $200k and $300k* if I select the "Western Sydney" search option:

http://www.domain.com.au/Public/Sea...00000&To=300000&PropTypes=H,S,X,T&PTDes=House

Cheers,

Beej


----------



## So_Cynical (22 February 2009)

sinner said:


> Not sure what you heard about Western Sydney, Bill M but I doubt it is reflected in reality.




Bill thinks Western Sydney is Chatswood. :


----------



## sinner (22 February 2009)

Beej said:


> Que??? I see *180 houses for sale priced between $200k and $300k* in the Penrith/Liverpool and Cantebury/Bankstown area's just from a simple seach:
> 
> http://www.domain.com.au/Public/Sea...es=House&from=200000&to=300000&sort=price-asc
> 
> ...




Sorry Beej, my bad. I plugged in "1br" assuming it would use this as a minimum number of bedrooms, but it apparently means only 1 bedroom! Silly little differences between domain and realestate.com.au I guess.


----------



## Bill M (22 February 2009)

sinner said:


> Not sure what you heard about Western Sydney, Bill M but I doubt it is reflected in reality.



sinner it really pays to actually click on the links provided. For you I repost the original link. Note: 2 bedroom house in Blacktown sold for 290K.

http://www.news.com.au/dailytelegraph/story/0,22049,25088378-5013110,00.html


----------



## Bill M (22 February 2009)

So_Cynical said:


> Bill thinks Western Sydney is Chatswood. :



You now the story with us Northern Beach people.... Anything past Spit Bridge or Roseville Bridge is like going on holidays. Chatswood is ok though because I can park in the Mandarin building for free and do all my Asian grocery shopping there, top spot for an adventure, don't mind buying those cooked Ducks hanging in the windows there.


----------



## SBH (23 February 2009)

In case anyone missed it... house prices to the mooooooon!



http://smallbusiness.smh.com.au/managing/finance/australia-to-cut-skilled-immigration-909121414.html

Skilled immigration will fall due to the global economic crisis, the Federal Government says.

''I expect the numbers of our program to drop next year ... as a reaction to the economic circumstances,'' Immigration Minister Chris Evans told reporters.

Senator Evans said the size of the cut would be a matter for cabinet.

The government was very aware that labour demand would differ across regions and economic sectors.

''It's not a one size fits all.''

In Britain the government is hardening immigration laws as unemployment rises amid the financial meltdown.

Non-European Union workers migrating to Britain will, from April, have to hold a masters degree and will have to show they earned a salary of at least $44,000 before moving to the UK.

Despite the pressures on immigration, Senator Evans said the Pacific guest worker program would not be reviewed ''at this stage''.

However, he did say the government was reconsidering what occupations should be listed on the commonwealth's critical skills list.

The Construction Forestry Mining Energy Union has already called for construction jobs to be cut from the list.

''The critical skills list is under review and that's one of the things we will look at as the circumstances change,'' Senator Evans said.


----------



## Trevor_S (23 February 2009)

Beej said:


> Read the contributions from people here that actually live in and are active in the more general Sydney northern beaches suburb markets, plus look at the median stats for suburbs other than Palm Beach and you can see what is going on more broadly plus in the price ranges of more relevance to most.




What do you think will happen to the <$500K houses once the Federal Gov't grant runs out in July ?  Will the feds continue to artificially prop up prices with a continuation of the FHOG and keep allowing the transfer of dollars to property sellers from the tax payer, or let that market segment find it's own "floor/ceiling" ?


----------



## Beej (23 February 2009)

Trevor_S said:


> What do you think will happen to the <$500K houses once the Federal Gov't grant runs out in July ?  Will the feds continue to artificially prop up prices with a continuation of the FHOG and keep allowing the transfer of dollars to property sellers from the tax payer, or let that market segment find it's own "floor/ceiling" ?




Only the "boost" expires in July - FHB grant will still exist at the old $7k/$14k level. Most likely if economy still down the boost will be extended anyway.....

Beej


----------



## robots (23 February 2009)

hello,

WORD OUT to Kincella with Toorak being recognised as most stylish suburb in Victoria, fantastic news

the walk would of been on today, I see why some agents are trying to list props in Kensington rd as South Yarra, bit cheeky

have an extra wine or scotch and cigar tonite brother

thankyou
robots


----------



## robots (23 February 2009)

Beej said:


> Only the "boost" expires in July - FHB grant will still exist at the old $7k/$14k level. Most likely if economy still down the boost will be extended anyway.....
> 
> Beej




hello,

sure has been a lot of hysteria over that Boost beej!, great move from the government

thankyou
robots


----------



## kincella (23 February 2009)

I dont get it...really, an extra 7000 is holding up the industry....thats not even 1% of a 500k prop....miniscule IMO....think you will need a lot more than a 7000 prop

really means very little to the serious home buyers...they would have been saving the money anyway...

everyone is getting a handout....except me....I have never been lucky enough ...oh sure I will get the 950 or whatever it is...chicken feed

saw a young couple they bought sydney's west...400,000k both had secure jobs...think public service...good incomes....

I would rather bash the banks..getting billions in handouts.....

the grant is also designed to try to keep some builders in work...keep as many jobs as you can....how many on here have a tradie son that might need looking after...


----------



## Trevor_S (23 February 2009)

kincella said:


> everyone is getting a handout....except me....




Which is a worry, to my mind... a piss poor use of tax dollars but that's another debate entirely.



kincella said:


> oh sure I will get the 950 or whatever it is...chicken feed




I don't qualify for that one either, so far, 0 to me  



kincella said:


> I would rather bash the banks..getting billions in handouts.....




I am not bashing anybody, I was asking a question.  I don't agree with the FHBG (all it does is transfer tax dollars to property sellers, I would speculate that the removal would save a whole heap of tax, that could be better used elsewhere and see prices go down significantly making them more affordable anyway) but then I don't agree with the vast majority of what the Gov't does and how it does it, so nothing different there either


----------



## numbercruncher (23 February 2009)

kincella said:


> everyone is getting a handout....except me....I have never been lucky enough ...oh sure I will get the 950 or whatever it is...chicken feed





Why would someone with a multi million dollar property portfolio worry about such trivalties ?


----------



## sinner (23 February 2009)

Bill M said:


> sinner it really pays to actually click on the links provided. For you I repost the original link. Note: 2 bedroom house in Blacktown sold for 290K.
> 
> http://www.news.com.au/dailytelegraph/story/0,22049,25088378-5013110,00.html




It really pays? How much? :

I didn't ignore the article at all, it was an *auction* so I went to domain to see if your statement was true.


----------



## numbercruncher (23 February 2009)

Looks like the permabulls demand argument is going to take a bit of a slamming !



> Slowing economy forces immigration cutFebruary 23, 2009 - 1:51PM
> 
> Australia will cut its annual immigration intake for the first time in eight years due to the slowing economy and weakening demand for labour, Immigration Minister Chris Evans said today.




http://business.theage.com.au/business/slo...90223-8fge.html


Also still looking for some proof about " House prices to keep rising for years " all weve got all year is salesman/spruiker speil .....


----------



## knocker (23 February 2009)

numbercruncher said:


> Looks like the permabulls demand argument is going to take a bit of a slamming !
> 
> 
> 
> ...




About bluddy time. What ijiots let immigrants into a country on the basis they can cut some wood with an electric saw, or cart some bricks around. Even to get in the Uk you need a masters nowdays. Oh well can see the dole ques getting longer already lol


----------



## johnnyg (23 February 2009)

kincella said:


> I dont get it...really, an extra 7000 is holding up the industry....thats not even 1% of a 500k prop....miniscule IMO....think you will need a lot more than a 7000 prop
> 
> really means very little to the serious home buyers...they would have been saving the money anyway...




Id have to say from a younger view point (early 20's), based on the number of my friends who have purchased homes in the last 6months that First home buyer incentive increase is actually doing a great job of propping up the real estate market.


----------



## robots (24 February 2009)

numbercruncher said:


> Looks like the permabulls demand argument is going to take a bit of a slamming !
> 
> 
> 
> ...




hello,

seaford up 15%, bonbeach up 15%, melton up, st albans up, everywhere for the Dec08 Q

next result out in month or so, great effort I know it can be hard to accept

just try and keep active, go for a walk, do some work to take the mind off things

but not sure why many here care? isnt renting the road to riches (and can be), nothing more than the tall poppy syndrome, the great divide, the rich vs the poor

have a great day

thankyou
robots


----------



## numbercruncher (24 February 2009)

knocker said:


> About bluddy time. What ijiots let immigrants into a country on the basis they can cut some wood with an electric saw, or cart some bricks around. Even to get in the Uk you need a masters nowdays. Oh well can see the dole ques getting longer already lol




Luckily alot of them only got work visas so the Gov will now give em the old heave ho now they have passed their usefullness ..... still that dole Q expands being financed with borrowed $$ no doubt .....


----------



## numbercruncher (24 February 2009)

robots said:


> seaford up 15%, bonbeach up 15%, melton up, st albans up, *everywhere for the Dec08 Q*







_Everywhere_ is up for Dec quarter eh ? 


Awesome


Nirvana


----------



## Junior (24 February 2009)

kincella said:


> I dont get it...really, an extra 7000 is holding up the industry....thats not even 1% of a 500k prop....miniscule IMO....think you will need a lot more than a 7000 prop
> 
> really means very little to the serious home buyers...they would have been saving the money anyway...
> 
> ...




This is total rubbish...I'm in my mid 20s and know several people who have decided to buy the first home purely because of the grant.  It forms a substantial part of your deposit, particularly if you're spending <$400k


----------



## Trevor_S (24 February 2009)

robots said:


> seaford up 15%,






Houses -3%



robots said:


> bonbeach up 15%,





Houses -7%



robots said:


> melton up




Houses -1%



robots said:


> st albans up




Houses +3%



robots said:


> everywhere for the Dec08 Q
> 
> I know it can be hard to accept



Indeed... on the face of it, your claim seems be bullsh*t 

+stats. above are 6 months to Jan '09.


----------



## Temjin (24 February 2009)

Trevor_S said:


> Indeed... on the face of it, your claim seems be bullsh*t
> 
> +stats. above are 6 months to Jan '09.




Watch it and he will illustrate how the annual change has been 10%+ for all those suburb in the very same report snapshot links you just posted.  



			
				robots said:
			
		

> everywhere for the Dec08 Q
> 
> I know it can be *hard to accept*




Thanks for pointing out the obvious.


----------



## kincella (24 February 2009)

the extra 7000 is substantial ???
....correct me if I am wrong....there is a grant of 7000 for old home or 14,000 for a new home.....but both have been boosted by an extra 7000....
when it was first introduced in 2000...the RE agents were adding that amount to the price of a house...when I said I was not a fhb they dropped it instantly
CBA is demanding a cash component to the depost...to prove they can save something...in the old days you had to prove at least 6 months of savings to get a loan...today they are not saving..just using the grants for the deposits...


----------



## gfresh (24 February 2009)

I think if buyers are *relying* on the grant to purchase, then it is almost subprime by a different name. Say $7k "real" money + $14k of government's money = $21k/350k prop = 6% deposit.  LVR of 94% gives so little in reserve, it's a worry..


----------



## gfresh (24 February 2009)

CBA already onto it ... so in my example above borrowers would soon need $10.5k of "real" money ..

http://www.theaustralian.news.com.au/story/0,25197,25092070-2702,00.html



> THE Commonwealth Bank will tighten borrowing rules for first-home buyers to insist they contribute *at least 3 per cent of the purchase price in their own money, in addition to any available government grants.*
> 
> The move is in response to growing industry concerns about the quality of loans to the fast-growing, first-home buyer market and is in anticipation of interest-rate hikes in coming years, due to the expected inflationary impact of the large, recent increase in household income.
> 
> ...


----------



## gav (24 February 2009)

I'm a FHB and CBA were the only ones who considered me, even though I had 20% deposit (part of that was from the FHB grant, but majority from my own savings).  I have a govt job, a good savings history, and I could still meet repayments if interest rates were 12%.  But I was turned down by ING and Heritige their reason - I hadn't been in my current job for 12 months.

Oh and Trev, Seaford units were up 15% for the Dec Q, I think that's what Robots was referring to.


----------



## Glen48 (24 February 2009)

Gav 
turned down...........you was lucky.
We use to get up before we went to bed.. that's nothing I have a mortgage.......ooooooo you win.
Just think what your future could have been like if it was approved????????
Paying rent to a Bank for life on a object loosing money.  Wait a few more years save up and pay cash .


----------



## Beej (24 February 2009)

Glen48 said:


> Gav
> Just think what your future could have been like if it was approved????????
> Paying rent to a Bank for life on a object loosing money.  Wait a few more years save up and pay cash .




That is the worse advice ever when it comes to your PPOR......

Besides, your advice in this case is probably falling on deaf ears, as Gav got his loan from the CBA and has bought his place already - congrats Gav! You will never look back! 

Renting money, renting a place to live, what's the difference? At least with the former you actually own something. I think Gav mentioned elsewhere he expects to have his loan paid off in ~10 years anyway. If he has planned this properly, in all likely-hood he will pay it off even faster than that 

Cheers,

Beej


----------



## kincella (24 February 2009)

I doubt if your  ( average wage earner 'tinks') saved money all theirr life..that they would ever have enough to pay cash for a house...in the meantime...all that money spent on rent
two incomes no kids...tink...otherewise once the kids arrive..theres no hope


----------



## gav (24 February 2009)

Yes Beej, you are correct. CBA approved were the only ones who would consider me, and they did approve the loan.  I dont see why I would continue trying to save for a larger deposit Glen, when the minimum deposit is the same as renting in the area.  Why rent and pay off someone elses mortgage, when I can pay off my own?  Especially when I can pay it off in less than a decade


----------



## kincella (24 February 2009)

I know I am dreaming...but what if the govt bailed out all home owners...say take 50,000 or so off your loan....sounds ridiculous...

not dissimilar to bailing out the banks in the billions..or the car industry

but look at it another way...dropping interest rates takes a similar amount off the cost of buying your home
eg 100,000 loan dropped from 10% to 5% save 5000 pa...x 10 years = 50,000
or the average loan of 240,000 save 12,000 x 4 years = 48000

now if we can just get it down to 3%...sorry retirees...the savings are even bigger
I am obviously bored...
cheers


----------



## Bill M (24 February 2009)

gav said:


> *Why rent and pay off someone elses mortgage, when I can pay off my own?  Especially when I can pay it off in less than a decade*





Congratulations on the purchase Gav, well done mate. The debate of paying the same for a mortgage as you would for rent has been going on for decades and nothing has changed, you made the right decision. In 10 years time it's "check mate" YOU WIN, game over and you will be living rent free for the rest of your life.


----------



## robots (24 February 2009)

Bill M said:


> Congratulations on the purchase Gav, well done mate. The debate of paying the same for a mortgage as you would for rent has been going on for decades and nothing has changed, you made the right decision. In 10 years time it's "check mate" YOU WIN, game over and you will be living rent free for the rest of your life.




hello,

yeah, congratulations Gav, well done man, i with the same bank as you

i am on 5.23% basic variable, nirvana yet the neighbours are paying close to $50/wk after ALL my costs now with IR drops, spot on Numbercruncher nirvana

top purchase Gav, congratulations Gav well done from all here at ASF

check mate alright Bill M, and how ten years will fly by

sorry sorry i know i know i know no-one will have a job in 2010

thankyou
robots


----------



## Mofra (24 February 2009)

gav said:


> I have a govt job, a good savings history, and I could still meet repayments if interest rates were 12%.  But I was turned down by ING and Heritige their reason - I hadn't been in my current job for 12 months.



They'd be fully securitised lenders so regardless of your deposit and capacity to pay, LMIs aren't looking at anyone with < 12 months with the same employer.


----------



## Mofra (24 February 2009)

gfresh said:


> I think if buyers are *relying* on the grant to purchase, then it is almost subprime by a different name. Say $7k "real" money + $14k of government's money = $21k/350k prop = 6% deposit.  LVR of 94% gives so little in reserve, it's a worry..



_That _is subprime? I've heard some extravagent claims by *both* sides of the bull/bear divide, but this is up there with the best of them.

a. 94% LVR loans would be LMIed, zero defaults allowed at this LVR. That is not subprime.

b. No gen savings loans are almost non-existant in Australia (and were a very small fraction of the market in the first place, the bulk of which were recent Uni grads in high-demand professions). 5% min gen saings is almost a universal requirement accros lenders in the current marketplace. Not subprime.

c. In any case, the UCCC requires a borrower to ensure they have capacity to pay (unlike NINJA loans in the US). Not subprime.

d. No / Low docs have much lower LVR requirements (under 80% for Low Doc) so even our closest equivalent to some of the more adventurous US subprime loans have better standards. The above case would clearly be full doc and therefore: Not Subprime.

e.  You'd need that to purchase even at below the median price in Australia, due to the requirements to pay stamp duty, LMI etc. This would be verified prior to a formal approval on a loan. Not Subprime.


----------



## singlefished (24 February 2009)

Trevor_S said:


> Houses -3%
> 
> 
> 
> ...






sounds like it will soon be cheaper to buy a 2 bedroom house instead of a 2 bedroom unit...

Go the FHB's!!!


----------



## gfresh (24 February 2009)

Mofra said:


> They'd be fully securitised lenders so regardless of your deposit and capacity to pay, LMIs aren't looking at anyone with < 12 months with the same employer.




So that basically means anybody who loses their job in the next 12 months, or in fact has lost their job in the last 6 months has next to no chance of entering the housing market even if they find new work. Clearly this is not a good situation for the market as a whole.  And with Government estimates we are heading towards 7% unemployment, this is possibly tens of thousands that are simply ineligible to enter the market. 



Mofra said:


> _That _is subprime? I've heard some extravagent claims by *both* sides of the bull/bear divide, but this is up there with the best of them




Not having an adequate savings history or adequate equity from the get-go was one of the very elements of subprime! While lending standards may not be as low or to the near unemployed as what occurred in the US, if we look to the UK where 100% loans were common, it's a very thin line between LVR100% and 96%! And we can see where the UK has headed, where lending standards were *not* as lax as the US, but low LVR's were a clear contributor. 

A small 5% or less cash deposit clearly shows the borrower cannot budget effectively to save over even a short period of time, and may well struggle as an owner at doing the same. Having a bare 6% deposit (and only say 3% of that your own), clearly would put FHB into negative equity with only small falls in the market, the magnitude of which has already been felt in the market in the last 12 months... Give it some further economic conditions deteriorating, and such borrowers will be in negative equity. And what happens if they lose their job once in that position? 

Given that less senior employees are probably some of the most vulnerable in the workplace to layoffs, it's setting up for a tense situation for many in the coming year or two.

Never mind if/when interest rates go up several percent in future years... where there are similarities with such a scenario in the US situation, where ARM resets were one of the key triggers to setting off the whole crisis.


----------



## Mofra (24 February 2009)

gfresh said:


> So that basically means anybody who loses their job in the next 12 months, or in fact has lost their job in the last 6 months has next to no chance of entering the housing market even if they find new work. Clearly this is not a good situation for the market as a whole.  And with Government estimates we are heading towards 7% unemployment, this is possibly tens of thousands that are simply ineligible to enter the market.



That only covers the broader LMI borrowers, and the actual criteria can be waived if the client is changing within the same industry or has an otherwise stable employment history. Horses for courses.



gfresh said:


> Not having an adequate savings history or adequate equity from the get-go was one of the very elements of subprime! While lending standards may not be as low or to the near unemployed as what occurred in the US, if we look to the UK where 100% loans were common, it's a very thin line between LVR100% and 96%! And we can see where the UK has headed, where lending standards were *not* as lax as the US, but low LVR's were a clear contributor.



Contributer in a broad sense, but the criteria for lending gets extremely tight above 90% LVR and above 95% it is almost non-existant now (was extremely tough in the first place). 

The major contributing factor was not the LVR in any case: it was capacity to pay. ARMS and severe credit-impared lending were almost completely excluded from home borrowing in Australia (we are talking a fraction of the 4% on non-conforming lender loans, and most of these has strong postcode restrictions in any case).



gfresh said:


> A small 5% or less cash deposit clearly shows the borrower cannot budget effectively to save over even a short period of time



Not necessarily. If you want to paint pictures, >95% LMI loans were pitched almost solely at uni grads who wouldn't have had the capacity to save much for a deposit. Kids walking out into $60-70k jobs as graduates.

Other segment (generally capped at 95% LMI) were investors who had money elsewhere who didn't want to contribute too much to the loan initially, or wanted to keep equity in other properties free for other purposes. 

The percentage of loans for FHBs in their 30s at > 95% LVR was very low at both my previous employers.



gfresh said:


> Having a bare 6% deposit (and only say 3% of that your own), clearly would put FHB into negative equity with only small falls in the market, the magnitude of which has already been felt in the market in the last 12 months... Give it some further economic conditions deteriorating, and such borrowers will be in negative equity. And what happens if they lose their job once in that position?



As stated previously, at 6% you would struggle to buy a property after purchase costs. 

It also needs to be noted that most here seem to forgotten that the US loans are almost all non-recourse (sub-prime or not). The consequences change markedly for defaulting borrowers in Australia as opposed to the US as a result.



gfresh said:


> Given that less senior employees are probably some of the most vulnerable in the workplace to layoffs, it's setting up for a tense situation for many in the coming year or two.
> 
> Never mind if/when interest rates go up several percent in future years... where there are similarities with such a scenario in the US situation, where ARM resets were one of the key triggers to setting off the whole crisis.



As said previously, we don't have ARMS in Australia. I think you seem to be confusing high LVR with capacity to pay, which are two seperate criteria. In addition, the recourse factor means borrowers in Australia are much less likely to hand in keys, as they will be pursued for costs & shortfall in the event of a negative equity sale (remembering LMI protects the lender: GE & PMI will still chase you even if you have satisfied the lender).

Sub-prime was extremely low in Australia (and basically non-existant amongst the big 5 lenders). The 20% of the securitised market has almost evaporated over the past 12 months, so the potential for even writing a sub-prime loan has contracted even further.


----------



## robots (27 February 2009)

hello,

LOOK AT THIS BROTHERS:

http://www.theaustralian.news.com.au/business/story/0,28124,25114294-643,00.html

hows that man, 16k of new jobs

not surprised it hasnt got a run with all the doomheads around

thankyou
robots


----------



## numbercruncher (27 February 2009)

robots said:


> hello,
> 
> LOOK AT THIS BROTHERS:
> 
> ...






Nirvana,  checkout chicks earn big bucks to keep the economy afloat eh ?


----------



## robots (27 February 2009)

hello,

great news with Woolworths announcing 16k new jobs, gee what a surprise i thought no one would have a job with all the writings from the doomheads on blogs, forums, press etc

this is great, 

thankyou
robots


----------



## robots (28 February 2009)

hello,

http://www.theage.com.au/national/hiring-not-firing-some-good-news-in-tough-times-20090227-8kdr.html

look out gloomheads, Aldi banging a few thousand as well so in a matter of days UP 18000

paradise, give it 5min for a gloomhead reply

thankyou
robots


----------



## knocker (28 February 2009)

Interesting

http://www.youtube.com/watch?v=AqbNO54SVDc


----------



## Mofra (28 February 2009)

robots said:


> look out gloomheads



I LOLed


----------



## Beej (28 February 2009)

I'm going to repost the link to an article Kincella found and posted in the other house price thread: 

http://www.businessspectator.com.au...a-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp

This one is definitely worth a read for bears and bulls alike - as it really looks at nearly all the points of discussion that occur in forums like this one. Right at the end there is this very interesting conclusion:



> The RBA’s findings run strongly against the grain of what many would have us believe (refer to the chart below): that is, despite strong growth in real house prices over the last 25 years, *the income younger home buyers have left over after paying off their mortgage was actually higher in 2007 than it has been at any other point in recorded history*. Of course, affordability has only improved since then with significant reductions in the cash rate combined with no growth in house prices during 2008.




Cheers,

Beej


----------



## robots (28 February 2009)

hello,

fantastic news today, a unit in our block went to auction today

2-bed, 3 bidders at auction knocked down for 425k, this is unbelievable, astonishing, cant believe it

Mr Keen said prices were going to drop by 40%, looks as though all the gains over the years are still there and with rents skyrocketing, paradise all the way

i guess thats the popularity of bricks and mortar, genuine product with genuine return, no financial engineering, no management team just plain old roof over the head

thankyou
robots


----------



## MrBurns (28 February 2009)

Went to an open house today, agent said anything around $500k is going well because of the low interest rates and first home buyers donation from the ATP (AU tax payer)

The real bust when it comes will be all the greater as a result.

We now have a dangerous combination to fuel an already huge bubble, low interest rates and bribes to get in. They both cant last forever.


----------



## robots (28 February 2009)

hello,

man the grant has been going for years, i think introduced when the GST kicked off with both fed & state putting in,

i didnt get to an auction around the corner, "premium St Kilda Hill location" on the board, looking at over 1.2m so will be interesting to see the result tonite

but who knows Cheech, its always great to wake up and see something new going on every day

thankyou
robots


----------



## MrBurns (28 February 2009)

Yeah but Rudd doubled it and interest rates have gone through the floor, inflation will kick in and it will be all over when rates go up again.


----------



## robots (28 February 2009)

MrBurns said:


> Yeah but Rudd doubled it and interest rates have gone through the floor, inflation will kick in and it will be all over when rates go up again.




hello,

but i thought we are like the US, UK, Japan et al with interest rates going under 2%?

dont we follow these places, gee so many awesome wide ranging thoughts and opinions, 

thankyou
robots


----------



## MrBurns (28 February 2009)

robots said:


> hello,
> 
> but i thought we are like the US, UK, Japan et al with interest rates going under 2%?
> 
> ...




We do follow them just not at the exact same time.


----------



## kincella (28 February 2009)

I am hearing some good sales prices from friends...its Melb...
lovely weather here today..good for an auction...no fires to worry about

over on the property forum is a good link to perth prices....10 suburbs with prices in the last year higher from 20-40%...wow..and 10 worst burbs with some funny numbers...
maybe we have 2 economies here in aus....one for the bulls and one for the bears....
its funny....burb by burb can be very different.....
oh and the economists got it wrong again....they said down 6% and its up 3% etc..or down  3% and its up 6%....oh well out by 10% is not too bad


----------



## robots (28 February 2009)

hello,

hang on, inflation is going to get us? do US, UK, Japan et al currently have an inflation issue?

oh yeah great day in Melbourne brother, Chapel st was packed with plenty enjoying the scene nirvana Number, tomorrow will be interesting because Sunday's recently have been quiet

the sun is still shining bright, what you know 12mths, 24mths, 60mths have passed and things still rolling on Cheech

thankyou
robots


----------



## Trevor_S (28 February 2009)

gav said:


> Oh and Trev, Seaford units were up 15% for the Dec Q, I think that's what Robots was referring to.




Indeed... but I was just querying his claim that EVERYTHING was up.



gav said:


> I dont see why I would continue trying to save for a larger deposit Glen, when the minimum deposit is the same as renting in the area.  Why rent and pay off someone elses mortgage, when I can pay off my own?  Especially when I can pay it off in less than a decade




The "theory", from some, is that house prices will get lower in the coming 2 years, unemployment will be higher, incomes will be lower, this will force rents down as higher rental places become vacant, competing with the lower rental places ie for the same money you will be able to rent a much nicer place, forcing the average places to lower their rent to attract tenants etc etc.  They cite the UK, USA and Japan for examples of this happening and you can see isolated incidents of this occurring in Aus.  

You obviously don't buy into that argument, as you bought a house   Which is what the Government wanted you to do, as they support propping the property market up with tax dollars (policy I am against but that's another debate entirly)  As to paying it off, just make sure you aren't tempted to tap into your repaymets by redrawing in the future to buy nonsense toys like cars, jet skis, holidays etc, once you start doing that, you really do destroy wealth quickly.

I am not quite as convinced of this scenario happening in Aus. to my mind it has nothing to do with immigration, and housing supply and all to do with non recourse loans and the Government propping up housing via transferring tax from the young to current home owners (eg FHBG), our distorted tax rules encouraging people to buy property and our lax property spruiking laws allowing all and sundry to offer inappropriate property advice to the gullible.

If those situations change and Governments decide to start walking away from the concept of having the nations wealth tied up in housing rather then invested in productive enterprise (this is the very reason we need the chinese to bail out Aussie companies, our tax laws encourage the mass's to put their wealth into property, rather then productive enterprises) then things may change and property may return to what it once was ie accommodation, rather then subsidised speculative investment.



robots said:


> but i thought we are like the US, UK, Japan et al with interest rates going under 2%?




Don't confuse the headline cash rate with the rate you can loan cash, locally, the banks are already on record about not passing on all of any following rate reductions.



robots said:


> dont we follow these places, gee so many awesome wide ranging thoughts and opinions,




Indeed    I just put in an offer for $650,000 (cash) on a 3x2 unit, where the vendor wants $894,000... we'll see.  I own 1 IP and one PPOR currently (both debt free), this would be a new PPOR.  I doubt they will take it but you never know.


----------



## Beej (28 February 2009)

MrBurns said:


> We do follow them just not at the exact same time.




LOL - or for the same economic reasons? or for the same housing market factors (mega high defaults, sub prime etc)?. Gee - anyone would think we actually do have our own economy that can and does often do it's own thing for it's own reasons - which anyone investing in said economy would do well to understand!

Beej


----------



## robots (28 February 2009)

hello,

knocker put up a link of current IR's in Uk and they are look quite reasonable in relation of the current cash rate in the UK,

aus banks have said this many times they cannot pass on full IR cuts, some have and some wont and that will probably continue

but i know i know, it's now apparent we wont follow that particular item

thankyou
robots


----------



## robots (28 February 2009)

hello,

i have got my finger on the pulse for todays auction results, checking REIV every 5 min for the results

hopefully Enzo will get them up quick smart, he is a nice chap Enzo dresses well and returns his email, the sign of a true professional, 

thankyou
robots


----------



## robots (28 February 2009)

hello,

here we go Beej:

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

72% today which is a fantastic effort, units & apartments up a bit more for the day

just like to thank Enzo for getting these results up prompt, top effort man

just a normal run of the mill market by the look of it, keep paying the P & I and presto living large, who says people arent paying off debt?

thankyou
robots


----------



## Beej (28 February 2009)

robots said:


> hello,
> 
> here we go Beej:
> 
> ...




Great result for Melbourne there.

And Sydney results for today can be found here: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Sydney results show a 66% clearance rate (4th weekend in a row with 60%+ clearance now and on reasonable sales volume again like last weekend). 183 properties sold out of 251 auctions (+ 21 withdrawn). Median price at for this weekends auctions $675k - which is a fair bit higher than the past 2 weekends, indicating that more of the mid range priced properties are now starting to sell (as expected). There's a quite a few $1M-$2M sales in there as well, plus a few $2M+ as well, Eg:

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007592994 ($2.02M) and http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007567225 ($2.715M)

So it would seem that higher activity from last quarter in lower price bands is now starting to flow through the market, as expected (and predicted). I predict we will see this reflected in the price stats for Q1 when they come out.

Cheers,

Beej


----------



## gfresh (28 February 2009)

Brisbane, 32% - going off!


----------



## Bill M (28 February 2009)

robots said:


> hello,
> 
> http://www.theage.com.au/national/hiring-not-firing-some-good-news-in-tough-times-20090227-8kdr.html
> 
> ...




Well it didn't take too long for a "gloomhead" reply. I opened up my local rag today and there was 5 pages of jobs in it. Had everything from professional, health, transport, apprenticeships and labouring jobs, all there for those that want to work. Went for my usual walk down the beaches again the coffee shops were full and the car parks all full. It seems to me like everything is as usual, nothing to worry about.


----------



## MrBurns (28 February 2009)

Beej said:


> LOL - or for the same economic reasons? or for the same housing market factors (mega high defaults, sub prime etc)?. Gee - anyone would think we actually do have our own economy that can and does often do it's own thing for it's own reasons - which anyone investing in said economy would do well to understand!
> 
> Beej




There are factors holding us up a little at present but we will not defy gravity for much longer , if I thought we could I'd be out there spending now.


----------



## moXJO (28 February 2009)

Bill M said:


> Well it didn't take too long for a "gloomhead" reply. I opened up my local rag today and there was 5 pages of jobs in it. Had everything from professional, health, transport, apprenticeships and labouring jobs, all there for those that want to work. Went for my usual walk down the beaches again the coffee shops were full and the car parks all full. It seems to me like everything is as usual, nothing to worry about.




This is what I am seeing as well (despite being a bit of a gloomer atm). Not too sure what is going on
But people seem to be spending. Construction has picked up as well and I'm busy again. People seem to be confident with  the low rates on offer.


----------



## Trevor_S (28 February 2009)

Trevor_S said:


> Indeed    I just put in an offer for $650,000 (cash) on a 3x2 unit, where the vendor wants $894,000... we'll see.  I own 1 IP and one PPOR currently (both debt free), this would be a new PPOR.  I doubt they will take it but you never know.




Wow... I just got an email, saying there are two people who own the place (I knew that), one is here locally and will accept it, if I make a formal contractual offer (I had just emailed the RE Agent), owner 1 is sure owner 2 will accept it.  Have I just bought the local median down for units ?  I must admit I was 1. surprised with the speed of the reply and 2. the (apparent) acceptance, I had been led to believe a couple weeks ago that I would be laughed at.  It has been for sale for a couple months (new penthouse unit, just completed, in a new complex) I (we) like the location and the aspect.


----------



## Bill M (28 February 2009)

Trevor_S said:


> Wow... I just got an email, saying there are two people who own the place (I knew that), one is here locally and will accept it, if I make a formal contractual offer (I had just emailed the RE Agent), owner 1 is sure owner 2 will accept it.  Have I just bought the local median down for units ?  I must admit I was 1. surprised with the speed of the reply and 2. the (apparent) acceptance, I had been led to believe a couple weeks ago that I would be laughed at.  It has been for sale for a couple months (new penthouse unit, just completed, in a new complex) I (we) like the location and the aspect.



Do I take it you won't be moving to Tassie now? A bargains a bargain, sounds good. I don't understand "a 3x2 unit", what is that exactly?


----------



## MrBurns (28 February 2009)

Bill M said:


> Do I take it you won't be moving to Tassie now? A bargains a bargain, sounds good. I don't understand "a 3x2 unit", what is that exactly?




3 x2 bedroom units


----------



## explod (28 February 2009)

moXJO said:


> This is what I am seeing as well (despite being a bit of a gloomer atm). Not too sure what is going on
> But people seem to be spending. Construction has picked up as well and I'm busy again. People seem to be confident with  the low rates on offer.




First, no one wants to believe things are going pear shaped.  Two, Glen Stevens said that it is going to come good and; Three, in our living memory it has always been good, so it must be.

The businesses going to the wall tells me not to buy it.   I will stick to gloom till I see some confirmed sunshine thanks.


----------



## MrBurns (28 February 2009)

I'm not gloomy for the sake of it but I've seen people go broke being overly optimistic so I tend to only dive in if I'm fairly sure I already know the outcome.
With whats happening round the globe you would be a fool to risk too much on anything right now.


----------



## knocker (28 February 2009)

Trevor_S said:


> Wow... I just got an email, saying there are two people who own the place (I knew that), one is here locally and will accept it, if I make a formal contractual offer (I had just emailed the RE Agent), owner 1 is sure owner 2 will accept it.  Have I just bought the local median down for units ?  I must admit I was 1. surprised with the speed of the reply and 2. the (apparent) acceptance, I had been led to believe a couple weeks ago that I would be laughed at.  It has been for sale for a couple months (new penthouse unit, just completed, in a new complex) I (we) like the location and the aspect.




Good stuff mate. Have a look in Cairns also, lots of goodies up for grabs there. But frankly, wait another year and make an offer for 400k ;-)


----------



## Beej (28 February 2009)

gfresh said:


> Brisbane, 32% - going off!




Yea - not so good. One comment though - does Brizzy traditionally have much of an auction driven market? The volumes always seem really low whether the clearance rate is low or high?

Cheers,

Beej


----------



## Trevor_S (28 February 2009)

Bill M said:


> Do I take it you won't be moving to Tassie now?




Very much still on the cards  This was originally an interesting exercise and I was mightily surprised it was accepted.



Bill M said:


> A bargains a bargain, sounds good. I don't understand "a 3x2 unit", what is that exactly?




sorry, 3 bedroom and a study  (2 bathroom) and that's the point isn't it ... is it a "bargain" ? if they have accepted that price, haven't I set the new floor in pricing, everyone else interested will presumably see what I bought for (if I go ahead) and want a lower price on the other ones still available and if they get them for less then me, then I paid "top dollar".

What say you ? WBC to cut dividends along with ANZ ? (most of the banking part of my portfolio is in WBC)


----------



## Beej (28 February 2009)

Trevor_S said:


> sorry, 3 bedroom and a study  (2 bathroom) and that's the point isn't it ... is it a "bargain" ? if they have accepted that price, haven't I set the new floor in pricing, everyone else interested will presumably see what I bought for (if I go ahead) and want a lower price on the other ones still available and if they get them for less then me, then I paid "top dollar".




What's been driving prices up to now? Sounds like a lot of these places are on the market? Any others sold? Quite a few desperate sellers around? The thing is, for $600-$800k you could buy a pretty decent 3/2 apartment in Sydney, on the lower north shore or eastern beach side suburbs (Bondi, Coogee etc). So to me, for Townsville, that type of money seems really high, and therefore possibly very risky, as how many people are around to drive/sustain prices at that level for that type of property? In Sydney the demand is clear and constant for say Bondi or Coogee - will that be the case in FNQ at that price level?

Just my thoughts...

Beej


----------



## singlefished (28 February 2009)

Beej said:


> Yea - not so good. One comment though - does Brizzy traditionally have much of an auction driven market? The volumes always seem really low whether the clearance rate is low or high?
> 
> Cheers,
> 
> Beej




Couldn't find much for historic rates in Brizzy.... the stuff on the RBA website only really references historic Melbourne & Sydney.

Found this though from mid 2003 :


> http://sites.ninemsn.com.au/minisite/property/research/buyingproperty/story12.asp
> Brisbane's clearance rate was also unchanged, with a rate of 61 percent, though volumes had their third monthly increase in the row with 197 properties auctioned, which is up from 155 recorded in the previous month.




All over the news this evening was how unemployment in QLD is currently the worst in Australia - up 18% from the previous quater (if i remember correctly) - and how it may impact the coming state election....


----------



## knocker (1 March 2009)

singlefished said:


> Couldn't find much for historic rates in Brizzy.... the stuff on the RBA website only really references historic Melbourne & Sydney.
> 
> Found this though from mid 2003 :
> 
> ...




Go anna


----------



## Bill M (1 March 2009)

Trevor_S said:


> > sorry, 3 bedroom and a study  (2 bathroom) and that's the point isn't it ... is it a "bargain" ? if they have accepted that price, haven't I set the new floor in pricing, everyone else interested will presumably see what I bought for (if I go ahead) and want a lower price on the other ones still available and if they get them for less then me, then I paid "top dollar".
> 
> 
> 
> ...


----------



## numbercruncher (1 March 2009)

Isnt knife catching such a fun sport ?


----------



## numbercruncher (1 March 2009)

Meanwhile in the real world ......




> * Tourism, mining jobs slashed in boom states
> * Centrelink inundated with jobless
> * Queensland, Western Australia hardest hit
> 
> ...




http://www.news.com.au/business/money/stor...1-14327,00.html


" House prices to keep rising for years " - yup sure they are mate .....


----------



## GumbyLearner (1 March 2009)

numbercruncher said:


> Meanwhile in the real world ......
> 
> 
> 
> ...




Of course the WORLD isn't facing it's first credit contraction in 60 years.

Totally agree NC. ------------------------------------------->


----------



## Beej (1 March 2009)

numbercruncher said:


> Meanwhile in the real world ......
> 
> http://www.news.com.au/business/money/stor...1-14327,00.html





QLD! The real world! ROTFL!!!!

In the "real world" down in Sydney and Melbourne life goes on, heaps of people still buying houses every week and prices are strong, and rising in some price brackets/area's. These are in the states that have not had the direct mining driven boom/bust impacting the local economies anywhere near as much as WA and QLD, and so have been economically sluggish for quite some time already. I'm just highlighting the facts. Sorry if they don't fit with your view of the world!



GumbyLearner said:


> Of course the WORLD isn't facing it's first credit contraction in 60 years.
> 
> Totally agree NC. ------------------------------------------->




The whole world? So every country including Australia, China etc currently has contracting credit do they? PS: you might want to check the lastest RBA figures released on Friday for AU.....

You know the other thing is, no one used to worry anywhere near as much about the  ROTW as all the internet scardy-cats do nowadays! The only people who used to be overly concerned were people running businesses that rely on import/export trade and people with investments in foreign share markets etc. Certainly no-one (especially Mr and Mrs Joe Blogs!) purchasing local property has ever been particularly concerned.... And quite correctly, as the report Kincella posted points out (reposted a page or 2 back here by myself), there is very little systematic long term correlation between housing markets in different countries - they are each driven primarily by their own local factors (supply, demand, urbanisation, population growth, taxation rules/regime, culture, percentage of home ownership, wage growth, demographic trends, household after tax/disposable income etc etc etc).

Cheers,

Beej


----------



## Bill M (1 March 2009)

numbercruncher said:


> Isnt knife catching such a fun sport ?




Just out of curiosity, you are negative on shares, negative on property and negative on the price of gold, are you always this happy? Or are you just happy being negative?:


----------



## kincella (1 March 2009)

of course buffett would be optimistic.....after 44 years in the business
thats the problem with old timers...after they have survived one crisis...they have some experience when confronted with the next one...etc
and its refreshing to see one optimistic voice...versus all the doom and gloom from everyone else
bit like our prop forum here
..........................................................................................
Warren Buffett says the economic turmoil that contributed to a 62% profit drop last year at the holding company he controls is certain to continue in 2009, but the revered investor remains optimistic.

Buffett released his annual letter to Berkshire Hathaway Inc. shareholders on Saturday morning, and detailed the worst of his 44 years leading the Omaha-based company. But in between the news of Berkshire's sharply lower profit and its nearly $US7.5 billion ($11.5 billion) investment and derivative losses, Buffett offered a hopeful view of the nation's future.

He said America has faced bigger economic challenges in the past, including two World Wars and the Great Depression of the  
1930s.

''Though the path has not been smooth, our economic system has worked extraordinarily well over time,'' Buffett wrote. ''It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead.''



http://business.theage.com.au/busin...tic-economies-will-rebound-20090301-8l6k.html


----------



## robots (1 March 2009)

hello,

you the king Beej with your observations:

http://www.realestate.com.au/cgi-bi...r=&cc=&c=26312396&s=vic&snf=rbs&tm=1235863128

i know trembling hand will love the description "premium st kilda hill location"

sold for 1.47m Beej which looks as though you are right that things are moving through the middle and higher ranges as well,

6mths ago another place in redan st, passed in and sat for mths

thankyou
robots


----------



## Beej (1 March 2009)

robots said:


> http://www.realestate.com.au/cgi-bi...r=&cc=&c=26312396&s=vic&snf=rbs&tm=1235863128
> 
> i know trembling hand will love the description "premium st kilda hill location"
> 
> sold for 1.47m Beej which looks as though you are right that things are moving through the middle and higher ranges as well,




Shucks - thanks Robots! That place looks quite nice by the way, also looks like it beat the reserve by quite a margin, as was advertised as "over $1.2M" and sold for $1.47M.

Cheers,

Beej


----------



## Trevor_S (1 March 2009)

Bill M said:


> Just as a comparison my mate bought a 2 story 4 bedroom brick home on the Central Coast for 335K.



http://www.townsvillebulletin.com.au/article/2009/01/21/34065_investor.html



> TOWNSVILLE has been named among most unaffordable places in which to live in Australia.
> 
> Skyrocketing property prices are eating up more than half of buyers' incomes on mortgage payments.




and this comment below, made with some jest by knocker may be on the mark 



knocker said:


> But frankly, wait another year and make an offer for 400k ;-)





Bill M said:


> It was expected unfortunately, I have no regrets in purchasing my rights issues in WBC @ $15.22. I will hold this stock for many years to come.




As will I, I have held from the days of buying them for $3 when Packer was on the board and they nearly went under,  everyone else was doom&gloom about me at the time if I recall correctly, nice buying in retrospect.

I am in two minds about topping up with WBC OR watching the SPSII offer list and buy them @ market OR just buy more WBC if it goes below $15.22 (I never took up the rights offer on WBC, I did with WES)



Bill M said:


> Also funny thing, ANZ shares jumped on the news




Brings a certainty, nothing "investors" like more then certainty.


----------



## MR. (1 March 2009)

Trevor_S said:


> I just put in an offer for $650,000 (cash) on a unit, where the vendor wants $894,000... we'll see.






Trevor_S said:


> This was originally an interesting exercise and I was mightily surprised it was accepted.






Trevor_S said:


> and this comment below, made with some jest by knocker may be on the mark






knocker said:


> But frankly, wait another year and make an offer for 400k ;-)




Wonder why many "good" realestate agents only accept offers in writing!  

Was this the only way you could have realised that the market might be decreasing and some people could be in trouble? 

When ya signin?


----------



## kincella (1 March 2009)

wow...that price for Townsville ???  its just a big old country town imo...was there on a flying visit a couple of years ago....5 star hotel....red carpet...but the 'others' were in thongs, lining up to play the pokies downstairs......
aaarrhhh grrrrrrrrrrrrr
oh well to each their own.....sounds very expensive ....they must be still in mining boom mode


----------



## numbercruncher (1 March 2009)

Bill M said:


> Just out of curiosity, you are negative on shares, negative on property and negative on the price of gold, are you always this happy? Or are you just happy being negative?:





Hello,


just replace negative with realistic ......

I doubt you can find a bearish comment on Gold from me ....

Negative on Shares ? Shares is such a diverse word and im certainly not bearish on all shares ..... I own many infact ... ( for better and worse! )

Im mainly bearish on Aussie RE as youve pointed out .... well actually Ive little faith in many many areas of the Australian economy ...



Bit of Quantative easing should sort yahs all out eventually ... 

So to answer you enquiry im happy being realistic !


----------



## Beej (2 March 2009)

Looks like sales of new houses are starting to pick up now:

From: http://business.smh.com.au/business/new-home-sales-surge-20090302-8lv2.html



> *New home sales surge*
> 
> New home sales jumped in January as buyers responded to interest rate cuts and the Federal Government's stimulus plan.
> 
> Sales of new homes, including multi-unit dwellings, gained by nationally by 8% in January, the Housing Industry Association said, reversing a 1.1% fall in December.




Cheers,

Beej


----------



## singlefished (2 March 2009)

Should have posted this in the other thread...

Increasing supply leading to less demand for rentals/purchase of existing stock... Unemployment rising... immigration intake under review... not looking good is it?


----------



## Trevor_S (4 March 2009)

Beej said:


> So to me, for Townsville, that type of money seems really high, and therefore possibly very risky, as how many people are around to drive/sustain prices at that level for that type of property? In Sydney the demand is clear and constant for say Bondi or Coogee - will that be the case in FNQ at that price level?




Went in for a look at another Unit on Sunday (2 of the 4 have been sold, both for $1.7Mil each, 2 left to sell), list price was $1.7Mil, dropped to $1.5Mil without asking and "we'll look at offers" from the RE Agent.

Got home, had a think and fired off an email offering $990,000 (subject to finance) on Sunday night ... cheeky bugger, yes I know but hey, it's a nice place    Got a reply back with $1.3Mil as a counter offer, I fired back saying $990,000 cash offer (no finance), heard nothing back as of yet.

Have a second inspection tomorrow on the other place mentioned before.

That aside, all this D&G is starting to infiltrate my usual pessimism and turn it into depression !  

We talked once again about just buying a decent 2nd hand motorhome,  traveling around for 12 months and having a look, keep the cash in the bank and rent the current PPOR out in the interim (next door rents currently for $510) and ending up in Tas. as originally planned !

of course if they come back an accept the $990,000 (which was actually a serious offer !) what is that a sign of ? good buying or the sky is falling from the resi market. and stay away ?


----------



## kincella (4 March 2009)

gist of the article today is ...investors are losing their homes to the banks...so the tenants are kicked out...
but the banks dont keep or hold the houses...they sell them...to other IP investors or fhb's

then the homeless people get help from the govt...which finds them another place to live...at the rate of 645 a month....not sure if that is 645 houses...or 645 people...(more like) it a month....

so...some prop investors are doing ok....all these tenants looking for homes...
not sure how many mortgage sales per month happening...
this story is about NSW only....so similar stories for each state...
http://www.news.com.au/business/money/story/0,28323,25136079-5013951,00.html


----------



## numbercruncher (4 March 2009)

> House prices to keep rising for years


----------



## Trevor_S (6 March 2009)

kincella said:


> wow...that price for Townsville ???  its just a big old country town imo...




Went for a second inspection on the place we had offered $650K for, (down from $809K asking) looks the goods, got the contract, will take to my solicitor as well and lots of paperwork to read over (rates, body corporate etc).  Like the location, like the aspect blah blah.  

Had a second email back from the $990,000 offer on the other unit we were interested in.  They "want to deal" if I can go up a bit more.  In all honestly, spending $1,000,000 on an apartment (plus $30G in Stamp Duty) would suck up just about all my cash, that alone would make me nervous ... so even if they accepted, a long hard think may see me baulk at it.  Very nice place though... I mean who doesn't want a bidet in the ensuite   3 bedroom, 3 bathroom, huge study blah blah blah.


----------



## Trevor_S (6 March 2009)

Trevor_S said:


> Had a second email back from the $990,000 offer on the other unit we were interested in.




Just got an email back saying they would get me a contract on Monday !  I guess this means they will hope for a better offer this weekend !

Well now we will have a choice:

Unit for $650K down from $809K asking (brand new, cash deal)
Unit for $1Mil down from $1.7Mil asking (two of the 4 have been sold at $1.7 Mil, 2 left to sell, brand new, cash deal)
or keep the status quo, leave my cash as cash and ivest as I see fit.


----------



## Beej (6 March 2009)

Trevor_S said:


> Just got an email back saying they would get me a contract on Monday !  I guess this means they will hope for a better offer this weekend !
> 
> Well now we will have a choice:
> 
> ...




Personally, I would still never pay either amount for any strata title property in a regional town in Australia, when as I have pointed out before you are at (and beyond) trendy beach-side Sydney prices at those levels. The amount of negotiability in the prices shows you how thin/illiquid the market is for that sort of property up there IMO, and clearly in this case the developers are trying offload quickly at virtually any price in order to eliminate their debt.

Additionally, Torrens/Freehold title is a must IMO if paying decent money for property - as you want to have sole control over your land and property - I hate body corporates - both the fees and the bloody managers and committee's etc! Plus you can't easily improve the property and add value.....

If you were getting a freehold block of land with a really nice house on it by the beach, near a good part of town etc, then I would say there might be real value and potential there....Just my 2c worth anyway.

Cheers,

Beej


----------



## kincella (6 March 2009)

Funny...I thought Townsville , centre of the storm fiasco, had 800 houses at risk of being repossessed....unless they are hoping for the govt to bail them out ??? should be a smorgasboard to choose from, in the months ahead...

agree with Beej....only Sydney or Melbourne warrant that type of money....


----------



## robots (6 March 2009)

hello,

yes I agree too, outrageous

any chance for a link on one of these "bargain" properties like with everything on realestate.com.au should be easy

thankyou
robots


----------



## billv (6 March 2009)

Hi Bulls

I haven't bothered to read the 201 pages before this 1 because I know what it's all about 
but thought I should post  here to let you know I am around and that I'm a bull as well 

So yes I agree property prices will keep rising and we are half way through the next cycle 
so people get out there and buy buy buy and get ready for the next boom...


----------



## numbercruncher (6 March 2009)

> we are half way through the next cycle





sO HOW LONG HAS THIS CYCLE BEEN GOING THEN ? IS IT NATIONWIDE ? excuse caps ...


----------



## billv (6 March 2009)

numbercruncher said:


> sO HOW LONG HAS THIS CYCLE BEEN GOING THEN ? IS IT NATIONWIDE ? excuse caps ...




Numbercruncher

I was actually referring to Sydney, which peaked in 2003.
We've been 6 years in this cycle so it's time for the markets to move upwards again.

In the past 6 years my wages have increased by 30% so my affordability has been improving while property prices have fallen or stayed the same.

So we have increased wages, lower interest rates & higher rents in a tight rental market. At the same time we have record low new building approvals
and increased population so provided we can get loans, property prices will have to go up.


----------



## Beej (6 March 2009)

Duck Billv - you are about to get bombarded with a dozen or so property bear responses containing pure unsubstantiated conjecture, but delivered with absolute certainty and confidence; almost religious zeal - be prepared! 

Cheers,

Beej


----------



## billv (6 March 2009)

Beej said:


> Duck Billv - you are about to get bombarded with a dozen or so property bear responses containing pure unsubstantiated conjecture, but delivered with absolute certainty and confidence; almost religious zeal - be prepared!
> 
> Cheers,
> 
> Beej




Do you think so?
I bet they're sick of waiting for the sky to fall and are about to change camps and join us....


----------



## Bill M (6 March 2009)

billv said:


> So yes I agree property prices will keep rising and we are half way through the next cycle
> so people get out there and buy buy buy and get ready for the next boom...




I don't know how relevant this clock is anymore but if it is right then I reckon we are at 7 O' clock. We are definitely at falling interest rates.


----------



## Trevor_S (6 March 2009)

Beej said:


> Duck Billv - you are about to get bombarded with a dozen or so property bear responses containing pure unsubstantiated conjecture,




no fair ... let him walk into the tiger trap 

anyhoo...

From Lateline Business 4/3/09


> Martin North argues that low interest rates and governments grants are creating the conditions for a deeper and more protracted recession.
> 
> Under this scenario house prices are likely to fall and for new home owners that could mean negative equity.




http://mpegmedia.abc.net.au/latelinebusiness/av/podcast/20090304-latebiz-gdp-proper_video4.m4v


----------



## Trevor_S (7 March 2009)

Beej said:


> and clearly in this case the developers are trying offload quickly at virtually any price in order to eliminate their debt.




I agree with your sentiment...

As to prices locally

http://www.townsvillebulletin.com.au/article/2009/03/06/43001_hpnews.html



> AN apartment in Mitchell Street, North Ward, is set to claim the title of Townsville's most expensive unit.
> 
> Trouble is no one wants to talk about it _ at least not publicly.
> 
> But if the whispers are right Unit 9, 88 Mitchell Street, is under contract to grazing identity Mick Anning for a scorching $3.4 million.






> Townsville's previous record unit price was set in 2007 for Tom Hedley's 18th floor penthouse in the T1 building in Sturt Street _ $2.8 million for a 603 square metre apartment.


----------



## numbercruncher (7 March 2009)

billv said:


> In the past *6 years *my wages have increased by 30% so my affordability has been improving while *property prices have fallen or stayed the same*.
> 
> .





I woulda thunk the permabulls would have something to say about that little wildcard ....


As an aside in the past 12 months my income has risen substantially, house prices (in my area) have tumbled and continue to do so, along with interest rates , yet im in no hurry to re-enter the RE market as it is awash with stock ..... the money renters all seem to be bolting for the door at once ..... such a predicatable mob .... Its a buyers market and its trending down ...... wake me up when quantative easing kicks off ..... all roads lead to Zimbabwe one punter reckoned ...


----------



## billv (7 March 2009)

numbercruncher said:


> Its a buyers market and its trending down



It could be, depends on the location




numbercruncher said:


> wake me up when quantative easing kicks off ...



Don't worry the media will do that and will be very accurate as well


----------



## numbercruncher (7 March 2009)

I read the Westies are cutting loose with fists full of Gov handouts ??



> It's been revealed that property sales across western Sydney are booming, despite the financial crisis.
> 
> The Daily Telegraph says data from the NSW Office of State Revenue shows that property sales across all western Sydney suburbs for the three months to February soared by up to 20 per cent on last year.




http://news.ninemsn.com.au/article.aspx?id=768272


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## billv (7 March 2009)

numbercruncher said:


> I read the Westies are cutting loose with fists full of Gov handouts ??



I think you'll find it's not just westies buying.

There is a large proportion of investors who think that 5-7% returns in this economic environment where inflation is 4% and our money in the bank is earning next to nothing are not to be ignored.

Unfortunately the first home buyers are just bringing competition to the market so investors & FHB's are both ending up paying more.


----------



## numbercruncher (7 March 2009)

billv said:


> Unfortunately the first home buyers are just bringing competition to the market so investors & FHB's are both ending up paying more.





But didnt you just say prices havnt budged for 6 years ? are you arthur or martha ?


----------



## Bill M (7 March 2009)

Sydney is doing just fine and this story seems to sum up quite well as to what's going on in my area.

*Nest-egg buying hots up*

However with many portfolios dropping 40 per cent in value people with money to invest are again looking favourably at bricks and mortar. 

We are starting to see mums and dads looking at an investment unit as their superannuation and anything sub $1 million is attracting them, he said. 

Click here for the full story


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## Beej (7 March 2009)

numbercruncher said:


> I read the Westies are cutting loose with fists full of Gov handouts ??
> 
> http://news.ninemsn.com.au/article.aspx?id=768272




I've been saying here and in the other property thread for months that this has been going on - the media only cottons on well after the fact (in both the case of a soft/falling market and the beginning of any turn-around). 

So in Western Sydney we now have confirmed rising volumes AND rising prices - most action in sub $500k bracket. So think people; what happens next?? Ie all those owners selling to those sub $500k places - what will a large proportion of them do next with their sale proceeds? Come on - this really is not rocket science....  I'll give you a clue - the auction results for the past 4 weeks in Sydney are already telling us the answer (but the media won't notice for a few months).

PS: Even top end is starting to shift a bit more now - one of my local papers (Mosman Daily) lists several $3M/$4M private treaty sales of premium property - wasn't seeing too many of those last year (although it's not like houses at that price sell by the dozen each weekend). The other local paper (North Shore Times) has this weeks top 10 sales starting at $1.375M (Castlecrag) and rising to $2.04M as number one (Longueiville). These properties are all still a bit cheaper than they might have been 12-18 months ago by up to 10% (but it is really hard to judge as each is unique). However, they seem to be selling like hotcakes at current prices in the current market, so it looks to me like the north shore of Sydney has found it's floor on prices for this cycle - this quarters median stats may even show a rise over-all just because there are more higher priced properties being sold across the board when compared to last half of last year.

Cheers,

Beej


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## billv (7 March 2009)

numbercruncher said:


> But didnt you just say prices havnt budged for 6 years ?




In general they haven't, but prices in the western subs have fallen in that period 
and now that interest rates fell and the FHB's grant came along 
the situation in the lower priced parts of Sydney has changed.

It's actually happening right now, as soon as 1 property sells for near asking price if not more , 
the next one will be listed at a higher price. I know because I'm looking to buy as an investment 
and unfortunately there are a lot of buyers out there, mostly FHB's pushing prices up.


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## kincella (7 March 2009)

history repeating again....after the 2000 tech wreck....took my money and left it in the bank.....daughter had been telling me about a house opposite to where she lived, she wanted me to buy ...it was on the market and awfully cheap, the owner was being relocated with his job....asking price was 85,000...inner city, regional city.....that was about march 2000....by May, owner changed mind and took it off the market....daughter was not happy with me...

suddenly, one Sunday night in July 2000 she called, saw them putting up the for sale sign....Monday morning I called the agent....asking price 115,000...same house nothing changed...except the price was now 30,000 more than 4 months earlier.....daughter wanted me to buy it Mon morning....I said I had to have a look inside first,,,,so at the first open house the following Sat...35-40 people were there at the opening, I sqeezed around , had a quick look...and told the agent I would take it....

that was 5 minutes after the opening...I signed the contract and gave him the deposit..the .full 10%....(not a generic...in case I change my mind amount of $500) heard a lot of people complaining...they had been thinking about it when it was 85.000, now they were disgusted at the extra 30,000.....but still thinking about it...

from that day and for the next 2 years,  I got the bug...all those cheap little places for sale....I ended up buying 10 over a 2 year period...

the media was still banging on about the tech wreck....the GST which had come in, in 2000 and everything else....the media thought property was too high, had peaked in 2000 or something silly......lots of people were nervous and selling .....and selling at ridiculous low prices

I was very busy with all the houses, getting tenants, renovating etc, did not care what the prices were after I bought them.....about 2003 the media woke up, and started suggesting people look at property as a safe haven after the tech wreck...
I was busy building a townhouse, fighting the bank about the future value, and having problems with the builder....he took 10 months...too busy with so many jobs,,,,and I was in Melb...miles away....
Then early 2004 an agent called he had a buyer for one of my props, if I was interested...well I said no..but what sort of money were they offering ???
(the house was not for sale...but agents were short of houses, so they door knocked looking for sellers) well they were offering 3 times the cost price....
so I said yes....
I met a lot of people in those 3 years, all property buyers, all having a ball, we could not believe how cheap the houses were....mostly since the media had given property a drumming about being overpriced......
and we laughed when the media finally woke up, and suggested that it was a good time to buy property...by the time the media woke up, it was too late,
our props had tripled in value....and we sold some of them.....

very similar to whats been happening for the past 6 months......the media banging on about high prices, screaming about a decline of less than 1%, in the meantime....people are out there snapping up the bargains.....
oh and the media focus on the property prices out weighs their focus on the share market slump of between 50-90%


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## kincella (7 March 2009)

message for Trevor.....

compared to the problems the bigger cities are experiencing...just wonder about the Townsville scene......???? seems way overpriced, expecially after reading this article....you can probably drop the offer by another 100k's
................................
16,623 apartments and townhouses...abandoned or halted.....
here's an extract
.....................................................................................
In Sydney's North Shore, along the Pacific Highway between Chatswood and Hornsby, there are estimated to be between 200 and 500 apartments unsold, including many that are unfinished. 

Developers overpaid for the sites in the boom and apartments are more costly to build than houses at $1400 a square metre versus $900/sqm for a house so they are unable to lower the prices in order to pay back their debts. 

Industry insiders say part of the problem is that many thought the apartment boom that began up to 10 years ago was here to stay. 
.....................................................................................................
scary stuff...you buy off the plan...some are sold...the rest unfinished shells...left and abandoned.....and you are left with either a unit or a deposit..

***
interesting ...apartments cost 1400 per square metre...compared to houses at 900.....yet majority of units sell for a lower price than a house.....
these must be luxury style units then....
bit different from fhb range of about 600 square metre

http://www.news.com.au/business/money/story/0,28323,25149947-5013951,00.html


----------



## kincella (7 March 2009)

some comparisons to think about regarding Townsville....

population of about 150,000....properties for sale on realestate site...1742, properties listed in the last 7 days...83

Albury/ Wodonga...population about 140,000....properties for sale 200
listed last 7 days...less than 10....

about 8.5 times as many for sale in Townsville and similar 8.5 times listed past week....
wow... 32 sold last week Townsville.....
Albury...7....but it only averages a sale a day for the past 9 months....
Townsville sales 200 since 23.1.09
Albury sales 180 since 9.09.08.....takes 6 months here to achieve the same results...

the RE agents must love the place with such a huge turnover.....
unbelievable........

.... a moving population.....this from wikipedia
.................................
Demographics
For a full list of suburbs in Townsville and the surrounding region see Suburbs of Townsville 
Townsville has a younger population than the Australian and Queensland averages. The city has traditionally experienced a high turnover of people, with the army base and government services bringing in many short to medium term workers. The region has also become popular with mine workers on fly in/fly out contracts. Major improvements to the lifestyle infrastructure over the past 10 years has led to a higher living standard, and consequently the population boom.[citation needed] In 2005-06, the Townsville Statistical District grew at just over 3 per cent and was the fifth fastest growing district or division in Australia.[25]

The annual average rate of change in population in the Townsville/Thuringowa between 30 June 2000 and 30 June 2005 was 2.5%, compared with 2.2% for Queensland.[23]


----------



## singlefished (7 March 2009)

billv said:


> In general they haven't, but prices in the western subs have fallen in that period
> and now that interest rates fell and the FHB's grant came along
> the situation in the lower priced parts of Sydney has changed.
> 
> ...




Quite ironic isn't it ~ it's the lower socio-economic community based out in these burbs that will be hit worst with the recession yet this is where you're spruiking the current epicentre for the Sydney "property boom" is and will subsequently spead to the east from here to the more effluent D) suburbs...

A vast proportion of Australias manufacturing and exporting derives from these very western suburbs you speak of yet the sectors of the economy that support this demographic are the ones that are failing fastest and that's a trend that will not likely ease up with the lack of business credit out there and the cheaper costs of manufacturing that can be achieved by taking your business overseas ~ look at Bonds for case in point.

I can assume that you're obviously of the belief that the worst has already been seen in the economy and you also expect that it too will also grow from here???


----------



## gfresh (7 March 2009)

kincella said:


> The annual average rate of change in population in the Townsville/Thuringowa between 30 June 2000 and 30 June 2005 was 2.5%, compared with 2.2% for Queensland.[23]




Sounds a bit like the Goldcoast.. now the easy money has dried up, a lot of those involved with construction industry are heading back to where they came from. Many that have only been here a couple of years also see the writing on the wall, chuck in the towel and go back to live closer to their family. 

The flow-on is that many smaller and medium businesses that relied on highly discretionary income (boat builders, car sales, hairdressers, beauticians,etc) are suffering a lot at the moment. Many will just stay in business, but with greatly reduced profits, only just getting by, leaving not much discretionary income for the rest of the local economy. And a lot are mum & dad businesses, with their house staked as equity... problems there. Not where I would feel safe buying at the moment - Brisbane is a little different.

Went to a couple of OFI's this morning.. probably 4 or 5 couples at each aged 25-30-ish. Places should sell pretty quickly, were not too bad... although up close to $400k 20km from the city. That whole Melbourne and Sydney outer-suburb thing of under $300k for a house just doesn't exist here, so FHB have to stake up a lot more.


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## lioness (7 March 2009)

Can anyone provide an updated link for todays auction results for Melbourne such as this one for last week by Robots??

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

Thanks in advance.

Thank god for FHB, they are swarming all over my unit in Brunswick.

I have the auction next week and be glad to dump it on their heads.


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## billv (7 March 2009)

singlefished said:


> I can assume that you're obviously of the belief that the worst has already been seen in the economy and you also expect that it too will also grow from here???




I don't know about the Oz economy but I believe Sydney has already been in recession for the past 2 years and that things can't get much worse.

That's my opinion, I can't predict the future, none can.
All I can do is to analyse the information I have on hand and plan for my future. 
I always invest when I am ready and always have an exit plan.

My last purchase was 12 months ago so it's time for me to go for 1 more.
I am not over extending myself, I don't cross col and I always borrow 80% so I am fairly conservative with my investments.


----------



## knocker (7 March 2009)

billv said:


> I don't know about the Oz economy but I believe Sydney has already been in recession for the past 2 years and that things can't get much worse.
> 
> That's my opinion, I can't predict the future, none can.
> All I can do is to analyse the information I have on hand and plan for my future.
> ...




lol You say Sysdney has been in recession for the past 2 years and things will not get worse. hahaha very humorous. You Sydneysiders lead such a sheltered existence. Wait until the rest of Oz as you put it, goes into recession. Good luck with you  blind optimism.


----------



## knocker (7 March 2009)

Trevor_S said:


> I agree with your sentiment...
> 
> As to prices locally
> 
> http://www.townsvillebulletin.com.au/article/2009/03/06/43001_hpnews.html




Would not want to live anywhere near Townsville or Hamiliton Island right now, with hamish picking up speed. Wonder how all those coastal properties will fair with rising tides and cyclone force winds. Good luck


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## shaunQ (7 March 2009)

billv said:


> My last purchase was 12 months ago so it's time for me to go for 1 more.
> I am not over extending myself, I don't cross col and I always borrow 80% so I am fairly conservative with my investments.




I had to double take at that - I thought you meant 80% deposit, but no, 80% debt - very conservative. Don't stop at one, there's lots of bargains now so you may as well pick up two - you can't lose!


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## robots (7 March 2009)

hello,

lioness, the results will get on about 7-7.30pm tonite, will post as soon as on man

yes it all is an internet conspiracy, not much has changed really, people still out and about, havent seen the soup line yet 

paradise everywhere you look, of course the bludgers of society will continue to tell us how bad things are

thankyou
robots


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## Beej (7 March 2009)

Sydney auction results for today posted now: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

*71% clearance rate*  on 123/173 with only 2 properties withdrawn. That last part is significant, withdrawals have been common-place up until the last few weeks, so this, in addition to 6 weeks of strong clearance rates, is a clear indicator that buyer competition is back and we may be swinging from a buyers to a sellers market here in Sydney....

Median sale price from the auctions was $623k, and again several $1M+ sales like last week, including 5 $2M+ sales.

How long can this last I wonder? Certainly no great house price crash going on here in Sydney at the moment - quite the opposite! If the newspapers and ASF forums weren't screaming doom and gloom I'd almost think we were in a booming R/E market? *Can any of the bears please explain to me how this can be happening?*

Cheers,

Beej


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## Largesse (7 March 2009)

beej

i'd be considered bullish on property just like yourself but the stats you are using are meaningless.
so what if there were 'several $1m+ sales... including 5 $2M+ sales'
whats to say those properties weren't all worth 1.5x or even 2x that last year?


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## robots (7 March 2009)

hello,

top effort up there in Syd man, and here's Melbourne:

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

mid seventies, top effort by Enzo in getting the numbers together, true professional of the industry

this is unbelievable, isnt it great to be alive

thankyou
robots


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## Beej (7 March 2009)

Largesse said:


> beej
> 
> i'd be considered bullish on property just like yourself but the stats you are using are meaningless.
> so what if there were 'several $1m+ sales... including 5 $2M+ sales'
> whats to say those properties weren't all worth 1.5x or even 2x that last year?




Well there are 2 points, which I will use to show the info is not meaningless. 

The first point is that sales in those price brackets regardless of discounting were struggling late last year as the share market crashed and many of the big finance companies went under etc. Ie there were few high end buyers around. The fact places in this price range are selling now is a positive sign for the market - it means buyers with that level of cash/finance are coming back into the market. They are probably different people than previous buyers (ie no B&B executives this time around!), but it shows that there are still folks with serious money in the market.

The second point is you can click through and see exactly what is selling at those prices (which I do because I am interested in real estate). It is very hard to tell what a particular property may or may not have sold for say last year vs this year, as rarely does the exact same property change hands in that sort of time frame. However, I know the Sydney market pretty well, and when I look at those sales it looks to me like they are solid prices for the properties and locations in question. In fact one of them - $2.8M for an apartment right on Bondi beach, seems like a very impressive price (ie not discounted at all compared to boom/peak prices): http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007584982

Cheers,

Beej


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## numbercruncher (7 March 2009)

> Originally Posted by billv
> My last purchase was 12 months ago so it's time for me to go for 1 more.
> I am not over extending myself, I don't cross col and I always borrow 80% so I am fairly conservative with my investments.





What % has that place gone down that you bought 12 months ago  ? whats it yield ?


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## robots (7 March 2009)

numbercruncher said:


> What % has that place gone down that you bought 12 months ago  ? whats it yield ?




hello,

tell them nothing Billv, for years the critics have wanted to know what "other" people have

let them lay it on the table,

thankyou
robots


----------



## numbercruncher (7 March 2009)

robots said:


> hello,
> 
> tell them nothing Billv, for years the critics have wanted to know what "other" people have
> 
> ...





Its not like im asking or even interested in peoples $$ im just asking for %%% ...


----------



## Glen48 (7 March 2009)

Brisbane houses down 20=25% Pullenvale up 34% so they tell us. Won't be long before you get a house with each set of Steak Knives. USA is still falling..11K for a block of land in the place they use to call Lost Wages now it's lost everything.


----------



## Beej (7 March 2009)

Glen48 said:


> Brisbane houses down 20=25% Pullenvale up 34% so they tell us. Won't be long before you get a house with each set of Steak Knives. USA is still falling..11K for a block of land in the place they use to call Lost Wages now it's lost everything.




Got a link to some data that shows Brizzy house price down 20-25% across the board? As usual for your bogus stats and assertions I suspect not..... ABS stats show Brisbane prices off a whopping 1.4% over the 12 months to Dec 08  by the way: http://www.abs.gov.au/AUSSTATS/abs@.nsf/MF/6416.0.

Beej


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## singlefished (7 March 2009)

Glen48 said:


> Brisbane houses down 20=25% Pullenvale up 34% so they tell us. Won't be long before you get a house with each set of Steak Knives. USA is still falling..11K for a block of land in the place they use to call Lost Wages now it's lost everything.




Seen this on Nine news this evening too, not sure if they were talking all of Brissy or if they just quoted the worst of the quaterly declines.... it will certainly be worth the pennies buying the newspaper tomorrow for the quaterly pull-out.

Another stellar weekend at the auctions.... 28.125%


----------



## singlefished (7 March 2009)

Beej said:


> Got a link to some data that shows Brizzy house price down 20-25% across the board? As usual for your bogus stats and assertions I suspect not..... ABS stats show Brisbane prices off a whopping 1.4% over the 12 months to Dec 08  by the way: http://www.abs.gov.au/AUSSTATS/abs@.nsf/MF/6416.0.
> 
> Beej




The numbers they mentioned on TV are quaterly drops.... will find out tomorrow in the mail (I think) as they mentioned there is some special pull-out or something detailing all the suburbs quaterly movements.

I'm not sure if the Sydders weekend rags will have it?


----------



## Bill M (7 March 2009)

*Young families defying recession to lead revival*

WESTERN Sydney is in the grip of a property mini-boom, with exclusive NSW Treasury figures revealing that young families are defying a national recession.

Liverpool, Campbelltown and Fairfield have recorded 12 per cent rises in sales, a six-year high, while Blacktown and Penrith have seen a 20 per cent increase.

A total of 8455 contracts were exchanged on new and existing homes during the three-month period in the Western Suburbs - an increase of more than 1100 over the same period last year.

FULL STORY HERE


----------



## Trevor_S (7 March 2009)

knocker said:


> Would not want to live anywhere near Townsville or Hamiliton Island right now, with hamish picking up speed. Wonder how all those coastal properties will fair with rising tides and cyclone force winds. Good luck




Seriously ?  We're used to it, really no big deal... happens every year and I have been in Townville since '75 and NQ since '65.  Might be a big thing for you guys but while alert to the danger, we just deal with it.  Don't put all your stock in News reports, much like the GFC   there is lots of hyperbole mixed in with the snippets of truth.


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## Trevor_S (7 March 2009)

gfresh said:


> Sounds a bit like the Goldcoast.



  Nahh nothing like it demographically.. more like an amalgam of Canberra, Darwin and Gladstone.  Canberra (we have a huge public service population, stable employment as most of the HQ's for the northern area public service is based in Townsville.)  Darwin (we have the largest Army base in Australia, massive troop base and they inject a fortune into the city) as well as being typically tropical ie two seasons (wet and humid 'n hot and cool and dry), Galdstone (we have a large manufacturing base with a Cu, Zn, Ni and Mn refineries), logistical support for inland mining (lots of fly in fly out mining) and some tourism.   All of the above leads to a huge turnover every year, huge public service /Army exodus and entrance, mining people moving in and out.  Land up here is cheaper but the cost of construction is way more ie  Building codes + transportation of building materials + cost of labour.

A few pics (taken by me)












Geeze, maybe I should get a job at the tourism bureau 

Cairns is more like the Gold Coast, basically a one horse town with tourism being the main drawcard.


----------



## knocker (7 March 2009)

Trevor_S said:


> Nahh nothing like it demographically.. more like an amalgam of Canberra, Darwin and Gladstone.  Canberra (we have a huge public service population, stable employment as most of the HQ's for the northern area public service is based in Townsville.)  Darwin (we have the largest Army base in Australia, massive troop base and they inject a fortune into the city) as well as being typically tropical ie two seasons (wet and humid 'n hot and cool and dry), Galdstone (we have a large manufacturing base with a Cu, Zn, Ni and Mn refineries), logistical support for inland mining (lots of fly in fly out mining) and some tourism.   All of the above leads to a huge turnover every year, huge public service /Army exodus and entrance, mining people moving in and out.  Land up here is cheaper but the cost of construction is way more ie  Building codes + transportation of building materials + cost of labour.
> 
> A few pics (taken by me)
> 
> ...




Don't get me wrong. Have a property in Cairns, just don't like this time of the year, especially Larry type cyclones. Like it in winter though not as much as here in the Algarve ;-)


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## MACCA350 (8 March 2009)

Bill M said:


> *Young families defying recession to lead revival*
> 
> WESTERN Sydney is in the grip of a property mini-boom, with exclusive NSW Treasury figures revealing that young families are defying a national recession.
> 
> ...



And then we'll be hearing about all the record repossessions, mortgagee auctions and all round "young families" hitting the wall..........but hey were all thankful for the governments grants and incentives to keep house prices at unaffordable levels  

The worlds financial systems come crashing down, thousands loosing their jobs left and right, companies going bankrupt and most affected countries housing values seem to have also been kicked in the gut.........but no not us, just a slap on the wrist..........I think I'll wait for the government incentives to run out and see what happens 

cheers


----------



## knocker (8 March 2009)

MACCA350 said:


> And then we'll be hearing about all the record repossessions, mortgagee auctions and all round "young families" hitting the wall..........but hey were all thankful for the governments grants and incentives to keep house prices at unaffordable levels
> 
> The worlds financial systems come crashing down, thousands loosing their jobs left and right, companies going bankrupt and most affected countries housing values seem to have also been kicked in the gut.........but no not us, just a slap on the wrist..........I think I'll wait for the government incentives to run out and see what happens
> 
> cheers




No need to wait macka!! the power of the media will keep you totally uninformed.


----------



## billv (8 March 2009)

numbercruncher said:


> What % has that place gone down that you bought 12 months ago  ? whats it yield ?




Why do you assume that it went down?
I bought a repossesed property, did a mini reno for $5K and a valuation before new year showed a 20% increase.
I don't think prices moved since I purchased it, it was simply a good buy and I added value with my mini reno.
the yield based on purchase price is 6.0%
Also, the rent is about $20-$30 below market but I am not increasing it further because I like this tenant and I also expect rental vacancies to increase.


----------



## billv (8 March 2009)

MACCA350 said:


> And then we'll be hearing about all the record repossessions, mortgagee auctions and all round "young families" hitting the wall.



Macca you've been watching too much telly
Dodgy lending is no longer possible so anyone getting a loan today must have a deposit plus proof of income and employment history.


----------



## singlefished (8 March 2009)

Beej said:


> Sydney auction results for today posted now: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> *71% clearance rate*  on 123/173 with only 2 properties withdrawn. That last part is significant, withdrawals have been common-place up until the last few weeks, so this, in addition to 6 weeks of strong clearance rates, is a clear indicator that buyer competition is back and we may be swinging from a buyers to a sellers market here in Sydney....
> 
> ...




Yes, I can.... decided to take your APM suburb list from this weeks sales results (every suburb on the list as a random cross section of the Sydney market) and check how the 6 month median has been going.....

deary, deary, me...

The majority of your million $$$ sales are in suburbs that have seen no growth/losses over the last 6 months and some buyers are obviously seeing some value there, they're probably down sizing to stay within their own neighbourhood and keep their kids around their friends in an environment they know.

Also, these million dollar price tags are in traditional million $$$ suburbs ~ that's obviously what you'd expect to pay if you were looking to buy in these suburbs!!!! Look at the falls across the board, not been many folks entering bidding wars driving the prices up over recent months has there...?

Higher volumes of late could easly be attributed to vendors lowereing their expectations to get their properties shifted before the market turns down even more....

The question is though, *"Can any of the bulls please explain to me how they can be in complete denial when it comes to Sydney property prices?"*

You've been spruiking for as long as I can remember that *Sydney prices bottomed out in 2004* and you're telling us all that *auctions are bustling with vendors and the market is looking healthy *~ almost to the point where you'd have us believe that we weren't just heading into a recession but rather we were just coming out of a recession....

Please explain why you have been lying to us all and even worse, *why have you been lying to yourselves???*

Every bit of negative data or sentiment that somebody provides here gets nonchalantly rebuffed and has to be supported by the OP or argued about until the natural course of the debate gets sidetracked or changes direction...

Look at the figures below and tell me that with only 25% of suburbs in green (and some only just) that we've been in a health market environment over the last 6 months... We still haven't even entered recession (some believe we are already) and you're already patting yourselves on the back thinking the market is in recovery mode!!!! 

The market may now be selling a lot more than over the previous few months but remember that rates are as low as they've ever been and the Government is providing additional stimulus to FHB's. These low rates and this FHB stimulus are both unprecedented and unsustainable factors which cannot be relied upon to provide support if the economy continues to slide and we enter an inflationary environment....

Well, for your amusement, please refer the following suburb list median price changes for the last 6 months of which about 95% of the listings have enough data to be statistically reliable (SNR if otherwise) according to APM.  Only house median fluctuations have been detailed except for Manly where I have also listed the Unit info for Bill M. 5% plus/minus have been highlighted.



Ambarvale -3%
*Artarmon -6%*
Ashbury +1%
Auburn +2%
*Avalon -5%*
Balgowlah -2%
*Bankstown +5%*
*Bardwell Valley -16%*
Baulkham Hills -3%
*Beecroft -9%*
Belfield +3%
*Bellevue Hill -37%*
*Belmore +6%*
*Berala -5%*
Beverley Hills +2%
*Bexley -9%*
Bexley North +2%
Birchgrove 0%
*Blakehurst -16%*
Bondi Beach 0%
Bossley Park +1%
*Botany -12%*
*Brighton-Le-Sands -19%*
*Bronte -5%*
Burwood -2%
*Cammeray -32%*
*Camperdown 11%*
Caringbah 0%
Castle Hill -1%
*Casula -6%*
Chatswood -1%
*Chippendale SNR (region -15%)*
*Collaroy -8%*
Concord -1%
*Concord -14%*
*Coogee 7%*
*Cremorne -6%*
*Croydon Park -7%*
Currans Hill -4%
*Darling Point SNR (region -15%)*
*Drummoyne -18%*
Earlwood 0%
*Fairlight +13%*
Five Dock +1%
*Forest Lodge -13%*
*Glebe -6%*
*Gordon +5%*
*Greenacre +6%*
*Greenfield Park -13%*
*Gymea -6%*
*Hunters Hill -24%*
Hurlstone Park +3%
Hurstville +3%
*Illawong -8%*
*Ingleburn +5%*
Kellyville +1%
*Killara -7%*
Kingsgrove +4%
*Kirribilli SNR (region -12%)*
Kyeemagh SNR (region -4%)
Leichhardt -4%
Leumeah +4%
Liberty Grove SNR (region -3%)
*Lidcombe -6%*
Lilli Pilli -3%
*Loftus -7%*
*Long Jetty -5%*
Malabar -4%
*Manly Houses -18%*
*Manly Units -12%*
Marrickville -3%
*Mascot +17%*
Matraville -1%
Merrylands 0%
Middle Dural SNR (region -4%)
Miller 0%
Mortdale -4%
*Narara -6%*
Narellan Vale -4%
*Naremburn -5%*
*Narrabeen -22%*
Neutral Bay 0%
Newtown -3%
*Normanhurst -5%*
*North Bondi -31%*
*North Curl Curl -9%*
North Parramatta -2%
*North Sydney -21%*
*North Willoughby -11%*
*Northbridge +8%*
*Paddington -7%*
*Parramatta +13%*
*Pennant Hills +9%*
*Potts Point SNR (region -15%)*
*Queens Park -26%*
*Redfern +10%*
Revesby -2%
Riverview +3%
Riverwood -2%
*Rockdale -13%*
Rodd Point SNR (region -3%)
*Roselands -5%*
*Roseville +23%*
Rozelle -3%
Sans Souci -2%
*Seaforth -11%*
St Ives Chase +1%
St Marys -2%
*Stanmore -8%*
*Strathfield -8%*
Strathfield South +3%
*Summer Hill +5%*
*Surry Hills +13%*
*Sutherland -6%*
*Tamarama SNR (region -15)%*
*Terrigal -8%*
Watanobbi -2%
*Wentworthville -6%*
*West Pennant Hills -5%*
West Ryde -2%
Wetherill Park +4%
*Willoughby -11%*
*Willoughby East +18%*
Yagoona -4%


----------



## numbercruncher (8 March 2009)

Thats alot of red for the one eyed permabulls to mull over !!


Bet they give every excuse under the sun except popping bubble and GEC ...


----------



## numbercruncher (8 March 2009)

Trevor_S said:


> Seriously ?  We're used to it, really no big deal... happens every year and I have been in Townville since '75 and NQ since '65.  Might be a big thing for you guys but while alert to the danger, we just deal with it.  Don't put all your stock in News reports, much like the GFC   there is lots of hyperbole mixed in with the snippets of truth.





And Victoria has bush fires every year .... why the tough talk hamish is now packing 280klm winds, I reckon youve never seen that in your life !


----------



## billv (8 March 2009)

numbercruncher said:


> Thats alot of red for the one eyed permabulls to mull over !! ...




I don't doubt that prices in high end suburbs eg Bellevue Hill did come down but that's common knowledge.


*I should now explain to you what a median price is.
**
If in one suburb for example you have a lot of sales of newly built properties (which are of higher value than the average house) then the suburb median price will go up. This doesn't mean that the prices in that suburb have increased, it simply means that many properties of a particular price range have been selling.*

Now that you know what a median price is, I'll have to say that with the FHB grant a lot of lower priced properties are selling so the suburb median price will fall. Before you say anything think what the median price is.
Again this doesn't mean that prices have fallen.

Ofcourse permabears will now pickup on the idea that prices have gone down when the fact is that my porfolio which consists of mainly entry level properties will have increased in value by at least 20%.
You don't have to believe me, go and research it for yourself.

*
 btw I don't need to be convinced one way or another. 
whether we like it or not this is how they work out prices.
I should point out though that this is a good thing.
Permabears will now think that property prices are affordable and will be converted to bulls *


----------



## Beej (8 March 2009)

singlefished said:


> Yes, I can.... decided to take your APM suburb list from this weeks sales results (every suburb on the list as a random cross section of the Sydney market) and check how the 6 month median has been going.....




I've already shown this APM data (and provided the link for individual research) many times, and argued (as you have shown us) that a great number of Sydney suburbs have actually seen price growth over a period where median prices have fallen by about 4%, the media has been full of GFC/recession doom and gloom, and the sharemarket crashed by 55% etc etc. So what does your data prove that we don't already know? Nothing. The auction results for the past few weeks though are starting to tell a different story - if you are too blinkered in your views to see it, that's not my problem!




> The majority of your million $$$ sales are in suburbs that have seen no growth/losses over the last 6 months and some buyers are obviously seeing some value there, they're probably down sizing to stay within their own neighbourhood and keep their kids around their friends in an environment they know.
> 
> Also, these million dollar price tags are in traditional million $$$ suburbs ~ that's obviously what you'd expect to pay if you were looking to buy in these suburbs!!!! Look at the falls across the board, not been many folks entering bidding wars driving the prices up over recent months has there...?




In other words, as I am pointing out, this indicates the market may have found/is finding it's bottom for this cycle. The key indicator to me is the fact that turnover in the higher price ranges is now increasing. The lack of turnover in the upper end of the market has been the main factor producing large negative median price changes for those suburbs during the last half of 2008, rather than just individual property price falls.

And by the way, the auction clearance rate, and some of the prices being achieved, DOES in fact suggest there are bidding wars going on and plenty of buyer competition starting to push prices again. How else do you explain $2.8M for the 2 bedder on Bondi Beach?



> The question is though, *"Can any of the bulls please explain to me how they can be in complete denial when it comes to Sydney property prices?"*




That is a silly question - it's the property perma-bears who are in denial. I'm only posting the facts. 

I've also participated in the Sydney market late last year and KNOW what is actually happening. I'm only trying to counter the un-substantiated negativity here so that some people don't end up missing what might be for them the opportunity of the decade to take advantage of the Sydney housing market.



> You've been spruiking for as long as I can remember that *Sydney prices bottomed out in 2004* and you're telling us all that *auctions are bustling with vendors and the market is looking healthy *~ almost to the point where you'd have us believe that we weren't just heading into a recession but rather we were just coming out of a recession....
> 
> Please explain why you have been lying to us all and even worse, *why have you been lying to yourselves???*




That's a serious and false allegation. Please find one post, one statement that I have made that contains a lie? (And you better be able to prove it). What's more, why don't you tell me what it is you actually think I am lying about and what view I am trying to support by doing so?

Seriously it's stuff like this that drives people away from forums - just because they have a different opinion to yourself and have the ability to substantiate with facts and rational arguments, you accuse someone of being a liar and a spruiker. Typical bear stuff though - play the man not the ball..... I've been personally attacked here by numerous idiot perm-bear posters before, I'm labeled a perma-bull and a spruiker (show me where I have ever spruiked property sales etc?). I've had my views constantly mis-represented, and now I'm being accused of lying. It's no wonder when I joined this discussion it was dominated by bears, as the tactic seems to be to attack anyone with a different view and drive them out of the forum as quickly as possible.



> Every bit of negative data or sentiment that sfomebody provides here gets nonchalantly rebuffed and has to be supported by the OP or argued about until the natural course of the debate gets sidetracked or changes direction...




LOL - this is really funny! Just sounds to me like you are upset that you may be losing the argument?



> The market may now be selling a lot more than over the previous few months but remember that rates are as low as they've ever been and the Government is providing additional stimulus to FHB's. These low rates and this FHB stimulus are both unprecedented and unsustainable factors which cannot be relied upon to provide support if the economy continues to slide and we enter an inflationary environment....




Low rates and FHB stimulus are neither nothing new, or unsustainable.

FHB stimulus has been around since 2000. Low interest rates are nothing new - interest rates often cycle to lows. It's a deliberate policy adopted by the RBA during economic slow downs and one of the impacts of this is it helps support property prices at such times through exactly the type of buying we are seeing occurring right now. The impact of FHBs + low interest rates starts to be seen in the low end of the market, and it then flows through the rest of the market over the next 6-18 months. Again we are starting to see that already right now in Sydney.

If the economy does not start to show signs of recovery by the end of 2009/early 2010, then yes I would agree that the current property upturn could halt. However, if economic recovery does begin, then right now may be seen when we look back as the point in time where the market had bottomed and started to turn, due to all the factors you correctly list working as intended. Re heading into a future inflationary environment - well that can only cause property prices in absolute terms to head one way - up.

Beej


----------



## numbercruncher (8 March 2009)

billv said:


> I should now explain to you what a median price is.
> 
> If in one suburb *for example *you have a lot of sales of newly built properties (which are of higher value than the average house) then the suburb median price will go up. This doesn't mean that the prices in that suburb have increased, it simply means that many properties of a particular price range have been selling
> 
> Now that you know what a median price is





 crackn me up dude .....


" House prices to keep rising for years "


nope .... isnt happenning yet ....


----------



## billv (8 March 2009)

shaunQ said:


> I had to double take at that - I thought you meant 80% deposit, but no, 80% debt - very conservative. Don't stop at one, there's lots of bargains now so you may as well pick up two -* you can't lose*!




Yes you can lose.
To go for 2 more there are 2 ways of doing this.
I'll be using existing equity or will be using my own money as the 20% deposit.

*1.   To use equity *
I'll have to revalue my properties and I don't want to do it yet.
It will be wiser to do it in 6 months time when prices would have increased.

*2.   To use my own money *
but this means I'll have to put my hand into my offset account but that's money for a rainy day eg lost my job, got sick etc so I'm not doing it. I could probably go with 10% deposit but then I'll have to pay LMI and I don't see the point in that.

I'm buying for the long term.  I don't expect prices to double overnight therefore IMHO aggressive investing in this environment is not justified.
*btw, the same applies to shares, I'm buying when I can afford it BUT without gearing*


----------



## billv (8 March 2009)

numbercruncher said:


> crackn me up dude ...



At least you've learned something today 

You and the other permabears didn't know what a median price is did you?


----------



## kincella (8 March 2009)

lets see..that  first house we bought in 1970 for 12,000 was valued for the divorce in 1978 at 70,000....but not sold until the recession of 1989 for 80,000 so thats an increase of 660% over 19 years.....
but it was still 600% over 8 years....from 1970 to 1978
those were the bad old days of high interest rates up to 18%, and all the other world crisis

it still proves the concept of triple the price over 10 years.....

and in case the bears have a problem with that.....it was used to lovingly house the family, plus 3 dogs, 2 cats and 5 horses across the road...
there were loads of parties and family gatherings and celebrations....
we hardly ever considered the value of the house in financial terms...we were too busy enjoying life

so lets see now....fhb house prices in the 300,000 range....in 10 years they will be 900,000.....scary isn't it.....if you are a bear.....but the opposite if not
cheers


----------



## Macquack (8 March 2009)

Beej said:


> I'm labeled a perma-bull and a spruiker (*show me where I have ever spruiked property sales* etc?).



And from the same post



Beej said:


> ...so that some people don't end up missing what might be for them the *opportunity of the decade to take advantage of the Sydney housing market.*


----------



## Beej (8 March 2009)

Macquack said:


> And from the same post




Hardly spruiking - spruiking is where you talk up the value of an individual property etc - like share ramping. Saying that you think it could be a good time to buy because we could be at the bottom of the property cycle, and posting price data, auction results etc to back this view up is NOT spruiking... but, whatever.

What do you label people who run around saying "the sky is falling" - "don't buy a house because prices are going to crash 40%!!!", "Sell your PPOR and IPs now before it's too late!!!!" etc etc? Anyone taking their advice faces more financial hazard/risk as anyone who takes the advice of people suggesting that now is a good time to buy. No matter what happens over the next few years, property values will only go up over the long term.....

Beej


----------



## MACCA350 (8 March 2009)

billv said:


> Macca you've been watching too much telly
> Dodgy lending is no longer possible so anyone getting a loan today must have a deposit plus proof of income and employment history.



And what happens when rates go back up?

The governments incentive are targeted at new home buyers, in many cases are inexperienced and will stretch themselves to get in, as rates start to rise they will feel the strain until they fall behind, before they know it the bank moves in. 

And that's not even talking about those who loose their jobs. Even if they don't loose their jobs, many companies are cutting the fat, which means many will loose overtime and other bonuses which many have been counting on.

cheers


----------



## billv (8 March 2009)

knocker said:


> lol You say Sydney has been in recession for the past 2 years and things will not get worse.




mate, when the NSW economy was contracting because of the housing slump nearly every other state was expanding due to the resources boom.

The RBA in my opinion made the mistake and increased interest rates too far and chocked the NSW economy.
It took a while for them to wake up to the fact that without the heart (Sydney) the body can't function.

Now they dropped interest rates and with the FHOG there is room for Sydney and OZ housing in general to expand and this will create jobs here and around the nation. That's my take on the whole thing.


----------



## Largesse (8 March 2009)

OFF TOPIC (slightly)

What is protocol with asking for the asking price for houses that are listed as "For Sale - Contact Agent for price".

Can i just send them an email saying

"Dear Agent,

What is asking price for 123 XYZ St, Suburb?"

or do i need to feign more interest in the property?

i really only want the price to see whether the property is even close to what i can pay before i go and waste time inspecting the thing

TIA


----------



## shaunQ (8 March 2009)

Largesse said:


> OFF TOPIC (slightly)
> 
> What is protocol with asking for the asking price for houses that are listed as "For Sale - Contact Agent for price".
> 
> ...




They want your phone number so they can hassle you every few days.


----------



## robots (8 March 2009)

MACCA350 said:


> *And what happens when rates go back up?*
> 
> The governments incentive are targeted at new home buyers, in many cases are inexperienced and will stretch themselves to get in, as rates start to rise they will feel the strain until they fall behind, before they know it the bank moves in.
> 
> ...




hello,

i thought we like US, UK and Japan and therefore IR's on the way to 0.5%, keep it real I thought there was no difference

so now our rates are going up?

this would be awesome i will just be paying principal on the loan and banging all the $ away, whereas the specuvestor renter will still be coughing up large

thankyou
robots


----------



## billv (8 March 2009)

MACCA350 said:


> And what happens when rates go back up?
> cheers




Macca

People will survive just like we did recently when our variable rates hit 10%.

How did we do it?
We cut spending, we(Sydney residents) have the biggest mortgages in the country so high interest rates hurt us the most and this is the reason the NSW economy was contracting. 

I'm not worried about first home buyers, they are getting more help than we did when we were starting out and as a last resort if things get worse and anyone experiences hardship the legislation says that we can always access our super.

Also, I think you'll find that banks are now conservative with their lending so they are counting on IR's being in the 8's therefore they won't be lending to people who can't show that they'll be able to pay the mortgage.


----------



## billv (8 March 2009)

Largesse said:


> OFF TOPIC (slightly)
> 
> What is protocol with asking for the asking price for houses that are listed as "For Sale - Contact Agent for price".
> TIA




Largesse
I think you'll find that they don't give you the price upfront because if it's entry level property the prices are moving daily (upwards).

They also want to see how much demand there is and the price they'll give you will depend on how many enquiries they have and how desperate buyers seem. They may actually tell you that they had some offers and may ask you to do the same.

I wouldn't send them an e-mail. In this environment they probably wouldn't reply. Just get on the phone and find out how much they want. Ofcourse choose your words carefuly so that you don't sound too interested. 

Where is the property?


----------



## robots (8 March 2009)

billv said:


> Why do you assume that it went down?
> I bought a repossesed property, did a mini reno for $5K and a valuation before new year showed a 20% increase.
> I don't think prices moved since I purchased it, it was simply a good buy and I added value with my mini reno.
> the yield based on purchase price is 6.0%
> Also, the rent is about $20-$30 below market but I am not increasing it further because I like this tenant and I also expect rental vacancies to increase.




hello,

top effort billv, one thing i notice all the time in my travels is the properties that are "finished" are getting snapped up quick smart for good prices (think has to do with the slacker generation around),

those "not finished" or require a bit work are lingering with people eventually getting them at some good prices (most likely what you have done)

over the next 5,10,20 or 30 years the man or woman who can themselves "update" will get some nice numbers

just like to send a special shout-out to all contributing  

thankyou
robots


----------



## singlefished (8 March 2009)

Beej said:


> I've already shown this APM data .............................................. views to see it, that's not my problem!




Hardly blinkered... what you're missing is the fact that volumes are significantly lower year-on-year yet you keep oin citing clearance rates like this is the be-all-end-all and everybody else is wrong. Pulling up the occasional example of a property that does well at auction to demonstrate your point, well, that just means your summarising the market by the results of a single property.... Everybody knows that not all properties are suited to auction and the properties that are and have something special to offer will return a good price regardless of market sentiment.





Beej said:


> In other words, as I am .................................... How else do you explain $2.8M for the 2 bedder on Bondi Beach?




Where does greater turnover in auction sales = the market has bottomed come from? Look at Harvey Norman quarterly figures, turnover is up yet profit is down Could greater turnover in auction sales = lower vendor expectations be argued more correctly?

Also, that Bondi place..... Niiiiice  *"what is arguably one of the worlds most spectacular viewpoints"*

Can't believe you have the balls to use this property in particular to your arguement.... 'nuff said







Beej said:


> That is a silly question - it's the property perma..........................................of the Sydney housing market.




You already know that the property market is in decline and the economy, well...... yet you're keen to advocate that now is a great time to buy and get into the market.

Yes, I agree that in the long term, property is always going to be a good investment, but timing is key to maximising your returns especially in a market that moves as slowly as property. And again, no I don't think we're going to see 40% as some people like to cite.

I think it is highly irresponsible to be advertising "now is the time" when many of these young FHB's or existing homeowners could be unemployed this time next year.






Beej said:


> That's a serious and false allegation. Please find ..............................................................out of the forum as quickly as possible..




Perhaps Lieing was a poor choice of words so apologies for that, but comments like *"...I'd almost think we were in a booming R/E market"* (of recent posting) and *"Sydney has already had it's bust and prices have been flat since 2004 and unlikely to drop by substantial amounts" *(from pages and pages back _somewhere_ in here) are completely false statements and are stated with the intent of achieving what end? You tell me...

There is no factual evidence that we have reached the end of the downturn and have currently entered a boom phase, but there's plenty of fact stating that we are still sliding down hill and no end is in sight...

See the following definition for spruik. Certainly not explicitly defined as talking up any individual property....

http://en.wiktionary.org/wiki/spruik





Beej said:


> LOL - this is really funny! Just sounds to me like you are upset that you may be losing the argument?




Hardly..... just tired of trying to make one-eyed-perma-bulls understand the bigger picture with the declining economy. This is what will fundamentally drive prices in the short term and I don't think that can be denied.





Beej said:


> Low rates and FHB stimulus are neither nothing new, or unsustainable.
> 
> FHB stimulus has been around .............................. right now in Sydney.




ABC is the only mainstream media outlet that I have seen that has actually warned of the possibility that if things continue to decline then many of the newly enticed FHB's may end up with unemployment issues, negative equity, interest rates rising from their 60 year lows.... well, it's be almost like watching the effect that all the margin calls had on the stock market last year wouldn't it! (yet it would be painfully slow and protracted....)





Beej said:


> If the economy does not start to show signs of recovery by the end of 2009/early 2010, then yes I would agree that the current property upturn could halt. However, if economic recovery does begin, then right now may be seen when we look back as the point in time where the market had bottomed and started to turn, due to all the factors you correctly list working as intended. Re heading into a future inflationary environment - well that can only cause property prices in absolute terms to head one way - up.




It could also be seen as the biggest Government promoted suckers rally in history. If the IMF didn't even see the crisis coming, how much confidence do you have in our Government seeing a clear path out of this mess? I have none since our Government cannot control the external influences that have so drastically played their part in bringing our booming economy down.


----------



## billv (8 March 2009)

robots said:


> over the next 5,10,20 or 30 years the man or woman who can themselves "update" will get some nice numbers
> robots




Robots

I agree, and for us investors an update will not only get us a higher rent but will also attract better tenants


----------



## robots (8 March 2009)

hello,

hey hey, here we go brothers:

http://www.news.com.au/heraldsun/story/0,21985,25156288-5005961,00.html

apartment rents up 14% for the year, fantastic news 

something has got to give with the slump in building approvals and it looks like rents are going up up and up, fantastic, hope the approvals fall again next month (purely from an investment perspective of course)

thankyou
robots


----------



## numbercruncher (8 March 2009)

Hello,


Jenman and the PM on channel 7 as we speak ..... PM reckons he is going to kick some spruiker **** .....

" House prices to keep rising for years "  hilarious

Better write to your central banker and ask for quicker inflation Permabulls .....

Thankyou


----------



## Wysiwyg (8 March 2009)

robots said:


> hello,
> 
> hey hey, here we go brothers:
> 
> ...




Must be nice to be flexible enough to kiss your own ass.


----------



## robots (8 March 2009)

robots said:


> hello,
> 
> hey hey, here we go brothers:
> 
> ...




hello,

just for anybody who missed it, here it is again Post #4089 and just to summarize rents up 14% for apartments y2008 

does anybody know when the building approvals come out again? should be interesting

what happened to the Labor Party rental scheme program?

thankyou
robots


----------



## Bill M (9 March 2009)

Some pages back someone was saying that banks are not lending and this will be the demise of the property market, not according to this story, plenty of money around for the right buyers.


*Commonwealth Bank hires staff for first home buyer grant demand*

THE nation's largest lender has been forced to hire more staff, as demand for the Federal Government's first home buyer grant has seen processing times for loans blow out.

The Commonwealth Bank has been inundated with people seeking home loans - hitting a 40 per cent increase in applications last month.

FULL STORY HERE


----------



## kincella (9 March 2009)

more stats that confirm what the bulls have been saying....and the opposite to what the bears say.....
............................................................................
rents rose in NSW by 11% last year..... 
and housing in Qld grew.....it did not decline.....funny thing about QLD, its the only state where the population is greater in the regional areas, not the cities...the opposite to the rest of OZ

extract.......
The latest housing figures for Queensland, meanwhile, showed an increase in median house prices in the December quarter in the state's coastal and southern regions.

The Real Estate Institute of Queensland (REIQ) statistics showed that regional centres from Bundaberg to Townsville recorded rises of between 1.5 to 2.9 per cent over the December quarter, while in southern regional Queensland the Southern Downs, the Scenic Rim and Dalby recorded growth of between 4.2 to 6.7 per cent.

The southeast experienced small declines in median house prices which the REIQ attributed to an increase in affordable house sales as first-home buyers returned to the market.
http://www.news.com.au/business/story/0,27753,25156288-31037,00.html


----------



## kincella (9 March 2009)

quote from singlefished in response to beej....

"Perhaps Lieing was a poor choice of words so apologies for that, but comments like "...I'd almost think we were in a booming R/E market" (of recent posting) and "Sydney has already had it's bust and prices have been flat since 2004 and unlikely to drop by substantial amounts" (from pages and pages back somewhere in here) *are completely false statements and are stated with the intent of achieving what end? You tell me...*

There is no factual evidence that we have reached the end of the downturn and have currently entered a boom phase, *but there's plenty of fact stating that we are still sliding down hill and no end is in sight...*"""
...............................................................................................

we keep giving you the facts on a daily basis...which you choose to ignore...

and your facts come from ????? the US UK Jap Ire 
where are your facts we are sliding downhill with no end in sight ?
you keep saying they are false statements....where are your facts to dissprove this....oh and we are only talking about the AUS market....not any other country


----------



## kincella (9 March 2009)

*Building rebound could prevent a recession*

AUSTRALIA'S largest home loan broker says Rudd's first home buyer grant has sparked a building rebound that could prevent a recession.

Mortgage Choice chief executive Paul Lahiff said more than *$8 billion worth of home lending had been completed by the end of January - and he believed more than $2 billion of it was to fund purchases of new houses. *
"We are experiencing incredible growth in activity," Mr Lahiff told BusinessDaily. 

"I suspect the multiplier effects in the economy for suppliers of building materials will start to show up in official economic data for the March and June quarters." 

*Home loan brokers are among the first intermediaries to discern imminent changes in home construction activity because they are a first port of call for people planning to build. *
Mr Lahiff said his company's franchised network saw continued record growth throughout February, *with more than 25 per cent of all brokered loans being for new dwellings. *

http://www.news.com.au/heraldsun/story/0,21985,25156863-664,00.html


----------



## kincella (9 March 2009)

*Victoria to fix 10,000 public houses, and build 20,000 new public houses*

The good news just keeeps coming.
I find this hard to believe....talk about 2500 uninhabitable houses...and then 10,000 that would otherwise be lost......
and building another 20,000 new public houses ....assume aust wide ? not just Vic
***good news for tradies and builders though...some will keep their jobs...or get new ones...*..................................
At the time, the Government said the money would repair 2500 properties nationally that were uninhabited or would be lost to public housing. But it has now approved proposals to upgrade more than 10,000 properties nationally, which would otherwise be lost, while a further 37,000 will receive minor repairs.

Victoria will receive $49.6 million this financial year and a further $49.6 million next year, which will pay for major repairs on more than 1600 properties that would otherwise be lost, and minor improvements to about 4000 other properties.

Ms Plibersek said state housing authorities would be able to start contracting tradespeople and builders immediately. The stimulus package also included $6 billion for 20,000 new public housing dwellings.

http://www.theage.com.au/national/victoria-set-for-100m-public-housing-boost-20090308-8sg4.html


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## MrBurns (9 March 2009)

So Rudd has been successful extending the AU housing bubble in some sectors while the rest of the world is in recession, doesn't that ring alarm bells in anyone else ?


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## kincella (9 March 2009)

Depends on how one views the news Mr Burns......
I see it as keeping people in work, and providing new jobs in the building industry...and because those tradies spend money...it helps the other sectors...

I do not see a bubble in there anywhere....just people can now afford to buy property, build their own homes.....and others will get to keep their jobs...maybe employ some new apprentices etc..


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## MrBurns (9 March 2009)

That all sounds very nice but it's going against global trends and I'm guessing it will end in tears and no amount of talking it up will stop that.

But rather than argue with me wait and see.


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## nomore4s (9 March 2009)

MrBurns said:


> So Rudd has been successful extending the AU housing bubble in some sectors while the rest of the world is in recession, doesn't that ring alarm bells in anyone else ?




It certainly does and I have stated as much in previous posts. If we do get a large spike in unemployment there could be problems in the future imo.

On a personal note if house prices don't collapse and the recession for Aust isn't deep it will be better for me due to our business making more money but I'm still to be convinced it is sustainable but i have been known to be wrong before.


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## kincella (9 March 2009)

I missed this one on Sat 7th....
just more good news for the positive ones here

FIRST home buyers are being being forced to buy a record distance from the city as low interest rates and higher first homeowner grants push up prices in once affordable suburbs.

Only 316 of Melbourne's 2720 suburbs and towns have a median price below the average first home buyer's budget of $277,000, new figures released by home seeker website Our Home Sweet Home. 

"Interest in properties in the $250,000 to $350,000 bracket is intense, with demand often outstripping supply, fuelling bidding wars in some areas," said the firm's chief executive, Peter Boehm. 


--------------------------------------------------------------------------------
Full list: Melbourne's affordable suburbs 
http://www.news.com.au/heraldsun/files/affordablesuburbs.pdf


http://www.news.com.au/heraldsun/story/0,21985,25149517-2862,00.html


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## ned_beaty (9 March 2009)

What the bulls here fail to recognise is that the only way property can keep going up is if there are continually new buyers available to bid up the prices. Since Australia has very low savings this money has to come from borrowing and it looks to me there aren't too many people left to go further into debt to out bid the next guy for a property. 

How can this trend continue when the government has to give away $14000 to convince people to go into debt to get into the market?? 

Where are the buyers going to come from once the FHB are tapped out and can't borrow any more??

These are the questions you should be asking yourselves.

The FHB increase looks to me to be the last acts of some desperate men hoping that we would just scrape through without going into recession. It isn't sustainable and property price increases are totally supported by increasing debt levels, which is also unsustainable.


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## Beej (9 March 2009)

singlefished said:


> Hardly blinkered... what you're missing is the fact that volumes are significantly lower year-on-year yet you keep on citing clearance rates like this is the be-all-end-all and everybody else is wrong. Pulling up the occasional example of a property that does well at auction to demonstrate your point, well, that just means your summarising the market by the results of a single property.... Everybody knows that not all properties are suited to auction and the properties that are and have something special to offer will return a good price regardless of market sentiment.




Auction results are an extremely relevant indicator of what is going on in the market - there are other indicators as well but ignore auction results at your peril if you are truly trying to gauge the market. Last year we had falling sales volumes, falling prices and falling auction clearance rates. So far this year we have stabalising sales volumes, stable and in many cases rising prices (especially lower/mid price brackets) and rising auction clearance rates. Blind Freddy can see that it is indicating something is changing, and those indicators are historically quite bullish.

Way back in this thread somewhere I pointed out that what often happens in soft markets is vendors tend to pull their head's in - ie, they see the market is bad and so put off plans to sell/upgrade etc until "things get better". So there ends being less property for sale than in boom times. This offsets reduced buyer activity and effectively sets a floor under potential price falls. Now, forced selling in large volumes obviously could counter that and break that floor (which is what happened in the US) - conversely, a pick up in buyer activity can have the opposite effect as the reduced micro-level supply means increased buyer competition = upwards price pressure.

So let's look at where we are at - is there increased forced selling currently (in Sydney/Melbourne)? Check the default rates/mortgagee sales stats etc and the answer is no. There was probably some high end forced selling last year due to corporate collapses + share market crash (margin calls etc), but in regular price ranges default rates have been falling as interest rates have come down.

Now, is there increased buyer activity (in Sydney/Melbourne)?? The answer is clearly yes. It is now undeniable that the FHB grant boost, plus the low interest rates, plus probably the sentiment that prices have been flat to falling for some time now (especially in western Sydney), have resulted in large numbers of FHBs who have been sitting on the sidelines coming into the market with gusto. The bears on this thread tried to deny this was happening for months at the end of last year - even as posters like myself and others pointed out the early indicators, including weekly auction results etc, our own experiences etc, that were showing this was starting to occur.

And now IMO the early indicators are showing that not only is the FHB activity continuing, the impact of that is flowing through the rest of the market. Higher priced properties are starting to sell, prices are rising in the low end and many mid range suburbs, as indicated by the rising median price in the weekly auction results. 

*As a result of this I will forecast here that for Sydney at least the median house price will rise in Q1 2009*.

Anyone else - including bears, please feel free to provide your forecast for Q1 09 for any city/region or nationally, if you think the data is telling a different story - let's put it on record and see who end's up being right?



> Also, that Bondi place..... Niiiiice  *"what is arguably one of the worlds most spectacular viewpoints"*
> 
> Can't believe you have the balls to use this property in particular to your arguement.... 'nuff said




Yes great view - but also big money for an apartment in Bondi, so I think it is a good example showing that there is serious money out there chasing the quality property again. Last year that unit would have struggled to get ANY offer.



> You already know that the property market is in decline and the economy, well...... yet you're keen to advocate that now is a great time to buy and get into the market.
> 
> Yes, I agree that in the long term, property is always going to be a good investment, but timing is key to maximising your returns especially in a market that moves as slowly as property. And again, no I don't think we're going to see 40% as some people like to cite.
> 
> I think it is highly irresponsible to be advertising "now is the time" when many of these young FHB's or existing homeowners could be unemployed this time next year.




I'm not saying "now is the time", what I am saying is that "now might be the time, depending on individual circumstances". Nothing is certain, but if I was say an Ambo, teacher, or copper for example, (I'm thinking of a cousin of mine for this example - couple, 2 kids, one cop one ambo), and I had been wanting to buy my first home for some years, then now probably is a very good time! What is the downside risk for them? They have very secure jobs, affordability is relatively high, rents are rising etc etc - really what have they got to lose? I've got a spreadsheet that shows that even if prices fell further from here (which in lower/mid price ranges in Sydney I don't believe they will), after 5/10 years this example couple would still be miles ahead as compared to continuing to rent. Plus they might WANT to own their own house for the stability/family life etc.

So it's not irresponsible at all to suggest the above IMO. What is irresponsible is to discourage people like the above from buying with alarmist and overly negative predictions of never ending doom and gloom, which may well turn out to be completely wrong (aka Prof Keen etc).



> "Perhaps Lieing was a poor choice of words so apologies for that, but comments like "...I'd almost think we were in a booming R/E market" (of recent posting) and "Sydney has already had it's bust and prices have been flat since 2004 and unlikely to drop by substantial amounts" (from pages and pages back somewhere in here) are completely false statements and are stated with the intent of achieving what end? You tell me...
> 
> There is no factual evidence that we have reached the end of the downturn and have currently entered a boom phase, but there's plenty of fact stating that we are still sliding down hill and no end is in sight..."""




Apology accepted re the lying accusation by the way - however I think Kincella defended my position and statements that you quoted there quite well already. To add to that, many of us are posting a stream of facts and data the support those assertions quite well. Sydney property DID peak in 2004 - that is a fact, not a falsehood. Then my statement "I'd almost think we were in a booming R/E market" was made in the context of looking at the auction results of the past 6 weeks and noting all the bullish indicators they were showing, then posing that question as a challenge - hardly a falsehood, just a statement of opinion and a challenge.

And as for your assertion that "we are still sliding down hill and no end is in sight" - please provide some facts and evidence that show this is the case for the Sydney property market? Everything i am seeing is (maybe even surprisingly given the economic situation) indicating the opposite. But the property market can be very surprising and very resilient at times.

Cheers,

Beej


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## aleckara (9 March 2009)

Beej I have to agree with you on this. The property market is showing some signs of strength in Sydney, particularly Western Sydney. A lot of sales are occuring in areas like Blacktown, Liverpool, Penrith, etc to FHB's. Most of the bargains that were on the market in these areas (and I have been looking) are being snapped up very quickly. And I suspect that the dynamics and culture of these areas will be changing in the coming years - a lot of these new starters will be people who probably lived closer to the city before but can not afford to buy there in this day and age.

And if house prices come crashing down I'm sure that for most people it won't make it more affordable - a lot of people will be out of the job. As long as their is a shortage the prices will be high relative to average income - although it might be lower. It will be like Japan, public sector jobs considered the only good ones.


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## kotim (9 March 2009)

Of course your going to see some rises, gov’t is splashing about money, very low interest rates, all sounds wonderful. Still relatively low unemployment.  Huge gov’t stimulus packages, all sounds wonderful but hides the truth.  

House prices in general whilst they have fallen a little are still extremely high by historical standards, meaning you need dual incomes to pay the loan, especially for the younger generations.

So if unemployment goes to 8-10%, then there are going to be many hundreds of thousands of people who are going to lose their jobs, whether they be full time or part-time.  So those people in loans who lose their jobs which needed dual incomes to support it, are going to have to put their properties on the market, one way or the other.  Lets add to that the many casual and part time workers who will have their hours reduced.

Most people will borrow to the hilt and all time low interest rates and here is the paradox.  If the stimulus packages work as they are supposed to, then inflation is going to be a problem, which means increases in interest rates.   Mmmmm, borrow money at 5% and interest rates go to, say,  7.5% and you have a 50 increase in repayments, that hurts a lot when your property is worth less than when you bought it, as is definitely the case, going to be for most of Australia.

We know the vast majority do not fix loans until it is too late.  If the stimulus package does not work and inflation is not a problem then also house prices will not increase.

There is no housing supply shortage, when times turn bad like they have, people share more, There are many thousands, of units especially, out there that can’t be sold because the developers don’t want to drop the prices etc.

Simple fact.  We have had the biggest property boom for decades, which means we have to have the biggest property fall in decades, never been any different in history any where in the world, the bigger the boom the bigger the bust.


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## kincella (9 March 2009)

kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
all I can say is...there is very little faith in the community out there...or confidence
but lots of scaredy cats....and wobbly crystal balls....and pigs that fly


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## Uncle Festivus (9 March 2009)

kincella said:


> kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
> all I can say is...there is very little faith in the community out there...or confidence
> but lots of scaredy cats....and wobbly crystal balls....and pigs that fly




....and pigs that fly.......the thread title says it all......

Can you tell me this, being a property investor with several properties subsidised by taxpayers, will you be getting the $900 Tax Bonus Payment?


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## robots (9 March 2009)

hello,

its been fantastic Kincella the discussion over the past 3yrs+, yes that long and not much has changed really

some suburbs go up some suburbs go down one year and then things change the next, 

is the internet still working in the UK?

thankyou
robots


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## satanoperca (9 March 2009)

Robots,

Fantastic news rents are up 15%. But wait, lets look a bit closer

The following stats from the REIV website :

ST KILDA MEDIAN PROPERTY DATA Annual Change 
St Kilda House -3.8% 
St Kilda Unit  -8.2% 

So lets do some sums on apartments :

Median Price Dec 08 - Dec 07 = $383,250 - $417,500 = - $34,250 Decrease

Rent in 07 say $400pw/ $20,800 *15% increase = $3,120. Fantatic news for you, you have recieved $3120 more in rental return while losing $34K in capital, you are the man to help Krudd out of this mess.

Paradise everywhere you look, with one eye open, pity you are often sitting on it.

Still up for the wager.


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## robots (9 March 2009)

hello,

yes, still up for it

no thats not right its a "median" so its not accurate (a traditional gloomhead excuse)

wont run away like other posters who have come and gone

thankyou
robots


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## kincella (9 March 2009)

robots...
.were you at the Moomba festival today...
I have been on other sites for the past 8 years...same old stuff....I say its a good idea...they say not....but unfortunately for them I have made a stack of money....and there is more where that came from...I am afraid....

and some of them still have the same story as 8 years earlier....no change in attitude
but since I am semi retired now...have even more time to sit here blogging away with the same old story....hopefully some will listen

well is it 8, 12, 0r 16 billion the first home buyers have spent in the last couple of months......thats a lot of fhb's....obviously they dont blog on here

the other poster....of course I will get some money back...I paid tax....its probably...nah never mind
taxpayer funded...well yes....but they have not been building and providing public housing since about the 70's....if it were not for IP owners like self...the rental situation would be even worse....plus our props are usually nicer than 5000 people crammed into little ugly boxes....

cheers and have a nice day


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## kincella (9 March 2009)

forgot to mention.....prices triple every ten years....so lets see ,,,4 resi props at say 300,000 each = 1,200.000 x 3 times = 3,600,000
or an extra 2,400,000....thats right 2.4 million extra.....and lock in some rate cuts......means even more cash to spend each year....
dont like the big tax bill though.....will have to straddle the sales, or hope there is no CGT.....
we self funded retirees need all the help we can muster.....
think I need to have a little chat with Peter Costello
cheers


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## IFocus (9 March 2009)

kincella said:


> kotim.....time will tell..who is right and who got it wrong....lets review this in a years time.....
> all I can say is...there is very little faith in the community out there...or confidence
> but lots of scaredy cats....and wobbly crystal balls....and pigs that fly




I must say that I didn't expect the RBA's and Treasury efforts to work as well as they have to support housing prices.

But the early signals were they would support the banks at all costs after watching the US and EU fiasco's and holding housing up is imperative to maintaining capitalization levels for the banks.

All this buys time for a slide as apposed to falling off a cliff but reading the comments here it appears to have also given some false confidence IMHO.

The big question is what happens after FHB's remember this is a false floor all be it a very effective one but it cannot go on forever.

As a trader I know all markets are inter connected in some way or as you might say asset classes. Sovereign default of some of the Eastern European countries is the current risk and its very real if that dose blow up then we see EU banks blow up along with the EU economy.

Whats this got to do with Oz housing......plenty


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## robots (9 March 2009)

hello,

people please remember:

*the FHG has been going since the GST was introduced, in 2001*

on the 1st July 2009 the following will happen:

buying existing homes, will go from 14k back to 7k

building new home, will go from 21k back to 14k

wow, what a ponzi scheme

kincella, went to birdman rally yesterday always a great time

is the internet still going in the UK?

thankyou
robots


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## Go Nuke (9 March 2009)

Ah everyone knows it takes 2 incomes to pay a morgage these days....so hpefully with rising unemployment people will be forced to sell, thereby increasing the pool of houses for sale and bringing down prices. 

At least thats what Im hopeing for.

Although I see the rest of the country is also saving every penny at the moment, so once this turmoil is over investors will return.

Shortage of housing is still keeping property prices up though unfortunately.

And my -1% wage rise for 2008 wont help me much.

Down down down..thats wher I want everything to go...other than my shares:>


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## singlefished (10 March 2009)

Beej said:


> Auction results are .............. historically quite bullish.




We've gone from low numbers of sales at auction to better sales results at auction but with lower amount of properties being auctioned. Good, vendors are starting to see the folly of an expensive failed auction campaign especially when theres no guaranteed result. Nothing I can find about falling inventories on the open market however, in any state or territory..... plenty of reasonably priced property up here (brissy) which would have been snapped up in times gone by sitting on the market going nowhere.




> So let's look at......................... have come down.




Not sure if there is forced selling but there is certainly what I would dub "forced buying..." _Interest rates never been so low, so much stock on the market, unprecedented doubling of FHB grants, got to get in whilst the going is good..._ certainly the lower end of the market is moving but even at the worst of times it's not the lower end that cops the massive capital losses. Don't be too surprised will you when this blip of "frenzied activity" gradually dissipates over the coming months as the contracting of the economy starts to bite.






> Yes great view - but also big money for an apartment in Bondi, so I think it is a good example showing that there is serious money out there chasing the quality property again. Last year that unit would have struggled to get ANY offer.




maybe serious money but it could just as likely be inconsequential small change for some high flyers weekend getaway.... certainly not a leading indicator.





> I'm not saying "now is the time", what .............use for the stability/family life etc.




Yes, all good reasons to purchase and I have no issues with people purchasing property at any time assuming they have considered the bigger picture and their own financial position and objectives. Downside risk: the other residents of their suburb (in general) won't have the security of a public services position could suddenly find themselves unemployed, reposession and forced selling of their etc, etc





> So it's not irresponsible at all to suggest the above IMO. What is irresponsible is to discourage people like the above from buying with alarmist and overly negative predictions of never ending doom and gloom, which may well turn out to be completely wrong (aka Prof Keen etc).




You like to bag this guy Keen don't you?

Saying that though, he's been more accurate with his predictions than any of your "respected economists" even if his predicted falls are a tad extreme!

And i'm pretty sure he didn't have much to do with the economy contracting for the first time in 8 years and likely to progress to technical recession when the data comes out next quarter. What I would consider alarming was the fact the "respected economists" were all predicting at least 0.2% growth only seconds before the data was released.

In summary, what I'm saying is it should be irresponsible to provide advice without outlining the downside risks.





> .....Kincella defended my position and statements that you quoted there quite well already.....




must have missed that, morse code was never one of my stronger subjects.



> And as for your assertion that "we are still sliding down hill and no end is in sight"




Sorry, I was referring to the state of the economy and the impacts the external influences will subsequently have. The downside risks underpin my less than bullish sentiment in the short term and it would be folly for anybody to turn a blind eye to this when considering the immediate future of property.


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## billv (10 March 2009)

kincella said:


> forgot to mention.....prices triple every ten years.
> cheers



Really??? 
 where are your IP's in SE QLD?
Remember that what goes up a lot can correct a lot as well.
Mine only double every 10 years which is only a couple of % above inflation.
Nothing to brag about but at least it's consistent long term growth.


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## billv (10 March 2009)

Uncle Festivus said:


> Can you tell me this, being a property investor with several properties subsidised by taxpayers, will you be getting the $900 Tax Bonus Payment?



Actually I am a property investor with several properties and I can tell you that the only tax break we get is *reduction* of *OUR* taxes.
No taxpayer money is handed over to us but it is handed over to first home buyers.
Meanwhile we investors provide housing for people to live in.
If we didn't buy those properties then developers wouldn't build new ones and you wouldn't have anywhere to live.
Whether we like it or not this is how the system works in this country.

*Are we going to get the $900 tax bonus payment?
*Yes if our taxable income falls within the specified range and before you say anything else it's *OUR* taxes we will be getting back. 
If we pay no tax we get nothing back.


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## kincella (10 March 2009)

Billv....my props are in regional area...Nsw/vic border.... I bought  first home 12,000 in 1970 sold for 80,000 in 1989.... 660% increase over 19 years...friend paid 12,000 house inner city armadale vic same time, now the land alone is worth 800,000
then this chart australia wide 20 years to 2006...median price established home in 1986 was 80,000 in 2006 400,00 so thats 5 times in 20 years....
I bought a prop in 2000 for 115k, 8 years later its worth 300k, in the current depressed market

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


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## ned_beaty (10 March 2009)

kincella said:


> forgot to mention.....prices triple every ten years....so lets see ,,,4 resi props at say 300,000 each = 1,200.000 x 3 times = 3,600,000
> or an extra 2,400,000....thats right 2.4 million extra.....and lock in some rate cuts......means even more cash to spend each year....
> dont like the big tax bill though.....will have to straddle the sales, or hope there is no CGT.....
> we self funded retirees need all the help we can muster.....
> ...




Dude you are clueless, prices tripple every ten years forever do they?? So let me get this right if I buy 1 property for $500000 now you are guaranteeing I will be able to sell it for 13.5 million in 30 years when I retire, plus all the rental income I get in between. Sounds too good to be true.... oh wait, it is.


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## kincella (10 March 2009)

Dear Ned,
you must be a newbie....or a non home owner...otherwise you may have done some research to find out the facts...
funny, its you.... calling me clueless......does name calling help ???
I am pleased that you do not believe....


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## Beej (10 March 2009)

ned_beaty said:


> Dude you are clueless, prices triple every ten years forever do they?? So let me get this right if I buy 1 property for $500000 now you are guaranteeing I will be able to sell it for 13.5 million in 30 years when I retire, plus all the rental income I get in between. Sounds too good to be true.... oh wait, it is.




I think what Kincella is saying it is POSSIBLE that an individual property, if you buy the right property in the right area, could well see this sort of price growth yes - especially if you own through a period of higher inflation (the last 15 years have been low inflation compared to the 70s and 80s). This is the same as if you buy the right share you can make heaps even in a crappy bear market.

Kincella - you have clearly done very well with your investments - I'd say you have a good eye for property with capital growth potential. I haven't made the sorts of gains you have. When I include all costs (maintenance, reno's, purchase stamp duty, agents fee's to sell etc etc), on 3 properties that I have owned and analysed in detail (and actually bought/sold), I've made about 85% capital gain (average of 6.5% pa compounding) plus rental income of about 4% pa over each 10 years of ownership (figures from between 1992 and 2008). Mind you these have been properties in established, low risk area's of Sydney, so probably would be ranked as fairly conservative investments.

Cheers,

Beej


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## Temjin (10 March 2009)

ned_beaty said:


> Dude you are clueless, prices tripple every ten years forever do they?? So let me get this right if I buy 1 property for $500000 now you are guaranteeing I will be able to sell it for 13.5 million in 30 years when I retire, plus all the rental income I get in between. Sounds too good to be true.... oh wait, it is.




ned, it's called the "recency bias" effect, one of many cognitive biases that most people would NOT ADMIT they are being affected. 

Past performance IS AN indication of future performance for them. 

And not to mention that most people would view themselve as "unique" out of the rest of the herd. I'm sure most people think themselves are unique and the decisions that they have made would outperform most others. I definitely don't deny that myself too. 

That's why almost every person who have real estate investments I have talked to say while median house prices may go down, their own choice of properties will not fall because it is in a great spot, etc, etc. Try asking around.


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## ned_beaty (10 March 2009)

Well your logic is flawed, and you obviously know nothing about economics. The "house prices tripple every 10 years" makes no more "sense than stocks always go up if you hold them" logic. You are looking at past price levels of property and assuming that trend will continue forever, but do you think about why those price levels have been reached?? I assume not because if you did you would see the rise in house prices has been accompanied by an unprecedenyted rise in household (and business) debt levels in Australia, and you will see that we already have twice the level of household debt compared to when the great depression started. What did the GD do for house prices??? I suggest you look it up because debt deflation is a bitch of a phenomenon.

P.S I do own a property, but I don't let that blind me to plainly evidential facts when I see them. I don't want the value of my property to decrease, but unfortunately there is very little that can be done about it.


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## Uncle Festivus (10 March 2009)

kincella said:


> the other poster....of course I will get some money back...I paid tax....its probably...nah never mind
> taxpayer funded...well yes....but they have not been building and providing public housing since about the 70's....if it were not for IP owners like self...the rental situation would be even worse....plus our props are usually nicer than 5000 people crammed into little ugly boxes....
> 
> cheers and have a nice day




So we can assume you will get the full $900 because you minimise tax by negative gearing? And all the while hinting at all the money you have made and will make, at the expense & subsidy of the taxpayer.


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## billv (10 March 2009)

kincella said:


> Billv....my props are in regional area...Nsw/vic border.... I bought  first home 12,000 in 1970 sold for 80,000 in 1989.... 660% increase over 19 years...friend paid 12,000 house inner city armadale vic same time, now the land alone is worth 800,000
> then this chart australia wide 20 years to 2006...median price established home in 1986 was 80,000 in 2006 400,00 so thats 5 times in 20 years....
> I bought a prop in 2000 for 115k, 8 years later its worth 300k, in the current depressed market
> 
> http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf




kincella
Good work, yes it is possible to have a huge capital gain if you buy the right property but as I said before, what goes up a lot can come down as well.
This doesn't mean that it will happen, but IMO it can happen.


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## Beej (10 March 2009)

ned_beaty said:


> I assume not because if you did you would see the rise in house prices has been accompanied by an unprecedented rise in household (and business) debt levels in Australia, and you will see that we already have twice the level of household debt compared to when the great depression started. What did the GD do for house prices??? I suggest you look it up because debt deflation is a bitch of a phenomenon.





That's the Prof Keen and co argument- fringe economics at best. The theory that the rise in household debt as a proportion of GDB MUST result in a period of massively falling house prices is unproven and disputed on many levels by many other economists etc. It is not gospel. Using the great depression as your example is not so hot either - the world was a very different place 80 years ago on so many social, economic, technological and political levels. Only the wealthy had any access to credit then, hence much lower household debt levels.

Again, that's not to say that house prices must or will increase at the same rate they have etc - the main factors I think have driven the growth of the past 20 years are increasing household disposable income (before housing costs), driven by both increased individual real earnings and trend to 2 income households, plus a prolonged low inflation/low interest rate environment. Add to this a growing population and a high level of urbanisation and all becomes clear. 

If you think about it, either of the first 2 factors alone can account for a doubling of household debt level to GDP ratio's and you can still argue that the debt level could grow even more and still be sustainable. Ie - if long term interest rates (and thus inflation) remain at half previous historical averages - that supports a doubling of sustainable debt right there. If household disposable income has doubled as well, that could well support a debt doubling alone (sustainably). So bottom line when you consider these factors IMO is the alarmist diatribe over the household debt to GDP is way over-done. 

It does add some risk in that high unemployment or any sharp rise in interest rates/inflation, or sharp falls in household income ,COULD have more of an impact in feeding an economic contraction than would otherwise have been the case. This is because as things turn bad consumers get more concerned about paying down that debt, and therefore reduce consumption more than they might have otherwise. However, this does not necessarily feed into an automatic massive and certain fall in house prices, as once the economy recovers and consumers are happy again, if we go back to low inflation/low interest rates and rising income, those debt levels will ramp right back up and a chunk of that will still flow back into housing. So long term even in the contracting economy scenario (where consumers are reducing debt), house prices still have potential for serious growth as we come out the other side of said slowdown.

Personally I think we will see a fairly orderly consolidation of that household debt in AU, which will result in only mild property price decreases in some area's (Perth, SEQ, maybe -10-15% for median prices peak to trough), and flat to mild increases in other area's (Sydney/Melbourne), for the next few years, with rises more likely for the lower end. 5 years plus things will take off again big time. I think all the action we are seeing in Sydney and Melbourne right now is supporting this outlook quite strongly.

Cheers,

Beej


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## kincella (10 March 2009)

beej,
 the first prop in 1970 was the worst performer, and that area still is...equivalent to sydney's west....but it was the family home...but time over again I would not go there,,,huge difference to friend who bought the same time in armadale...that prop is 4 times the value of my old one....hers was inner suburb..mine was outer...that was the difference
now I only go with the inner suburbs

 the best ones I had were in a similar environment to now...(although now is far worse)...but between 2000 to 2002....when everyone was focused on the falling stock market....props were unloved and not popular....I bought a couple for ridiculous prices and sold for triple the cost within 3 years....

I also made another mistake by buying a unit for daughter...it was inner suburb....had a bad reputation years ago....I thought with a few new owners we could turn it around.....but no....robberies every month....got out by the skin of my teeth....but would never try that again...far too risky....

I missed out on another of those bargains....I was watching it....a divorce again...it was on the market for about 80,000 less than others in that area, and then it sold in Oct 08.....I had actually been through and  wanting to buy it about 5 years earlier (they were divorcing then) but they made up and took it off the market...it was in one of my fav streets....

I had my hands full earlier this year....of course I regret not buying it...such a bargain.....but apart from being lucky....I only watch 2 suburbs...I know each of them very well...in fact there are only specific streets I will buy in...not just anywhere in the suburb....
pretty certain I will find another 'bargain' this year....walking distance to everything that matters...I buy in the heart, in the middle of the city, that suits me...but when selling it suits the young, the old, and families, saves on transport, travel and everything is convenient......go out for dinner and drinks and walk home etc

I know people who do not like that...they prefer to be out of the way...where its quieter
I have found sales are easy and quick...so my ideas seem to be popular.... 
oh and usually a period style house
cheers


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## gfresh (10 March 2009)

Beej said:


> 5 years plus things will take off again big time. I think all the action we are seeing in Sydney and Melbourne right now is supporting this outlook quite strongly.




That is not altogether unrealistic.. but by that measure, by 2014, it would have been *7 years* since the GFC really kicked off, not a small period of time. That would fit in with the shorter term 7 year cycle...but could be in trouble if we're heading into the downturn leg of a longer-term cycle  I guess you have to take that risk.


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## kincella (10 March 2009)

my 2 cents worth again......I disagree with the govt handout...it would be better spent on fixing all the road, rail, hospitals etc....I did not ask for it..they will just give it...and ...its such a small amount it means nothing to me...I have no plans for it...they can keep it....if we were talking 10,000 I may be interested.....however now I have to think about it, I will probably hand it over to the kids....and they can waste it however they like

the other points about debt.....my props are geared to less than 40%...I have 60% equity....and I only need to dump one small prop to wipe out all the debt....I have a convenient credit card, 55 days interest free, it records all the purchases conveniently for tax records....I am not massively in debt...I do not have car loans or any other debt....and I have a nice buffer of cash just sitting there....enough to live on for about 4 years...if everything else failed....or ready to buy another property if I want to....

repeat...am semi retired, only work part time....could work more if I wanted or needed to...am self employed....could sell some of my props if I chose to, but will more than likely buy another...

so narking off at me ...is like water off a ducks back.....


----------



## Taltan (10 March 2009)

Quoting Herald-Sun articles is not something I would take as gospel:-

Rent increases means rental squeeze encouraging more buyers, boom. 
Rent decreases allows more people to save and buy, boom. 
Increasing prices indicate good investment and you will miss the train if you don't buy. 
Decreasing prices indicate very cheap to buy and you will miss the train if you don't buy.
Government not building cheap housing means short of supply.. boom market!
Government building cheap housing means they are going to buy land from landlords.. more boom!!
Higher stock market means people are feeling more wealth and they buy property ... boom market!
Lower stock market means people are turning to property market .. more boom!!
High building construction activity means booming market 
Low building construction activity means short of supply.. more booming market. 
High sale volumes indicate high turn over and a booming market
Low sale volumes indicate no distressed sellers and booming market (US/UK sales volumes have been plunging .... . so super boom for them) 

Alternatively the above could be explained by the amount of money News Ltd makes from real estate advertisers.


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## nomore4s (10 March 2009)

Taltan said:


> Quoting Herald-Sun articles is not something I would take as gospel:-
> 
> Rent increases means rental squeeze encouraging more buyers, boom.
> Rent decreases allows more people to save and buy, boom.
> ...




lol, I've noticed the permabulls are the same - everything is positive news for property. I was going to post something along these lines a couple of days ago but really couldn't be bothered


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## ned_beaty (10 March 2009)

Beej,

I accept your point that most families are two income these days, however when I said household debt is double what it was I was referring to the debt to gdp ratio, so household income has doubles, but debt has still doubled up on that!! Interest rates may stay low (nominal rates) as this reflects the demand for borrowing, and the banks attempt to stimulate borrowing by making the terms more attractive. It is already evident that this demand is slowing in the dropping of nominal interest rates.

kincella,

I wasn't saying that you personally are over indebted, and after your brief review of your finances I am not saying that you are not either. I am looking at this from a macro economic level, and from that perspective property looks crook. Just trying to point out that you want to sell your property to someone to make your profit. How are they going to finance it?? How much debt can others go into to buy a house??

If the government has to new buyers $14000 (plus more through the waver of stamp duty) to convince them to purchase an investment, it doesn't seem like that great an investment to me.


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## kincella (10 March 2009)

ned....my props are in the lower range, affordable, under 500k's...easy to offload at  a profit...at anytime....that market is hot at the moment...

the average mortgage loan in Australia is 239,000....that is affordable for most people....

I think some of you place too much reliance on the US and UK markets.....and then say the same thing WILL happen here.....

I have several properties, bought when they were very cheap....prefer that method, rather than buying one bigger expensive property....

oh and waited 5 years for a commercial property to come onto the market, in a specific location....nabbed that one cheaper too.....its been an outstanding performer.....it will never be sold by me....passing it onto the kids...

most of my friends and associates have similar properties  and situations


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## singlefished (10 March 2009)

kincella said:


> I bought  first home 12,000 in 1970 sold for 80,000 in 1989.... 660% increase over 19 years...






566.67%


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## Beej (10 March 2009)

singlefished said:


> 566.67%




Which by the way is about 10.5% pa compounded. Sounds about right for holding through the high inflation periods of the 70s and 80s, + the late 80s boom.

Cheers,

Beej


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## kincella (10 March 2009)

fraid you made the error,,,12,000 x 5.667 = 68004 ???  different to 80,000
12,000 x 6.660 = 79920
I shortcut  it to 80 / 12 = 6.666
who really cares...the point was it was over 6 times the price when sold...discussing the triple value every 10 years


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## Beej (10 March 2009)

kincella said:


> fraid you made the error,,,12,000 x 5.667 = 68004 ???  different to 80,000
> 12,000 x 6.660 = 79920
> I shortcut  it to 80 / 12 = 6.666
> who really cares...the point was it was over 6 times the price when sold...discussing the triple value every 10 years




Kincella FYI Singlefished is right on that one: To calculate the _percentage_ gain the formula is:

((Final Price / Purchase Price) - 1) * 100

Ie; for your example:

((80000 / 12000) -1) * 100 = 566.67%.

What you are stating/calculating is the _multiplier_ of purchase price to final price, which is different from the percentage gain. So yes your property increased in value by over 6 times (6.66 to be exact), which equates to a percentage gain of 566.67%, which incidentally over a 19 year period equates to an annual compounding gain of 10.5% pa!

I think I have that all correct this time anyway 

PS: Think about it with a 0% gain, or even try say a 50% gain, and it will all make sense.

Cheers,

Beej


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## kincella (10 March 2009)

beej..thanks for pointing out my error,,,think I will just stick to talking in terms of 6 times or 10 times, rather than %'s


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## Glen48 (10 March 2009)

Stocks returned 7% a year for 200 years ended 2004, according to Wharton professor Jeremy Siegel. That’s after subtracting an average of 3% a year for inflation, or the gradual rise in prices of ordinary goods. The plunge in stock prices over the past 16 months makes me all the more sure that shares are poised to deliver good returns over the next decade or two. Houses returned 0.4% a year over 114 years ended 2004, according to Yale professor Robert Shiller, co-creator of the most widely used index for house prices. That number is suspiciously close to zero. Indeed, it might have been zero, reckons Shiller, if not for two periods of aggressive house buying, one spurred by government incentives following World War II and another created by the Federal Reserve’s drastic interest rate cuts in 2002 and 2003.
Some thing to think about???


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## robots (10 March 2009)

Glen48 said:


> Stocks returned 7% a year for 200 years ended 2004, according to Wharton professor Jeremy Siegel. That’s after subtracting an average of 3% a year for inflation, or the gradual rise in prices of ordinary goods. The plunge in stock prices over the past 16 months makes me all the more sure that shares are poised to deliver good returns over the next decade or two. Houses returned 0.4% a year over 114 years ended 2004, according to Yale professor Robert Shiller, co-creator of the most widely used index for house prices. That number is suspiciously close to zero. Indeed, it might have been zero, reckons Shiller, if not for two periods of aggressive house buying, one spurred by government incentives following World War II and another created by the Federal Reserve’s drastic interest rate cuts in 2002 and 2003.
> Some thing to think about???




hello,

gee and so many waste there time posting about the 0% return, Shiller wastes his and the universities time on an asset class that provides a 0% return

he should hand back his qualification, cant see ANY unit in my block going for price i purchased for in 1998, stooge

more who have missed out, tall poppy syndrome

top effort kincella, look at the example of doctor out berwick way 1mil to 6mil check that one out Ned, 20yrs locked in Ned

you're a legend Kincella keep the great posts coming

thankyou
robots


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## kincella (10 March 2009)

Hi Robots...thanks for the thumbs up....
now Schillers index is rubbish...and all the kids have spread it around....
schillers chart has been adjusted for this and adjusted for that, and the cpi was adjusted....I used to have a chart  that showed original house prices over 100 years....it was then up to you to change it to reflect the cpi....
now when I go looking for it...go 60 pages and the silly schiller thing comes up every time....

here is a really good article...facts and figures and rubbishes a lot of what is spread around on the net today...and used by some as the research....
this writer debunks most of the rubbish....

an extract to start with
........................................................................
All of the Demographia International Housing Affordability Survey findings are based on one extremely simple metric known as a “house price-to-income” ratio. In short, Cox & Co. assume that you can “value” housing markets using this crude measure. 

The first problem here is that there is no statistical evidence that there is any stable or predictable long-term relationship between median incomes and house prices. Notwithstanding this, Wendell Cox claims, “The [house price to income ratio] in Australia is 6.0, double the 3.0 historic maximum norm and well above levels of just a decade ago.” In fact, the median incomes used for the purposes of creating these house price-to-income ratios are likely to be quite different to the incomes associated with the marginal home buyer (where the median income used in their ratio includes much lower income and higher credit risk households).

The RBA has recently published some long-term analysis on the subject across a variety of countries. It is useful noting upfront that the RBA’s estimate of Australia’s house price-to-income ratio in 2007 of 5.5x is lower than the Demographia finding. The second interesting point deriving from the RBA analysis is that contrary to some of Demographia’s claims, Australia’s house price-to-income ratio has actually declined since 2003 when it peaked at 5.9x (see chart below). Given that house prices in 2008 have decreased slightly while nominal disposable household incomes rose by a strong 9.5 per cent in the year to end September 2008 alone, our house price-to-income ratio should have declined quite substantially.

and this bit......
Perhaps the most important flaw in this analysis, however, is that incomes are but one variable that determine long-term changes in house prices. House prices are determined by the intersection of a range of demand- and supply-side variables including interest rates, incomes, immigration, organic population growth, employment, and the supply of homes (or housing starts). 

You cannot, therefore, “value” house prices by taking one simple demand-side factor, such as incomes. It would be akin to trying to value gold prices ignoring the supply of gold and only referencing some proxy for demand””say, the time-series change in the number of per capita weddings. And we know that there is a very wide consensus amongst almost all economists and government agencies (including both the Treasury and the RBA) that Australia’s housing demand far exceeds supply. 

Building approvals (ie. supply) in Australia have been in free-fall during the last year with the latest November 2008 data implying that housing starts are running at just 110,000 properties per annum compared with Treasury forecasts for housing demand of closer to 200,000 homes per annum. In NSW, building approvals are at their lowest level since 1958

http://www.businessspectator.com.au/bs.nsf/Article/Demographia-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp


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## knocker (10 March 2009)

robots said:


> hello,
> 
> gee and so many waste there time posting about the 0% return, Shiller wastes his and the universities time on an asset class that provides a 0% return
> 
> ...




Good morning robots

All is good here in sunny algarve. Went for a stroll around the town centre, had some lattes, very cheap here only 1 euro. Looked at some nice town houses here, all very cheap because they have been empty for some time. Will go for a drive in my new beemer later into the countryside to see how my villa is going. lol life is grand . Hope your life in Stkilledher is just as nice.

thankyou


----------



## robots (10 March 2009)

knocker said:


> Good morning robots
> 
> All is good here in sunny algarve. Went for a stroll around the town centre, had some lattes, very cheap here only 1 euro. Looked at some nice town houses here, all very cheap because they have been empty for some time. Will go for a drive in my new beemer later into the countryside to see how my villa is going. lol life is grand . Hope your life in Stkilledher is just as nice.
> 
> thankyou




hello,

sounds wonderful, keep the great times rolling and looks as though we both in paradise brother

thankyou
robots


----------



## knocker (10 March 2009)

robots said:


> hello,
> 
> sounds wonderful, keep the great times rolling and looks as though we both in paradise brother
> 
> ...




yes indeed. Cheap beer 1 euro a bottle. Great wine. Cafe and bars on every street. Happy people, sunny weather great food. All good my friend. Adios


----------



## robots (10 March 2009)

Glen48 said:


> Stocks returned 7% a year for 200 years ended 2004, according to Wharton professor Jeremy Siegel. That’s after subtracting an average of 3% a year for inflation, or the gradual rise in prices of ordinary goods. The plunge in stock prices over the past 16 months makes me all the more sure that shares are poised to deliver good returns over the next decade or two. *Houses returned 0.4% a year over 114 years ended 2004, according to Yale professor Robert Shiller, co-creator of the most widely used index for house prices. *That number is suspiciously close to zero. Indeed, it might have been zero, reckons Shiller, if not for two periods of aggressive house buying, one spurred by government incentives following World War II and another created by the Federal Reserve’s drastic interest rate cuts in 2002 and 2003.
> Some thing to think about???




hello,

hahahahahahahaha, and people reckon i am an idiot

ps. is the internet still working in the UK, another one bites the dust

thankyou
robots


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## nunthewiser (10 March 2009)

well sitting in my seedy hotel in melbourne right now , im looking out the window at ALL the cranes doin there thang around southbank and the city centre area and wondering if all these you bewt apartments are actually sold off the plan or do i get a bargain on one of them when they are finally completed ...... 

on a side note ...... you guys that live here sure are spoiled for good food . just been down lygon street and a had a loverly fish curry, tastede bewtiful ...... no latees for me tho ..... bourbons just fine 

 thankyou


----------



## knocker (11 March 2009)

nunthewiser said:


> well sitting in my seedy hotel in melbourne right now , im looking out the window at ALL the cranes doin there thang around southbank and the city centre area and wondering if all these you bewt apartments are actually sold off the plan or do i get a bargain on one of them when they are finally completed ......
> 
> on a side note ...... you guys that live here sure are spoiled for good food . just been down lygon street and a had a loverly fish curry, tastede bewtiful ...... no latees for me tho ..... bourbons just fine
> 
> thankyou




lol hows it goin nun? Still stuck in that sh!thole? Oh well. lol went surfing today here in the algarve. Off to a nice meal in a restaurant around the corner soon. Have some sagres lol Gee life is tough lol adeus


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## ned_beaty (11 March 2009)

robots said:


> hello,
> 
> gee and so many waste there time posting about the 0% return, Shiller wastes his and the universities time on an asset class that provides a 0% return
> 
> ...




Yes Robots, great back slapping, but you seem to have missed my premise. I didn't say that people haven't made profits in the past in property, quite to the contrary I know they have, because I am one of them. 

Like I said earlier, why doesn't everyone just buy a $500,000 property for the guaranteed pay off (according to you) of $13.5 Mill at retirement?? Sounds like the perfect retirement plan.

Over the last 40-50 years have seen an ever increasing level of debt accumulated by the Australian population, with allot of that going to pay larger and larger amounts for used properties (unproductive). This is why our debt to GDP ratio is at an all time high.

The question I was asking that no-one here has given an answer two is in the future where are the buyers coming from?? Who can, or would want to take on the debt burden to keep prices going up??


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## kincella (11 March 2009)

ned....you could have asked the same question back in 1986..when prices were about 85,000......
are we not all wealthier today....wages have grown, cost of producing has grown...inflation
things are different from the days when wages were 5 pounds a week hey
or would you rather go back to those days ????


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## Beej (11 March 2009)

ned_beaty said:


> Over the last 40-50 years have seen an ever increasing level of debt accumulated by the Australian population, with allot of that going to pay larger and larger amounts for used properties (unproductive). This is why our debt to GDP ratio is at an all time high.




Firstly, the debt to GDP has not been growing constantly over 50 years - it's gone up, it's gone down - currently it is high yes, but as discussed yesterday not unsustainably so if you consider the factors that have driven it over the past 10-15 years. The current ratio of household debt to GDP is roughly 100% (and falling by the way) - at the macro level, that's equivalent say to an individual having a $50k mortgage if they earn $50k pa - that's hardly such a huge problem to pay off if they choose to is it?

As for money spent on housing being unproductive, that is an easily challenged assertion. How can you say money going into housing is unproductive? Let's say I borrow $300k, add a $50k deposit I saved and buy a $350k house. I give that money to someone. Either a developer who has just built a house (and therefore all that money was in effect used to buy materials, pay tradies, government taxes/fees for local infrastructure - sewerage, power, roads etc etc). Or an existing holder of established property - who then does what with the money? Maybe they build a new house (so money goes back into building industry) - or another established house? Or they save it? Or they spend it on other stuff? Maybe the invest the money in the share market or start a new business with it? Maybe they just spent a motza renovating (and thus improving the housing stock and employing tradies/ builders/ architects etc). The point is, the money has to end up SOMEWHERE, where it will be "productive" in some way or another.

So IMO it is wrong to say that just because money made available through finance is spent on housing (regardless of price level) is an "unproductive" use of that money.



> The question I was asking that no-one here has given an answer two is in the future where are the buyers coming from?? Who can, or would want to take on the debt burden to keep prices going up??




That's easy - The buyers come from new entrants (population growth and migration) - in a growing country like Australia we have probably a century of sustainable population growth yet ahead of us (maybe debatable if you are a greenie but this is what will happen and the government plans for it). As wages/incomes grow through inflation and due to economic growth/ productivity improvement etc, disposable income is higher, and this feeds into housing price growth. Remember that FHBs only represent between 15 and 25% if home purchasers at any time - the rest of existing owners upsizing, downsizing etc etc.

Because land is a "non renewable commodity", existing housing stock will always become more and more "exclusive" as time goes on and the population grows, eg, there will only ever be a certain number of places by Bondi Beach available, which over time are in the hands of a smaller and smaller proportion of the total population. That factor is what drives prices of existing stock at a rate greater than wage growth and inflation - another way to think of it is an area starts as a FHB area, but 30 years later only 20% of owners are FHB, and 30 years later again everyone there is on their 2nd/3rd residences etc (as that area is now too expensive for FHBs).

As for affordability for new entrants, ultimately affordable new housing has to be created over time to meet that demand - over time that new cheaper housing is what will cause MEDIAN prices to only grow by the rate of inflation plus a small amount.

See how it works?? 

Cheers,

Beej


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## kincella (11 March 2009)

good news for small business....so long as the rates are the right price
small business are the biggest employers......so maybe some more light at the end of the tunnel
............................................
wbc set to topple the nab as the biggest lender for sme's....and planning on employing a further 300 business bankers.....
and what is required for an sme to borrow ????...you guessed it right if you said resi props.....

resi props are the backbone of the country and small business...the banks require that house as security...
..................................................
extract

Westpac, in the meantime, had set no internal limit on its SME lending, after extending $15 billion to the segment in the 2008 calender year. 

This compared to recent commitments by CBA and ANZ to lend the same amount as they did last year -- $12 billion and $8billion respectively. 

The SME segment was hotly contested because it tended to recover more quickly than large corporations from a recession, Mr Hanlon said. 

"The companies tend to be more nimble, and the people running them are more entrepreneurial," he said. 

"It's definitely a big opportunity at the moment, one of Westpac's top three priorities, because at some point the economy will turn and start picking up." 

Late last year, Westpac announced plans to hire a further 300 business bankers, and add more business banking centres. 

NAB is adding 175 business lenders.

http://www.theaustralian.news.com.au/business/story/0,28124,25168126-643,00.html


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## Trevor_S (11 March 2009)

Beej said:


> at the macro level, that's equivalent say to an individual having a $50k mortgage if they earn $50k pa - that's hardly such a huge problem to pay off if they choose to is it?




That's a little disingenuous isn't it ?  I was of the understanding that was for every single person and yet most babies and kids don't hold mortgages, to use your example.



Beej said:


> How can you say money going into housing is unproductive?




Easy, in Australia, on the whole it doesn't earn an income above CPI. In fact it often makes a loss and relies on a hoped for capital gain  (what business investment can you name where an investor aims to make a loss ?) nor does it add to export growth.  

It's unproductive like you and your neighbor paying each other to take each others washing off the line.

I would suggest a decent return would be 10 - 15%.  Just look to Somersoft for some eyewatering use of debt to achieve very little but a hoped for CG, they are reliant on huge capital gain to make any money and even a modest capital gain will see them languish.



Beej said:


> So IMO it is wrong to say that just because money made available through finance is spent on housing (regardless of price level) is an "unproductive" use of that money.




So much money is tied up in this "unproductive" use of money that our major business have to go overseas to get money to survive eg RIO, Fortescue etc.  and there is little opportunity to expand and value add in Aus because most people are so in debt on their houses, they have little money to invest in genuinely productive assets.

The cash grabs from the likes of WBC, CBA etc etc recently from shareholders, without them the banks would collapse, or Government would be tipping in vastly more amounts of taxpayer $.  The government is propping up the housing market with vast amounts of tax payer dollars though  



Beej said:


> See how it works??




Not at all  ie by that I mean I don't agree with you 

All of that aside, it seems to me those who think property is a great investment right now, have convinced themselves there is not only a disconnect between resi. property and the rest of the Aus. economy and Aus commercial market (look to GPT, Cetro etc for proof of the massive devaluations there) but the entire rest of the World.... I could be wrong and resi. property keeps going up for ever in Aus but to my mind, the odds are seriously against it for the next 5 - 7 years at least.  

I am buying shares because there has been a correction in the sharemarket where lots of shares now represent good value (I have no idea if they have bottomed) but this decent devaluation has NOT happened in the residential property market yet...


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## kincella (11 March 2009)

oh dear...unproductive...a roof over the head for the family...a nesting place...and all the things that go into a house.....whitegoods, entertainment appliances, building materials....insurance, finance....
so you could forget all about the top 200 companies....all produce something geared towards the building or the home

and then you compare it to shares/stocks being productive....if you did not have the house to begin with...no point in holding shares....most of the companies out there produce something for the home...
oh and more importantly....small business are the largest employers in this country.....sme's need a loan to continue......yes but only if the bank  has the home as security.....

the alternative....live  in a bark tent under a tree....and forget the stockmarket....


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## Beej (11 March 2009)

Trevor_S said:


> That's a little disingenuous isn't it ?  I was of the understanding that was for every single person and yet most babies and kids don't hold mortgages, to use your example.




No it's not disingenuous at all - just an analogy. At the national level, if we EARN X dollars a year, and OWE X dollars in total debt, then it is analogous to a individual earning $50k a year and having $50k of debt. you could use any wage/debt number you like in my analogy - it doesn't matter.

Re the unproductive spending argument - I think you are imagining all this money sitting there doing nothing - that's not how it works as I see it. The money used to buy a house ends up somewhere else in the economy, doing something productive. It has to! Your argument would only apply to that portion of GDP (which represents a portion of the GDP portion which is total wages/salary earned by individuals with mortgages) spent each year paying back interest on housing loans, not the total amount of money SPENT on housing. Ultimately however money makes it's way into the economy, someone somewhere has to pay the interest (or opportunity cost) on it. You could argue that high house prices result in less credit being available DIRECTLY for other borrowing/purposes though that are unrelated to the housing/construction industry - maybe that's what you are saying?

Cheers,

Beej


----------



## gfresh (11 March 2009)

kincella said:


> good news for small business....so long as the rates are the right price
> 
> small business are the biggest employers......so maybe some more light at the end of the tunnel
> 
> resi props are the backbone of the country and small business...the banks require that house as security...




And that is another very important thing to be keeping an eye on.... If a very large number of SME's go to the wall (and they are starting to), then so do the houses supporting them, enough of these go and well, we've got the domino effect, no matter how much underlying demand there is due to population growth or the like, short term at least. 

I agree fully with Trevor_S' perspective regarding the argument of productivity.. if we are relying on a large chunk of our "production" to be simply tied up with "shelter" and even simply "consumption", and very little innovation or actual exportable production going on then this country could have a serious problem. If the money wasn't going into housing, it would have to be created elsewhere wouldn't it, and go into other areas - many of which could help Australia rise up several ranks in the top 20 economies. Having such a large chunk of GDP focused on housing really has never made any country wealthy, at least not longer term. 

Looking across to our forefathers, the UK, we can see such a path can lead... and that is serious damn problems if things go even slightly pear, even worse so than the US, that at least has some intuitive productive capability.


----------



## gfresh (11 March 2009)

case in point re sme's: http://www.businessspectator.com.au/bs.nsf/Article/Dun--Bradstreet-$pd20090309-PXR24?OpenDocument&src=sph



> Australia’s leading debt rating/collection agency Dun & Bradstreet raised the financial distress alert last month when they reported that the number of companies rated as having a high risk of financial distress or failure was up 12 per cent on the previous year and was 20 per cent up on 2007 figures. D&B reported a 40 per cent rise in debt referrals in November and December and a sharp increase in payment terms which took debtor days to the highest level since 2001.
> 
> Since then there has been a significant further deterioration and the level of impending financial distress among business enterprises has risen to levels that D&B have not seen since the early 1990s.


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## Glen48 (11 March 2009)

Hail KING ROBOT"S et al:
They were right and us poor ones have to eat humble pie...Looks like I missing out on another boom

AUST DATA REVIEW] The recovery in demand for housing finance continued in Australia; with the number of home loans approvals rising firmly for the fourth straight mth in a row. Approvals gained by a further 3.5% over Jan, less than forecasts on a 4.0% gain but after Dec's prelim 6.4% surge was revised up to a higher 6.7%. Meanwhile, total value of owner occupied loans rose a further 0.7% after rebounding 6.0% prior. Of the latter, the value of invt lending fell back by -3.8%, but owner occupied housing gained a further 2.3%. Jan's ensuing gains continue to be primarily driven by ongoing demand for new home purchases after the Govt's handout to first home buyers in Dec. However a broad recovery is also starting to be evident in response to RBA's aggressive rate cuts since Sept.


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## Uncle Festivus (11 March 2009)

Glen48 said:


> Hail KING ROBOT"S et al:
> They were right and us poor ones have to eat humble pie...Looks like I missing out on another boom
> 
> AUST DATA REVIEW] The recovery in demand for housing finance continued in Australia; with the number of home loans approvals rising firmly for the fourth straight mth in a row. Approvals gained by a further 3.5% over Jan, less than forecasts on a 4.0% gain but after Dec's prelim 6.4% surge was revised up to a higher 6.7%. Meanwhile, total value of owner occupied loans rose a further 0.7% after rebounding 6.0% prior. Of the latter, the value of invt lending fell back by -3.8%, but owner occupied housing gained a further 2.3%. Jan's ensuing gains continue to be primarily driven by ongoing demand for new home purchases after the Govt's handout to first home buyers in Dec. However a broad recovery is also starting to be evident in response to RBA's aggressive rate cuts since Sept.




Mmmm..... suck them in then have a recession? Sounds like the teaser rate scheme they had in the US.......only make it worse in the end when all the newcomers want out coz they don't have a job? Either that or it's getting set up again for some hefty (house price) inflation down the track and.....higher interest rates to cool it down.......like an imbalanced wheel....


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## kincella (11 March 2009)

a prudent buyer like those teenage kids on tv this week that bought a house....he had budgeted for an 8% interest rate some time in the future...and they had saved 5000 towards the deposit

you all seem fixtated on going back to the horse and cart days....
but what if stacks of people bother to fix the new low rates....and fix them for 5, 10 15 years.....
your arguments are fine if everything falls in a heap for a long time....
and if it recovers within a year.....the alternative  is ????
a subdued recovery....kids not been given 5 credit cards to rack up with no intention of paying back....everyone acts a little more conservativley.....

get rid of some of those cowboys.....
its the recession you had to have....all will be forgotten within 3 years...


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## kincella (11 March 2009)

some of us will like this news and some will not...so there is a bit here for everyone.......now before you get too excited that the fed govt will do anything about the  shortage.......there was a national housing review commissioned....oh about 8 years ago...could be wrong on the date...was about the time the GST was introduced....I put in my 2 cents worth at the time...............and guess what has happend since then..nothing zilch, zit..

in fact the state govts have made the situation even worse...and local councils...well I had a problem with them....could the birds still fly in a straight line past my house ????? and they held it up for about 4 months....

but here it is....an extract

There's plenty of land to build upon but that's unlikely to stop housing shortfalls and prices from skyrocketing in the next 20 years, a new report shows.

In a report commissioned by the federal government, the National Housing Supply Council has confirmed there is plenty of land available for development on the fringes of Australia's major cities.

But without significant government and industry intervention the nation's housing crisis could increase tenfold by 2028, the report said.

In 2008, the housing shortfall was about 85,000 dwellings.

In three years' time the number was expected to reach 203,000 and hit 431,000 by 2028.

http://news.theage.com.au/breaking-...rtfall-prices-to-skyrocket-20090311-8uz1.html


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## italiandragon (11 March 2009)

Hello, I strongly advice you all to spare 30 minutes to read carefully a report, it is free but I can`t post links yet as I am a new member so you have to google it, google the following:

"5th Annual Demographia International Housing Affordability Survey"

just make sure to Google the web and *not* just pages from Australia.

Anyone with a brain would understand how seriously inflated Australian and NZ property prices are and WHAT could happen here and in NZ in the coming months both in the Commercial and residential property market.


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## kincella (11 March 2009)

italian dragon....and I suggest anyone who reads that rubbish...should read this from the business spectator to set them straight.
and that company uses house price to income ratios....that have been denounced by every one else..
this bits a joke too
extract......

No-one will draw attention to the fact that in your ranking of some of the world’s 32 most unaffordable metropolitan markets you have listed, alongside the obvious culprits, Bundaberg, Newcastle, Wollongong, Cairns and Hobart. In fact, according to Demographia, housing in Bundaberg is less affordable than New York and London

http://www.businessspectator.com.au/bs.nsf/Article/Demographia-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp


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## Glen48 (11 March 2009)

The benefits of believing in your own product:
Vito Simone, the prominent realtor and property investor and President of the Greater Baltimore Board of Realtors, filed a chapter 7 bankruptcy petition with his wife, Gail. The couple claim assets of $468,900 and debts of more than $3.5 million.


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## sinner (11 March 2009)

Mortgagee sales in NZ are already on a sharp incline in Feb with worse expected.


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## knocker (11 March 2009)

sinner said:


> Mortgagee sales in NZ are already on a sharp incline in Feb with worse expected.




Please don't tell robots beej et al. You will spoil there drug influenced euphoria roflmho


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## nat (11 March 2009)

hi there ,i live in bundaberg and i find it hard to believe it is more unaffordable then london or new york ,there is so many houses here from 170000 to 250000, and cheap to live here .beaches 10 min away ,can surf, swim fish snorkel . 3 river systems can water ski ,fish ,whatever salt or fresh .Flat as except for hummock, robots could ride round all day . How long it stays affordable who knows as many southerners starting to  discover it ,but looking what other people are paying for there houses in other parts of australia i dont know how that article could single out bundaberg ,Nathan


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## knocker (11 March 2009)

nat said:


> hi there ,i live in bundaberg and i find it hard to believe it is more unaffordable then london or new york ,there is so many houses here from 170000 to 250000, and cheap to live here .beaches 10 min away ,can surf, swim fish snorkel . 3 river systems can water ski ,fish ,whatever salt or fresh .Flat as except for hummock, robots could ride round all day . How long it stays affordable who knows as many southerners starting to  discover it ,but looking what other people are paying for there houses in other parts of australia i dont know how that article could single out bundaberg ,Nathan




lol Bundaberg? You have to be joking. It's hardly the hub of society, and scant work. Better off going to cairns or townsville. Or better still just up and go OS. Lovely day here in the Algarve. Soaking up the climate the scenery and the good life. cheers


----------



## Beej (11 March 2009)

knocker said:


> lol Bundaberg? You have to be joking. It's hardly the hub of society, and scant work. Better off going to cairns or townsville. Or better still just up and go OS. Lovely day here in the Algarve. Soaking up the climate the scenery and the good life. cheers




So what are you doing hanging out in internet cafes and spending your time surfing ASF and making typical idiot posts then?? In all the years I have spent travelling the world that's the LAST thing I would have been caught doing! 

PS: Thought you had sworn off this thread anyway?

Beej


----------



## grace (11 March 2009)

knocker said:


> lol Bundaberg? You have to be joking. It's hardly the hub of society,




Just be careful here.  "There's no place like home".  Remember The Wizard of Oz.


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## Trevor_S (11 March 2009)

knocker said:


> lol Bundaberg? You have to be joking. It's hardly the hub of society, and scant work.




I have to disagree with this, I have lived / worked alot of small and remote places, I have never lived in a bad place, everywhere has something interesting about it.  Hell I lived and worked south/west of Cloncurry for quite a few years and enjoyed the experience no end. I have been to Bundy, it seem'd okay to me.  I do remember reading somewhere it had the "perfect" climate, whatever that means to different people (not to hot in summer and not to cold in winter apparently.)

Of course there are a few places in Aus. I would never live: Brisbane, Sydney (and the greater Sydney metropolitan area) and the Gold Coast ... but just about anywhere else is fine


----------



## Trevor_S (11 March 2009)

I thought this interesting

http://www.berkshirehathaway.com/letters/2008ltr.pdf



> Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But *enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities*. And the home purchased ought to fit the income of the purchaser.
> 
> The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified.
> 
> Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition.




I guess I echo WB's sentiments here in Aus.  I wonder if the Governments continual propping up of the Property Industry will continue for much longer or if we will return to a more realistic view of residential property ?


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## nat (11 March 2009)

knocker said:


> lol Bundaberg? You have to be joking. It's hardly the hub of society, and scant work. Better off going to cairns or townsville. Or better still just up and go OS. Lovely day here in the Algarve. Soaking up the climate the scenery and the good life. cheers




Ha ha ,i knew this would invoke a post like this, each to their own ,depends what one wants out of life ,i know im never bored living here,not enough hours in the day .Ive been to townsville and cairns what a joke ,quickly racing from air con to aircon ,mud flats ,stingers, crocidiles ,,, but if being in the hub of society is what u want out of life go for it, guess one can find good or bad in any place . Nathan


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## nunthewiser (11 March 2009)

knocker said:


> lol hows it goin nun? Still stuck in that sh!thole? Oh well.





Nothing wrong with melbourne 

GREAT place to visit . the place has a vibe like no other city.. actually get envious everytime im there ........ BUT did live there for a number of years and left and happy JUST to visit these days

seriously tho . anyone know what the go is with all these apartment blocks getting built around southbank etc. presold ? or will they be offered up for sale on completion ....... wouldnt mind a lil city sin pad if one can get it cheap enough


----------



## nunthewiser (11 March 2009)

Beej said:


> So what are you doing hanging out in internet cafes and spending your time surfing ASF and making typical idiot posts then?? In all the years I have spent travelling the world that's the LAST thing I would have been caught doing!
> 
> PS: Thought you had sworn off this thread anyway?
> 
> Beej




hahahahaha 

WELL DONE BEEJ 

spot on


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## Bill M (11 March 2009)

nunthewiser said:


> wouldnt mind a lil city sin pad if one can get it cheap enough




You sicko, and I thought you were an honest bloke:whip


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## nunthewiser (11 March 2009)

Bill M said:


> You sicko, and I thought you were an honest bloke:whip





sicko ?

and yes would honestly like one I i could get it cheap enough


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## robots (12 March 2009)

hello,

yes Nun, great joint melbourne, the apartments are just new towers being offered by the likes of Central Equity, Becton and other mostly private developers

i would be more inclined to get an exisiting 1-bed or 2-bed in sth yarra, richmond, prahran, east melb

when i pushie past that area around 5-6.30pm there is tonnes of people living there

just like to congratulate Australians for taking the tuff stance on firearms here in this fine country, leaders of the world 

thankyou
robots


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## knocker (12 March 2009)

Beej said:


> So what are you doing hanging out in internet cafes and spending your time surfing ASF and making typical idiot posts then?? In all the years I have spent travelling the world that's the LAST thing I would have been caught doing!
> 
> PS: Thought you had sworn off this thread anyway?
> 
> Beej




Stirred up a hornets nest have I? lol  Just proving what a bunch of losers you are harping on about "cosmopolitan melbourne" lol 

P.S yes I am hanging out AT MY OWN "INTERNET" CAFE LOL


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## nunthewiser (12 March 2009)

robots said:


> hello,
> 
> yes Nun, great joint melbourne, the apartments are just new towers being offered by the likes of Central Equity, Becton and other mostly private developers
> 
> ...




gday Robots

actually more intrested in these brand new u bewt swanky pads that maybe willl sit there unsold when they are finally completed ... maybe a firesale to cover costs ??

YES re richmond etc .much more character and buzz around there but not really looking at the established "proven" pads as they already got an expected pricetag that "normality" will keep up to a certain level ...... 

lol i wanna squeeze myself a nice new one from some poor hard done by developer type 

anyways ..... have a great day man and enjoy that vast range of food and culture you guys have got so close to home


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## Junior (12 March 2009)

nunthewiser said:


> gday Robots
> 
> actually more intrested in these brand new u bewt swanky pads that maybe willl sit there unsold when they are finally completed ... maybe a firesale to cover costs ??
> 
> ...




Docklands is the area where much of the development is occurring...they do seem like they're overdoing it there, and I wouldn't be surprised if there's a few bargains in the coming years.  However there's also some huge office developments happening including an ANZ building, so I guess this will provide some demand for accommodation in the immediate area.

Another area to look at is East Melbourne, there's two new luxury apartment developments happening.  One of them is One East Melbourne, which is right on the fringe of the CBD, the penthouses are incredible and are advertised at 3-4 million+.  The other is on Clarendon street overlooking Fitzroy gardens.


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## robots (12 March 2009)

hello,

gee there is some real sour apples around in society

most new towers in southbank, city or carlton get filled up by tenants (overseas students), alot of the developers (private) left in the game have many other business interests and just sit, sit, sit and sit on the property by either renting or slowly selling

Meriton is a classic example whereby he held heaps and converted them into short term executive type apartments,

we have one development kicking off on Chapel St, Sth Yarra next to como whereby a permit has only just been issued yet already well underway with basement carpark, crane onsite etc 

bigW and some other shops going in and probably 200+ units

thankyou
robots


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## kincella (12 March 2009)

robots, 
spot on...the kids and everyone else just love chapel st, its hot, its vibrant, and always busy......

have to take the dog down at least once a week..she likes KFC for a treat

parking is easy, in the car parks, a fav cake shop down there, and chemistwarehouse (so cheap, when you get a bit older and need all that stuff) then all the other hip fashion bargains.....and of course the fav eateries

btw...no it does not matter
I use chapel st as a barometer of society.....and its going strong for the gen Y's and gen X's
cheers


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## robots (12 March 2009)

hello,

yes kincella, its fantastic probably the hippest street in australia at the moment and we part of it brother just plodding along in life

everybody accepted down there

now cakes, people talk Acland st cake shops, Pattersons etc but if you after the real deal and not those gelatine infused vanilla slices then get down to this place:

http://www.womow.com.au/biz/Avivs-Cakes-Bagels/

the review there on the apple crumble is spot on, vanilla slices, any of the french or danish pasty, 

another one past Coles on glenhuntly rd as well, support the economy 

thankyou
robots


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## ned_beaty (13 March 2009)

hmmmmmmmmmmm

http://money.ninemsn.com.au/article.aspx?id=771092

"Declan Murphy, the chief executive of online home loan provider BidMyLoan, said the weakening local economy and rising unemployment would leave first home owners vulnerable to falling house prices."

I know I'll hear "that's not true because......" or whatever, but even the main stream is turning.

hmmmmmmmmmmmmmmmm


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## Bill M (13 March 2009)

*It’s cheaper to buy than rent*

A new RP Data report shows 74 Australian suburbs where it is cheaper to buy than rent, reflecting the fundamental shifts in the property market.

The differences in savings ranged from as little as 42c a month to a whopping $3877.48 in Baynton, Western Australia.

FULL STORY HERE


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## kincella (14 March 2009)

*buy a house for 1.50 plus 10,000 rates *

...surely some can afford these prices
at under $500.....but apparently the houses come with yearly taxes of up to 8000.....but they can claim the interest as tax deductible...

I guess they also need to be able to afford the air fare....unless they just buy them over the internet....

read an article a few weeks ago of up to 400 people at a time, being taken in buses to view all those empty houses for sale,,,and the buyers were snapping them up

cannot understand why all those people in sacremento are living in tents,,,when they can buy a house for 1.50 

http://www.news.com.au/business/money/story/0,28323,25184134-5013951,00.html


----------



## overlap (14 March 2009)

It may surprise you most of the world doesn't live in or care about places like Chapel St, Docklands....

http://www.news.com.au/heraldsun/story/0,21985,25181373-664,00.html

Hard times hitting home

First homebuyers are all but propping up the property market. After years of sitting on the sidelines they can now afford to buy. And with $21,000 (plus) from the Government, and interest rates at record lows, they can afford to borrow a bit more they email me about it all the time.

The banks understand this. So do the developers and the real estate agents. Yet as my mate, property expert Neil Jenman, says, committing yourself to the maximum when rates are at their minimum is a recipe for maximum pain in the future.

The storm will erupt in a few years time when many of these young homebuyers lose their jobs as a result of the prolonged economic downturn. Little savings, rising repayments, are ingredients for disaster (especially with an extra mouth or two to feed).


----------



## ned_beaty (14 March 2009)

kincella said:


> *buy a house for 1.50 plus 10,000 rates *
> 
> cannot understand why all those people in sacremento are living in tents,,,when they can buy a house for 1.50
> 
> http://www.news.com.au/business/money/story/0,28323,25184134-5013951,00.html




Ummmm maybe because they have defaulted and there is no-one willing to loan them even $10000 to pay the rates for these. These people are in financial ruin from speculative property purchases. I'm pretty sure if it was as easy as flippin a buck fiddy to the guy and moving in they would take the option.


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## sinner (14 March 2009)

Read the comments, the last one rings true.

Been able to buy these houses for a few years now all over the US for anyone who was watching sub-prime unfold.

Funny how everyone over there was screaming "bargains! bargains!" the whole way down :/


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## Uncle Festivus (14 March 2009)

The problem for the RE permabulls is that the latest government subsidy, that helps to keep them from economic reality, looks like being too successful. Why rent when you can buy? Why buy an existing house when you get more taxpayer money from building a new one? So we have less renters _and _more new houses. And, down the track, less renters _and _more new houses _and_ rising interest rates _and_ rising unemployment. 

This is how the (global housing bubbles) problems started in the first place - risk was subsidised or underpriced. 



> In other words, monetary policy that kept interest rates low for an extended period of time, *tax policy that favored debt over equity*, regulatory policy that allowed financial institutions to operate opaquely, and social policy that pushed home ownership regardless of affordability, all combined to create artificial economic demand that could only be financed with debt because the savings (i.e. equity) to purchase them did not exist.
> Moreover, as more and more debt was created through financial engineering and policy prescription, the prices of these were bid up higher and higher. *This led these products to become grossly inflated in value compared to any inherent economic worth they might possess*. Once the bubble burst, their value dropped precipitously.
> 
> *by Michael E. Lewitt*




Unless you think that Australia is immune from the rest of the globe's financial, trade and manufacturing meltdown? The perfect storm brewing, but will they face reality?


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## kincella (14 March 2009)

and the RE permabears response....look at the US or anywhere else...one price fits all...everybody is the same...its a global village etc

the US has a surplus of over a million homes.....we have a deficit

sounds more like jealousy....than reality....

the bears can always go and buy the cheap houses in the US.....

I am providing for myself and family....no centrelink handouts needed ....
nor wanted..
I have a standard of lifestyle, that I intend to retain until I die....no way could I live on a pension....and I have no intention of living like a pauper

so I fund my own lifestyle....and so far property has proved very successful...
I also provide a service to the community...I provide good rental accommodation...to those who want, need or prefer to rent

in the meantime...I will be buying more props, and taking up as much of this 'window of opportunity' as I can....to support me for the future
cheap houses, low interest rates.....its heaven for a property investor..

otherwise to each their own....


----------



## IFocus (14 March 2009)

kincella said:


> and the RE permabears response....look at the US or anywhere else...one price fits all...everybody is the same...its a global village etc




I own investments properties and have made strong returns as a result. 

However I would be a complete fool not to have some appreciation of the global economy and its implications on the Australian economy flowing through to housing.

As said many times before this current Global story unfolding is *unprecedented* in your life time or as many now think all the way back to the 30's, you keep mentioning how you have been successful and as such should continue.

Not you nor I can tell what will happen in this current situation which dare I say it again is *unprecedented*. If you use your history or any history of housing pricing in Australian its going to be at best what? 

Like you have already experienced?

As for the bear / bull thing I can only see it as a risk seeking environment or risk defending environment. I believe this is a risk defending environment now, when the next credit expansion starts I will return to risk seeking.





> I am providing for myself and family....no centrelink handouts needed ....
> nor wanted..
> I have a standard of lifestyle, that I intend to retain until I die....no way could I live on a pension....and I have no intention of living like a pauper




And long may it continue




> in the meantime...I will be buying more props, and taking up as much of this 'window of opportunity' as I can....to support me for the future
> cheap houses, low interest rates.....its heaven for a property investor..




Remember many here who may read this and may not be in your strong position....


----------



## Glen48 (14 March 2009)

I see the feds are talking about cutting Neg.gearing and only allowing a tax claim against the income from the IP not the total income of the owner/s.
They seem to think this ruling was one of the causes for suckers getting into property.
If you want 25% of a penthouse go to the GC or go to USA and get a house for $1.5  to 5K and get 10k in tax credits.


----------



## Beej (14 March 2009)

Glen48 said:


> I see the feds are talking about cutting Neg.gearing and only allowing a tax claim against the income from the IP not the total income of the owner/s.
> They seem to think this ruling was one of the causes for suckers getting into property.
> If you want 25% of a penthouse go to the GC or go to USA and get a house for $1.5  to 5K and get 10k in tax credits.




Which Feds? Are you talking AU or US? Got a link to that story? Or is that just the speculation of some unknown blogger? 

Government here in AU has always been adamant since the failed Keating/Hawke attempt to remove negative gearing for IPs in the 80s that it was here to stay.

Cheers,

Beej


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## joeyr46 (14 March 2009)

article especially for the bulls, report for the government by The National Housing Supply Council in the Daily Telegraph (not sure last couple of days)

"In 2008, the housing shortfall was about 85,000 dwellings. In three years' time the number was expected to reach 203,000 and hit 431,000 by 2028.

The forecasts were based on recent housing development and government funding trends. If these trends slowed, the predicted shortfall could top 800,000, the report warned.

The shortfalls could also be higher than the report predicts because it fails to take in the impact of the global financial crisis."

Perfect example of linear thinking just like the experts did when oil was $150 a barrel, and of course we know the results of that. No I'm not bearish yet but not long term bullish either another run 6 to 12 months IMO should see us all forget the GFC but dont see any real shortage. Who knows with an ageing economy and a failing health system might get a surplus


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## satanoperca (14 March 2009)

For those who are interested :

The eight members of the National Housing Supply Council will be:

Mr Brendan Crotty, former Managing Director of Australand.
Mr Saul Eslake, ANZ Chief Economist.
Ms Sue Holliday, former Director General of Planning NSW.
Mr Chris Lamont, HIA Chief Executive - Policy.
Mr Marcus Spiller, Director SGS Economics. 
Ms Marion Thompson, WA Urban Development Coordinator.
Mr Stuart Wilson, Managing Director of Wilson Homes.
Ms Judy Yates, one of Australia's pre-eminent housing researchers

A report is only as good as those that contribute to it.


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## joeyr46 (14 March 2009)

satanoperca said:


> For those who are interested :
> 
> The eight members of the National Housing Supply Council will be:
> 
> ...




No conflict of interest there then LOL


----------



## lioness (14 March 2009)

I had my auction today, not one bid. Amazing. An inner city townhouse priced between 450K and 500K and not one bid. 

God help me when property does collapse.


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## Beej (14 March 2009)

lioness said:


> I had my auction today, not one bid. Amazing. An inner city townhouse priced between 450K and 500K and not one bid.
> 
> God help me when property does collapse.




Maybe they all read your latest posts on here and decided to wait because you convinced them prices are going to crash??? 

Seriously though - any pre-auction offers? Regardless if there are interested people you may still get offers through in the next week - FHBs in particular often don't like to buy at auction because of the unconditional contract (in NSW anyway).

Cheers,

Beej


----------



## lioness (14 March 2009)

Beej said:


> Maybe they all read your latest posts on here and decided to wait because you convinced them prices are going to crash???
> 
> Seriously though - any pre-auction offers? Regardless if there are interested people you may still get offers through in the next week - FHBs in particular often don't like to buy at auction because of the unconditional contract (in NSW anyway).
> 
> ...




Beej,

Yes, that's what happened. No pre-auction offers but 5 FHB's who were dead keen and turned up but all froze on the day(probably because it was bucketing down with rain!).

Agent is confident of selling over the next 2 weeks. I will keep you informed.

Cheers.c:


----------



## Bill M (14 March 2009)

lioness said:


> I had my auction today, not one bid. Amazing. An inner city townhouse priced between 450K and 500K and not one bid.
> 
> God help me when property does collapse.



Auctions are not always the best way to go. I auctioned one of my properties once and didn't get a bid either, I had a gut feeling I wouldn't. A Month later I sold it for a fair price. I've seen a lot of auctions not attract any bids even in the boom times. It's just got to be that something special kind of place to get several buyers to jump on it, good luck anyway, this isn't that unusual.


----------



## lioness (14 March 2009)

Bill M said:


> Auctions are not always the best way to go. I auctioned one of my properties once and didn't get a bid either, I had a gut feeling I wouldn't. A Month later I sold it for a fair price. I've seen a lot of auctions not attract any bids even in the boom times. It's just got to be that something special kind of place to get several buyers to jump on it, good luck anyway, this isn't that unusual.




Thanks Bill, I agree with you. I probably should have went private sale in hindsight, but now hopefully the agent will flush out interested parties.

He seems confident. It is spot on in the price bracket where FHB's are in.

It is cash flow neutral with rent anyway, so no loss.


----------



## robots (14 March 2009)

hello,

what happened after auction?

is it a reasonably new place? 

in todays market I see ANY property that has an "issue" just gets crossed off,

in the unit/townhouse market this may be main rd exposure, privacy issue, condition issue

most FHB's do not want to do any work on any place

thankyou
robots


----------



## Largesse (14 March 2009)

lioness,
do you have a weblink for your listing?
What city is it in?

We are looking at inner city townhouses up to $500k in Melbourne and Sydney, would love to have a look at yours.

PM me or post on thread if you wish


----------



## Largesse (14 March 2009)

In other news, a tiny 1 room studio in South Yarra went for $268k at auction today. 
When i say tiny, i mean, my bedroom is bigger than the whole unit


----------



## lioness (14 March 2009)

Largesse said:


> lioness,
> do you have a weblink for your listing?
> What city is it in?
> 
> ...




Hi Largesse, send me you email address as a private message and I will send you a link. I am happy to keep it as it pays $425 per week rent and is a 2 bedroom with lock up carport.


----------



## lioness (14 March 2009)

Hi Robots,

it is not on a main road, it is in a good street and location.

I will wait, these FHB's are just nervous nellies with no money.

Can you post me your link for today's auction results. Many thanks.

Keep sucking down those ruskies. Have one for me, I could use one now.


----------



## robots (14 March 2009)

hello,

thats fantastic news Largesse, top spot South Yarra right next to one of ASF's kings, Kincella

whoever lives in that joint will probably be strolling to the gardens, running/or walking the tan, popping e's at Summadayze, sipping cafe latte's on chapel st, on the pushie down st kilda rd, 

Australia what a place, but hey airport still running if you want to head over to Detroit and pick-up one of those $1.50 jobs (just get to Walmart straight off the plane to get the arsenal)

thankyou
robots


----------



## michael_selway (14 March 2009)

Interestign Stuff

http://www.globalpropertyguide.com/investment-analysis/Most-expensive-real-estate-markets-in-2009




> Most expensive real estate markets in 2009
> Global Property Guide
> 
> Last Updated: Feb 15, 2009
> ...




*Most expensive property markets
(based on a 120 sq. m. apartment ) *
COUNTRY CITRY/REGION AVE PRICE (US$/sq.m.)  
1 Monaco Monte Carlo 47,578  
2 Russia Moscow 20,853  
3 UK London 20,756  
4 Japan Tokyo 17,998  
5 Hong Kong Hong Kong 16,125  
6 USA New York 14,898  
7 France Paris 12,122  
8 Singapore Singapore 9,701  
9 Italy Rome 9,166  
10 India Mumbai 9,163  
11 Ireland Dublin 9,069  
12 Finland Helsinki 8,404  
13 Bermuda Bermuda 7,861  
14 Greece Athens 7,858  
15 UAE Dubai 7,151  
16 Spain Barcelona 6,523  
17 Montenegro Montenegrin Littoral 6,184  
18 Switzerland Geneva 6,178  
19 Luxembourg Luxembourg 6,165  
20 British Virgin Islands British Virgin Islands 5,843  
21 Barbados St. James 5,767  
22 Spain Madrid 5,672  
23 Russia St. Petersburg 5,527  
24 Andorra Andorra 5,379  
25 Germany Munich 5,255  
26 Romania Bucharest 5,184  
27 Slovakia Bratislava 5,088  
*28 Australia Sydney 4,994* 
29 Turks & Caicos Providenciales 4,963  
30 Netherlands Antilles Sint Maarten 4,889


----------



## Beej (14 March 2009)

michael_selway said:


> Interestign Stuff
> 
> http://www.globalpropertyguide.com/investment-analysis/Most-expensive-real-estate-markets-in-2009
> 
> ...




Good article - that fit's in pretty well based on my own perusing whilst travelling around the world over the years and visiting many of the cities on that list.

Meanwhile, back in Sydney the long awaited property crash still does not appear to be eventuating with yet another very healthy auction clearance rate of 69% (126 sold properties) with a median price of $644k - higher yet again than the previous weekend.

Results can be found at: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

As previously discussed, the FHB segment of the market seems to be almost in a mini-boom now by many anecdotal accounts (was a story on Ch-7 news as well; only about 3 months behind the actual trend as usual). 

One thing I was thinking about today as well was the impact of the potential removal of the FHB grant boost (although given how successful the boost has been I reckon there's a better than even chance it will be extended). As interest rates continue to fall due to the worsening economic outlook locally, I am thinking now that the next "wave" buying is going to be self funded retiree's looking for a solid and certain cashflow going forward. With rental yields of 5%+ easily available, and cash account rates likely to fall to 3/2%, I am thinking that in addition to the "upgraders" (who incidentally are 75%-85% of the market at any time anyway), any drop off in FHB numbers will be offset by the re-emergence of the SFR as buyers post Jul 09. Remember this group in the economy are NOT impacted by rising unemployment etc either - in fact they have already taken their hit from the downturn through reduced cash returns, dividends and the tanked share market.

One more comment to make - for those who think the current market is only being artificially propped up by government intervention; whilst it has clearly helped, I think by far the largest factors driving the current FHB mini-boom is the pent up demand (people who have been wanting to buy for years but it was too expensive - but kept saving in the meantime) coupled with reduced micro-supply (due to many owners thinking the market sucks and the say is falling in). The FHB grant boost is just the icing on the cake.... IMO.

Cheers,

Beej


----------



## kincella (14 March 2009)

psst, off topic...its like a mini cyclone here in melb atm...huge winds and rain...winds look like the 100 kph same as black saturday...
what do you see Robots ?


----------



## robots (14 March 2009)

hello,

yes same here Kincella, the wind speed is enormous the tree's are going bezerk

gee the planet provides such beautiful stimuli

thankyou
robots


----------



## MrBurns (14 March 2009)

Same here, love the rain but this is a bit scary.

look at this - 

http://www.bom.gov.au/products/IDR023.shtml


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## kincella (14 March 2009)

beej..I agree with you...
noted during the week a  for sale sign on a unit nearby....today it has sold on it...another I never saw the for sale sign...its is sold...thats in one street alone...only 500m apart......think I noted during the week that Toorak is hot atm....hardly on the market for 2 mins  and  they are sold

the last time I saw any activity in the lower end here was 5 units for sale in May 07 and all sold within 2 weeks of my sighting them....otherwise you can go for years without one for sale...or so it seems...
I only watch certain streets.
May 07 was when  you could dump 1 million into your superfund by 30.06.07 so I think people who had a loan against their units...sold them at a nice profit and took the cash to load up the superfund....
still not sure about the borrowings for the superfunds....and the ATO did not like any of the proposals doing the rounds at the time

some of those self funded retirees may be a bit cash strapped after the stock market rout...so they may need a small loan to buy a property now....others will buy straight from the superfund.....
well thats my theory
cheers


----------



## MrBurns (14 March 2009)

Looks like it's passed - 

http://www.bom.gov.au/products/IDR024.loop.shtml


----------



## kincella (14 March 2009)

its Dorothea McKellar Stuff...My Country....careful of copyright...
but ...her beauty and her terror..the wide brown land for me....just about sums it up here  lately...well across the east coast.
drought, fires and floods in Qld...so a cyclone would not surprise me....
they could do with some flooding rain inland , Vic/Nsw and the rest of the continent
cheers


----------



## robots (14 March 2009)

hello,

check check check, here we go:

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

fantastic result 74% clearance rate

its all happening Beej

thanks Enzo for getting the results up quick smart, true professional of the industry

what a day all

thankyou
robots


----------



## gfresh (14 March 2009)

Why are self funded retirees going to flock to property, when there is no adequate yield? At best, they are relying on capital gains, which may not be existent for another few years. Pretty risky investment with no guaranteed payoff when you do need to pull the pin and cash it in. May as well just stick with term deposits. 

Many retirees I'm sure also scratch their head at home much prices have gone up in the last 10 years, compared to the 20-50 before that, and would be a little more cautious. Many (conservative) people in their 50's and 60's are some of the more bearish on property that I have spoken to, they realise the best returns will not occur for possibly another decade. They've seen this all before.


----------



## Glen48 (14 March 2009)

Beej 
To days Courier Mail reported how Henry is looking a Neg. gearing...Looks like the World is having an attack of commonsense...bring Neg gearing to stop Specusuckers, black ban on Countries who run secret bank accounts, Ceo wages to be tied to profit now if they stop the FHO and bring in CGT on PPOR there is a slight chance things might return to normal.
All we need is the Council to start setting up Tent cities and we are ready for the depression.


----------



## Julia (14 March 2009)

Glen48 said:


> All we need is the Council to start setting up Tent cities and we are ready for the depression.



And by that time we'll all have talked ourselves into it.


----------



## Trevor_S (14 March 2009)

Beej said:


> One thing I was thinking about today as well was the impact of the potential removal of the FHB grant boost (although given how successful the boost has been I reckon there's a better than even chance it will be extended).




Success ?? !!  dismal failure would be a better description, much like Costellos ill conceived baby bonus and the current economic stimulus packages... .  All you are doing is taking much needed tax payer dollars (mine) and propping up an overvalued housing market for the benefit of a small section of property owners, rather then using the tax dollars (and deficit spending) to produce productive assets to help u spay it back !  Letting that lower end of the market fall to it's natural level, (perhaps a 10 - 20% fall, or higher !), would achieve less cost of entry for FHB and not result in a tax payer transfer of wealth, not leave tax payers with a massive debt overhead with nothing to show for it and not have starry eyed FHB'ers sidled with a mountain of debt that will come back to bite them.  



Beej said:


> As interest rates continue to fall due to the worsening economic outlook locally, I am thinking now that the next "wave" buying is going to be self funded retiree's looking for a solid and certain cashflow going forward.




So your argument that everyone will be buying a house ? ... who is left to rent,  surely rental yields will fall in that scenario ? 



Beej said:


> With rental yields of 5%+ easily available, and cash account rates likely to fall to 3/2%,




Grab an AMP bond at >7%, in that case, risk is much lower then buying a house IMO and your chance of capital protection is better then with house prices in these unprecedented times.


----------



## Julia (14 March 2009)

Trevor_S said:


> Success ?? !!  dismal failure would be a better description, much like Costellos ill conceived baby bonus and the current economic stimulus packages... .  All you are doing is taking much needed tax payer dollars (mine) and propping up an overvalued housing market for the benefit of a small section of property owners, rather then using the tax dollars (and deficit spending) to produce productive assets to help u spay it back !  Letting that lower end of the market fall to it's natural level, (perhaps a 10 - 20% fall, or higher !), would achieve less cost of entry for FHB and not result in a tax payer transfer of wealth not leave tax payers with a massive debt overhand with nothing to show for it and not have starry eyed FHB'ers sidled with a mountain of debt that will come back to bite them.



Yep, that's how I see it too, Trevor.  I hate to think what will happen with some of these people who have used the FHB grant plus current low interest rates, when interest rates go back up again.  And they will.
The whole scheme could qualify as our very own subprime plan.
Yet another example of the Rudd government's short term approach.


----------



## kincella (15 March 2009)

surely those young ones will have enough sense to probably lock in the low rates for 5-10 years...
cannot tar them all to the one brush....sure some will encounter problems..but I dont see a massive problem.....
check ...how are the ones going that have had the grant since it inception 1.07.2000  ???? they would have done very nicely
next....
the baby bonus was designed to increase our own population......aka we will need taxpayers in the future....think it hit the right cord and produced almost 175,000 in 2006
unlike Japan where they do not have immigration and a very old population...and the girls are not marrying and having babies

in hindsight...the amount of billions our govt thas thrown out in handouts to anyone, and all the money to the banks, car makers etc
I would think the baby bonus pales into insignificance, but will produce an army of taxpayers into the future...unlike the 100 billion the govt is wasting now


----------



## Largesse (15 March 2009)

anyone know of a good some good sites on the web to find listings for blocks of apartments?
looking in melbourne, mainly inner east, upto $6m

TIA


----------



## kincella (15 March 2009)

most agents list on the realestate site or domain...not sure if a block would come under the  realcommercial site  or property.com.au


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## MrBurns (15 March 2009)

Blocks would be under investments in either site.


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## IFocus (15 March 2009)

Hate to keep bunging on about this stuff but maybe the main stream is starting to catch on about the possible risk bias to the down side rather than upside.

http://www.smh.com.au/national/fears-over-jobless-forecast-20090315-8yq1.html


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## kincella (15 March 2009)

http://www.treasury.gov.au/documents/1239/HTML/docshell.asp?URL=02_Part_1.htm
extract from above

Employment growth has been strong, with unemployment falling virtually continuously, from a peak of around 10 ½ per cent in 1992 to below 5 per cent currently. Labour force participation rates have been rising, particularly after 2000. As a consequence, the proportion of the population aged 15 and over in employment is at its highest level ever (Chart 1.2).

http://www.abs.gov.au/ausstats/abs@...fe659e0304564424ca256ec1000820bd!OpenDocument

in 1983 and around 1992 it climbed above the 10%...
so been there done that and recovered again.....
looks like it takes about 5 years to get it down to 6% again....


----------



## Uncle Festivus (15 March 2009)

kincella said:


> so been there done that and recovered again.....
> looks like it takes about 5 years to get it down to 6% again....




And 1 year to get back over 6%. Your data is 2 years old, reflecting the peak of the cycle. 



> The jobless rate has soared to 5.2 per cent for the first time in nearly four years, as deteriorating economic growth pushed 47,100 people onto the dole queue in February.




And that's only the 'official' figure.


----------



## kincella (15 March 2009)

I was not really looking for recent stats...since we know they have been falling....I was looking for the older ones....history...and how high they went and for how long...and thats what I found...............that was my point

now this out today...another housing boom
oh and we will not have a sub prime melt down like the old USA
and if our govt expecting unemployment rates of 10%..why on earth would they keep on allowing immigrants in....to pay them the dole too???
hello...stop the immigration now

back to this article......
its an ad etorial.....promoting this bloke...but put it out as a news item....
since the media prefer the house price crash scenario...this guy would have had to pay them for this one...
http://news.theage.com.au/breaking-...ng-boom-tipped-for-h2-2009-20090315-8yo4.html


----------



## Uncle Festivus (15 March 2009)

Yes, I agree, re immigration, but do governments ever plan for the future? But with property prices having not really droped by much at all from the peak several years ago ie stagnating, there leaves little room for the type of 'headline' appreciation that preceded the boom before getting to 'unaffordable' levels again, even at current rates? The best money is made after a good old rout, which didn't really materialise thanks to the various financial 'crutches' the RE market is relying on these days -flatlining.


----------



## Julia (15 March 2009)

kincella said:


> the baby bonus was designed to increase our own population......aka we will need taxpayers in the future....think it hit the right cord and produced almost 175,000 in 2006



How sure can you be that these babies will grow up to be future taxpayers?
I don't think too many couples who are working taxpayers would have been influenced by $5000 to have a child they would not otherwise have had.
Conversely, I know of many unemployed young women (who have no intention of working) who saw the $5000 payment as an incentive to produce either their first or an additional child.   So imo you have to wonder how successful the plan will be in terms of supporting the tax base for the ageing population.




> in hindsight...the amount of billions our govt thas thrown out in handouts to anyone, and all the money to the banks, car makers etc



Unless I'm misunderstanding the situation, the banks haven't actually had any tax payer funds given to them and in fact have paid the government a handsome premium for the government guarantee.


----------



## kirtdog (15 March 2009)

im currently a first home buyer and im thinking the extra first home buyers bonus has boosted house prices up.. any opinions on this?? Not sure whether to rush in and find a house before the end of the bonus or sit back and relax..


----------



## kincella (15 March 2009)

Julia...with a 10% unemployment thats 17,500, leaving the 90% of 175,000 as future taxpayers...its a start....
together with the family tax benefit of about 200pf, makes raising a family easier with that cash coming in each fortnight

and even though the govt may not have paid out any money to banks (who knows anyway) they guaranteed up to 2 trillion...


----------



## robots (15 March 2009)

kirtdog said:


> im currently a first home buyer and im thinking the extra first home buyers bonus has boosted house prices up.. any opinions on this?? Not sure whether to rush in and find a house before the end of the bonus or sit back and relax..




hello,

i wouldnt rush, take your time and do the numbers to see what you can afford and what you get

many believe the "extra" bonus will continue in some form considering the boost it has made to "new" home construction

i wouldnt have a clue, but in 10-15yrs brother you will have a roof over your head and be living it large man

thankyou
robots


----------



## Dowdy (15 March 2009)

robots said:


> hello,
> 
> i wouldnt rush, take your time and do the numbers to see what you can afford and what you get
> 
> ...




LOL. In 10-15 years you'll still be paying for the house so you'll be in debt. Not livin' large. LOL


----------



## enigmatic (15 March 2009)

Well dowdy that all depends on your goals, if you Believe you will be stilling paying off your house in 10-15years time I'm 99% confident you still will be.
Unless your belief changes offcourse.

On the other hand if you think you will be paying off your 3rd-5th house in 10 to 15years time I Certain you would of paid atleast 1 maybe 2 off by that time.


----------



## singlefished (16 March 2009)

kirtdog said:
			
		

> im currently a first home buyer and im thinking the extra first home buyers bonus has boosted house prices up.. any opinions on this?? Not sure whether to rush in and find a house before the end of the bonus or sit back and relax..








			
				robots said:
			
		

> i wouldnt rush, take your time and do the numbers to see what you can afford and what you get
> 
> many believe the "extra" bonus will continue in some form considering the boost it has made to "new" home construction






Yup, agree with Robots that no need to be rushing the big decision kirtdog.

If they pull the additional 7K then the boost in prices you mentioned will more than likely come back off by 7K so - you win!

If they keep the bonus going then - you win!

7K isn't that much really and would only be equivalent of maybe 4 months mortgage payments (depending how much $$$$ you want to spend)... if you miss the deadline then between now and then you'd have possibly saved up the 7K anyway so bigger deposit - you win!

Also if they pull it you could possibly use it to your advantage when discussing price -  you might win


----------



## kincella (16 March 2009)

I posted this on another forum....
I mentioned this would be the case, in all probability, way back in July of last year, then confirmed it in Oct/Nov...
when everyone was calling a price crash coming... I suggested the middle to higher price bracket owners...would take their houses off the market....
hence the very low numbers of sales.....some cases only 25% of the usual number are available, with high clearance rates
its not as if there are 1200 up for auction..there are only 300 up for auction 
only difference in the burbs I watch, is that the more expensive homes are now selling,,,slowly...but the middle market has dissapeared....there's none for sale, and nothing much left in the fhb range

the next wave will be when jobs are considered safe...then the middle market will come to life as owners upgrade

http://www.news.com.au/business/money/story/0,28323,25191709-5013951,00.html


----------



## Junior (16 March 2009)

Hang on...so are you saying the recession is almost over and the unemployment rate has peaked?  I think you're getting a little bit ahead of yourself at the moment.


----------



## nunthewiser (16 March 2009)

love this thread

 sunshine and lollipops


----------



## kincella (16 March 2009)

junior...never said anything like that at all.....I said....I dont believe there is a price crash coming

it will take a year at least before things settle down...unemployment to rise, and probably been in, or heading for a recession here , in my view, for about 18 months
while interest rates were rising every month....and those in charge just kept on flogging us all....had to stop spending...paying it all monthly in rate rises
I stopped spending 18 months ago.....buckle down and protect ones self....


----------



## MR. (16 March 2009)

lioness said:


> I had my auction today, not one bid. Amazing. An inner city townhouse priced between 450K and 500K and not one bid.
> 
> God help me when property does collapse.






Beej said:


> Maybe they all read your latest posts on here and decided to wait because you convinced them prices are going to crash???
> 
> Seriously though - any pre-auction offers? Regardless if there are interested people you may still get offers through in the next week - FHBs in particular often don't like to buy at auction because of the unconditional contract (in NSW anyway).






lioness said:


> Yes, that's what happened. No pre-auction offers but 5 FHB's who were dead keen and turned up but all froze on the day(probably because it was bucketing down with rain!).
> 
> Agent is confident of selling over the next 2 weeks.





Perhaps the FHB's read how you were going to dump it on their heads!

Now the agent thinks it will sell in the next two weeks.  Many do and the agent's contract is also approaching expirey.  Sign him/her up to extend the time he/she has to sell now, even one extra month.  Otherwise don't be surprised when your agent starts to apply some pressure for you to drop your price.  At least if you end up accepting a lower price, which will be the case, you can eliminate in part that the agent was running out of time.


----------



## vincent191 (16 March 2009)

There is a shortage of "average" housing in Sydney. By avearge I mean the ordinary "bread & butter" housing not the top end market catering for the exclusive few.

I have been looking for an inner city "average" 2BR apartment at a reasonable price (high $400K) and they are as rare as hens' teeth. Even in the low $500k region there are very few available.

Even around the $700k region (which is out of my range)there ain't too many around.


----------



## kincella (16 March 2009)

I don't know....almost 14 billion...spent on owner occupier finance in January alone...and commercial finance rose 6.5% to 31 billion

thats a large amount of money being spread around on property...seems very different to the media hype for the past year

http://www.news.com.au/business/story/0,27753,25192851-31037,00.html


----------



## Beej (16 March 2009)

Kincella - yes very interesting stats.

Here's a very interesting arcticle by Michael Pascoe of the SMH:

http://business.smh.com.au/business/safe-as-average-houses-20090316-8zhk.html?page=2



> *Safe as (average) houses*
> 
> It's a reckless soul who gets carried away with any single month's statistics, but there's another speck of light in the housing industry tunnel with today's lending finance figures and - more importantly for our banks - the price performance of the average Australian home.
> 
> With the domestic and global economies deteriorating so quickly, January statistics are somewhat ancient history, but for what they're worth, the number of people borrowing to buy a home rose 2.5% in trend terms from December to January. That's a monthly rate that would make for very happy banking and residential real estate industries if it was sustained.




And here is a great quote from Rory Roberston of Macquarie, which is worth consideration by all those bears that think unemployment is now going to be the trigger for the great aussie house price crash, seeing as all the previous predicted triggers (we follow the US *bzzz*, severe local credit rationing *bzzz*, rising mortagee sales *bzzz*, absence of FHBs *bzzzz* etc etc) do not seem to have worked:



> ''Between June 1990 and June 1992, full-time employment fell by 7%, and then took a full three years to get back to where it started. So, how far did home prices fall?  Actually, they didn't. Average house prices across Australia's state capitals rose - not fell- by about 2% per annum in nominal terms as that early-1990s recession and jobs disaster unfolded.
> 
> ''It turns out that the downward pressure on home prices from shrinking employment in the early-1990s recession was more than offset by upward pressure on home prices from the halving of mortgage rates, from a record 17% in 1989 to 8.75% in 2003"
> 
> ...




Perhaps I should be posting this in the "house prices to fall" thread, as really this article primarily debunks the ongoing notion many people hold that house prices here are destined to fall for years. However, given that even if you just think house prices won't fall much for a while, and that some segments will actually show modest growth and will probably increase again quite strongly in a few years time, you are labeled a "perma-bull", it's better to post this stuff over here I think 

Cheers,

Beej


----------



## Mc Gusto (16 March 2009)

Is obviously a tricky one to predict either way. What I can tell you is this: I am in the mid 700's range for a house. My partner and I have been looking for around 9 months. From this personal market research I have come to the following conclusions:
1. The house market has come down (in the range i mentioned) anyone who tells you different is wrong (apart from the below 500k range)
2. There is far less volume of houses available - true test of the market is when and if volume increases over the next 12 - 18 months
3. Money is cheaper so I am now looking at a better house in a better location at a cheaper price and lower repayment for my 750k
4. I am happy as a buyer.

Thanks

Gusto


----------



## kincella (16 March 2009)

beej,
of course its holding up, and I have no worries about the 500-600 market and below....just believe you can get a very nice house in that range....no need to go over the top...as it stands, those median price houses will be over 1 mill one day in the future...but its not like you are paying interest on that amount
if you have experienced it you should have learnt from it (you and I know thats the lesson we all have to learn sometimes)...on any subject...so in my case its been there and done that....of course its nothing like what all the scaredy cats were screaming about....

I expect some softness in the above 1 mill bracket..but I still believe the next wave will be the upgraders, who will move into the market and snap up any bargains
its just good to see our predictions are now confirmed...
cheers


----------



## gfresh (16 March 2009)

And meanwhile, in QLD, agents beg for the FHOG to be extended.. 

A tale of two cities me-thinks.


----------



## IFocus (16 March 2009)

Beej said:


> Kincella - yes very interesting stats.
> 
> Here's a very interesting arcticle by Michael Pascoe of the SMH:
> 
> ...




Saw that article and it had some excellent valid points for the up side but the time frames are very different, interest rates cut 850 basis points over 4 years vers 400 over is it one year yet.


----------



## Uncle Festivus (16 March 2009)

kincella said:


> I don't know....almost 14 billion...spent on owner occupier finance in January alone...and commercial finance rose 6.5% to 31 billion
> 
> thats a large amount of money being spread around on property...seems very different to the media hype for the past year
> 
> http://www.news.com.au/business/story/0,27753,25192851-31037,00.html




Is there any way we can put that into perspective ie what was the effect on house prices during the same period. Did it translate into real gains (after inflation etc) or did it only manage to hold/lose ground? If so, in the face of the stimulii, is this the ongoing 'commitment' of state & Federal government's in perpetuity then until inflation and unafordability set the agenda, again? A homegrown negative spiral into pricing out another generation of aspiring home owners?

PS speaking of immigration, the bobble heads have finally started to see the light - cutting immigration by a token amount - the first sure sign that we are definitely in a recession?


----------



## Dowdy (16 March 2009)

enigmatic said:


> Well dowdy that all depends on your goals, if you Believe you will be stilling paying off your house in 10-15years time I'm 99% confident you still will be.
> Unless your belief changes offcourse.
> 
> On the other hand if you think you will be paying off your 3rd-5th house in 10 to 15years time I Certain you would of paid atleast 1 maybe 2 off by that time.





This is not THE SECRET where if you believe it will come true. 

I'm talking about paying it off 100%.

Most of the speculators out there who have 3-5 houses don't own them. All they have is 3-5 loans that need to be paid off. That's not real wealth


----------



## knocker (17 March 2009)

OH no this can not be happening
http://www.theage.com.au/national/mortgage-belt-jobs-in-peril-20090316-9023.html


----------



## enigmatic (17 March 2009)

Dowdy i was also talking about paying the houses off in that time period, Paying them Completely.

This isnt related to the thread but more to the comment.

I once read, call it a theory ...

Majority of people believe that a person that earns 80kpa believes he can only survive on 20kpa whilst a person earning 500kpa generally believes there is no way he could survive on less then 80kpa.

well most peoples train of thought is the change in the amount that the person believes he can survive is determined from his income, although this is a valid possiblity is it not more likely that he who earns 500kpa earns that because he thought there was no way he could survive on less then 80k

Maybe I'm just rambling early in the morning though.


----------



## kotim (17 March 2009)

I as a yong unknoweldgable fella bought a good house in Townsville in 1991 for 113 grand, had offers 18 months later near the 150 grand mark, but did not take it, as I thought I was going to be "rich" at that rate. Well the downturn happened and due to curcumstances I offloaded that same house for 137 grand in 2002, some year or so before the next boom.

Now had someone of bought the house from me in 193 for 140-150 grand, then basically ten years later it was worth no more. 

The simple fact of the matter is that the same thing is going to hapen again.  Those who paid high prices towards the end of the boom are going to see no real increases in the value of their property until we have a new boom in 5-10 years time.  If as people think that the stimuluses etc work, then we are going to be faced with extremely high inflation wi]ich means skyrocket interest rates relative to now.  

If the world stimulus packages don't work big time then we don't have house price increases, if it work, we will have house price increases along with high interest rates, meaning that many who bought during recent, current or short term future times are going to be whacked by huge interest rate rises. 

It is human nature that people do not fix their rates untill it gets too high.  Sure some do, but the vast majority don't and won't, because beside human nature, they have been conditioned with low interest rates over the last 10 years.


----------



## Beej (17 March 2009)

kotim said:


> I as a yong unknoweldgable fella bought a good house in Townsville in 1991 for 113 grand, had offers 18 months later near the 150 grand mark, but did not take it, as I thought I was going to be "rich" at that rate. Well the downturn happened and due to curcumstances I offloaded that same house for 137 grand in 2002, some year or so before the next boom.




The real moral of this story is you should not have sold your house in 2002, unless you were doing it to upgrade and therefore paid a similar amount less for the new house you bought. Then you would be laughing right? You can't time any market and pick the tops/bottoms - I think with R/E this rule applies doubly so.

PS - don't know what goes on with Townsville house prices, but in Sydney if you bought in 1991 and sold in 2002 you would have got more like 2.5-3 times what you paid in 91, depending where you bought!

Cheers,

Beej


----------



## kincella (17 March 2009)

kotim...I find it hard to believe that buying a house in 1993, it would be the same price 15 years later....in 2008
in june 2007 the median price was 293500.....
generally , australia wide, the houses I see as not keeping up in price are usually former public houses...and some houses in a bad spot...every town has a bad spot


----------



## Knobby22 (17 March 2009)

Kotim

I agree.
I know someone who bought and sold in roughly the same period ,'86 to '93 in Kensington, inner city Melbourne, and made no money despite some refurbishments. The boom then occurred greatly increasing the price.


----------



## kincella (17 March 2009)

knobby...correct me if I am wrong...but stock crash Oct 87, the property boom until about Oct 89, then property crash. ... 1992..supposedly and sideways until growth about 2000 from memory thats what people said...but the chart shows from 80,000 to 230,000 in 2000 is almost triple

although the chart below, after adjusting for inflation does not really show a crash
just wondering if they overpaid in the first place....see price in 1986 were about 80,000 and by 1989 were 138600 = 58600 profit in there, price about the same in 1992
http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


----------



## Knobby22 (17 March 2009)

Kincello, Maybe I have the dates slightly wrong, it is from memory. 

They did buy at the peak of the market. They sold about 6 months before the market took off again. Looking at your attachment, it suggests they bought in late '89.

They bought a house in Sydney with the proceeds so after that they did really well.

I disagree with the attachment though. Prices definitely fell a bit during that period. Maybe inner city fell more?


----------



## SBH (17 March 2009)

The article is about the UK introducing a maximum loan amount of 3x annual income. A great idea Im sure youll agree? 

What time is it on the property clock if this ever gets introduced into australia? 

http://www.telegraph.co.uk/finance/...es/4995778/FSA-to-cap-mortgage-borrowing.html


----------



## Knobby22 (17 March 2009)

No offence, SBH, but I think it is a bad idea.

Some people save harder than others and some are dishonest. It will be rorted to the advantage of the dishonest.

What should happen is that banks operate prudently. (I know I'm dreamin)


----------



## UBIQUITOUS (17 March 2009)

SBH said:


> The article is about the UK introducing a maximum loan amount of 3x annual income. A great idea Im sure youll agree?
> 
> What time is it on the property clock if this ever gets introduced into australia?
> 
> http://www.telegraph.co.uk/finance/...es/4995778/FSA-to-cap-mortgage-borrowing.html




SBH, it will not be introduced here for a while. 

1)At the moment banks are attempting to protect their balance sheets by talking up the property market.

2)When this fails (and fail it will), and prices plummet, they will have no alterantive but to reduce lending multiples to protect themselves in the long run.

I would say it will be at least another 24months before we see such strict criteria.


----------



## robots (17 March 2009)

hello,

hello and good evening fellow friends, another fantastic day on the planet

apologies for lack luster posting the last couple of days as have been out doing my bit for the economy, keeping people employed, giving some a chance in life

amazing how many bankers we have here at ASF

whats happened to Numbercruncher? disappeared like so many others, oh well

the hardcore crew still going

thankyou
robots


----------



## Mofra (17 March 2009)

UBIQUITOUS said:


> SBH, it will not be introduced here for a while.
> 
> 1)At the moment banks are attempting to protect their balance sheets by talking up the property market.
> 
> ...



Our criteria are already much more stringent than both the US & UK markets were. In any case, it would have to be one of the dumbest moves anyone with a modicum of financial sense could contemplate.

A simple multiple of income method of determining lending capacity is both stupid,  and far too shallow to work in practice - it is after tax, post-liability cashflow which is currently measued. Why would a lending institution adopt a less comprehensive lending model? Why would lending capacity be fixed to an income ratio regardless of interest rate movement? Are people not aware of basic facets of our financial system, such as the stepped tax rate?


----------



## UBIQUITOUS (18 March 2009)

Mofra said:


> Our criteria are already much more stringent than both the US & UK markets were. In any case, it would have to be one of the dumbest moves anyone with a modicum of financial sense could contemplate.
> 
> A simple multiple of income method of determining lending capacity is both stupid, and far too shallow to work in practice - it is after tax, post-liability cashflow which is currently measued. Why would a lending institution adopt a less comprehensive lending model? Why would lending capacity be fixed to an income ratio regardless of interest rate movement? Are people not aware of basic facets of our financial system, such as the stepped tax rate?




All of the above applies to the UK aswell.  
Interest rate movements are not taken into account because they tend to be short term, as oppoesed to the loan itself which is long term.

"It's different here" just doesn't cut it anymore.


----------



## doctorj (18 March 2009)

Mofra said:


> A simple multiple of income method of determining lending capacity is both stupid,  and far too shallow to work in practice - it is after tax, post-liability cashflow which is currently measued. Why would a lending institution adopt a less comprehensive lending model? Why would lending capacity be fixed to an income ratio regardless of interest rate movement? Are people not aware of basic facets of our financial system, such as the stepped tax rate?



Whether banks lend less on a 'multiple' basis as suggested or they lend less some other way, they will be lending less.  Securitisation markets are dead and buried and increasing NPLs are threatening already strained capital.

Many emerging market banks have already put their loan portfolios into run off.  Banks receiving 'bail outs' are retaining capital rather than lending...

Loans will not be what they were for some time yet.


----------



## Beej (18 March 2009)

doctorj said:


> Whether banks lend less on a 'multiple' basis as suggested or they lend less some other way, they will be lending less.  Securitisation markets are dead and buried and increasing NPLs are threatening already strained capital.
> 
> Many emerging market banks have already put their loan portfolios into run off.  Banks receiving 'bail outs' are retaining capital rather than lending...
> 
> Loans will not be what they were for some time yet.




And despite all this going on in some other countries - in Australia lending for housing finance is on a clear uptrend after appearing to bottom out late last year:

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument

PS: I agree with Mofra's comments - such a simplistic regulation as allowing lending of  no more than 3 times income is just silly, and I am amazed that it is seriously being considered in the UK. What they should be doing is looking at the criteria used by most "sensible" institutions, and build some regulation framework around that if they must (and that would at least stop the cowboy practices from gaining prevalence again).

Cheers,

Beej


----------



## gfresh (18 March 2009)

I wouldn't be blowing the trumpet for the lending finance rises until post June 30th .. with such artificial stimulus being applied. 

Lets remove it right now if lending is so healthy eh?


----------



## kincella (18 March 2009)

hmmm....CBA will give the unemployed a years holdiay on the loan repayments,,,and capitalize the interest.....thats a good idea
and keep the economy a bit stable....people in their homes

http://www.news.com.au/business/money/story/0,28323,25204097-14327,00.html


----------



## MrBurns (18 March 2009)

kincella said:


> hmmm....CBA will give the unemployed a years holdiay on the loan repayments,,,and capitalize the interest.....thats a good idea
> and keep the economy a bit stable....people in their homes
> 
> http://www.news.com.au/business/money/story/0,28323,25204097-14327,00.html





They must be expecting a huge crash.


----------



## kincella (18 March 2009)

on the contrary....they are very busy writing loans.....I am the eternal optimist....so I dont expect a crash in house prices....well not in my houses...they are in the lower range..not million dollar props

I am intending to buy more (missed a couple of little beauties so far) and also another shop or two...
figure since I will have to continue supporting myself for another 30 odd years,,,and prefer a stable income, something I can have almost complete control of..(except for interest rates and tax)...and need xxxx amount to support my lifestyle....it may as well be in property.....its worked very well for me so far....so why change it
I receive added benefits from the resi props,,,,I can renovate, refurbish, and plan the landscaping etc....I like interior design too.....brings out the creativity gene for me
cheers


----------



## MrBurns (18 March 2009)

They have to lend thats their business but I bet they're careful about valuations and who they lend to.

I'll be buying too, but not just yet, would really like a unit in Port Douglas, rented out but can use it a couple of weeks a year. It complies with Super rules because it's an investment

Not yet going to wait a bit longer - have a look at this from the Age today - 



> First-home buyers in the eye of a storm Danny John
> March 18, 2009
> 
> *THE Australian housing market is facing the prospect of a "perfect storm" of financial pressures - including high mortgage debt, overvalued homes and rising unemployment - in which prices could eventually fall by as much as 30 per cent, investors have been warned.*
> ...


----------



## gfresh (18 March 2009)

One of the arguments why it may not be so stupid to get an affordable PPOR if haven't already done so.. it's becoming increasingly obvious banks/government/media will be doing everything to keep people in their homes, as the environment deteriorates. Whereas renters, nobody gives a **** about them.


----------



## UBIQUITOUS (18 March 2009)

MrBurns said:


> They have to lend thats their business but I bet they're careful about valuations and who they lend to.
> 
> I'll be buying too, but not just yet, would really like a unit in Port Douglas, rented out but can use it a couple of weeks a year. It complies with Super rules because it's an investment
> 
> Not yet going to wait a bit longer - *have a look at this from the Age today* -




It's not just in the Age. The article is in all of the country's papers. Reality is hitting home.


----------



## Aussiejeff (18 March 2009)

MrBurns said:


> They must be expecting a huge crash.




Yeah .... of the non-bank lenders, who will be pulling their last few remaining hairs out after this one. 

Talk about strangle the competition out of the banking sector. 

Lemme see ... the remaining "BIG 3" will follow suit, followed by a chorus of "Not fair - they're underwritten by the gummint!" cries from the non-bank lenders.

LOL

Game, set & match....


----------



## Beej (18 March 2009)

MrBurns said:


> have a look at this from the Age today -




That article is very inconsistent in it's arguments - and therefore I think lacks credibility. Firstly, it starts with an alarmist headline, but then if you read it goes on to state all the reasons why AU property is actually doing relatively well:



> The authors of last month's report, which is now circulating among local investors, accept that a variety of positive factors could help cushion any fall.
> 
> These include past budget surpluses, the Federal Government's two stimulus packages, the strength of the Australian banks, which have avoided a "disastrous lending binge", falling interest rates and the drop in the value of the Australian dollar.
> 
> ...




Secondly, the article states that: 


> There [in the US and UK], the fall in housing values has exacerbated recessions and prices have started dropping below or sharply back to what is described as "fair value" levels after nearly 10 years of soaring property costs.




That statement simply not correct! House prices have fallen in the US due to massive mortgage default rates driven by the sub-prime mess, and massive over-building. The recessions in the US and the UK were STARTED by the housing collapse, triggered by that sudden increase in mortgage defaults and jingle mail etc as honeymoon interest rates switched off for huge numbers of sub-prime borrowers. This then uncovered the weaknesses created through the sub-prime lending debacle/mortgage securitisation markets etc, which led to the credit crunch/crisis, the collapse of many large financial institutions etc, and then a stalled economy due to lack of flow of credit to business and a sharp contraction in consumer spending.

In Australia, our recession/slow down (whatever it officially turns out to be) has been caused by a drop off in demand for exports from our trading partners caused by the US issues, the collapse of several highly leveraged businesses exposed to the effects of the international credit freeze, plus dampened consumer confidence (and thus demand) due to the share market crash, and concerns about the international situation. Any house price impacts are an EFFECT not a CAUSE. And so far the effect has been typical of past recessions where prices have come under pressure, and in response the volumes of available property for sale has declined dramatically, which acts as a sort of automatic stabliser stopping any precipitous price falls. This effect is made all the more effective when coupled with strong fundamentals like a lack of macro level supply (ie we are NOT over-built like the US), high level of urbanisation and population growth, ability to significantly reduce borrowing cost through lowered interest rates, etc etc. 

That's why our situation is very different here and I think it is very naive to just expect house prices to magically fall here by large amounts just because they did in the US (and to a lesser extent the UK). Bet on this occurring at your own financial peril I still say!

Cheers,

Beej


----------



## kincella (18 March 2009)

beej, it must be the journo's bias....I often find that...the headline exaggerates a tiny piece...blows it out of proportion...but if you actually read the articles you find our prices dropped a tiny .08% not even 1%...or the article in fact is the opposite to the headline used

another forum...over the years I have found so many people just read the header...and base their investment decisions on the headline...never bother to read the article...they dont have time...saw it all the time with day traders, and when we went in depth..after the shares crashed back to earth...a lot of them admitted the heading was all they knew and bought in on that basis.....
I found similar posters on the property threads....they only read the headlines...that is all the research they did....fancy calling that research...

 when you show them the facts...they choose not to read it....
like Jan Sommers saying about property...it can be applied to most asset classes....the ten most popular excuses...why people dont buy a house, or change their minds and sell a house etc...

that article applies to this quote

Quote:
"I don't read economic forecasts. I don't read the funny papers."
- Warren Buffett
and this one is appropriate for property

Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."
- Warren Buffett


----------



## MrBurns (18 March 2009)

From Crikey - 



> *The Australian banks, led by the Commonwealth, are about to end the first home buyers' party, in a move that could also kick the chocks away from the only support for the weakening Australian economy. *
> 
> From next Monday, the CBA will not recognise the first home buyers grant of $14,000 for an existing home and $21,9000 for a new home as proof of savings.
> 
> ...


----------



## Taltan (18 March 2009)

http://www.rebuildca.org/shortage.html

Housing shortage


----------



## MrBurns (18 March 2009)

Taltan said:


> http://www.rebuildca.org/shortage.html
> 
> Housing shortage




ROFL in California ???? I doubt it


----------



## Beej (18 March 2009)

MrBurns said:


> From Crikey -




I don't see any of that as a bad thing. People I know who are keenly looking to buy their first home are people who feel they have been priced out of the market for many years, but see now as a good time to buy because prices have been flat for quite a few years now (in Sydney) + they get the FHOG (ie pent up demand). As a result they have large savings to use as a deposit - more like $100k++ rather than only $10k and certainly not zero! So they won't have any problem. I think this applies especially to those buying in the $500k-$600k suburbs, as they also tend to have above average incomes. The "battler" FHBs who are more likely to have little savings would be looking at buying more in the $250k-$350k range I reckon, which means they only need to have maybe $7.5k-$10k in the bank to satisfy the CBA criteria - I think *most* should meet that.

I think the bears really under-estimate the level of pent up demand that is out there, and how much cash many potential FHBs actually have squirreled away. That's a reason why the FHOG has provided such a boost to the market, as it has provided that little extra incentive along with all the other market factors to encourage people to take that first step.

I also notice in the article posted the following little gem of information: 







> And real estate agents and conveyancers say there's a slow rise in the level of second and third home buyers now in the market.




This is exactly what I have been expecting to occur and have said as much in several posts here over the past few months. If the FHB numbers keep up for a few more months along with low interest rates, that will keep the wind in the sails for the whole market for another 1-2 years, after which we will have economic and stock market recovery to kick things along again. Remember FHBs only represent between 15% and 25% of the market at any one time, the real action that pushes prices are the upgraders - 2nd/3rd home buyers etc - watch that space from here.

Cheers,

Beej


----------



## gav (18 March 2009)

MrBurns said:


> Further signs of an increased level of activity in the secondary housing market were significant rises in auction clearance rates in both Sydney and Melbourne in February, and a component of the Westpac-Melbourne Institute consumer sentiment survey indicated that current conditions were conducive to buying a dwelling.




Interesting article Mr Burns.  However the portion above seems to be misleading.  The reason for the significant rises in auction clearance rates is because a significantly lower number of houses are being put up for auction.

See here:
http://www.news.com.au/business/money/story/0,28323,25191709-5013951,00.html

Taken from above link:

"In Sydney the auction clearance rate was 63 per cent, up from 47 per cent the same weekend last year. But the number of properties sold slumped from 229 last year to just 127 at the weekend.

In Melbourne the auction clearance rate remained steady - at 66 per cent - but the number of properties listed for sale crashed from 1265 the same weekend last year to just 396.

In Brisbane and Adelaide, markets dominated by private-treaty sales, the cupboard had almost been stripped bare, with clearance rates and property volumes both taking a dive.

In Adelaide only 25 properties were put up for auction compared with 108 for the corresponding weekend in 2008, and with eight auction results yet to be reported, 17 properties had already been passed in.

Only 38 properties were placed on the market in Brisbane compared with 115 for the same weekend last year.

Real Estate Institute of Victoria head Enzo Raimondo said it was the decline in properties available for sale that had driven the recovery in clearance rates.  "We've seen a decrease in transactions right across the board," Mr Raimondo said."


----------



## MrBurns (18 March 2009)

I just really take notice of this - if the first home buyers walk away watch the figures then.

We'll see in the next few weeks.



> The Australian banks, led by the Commonwealth, are about to end the first home buyers' party, in a move that could also kick the chocks away from the only support for the weakening Australian economy.
> 
> From next Monday, the CBA will not recognise the first home buyers grant of $14,000 for an existing home and $21,9000 for a new home as proof of savings.


----------



## Aussiejeff (18 March 2009)

gav said:


> Interesting article Mr Burns.  However the portion above seems to be misleading.  The reason for the significant rises in auction clearance rates is because a significantly lower number of houses are being put up for auction.
> 
> See here:
> http://www.news.com.au/business/money/story/0,28323,25191709-5013951,00.html
> ...




Even Enzo can see that is the reason for the "higher" clearance rates.

It's rather mis-leading to simply compare last year's "auction clearance rates" with this year's, without taking into account the relative number of homes listed!


----------



## gfresh (18 March 2009)

It is a certainly a good thing, but it will push out a few borrowers.. especially those marginal ones. In some areas this will be quite effective at cutting off demand from over-eager FHB, but will probably just drive them to less discerning lenders. 

$250-350k doesn't buy much in SEQ - basic units or apartments really... lots of cars for sale at the moment I notice with "selling due to first property purchase". That is how many will get their required "savings".


----------



## Beej (18 March 2009)

Aussiejeff said:


> Even Enzo can see that is the reason for the mis-leading "higher" clearance rates.
> 
> It's like chalk 'n cheese to simply compare last year's "ausction clearance rates" with this year's, without taking into account the relative number of homes listed!




Well of course volume and clearance rates are important to understand the level of activity, however, clearance rates are very important in indicating the level of UPWARD or DOWNWARD price pressure in the market at any time. Regardless of volume, high auction clearance rates = sellers market, and conversely of course low rates = buyers market.

That's why anybody who knows anything about the resi property market plays close attention to auction clearance rates.

Cheers,

Beej


----------



## grace (18 March 2009)

Here is some news for you all....on Business Spectator today



> Housing market could tumble: report
> 
> The Australian housing market faces a "perfect storm" of financial pressures which could push prices down as much as 30 per cent, according to a report by BCA Research in Canada.
> 
> ...


----------



## Beej (18 March 2009)

grace said:


> Here is some news for you all....on Business Spectator today




It would be good if everyone read the other posts on the thread for the last couple of days before jumping in - same article (from different source though) already posted and been discussed for most of today, starting with Mr Burns post here: https://www.aussiestockforums.com/forums/showpost.php?p=410216&postcount=4275

Of course further comment/opinion/analysis of said article is welcome! 

Beej


----------



## kincella (18 March 2009)

oh ye of little faith...and the wheels  keep turning.....
some people are still making money on property...and have been for the last year or more...nothing too much changes for them

regarding flipping....
in the burb I watch, an electician bought 3 houses last June...all rundown, and sold by a govt dept...surplus to their needs...he bought them really really cheap...apparently spent 60,000 on each and has them on the market, reasonable price and a nice profit...he is planning on buying another 2 that should come on the market soon...

now in hindsight...because I  watch that market.....he could have left them just sitting there and not spent any money on them....and they would have still sold for a handsome profit by Oct....4 months.

I missed out on a couple of terrific props....owners freaking, scaredy cats, sold for about 80,000 below value, must admit there was an agent who advised them to mark them down.....he had triple the number of sales to normal, wonder how those sellers are feeling now ????
...and  I had my attention on something else...distracted
grrrrrrrrrrrrrrrrrrrrrrr


----------



## Taltan (18 March 2009)

Mr Burns - the article regarding California was from three yrs ago, that was the point. Housing shortage is a myth always brought up when house prices rise.

Having said that I read two interesting articles today. One is the news that CBA will freeze mortgage payments for 6 months for the newly unemployed and secondly that in the height of the Japanese property bubble prices in central Tokyo reached $500,000 per sq metre. Along with FHOB, media spruiking & govt politicking these articles just go to show just how high and how long a bubble like the current one could last 

Of course the unfortunate thing is that the larger the bubble the bigger it pops


----------



## prawn_86 (18 March 2009)

Dont post much in here, but my partner and I have set ourselves a goal to have a property (house, unit, anything) completely paid off by the time we are 35, preferabbly 30 (both 21 now).

Will prob look at buying in a few years once we have a big 10-20% deposit saved, and when housing prices have come back in double digits by then...


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## MrBurns (18 March 2009)

prawn_86 said:


> Dont post much in here, but my partner and I have set ourselves a goal to have a property (house, unit, anything) completely paid off by the time we are 35, preferabbly 30 (both 21 now).
> 
> Will prob look at buying in a few years once we have a big 10-20% deposit saved, and when housing prices have come back in double digits by then...




I'd say your timing is about right


----------



## prawn_86 (18 March 2009)

MrBurns said:


> I'd say your timing is about right




Thats the plan... 

I gotta get something right, the economy went to **** just when i was about to graduate with a finance degree, so hopefully there is a benefit to the downside...


----------



## gav (18 March 2009)

Best of luck prawn_86.  I actually have the same goal! (paid off by 35, earlier if possible) However I've already found a place, settlement is next month


----------



## sinner (18 March 2009)

Taltan said:


> in the height of the Japanese property bubble prices in central Tokyo reached $500,000 per sq metre.




Errr you mean 500,000 JPY/sqm...


----------



## IFocus (18 March 2009)

prawn_86 said:


> Thats the plan...
> 
> I gotta get something right, the economy went to **** just when i was about to graduate with a finance degree, so hopefully there is a benefit to the downside...




You will be fine Prawn, its not a race plenty of time just make sure you enjoy the time now, life's short and youth is soon gone.

I didn't buy my 1st property until I was 35, doubled in two years bought the next one same result. Both were bought as investments but with an eye on life style i.e. acres. 

Like I said you will be fine property will always be there but you will only ever be young once.


----------



## MrBurns (18 March 2009)

prawn_86 said:


> Thats the plan...
> 
> I gotta get something right, the economy went to **** just when i was about to graduate with a finance degree, so hopefully there is a benefit to the downside...




Good friend of mine who has a brother who knows people at the highest level, I mean smart business people . sold his house and wont buy back in for 2 years, his brother said 2 or 3 years.

My knowledge of the real estate industry and his smarts come to the same conclusion so there's a fair chance we're right.

I'm busting to buy more real estate but will have to sit on my hands for a while yet.

Good luck.


----------



## prawn_86 (18 March 2009)

gav said:


> Best of luck prawn_86.  I actually have the same goal! (paid off by 35, earlier if possible) However I've already found a place, settlement is next month




Well done Gav, the new job must be paying well then... 



IFocus said:


> Like I said you will be fine property will always be there but you will only ever be young once.




Trust me i have/still am ejoying my youth more than most people. How many people get to go to uni, travel overseas a couple times a year, and still finish with a bank account higher than what they started (big piss off HECS debt though)?  I know im lucky so i plan on making the most of it...


----------



## kincella (20 March 2009)

the youth dont have a monoply on fun, in fact they play with limited funds generally...earning less etc....
I did the marriage, bought the house, had kids bit...partied all the time....
then the divorce, studied, worked hard.....and then partied again like never before...this time had stacks more money to play with.....after 4 years was bored...
but besides all the above...fun is still fun no matter what age you are....
I also enjoy the knowledge and experience one gains after being here awhile, have stacks of interests, and am always busy....assume I will have fun forever

and this out today...aussies are the most properous in the world....but being wealthy has nothing to do with happiness.

http://news.theage.com.au/breaking-...st-prosperous-in-the-world-20090320-93w2.html


----------



## aohx075 (20 March 2009)

My friend is thinking about investing money in shares soon...but I was wondering with the recent speculation of Australia's property crash, would the property industry crash have any effect on the share market? What's the correlation between the two?

My assumption is that it wouldn’t have that much of an effect on the share market in general cause: 
- If people were short on capital, they’d have already sold their shares some time beforehand.
- Defaulting your mortgage would be the last option to take and you’d be forced to take that option cause you have none left.
- I guess I see it as an indicator that the economy has reached a bottom.
- I see the property market as a lagging indicator in comparison to the share market


----------



## robots (22 March 2009)

hello,

wow, another fine day in Melbourne yesterday:

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

75% clearance rate, this is unbelievable, whats going on

thankyou
robots


----------



## MACCA350 (22 March 2009)

robots said:


> hello,
> 
> wow, another fine day in Melbourne yesterday:
> 
> ...



"While the auction market continues to deliver very consistent sales results the activity in *the market has clearly shifted to private sales this year with the REIV recording more homes sold by private sale than the comparable time last year.*"

cheers


----------



## robots (22 March 2009)

MACCA350 said:


> "*While the auction market continues to deliver very consistent sales results *the activity in *the market has clearly shifted to private sales this year with the REIV recording more homes sold by private sale than the comparable time last year.*"
> 
> cheers




hello,

you missed this part of the statement macca350, 

and with private sale you have unlimited vendor bids there, great stuff around for property owners

thankyou
robots


----------



## Beej (22 March 2009)

And the current high clearance rate, lower number of properties available trend continues in Sydney as well - 73% yesterday, 128 sold out of 176 put up. Median price sold at auction $578k (lower than past couple of weeks which have been mid $600s).

http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej.


----------



## hotbmw (22 March 2009)

guys, what about the effect of inflation. after what the US govt announced mid last week its confirmed that the whole world will print away. do u think prices will increase and those who have saved and hold money in cash over the next year or 2 waiting to buy will miss the boat?


----------



## nunthewiser (22 March 2009)

sunshine and lollipops................


unemployment levels wont rise 

intrest rates wont rise 

banktrupcy levels not rising



sunshine and lollipops................


----------



## MrBurns (22 March 2009)

nunthewiser said:


> sunshine and lollipops................
> 
> 
> unemployment levels wont rise
> ...




It's a bloody housing *boom !, *get in while you can or you'll miss out !


----------



## Bill M (22 March 2009)

We have seen it all before, doom and gloom everywhere but the real estate prices just kept going up over time. Here is something for all the doom and gloomers to ponder about. This was cut out from page 72 of the realestate.com.au lift out from The Manly Daily yesterday.


----------



## MACCA350 (22 March 2009)

robots said:


> hello,
> 
> you missed this part of the statement macca350,
> 
> ...



I didn't miss it, the auction market seems concentrated with those who are keen to sell, auction numbers are running around 1/4 compared to last year. Unlimited vendors bids are fine, although we've been bidding them down not up. Numerous properties we've looked at have been reduced around 15% since they were brought to market......and that's before we start negotiating.  

On another note, anyone notice a flood of properties hitting the market?


----------



## kincella (22 March 2009)

Ok...lets see how many fhb's we have if the govt stops the handout...I  dont think its much money in the greater scheme of things...but it obviously is to those who do not save anyway.....
so I think it would be a good idea to go back to the old fashioned way...the banks demanded proof of saving over 6-12 months....so the parents could not just put up the money and pretended you saved it...
might be too hard for some who just live from week to week...

it was originally introduced to compensate  for the cost of the GST for fhb's....
now its supposed to keep the builders and tradies in work....
which is a good idea....
will not have too long to wait until the may budget to find out


----------



## nunthewiser (22 March 2009)

Bill M said:


> We have seen it all before, doom and gloom everywhere but the real estate prices just kept going up over time. Here is something for all the doom and gloomers to ponder about. This was cut out from page 72 of the realestate.com.au lift out from The Manly Daily.




I own realestate..... 


would i buy more now at present prices in current financial climates .......... NO 

good luck to those that do tho .........


all sunshine and lollipops ......must be , i read it here


----------



## singlefished (22 March 2009)

Beej said:


> And the current high clearance rate, lower number of properties available trend continues in Sydney as well - 73% yesterday, 128 sold out of 176 put up. Median price sold at auction $578k (lower than past couple of weeks which have been mid $600s).
> 
> http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf
> 
> ...




Why are *private sales* included in the auction clearance figures you are quoting?

Adelaide sold nothing at auction in the last week according to the figures APM are reporting yet the auction clearance rate indicates 20%.

Sydney median based on the properties that actually went to auction is $568K and not $578K.


----------



## sinner (22 March 2009)

Bill M said:


> We have seen it all before, doom and gloom everywhere but the real estate prices just kept going up over time.




How can you reconcile this with London? High immigration, high demand, low supply. Their average house price is even a lower multiple of average income than Sydney!

All the reasons the bulls here are so confident. Yet they were not immune.

It appears that in the face of credit deflation, none of these pros mean anything at all.


----------



## Beej (22 March 2009)

nunthewiser said:


> I own realestate.....
> would i buy more now at present prices in current financial climates .......... NO
> good luck to those that do tho .........
> all sunshine and lollipops ......must be , i read it here




So would you SELL what you currently own and put in cash at < 3% before tax, pay rent instead because you think prices will fall?

What if you didn't own any property and had been waiting for 5 years, saving, noticing that prices of places you are interested in had been flat for several years and maybe even fallen, and your sums show you that at current interest rates it would be cheaper to own than to rent? Would you consider buying in the current climate then? Clearly many people answer yes to that question!



singlefished said:


> Why are *private sales* included in the auction clearance figures you are quoting?
> 
> Adelaide sold nothing at auction in the last week according to the figures APM are reporting yet the auction clearance rate indicates 20%.
> 
> Sydney median based on the properties that actually went to auction is $568K and not $578K.




What are you on about? Just because a property sells prior to auction? If property was advertised as being available for public auction and therefore if it sells it is included in the reported sales. Anyway you can argue all you like but that's the way auction clearance rates have always been determined and reported.



sinner said:


> How can you reconcile this with London? High immigration, high demand, low supply. Their average house price is even a lower multiple of average income than Sydney!
> 
> All the reasons the bulls here are so confident. Yet they were not immune.
> 
> Yet it appears that in the face of credit deflation, none of these pros mean anything at all.




You are seriously trying to argue that London property is cheaper than Sydney???

Beej


----------



## kincella (22 March 2009)

just wonder...RE Agents usually add on xxxxx of dollars to your asking price, they test the market...or humour you for awhile...as the seller. the RE A usually wants a quick sale, so after no one turns up for the first open house, they will work on you until you bring the price down...
auctions only work in a hot market...I dont see it is a problem to not auction..its not a hot market imo...
but then I have not been to any auctions or inspections recently....
understood it is a buyers market.....

and yes I have noticed an increase in listings lately.....obviously to take advantage of the fhb's...
burb I watch weekly...had 150 houses for sale and 35 of those were under offer.... 
oh and the banks are running behind with applications...taking a month where it used to be about a week


----------



## sinner (22 March 2009)

Beej said:


> You are seriously trying to argue that London property is cheaper than Sydney???
> Beej




Errr what? I never said cheaper? Only highlighted that their average house price is a lesser multiple of their average income than the same ratio for Aus.

All I am pointing out is that the fundamentals of London house prices are at least somewhat similar to those of Sydney but this did not save London house prices anymore than it will save ours.

The bulls who claim property price will only go up are now either betting on steady inflation or steady employment by a majority of the population. Because we are no longer going to have the crazy speculative bids fueled by easy credit.

Frankly, I have no issues with betting on employment (bet however you like), but I wouldn't do this with an asset class that requires my own employment to remain solvent!


----------



## Largesse (22 March 2009)

sinner said:


> Errr what? I never said cheaper? Only highlighted that their average house price is a lesser multiple of their average income than the same ratio for Aus.
> 
> All I am pointing out is that the fundamentals of London house prices are at least somewhat similar to those of Sydney but this did not save London house prices anymore than it will save ours.
> 
> ...





Completely different macro environment at play in the UK compared to AUS.
Their economy is arguably further up **** creek then the USA.
They were highly leveraged to the financial services sector and excluding that, the UK just has a whole heap of aging uneconomical rustbelt industries.
The pound will continue to go lower and lower and the UK is a place I wouldn't want to be living in over the next decade


----------



## nunthewiser (22 March 2009)

Beej said:


> So would you SELL what you currently own and put in cash at < 3% before tax, pay rent instead because you think prices will fall?





YES i have sold property already IP,s.  

 i currently still hold one IP in tasmania also a riverfront block in tasmania . these are mortgage free provided kindly by the sale of subdividing the IP .. why would i sell whats left? . returning a positive cashflow .

i also hold a property in geraldton wa in which i live which by the way was bought some time ago and adjacent to the new oakagee proposed develoipment and hell yeah i will be selling the joint as soon as the hype surrounding the proposed port builds to a nice crecendo ... will i buy again with the profits ... hell yeah ........ BUT i wont be at the beck and call of mortgage rates or employment prospects ...


----------



## Bill M (22 March 2009)

sinner said:


> How can you reconcile this with London? High immigration, high demand, low supply. Their average house price is even a lower multiple of average income than Sydney!




I have repeatedly said, London or USA *is not* Australia and in particular my area. Totally different circumstances and economics over here. Look and deal with the way things are here, not overseas. Right now everything under 500k is sold within 2 weeks, there are buyers everywhere. The market is very much alive and shows no signs of abating. If I was faced with a rental bill of $500 p/w or a mortgage for 500 p/w I take the mortgage anytime, it was exactly the same argument in the 70's when I first bought. Now I live rent free and my friends who didn't buy are now like the old man posted before, still waiting and still paying rent.


----------



## kincella (22 March 2009)

since I am in the do nothing mode atm....thinking might help the tradies out in the meantime, and do some reno's on one old place....
then have a bet each way....
see how low the rates go.....and if the housing does slow down and I find another bargain....then just add another to the portfolio....and lock in the low rates for a long time
prices will come back and continue on in a steady pace in the future ...

I figure I have  30 years of retirement in front of me...thats going to need a lot of saving and income to generate...for my lifestyle


----------



## singlefished (22 March 2009)

Beej said:


> What are you on about? Just because a property sells prior to auction? If property was advertised as being available for public auction and therefore if it sells it is included in the reported sales. Anyway you can argue all you like but that's the way auction clearance rates have always been determined and reported.




What side of the bed did you get out of this morning? I wasn't making an argument, I was asking a question. Is that so offensive?

Why are properties that have been *marketed* as an auction captured within their auction clearance results even if they never made it to auction? Just because *it's always been done that way *doesn't provide me with an answer.

I think it is fundamentally incorrect to use private sales to beef up the auction sales results based on the *marketing campaign* adopted. It also provides potential for the publisher to skew the figures to suit their purposes whenever and however they want. Where is the legislation that provides a clear definition of how clearance rates are calculated?

So, you still haven't answered the initial question. If you don't know the answer then thats fine, no need to be getting stroppy! I won't hold it against you as I don't know either!!!!


----------



## robots (22 March 2009)

MACCA350 said:


> I didn't miss it, the auction market seems concentrated with those who are keen to sell, auction numbers are running around 1/4 compared to last year. Unlimited vendors bids are fine, although we've been bidding them down not up. Numerous properties we've looked at have been reduced around 15% since they were brought to market......and that's before we start negotiating.
> 
> *On another note, anyone notice a flood of properties hitting the market?*




hello,

no, there is stuff all for sale in St Kilda at the moment, very very few boards around and *as you say a 1/4 compared to last year*

fantastic, but thats okay we all have a choice to rent or buy no big deal

why are people so fascinated with what happens in other countries, USA has sub-machine guns for sale in 7-eleven so we must get them in 7-eleven?, no because we the leaders of the true free world 

thankyou
robots


----------



## satanoperca (22 March 2009)

Hi,

I agree with you Singlefished. If a property is sold prior to auction, then it should not be included in the Clearance rates as it never went to auction.

The Clearance rate should only include those properties where by the public(a buyer) had the opportunity to place a bid in at a live auction.

I think this issue is just part of the ongoing problem of trying to analysis RE statistics especially median prices over a short period of time 1-3months.

The only way to determine if a market is on the rise or fall is to study a small segment that you are interested in. I know, that in the area of South & Port Melbourne, Victoria house prices are down approx 10% off peak. My defined segment in the sector is houses/townhouses 2-3 Br b/w $500K & 900K. To ascertain what the market is doing, I have been attending auctions, keeping an eye on what comes onto the market, when, what price, for how long and trying to establish the end selling price. Quite a few properties over the last 6 months have been taken off the market and rented out. The one thing that stands out is that the asking selling price and the rental price for these property is telling of no more than 4% Gross returns. While this sounds alright compared to returns on bank deposits, it may seem crap in the next few years if property only drops 4% per year, then the bank deposit will look good.

Even my above statement cannot be taken as black or white, it also depends on the situation of the property holder. If they own the house outright, they may see bricks and mortar as a safer option than trusting the banks to hold their money. If the house owner owes 100%, then selling know would seem like a smarter option than to keep losing on a investment that more than likely will see no CG this year or the next. But even then, if we say that the owner bought 4 years ago on 100% interest only loan, the CG over those years will have left them will 30%+ equity in the home, leaving them some room to wait before selling (-equity).

So, the subject of property increasing for years has many facets that can be discussed. What might be interesting to debate is why did property prices rise 100% in 7-10years and can those determining factors change due to the current economic climate.

I for one see that if cheap and easy credit is reduced, then this alone will stagnate property prices for several years. And if, unemployment increases this will see stagnation to falling RE prices. 

Prices coming down 40% is a black and white statement, it would seem more prudent to place a percentage on a percentage. 

Eg Property prices for 09 over 500K to  :
Stagnate : 10%
To fall 10% : 45%
To fall 20% : 25%
To fall greater than 20% : 20%

Thus, I believe that prices more than likely fall 10% this year, I have not totally ruled out that they won't fall more than 20% but I think it is unlikely, whilst I think it is highly unlikely that they will stagnate. No I give 0 chance they will increase.

If I was to give figures for properties under 500K, then they would be different to the above, but I have not studied this market that is being support from government through FHBG.

Cheers

Benjamin


----------



## hotbmw (22 March 2009)

guys, what about the effect of inflation. after what the US govt announced mid last week its confirmed that the whole world will print away. do u think prices will increase and those who have saved and hold money in cash over the next year or 2 waiting to buy will miss the boat?


----------



## nunthewiser (22 March 2009)

hotbmw said:


> guys, what about the effect of inflation. after what the US govt announced mid last week its confirmed that the whole world will print away. do u think prices will increase and those who have saved and hold money in cash over the next year or 2 waiting to buy will miss the boat?




a sinking ship is always best viewed from the jetty rather than being on a sinking ship wishing you were on a jetty 

just thought i,d post that while the subject of boats came up


----------



## kincella (22 March 2009)

just came back from chapel st....its the busiest I have seen it in a long time...pavement packed with shoppers, and all those young things, and the worst traffic jam...sat there for at least 10 minutes...
restaurants are full....
someone had better tell all those young ones about the GFC...since they dont appear to be taking any notice....and just carrying on as usual


----------



## apra143 (22 March 2009)

Bill M said:


> I have repeatedly said, London or USA *is not* Australia and in particular my area. Totally different circumstances and economics over here ...




Only a matter of time: Australian housing market holds sub-prime danger


----------



## MrBurns (22 March 2009)

kincella said:


> just came back from chapel st....its the busiest I have seen it in a long time...pavement packed with shoppers, and all those young things, and the worst traffic jam...sat there for at least 10 minutes...
> restaurants are full....
> someone had better tell all those young ones about the GFC...since they dont appear to be taking any notice....and just carrying on as usual




I notice that too, impossible to get around on the weekends, traffic jams everywhere, I guess Brumby will wake up to it one day then do what he does best.....nothing.


----------



## MrBurns (22 March 2009)

kincella said:


> just came back from chapel st....its the busiest I have seen it in a long time...pavement packed with shoppers, and all those young things, and the worst traffic jam...sat there for at least 10 minutes...
> restaurants are full....
> someone had better tell all those young ones about the GFC...since they dont appear to be taking any notice....and just carrying on as usual




I think perhaps they're all out there spending $3 on a latte' like robots *and nothing else.*

Retailers are going broke by the truckload, so the people are out there but not spending.


----------



## robots (22 March 2009)

MrBurns said:


> I think perhaps they're all out there spending $3 on a latte' like robots *and nothing else.*
> 
> Retailers are going broke by the truckload, so the people are out there but not spending.




hello,

today i upped it though MrBurns, 1 latte on chapel and 2 slices of pizza at south melbourne market,

kincella, last 2 weekends I have been on the pushie down to sth melbourne and the joint is packed, not bad for the second most expensive market in the state

thankyou
associate professor robots


----------



## MrBurns (22 March 2009)

robots said:


> hello,
> 
> today i upped it though MrBurns, 1 latte on chapel and 2 slices of pizza at south melbourne market,
> 
> ...




I cant believe the numbers of people out there, i dont go out a lot on the weekend but if I try to go anywhere it's bumper to bumper all the way like peak hour runs for 24 hours.


----------



## kincella (22 March 2009)

not sure why the traffic is so bad...probably the knowledge, that the trains don't come with brakes?? or the system is so packed anyway...so they are reverting to using their cars
been to sth melb a few weeks ago...could not find  parking within the timeframe, so gave up, came back empty
its the same wherever I go..traffic is busy and slow, ages to find a park etc

a bike is obviously the way to get around....

autumn is the best time in melb....perfect one day, gorgeous the next
cheers


----------



## robots (22 March 2009)

hello,

i also stick to the trams on weekends with the 5 x Weekend Daily Ticket which costs basically $3.00 for all day everywhere travel on the met on Sat or Sun, fantastic you have your own driver

always see some wak characters, 

the AFL kicks off on the weekend coming and before you know it another year has passed, then another, then another, then another and you living large after making some simple decisions 

thankyou
associate professor robots


----------



## Bill M (22 March 2009)

apra143 said:


> Only a matter of time: Australian housing market holds sub-prime danger



huh? It's been nearly 2 years since subprime reared it's ugly head in USA. Could you please inform us to how much LONGER we have to wait in Australia? Been waiting a while but it's just not happening


----------



## numbercruncher (23 March 2009)

The market here continues as expected to be flooded by unsold inventory, substantial discounts abound where ever you look .... does this mean less peoples(demand) are moving to QLD ? I sure hope so 

You will never again in your lifetimes see RE at a price to income ratio that was seen in the 2007 frenzy......


" House prices to keep rising for years " ....... hahaha funny stuff.


----------



## MrBurns (23 March 2009)

numbercruncher said:


> The market here continues as expected to be flooded by unsold inventory, substantial discounts abound where ever you look .... does this mean less peoples(demand) are moving to QLD ? I sure hope so
> You will never again in your lifetimes see RE at a price to income ratio that was seen in the 2007 frenzy......
> " House prices to keep rising for years " ....... hahaha funny stuff.




Eventually they will rise again but it will be a long wait this time and not untill all those with too much debt have had their **** well and truely kicked.

And thanks to Rudd you can add a lot of FHB's to that list.


----------



## Bill M (23 March 2009)

numbercruncher said:


> The market here continues as expected to be flooded by unsold inventory, substantial discounts abound where ever you look .... does this mean less peoples(demand) are moving to QLD ? I sure hope so



Last week I was up the Gold Coast and there was plenty of building still going on. I was staying in Burleigh and there was a couple of new high rises going up. Near the Miami pub close to the Ford Dealers on the main drag there was a 5 story new apartment block across the road. They wanted 495k for a 1 br unit. Are they kidding themselves? Who's going to pay that and live on a 6 lane highway? The whole building was empty, no one living in it, nothing appeared to be sold. Sometimes I think developers are kidding themselves. I see inventory everywhere on the Gold Coast but as for Sydney we have no more land, the Northern Beaches is built out. You really need to pick your areas in this business. I am not an expert on the Gold Coast but I can see problems of over priced supply emerging.


----------



## Aussiejeff (23 March 2009)

MrBurns said:


> I think perhaps they're all out there spending $3 on a latte' like robots *and nothing else.*
> 
> Retailers are going broke by the truckload, so *the people are out there but not spending.*




It's the mod way of life, man.

Peeps gotta try "keeping up appearances" with one's peers, donch'a know?

Maintain that facade ... that's all that matters. 

Life's a doozy.

Chill.



PS: Wot's with the crazy Herald Sun announcing this alleged $900 Million hit on defaulting mortgagees? 1,400 homes repo'd? Are they mad??


----------



## Beej (23 March 2009)

Bill M said:


> Last week I was up the Gold Coast and there was plenty of building still going on. I was staying in Burleigh and there was a couple of new high rises going up. Near the Miami pub close to the Ford Dealers on the main drag there was a 5 story new apartment block across the road. They wanted 495k for a 1 br unit. Are they kidding themselves? Who's going to pay that and live on a 6 lane highway? The whole building was empty, no one living in it, nothing appeared to be sold. Sometimes I think developers are kidding themselves. I see inventory everywhere on the Gold Coast but as for Sydney we have no more land, the Northern Beaches is built out. You really need to pick your areas in this business. I am not an expert on the Gold Coast but I can see problems of over priced supply emerging.




Are any of the full-on property bears from Sydney? 

It's interesting but I still think all the angst is from people who live in area's other than Sydney who have freaked out as they watched R/E sky-rocket in the past few years. Meanwhile, everyone who lives in Sydney seems to have come to terms with expensive property (if you want to live close to the city, beaches etc anyway), 30-40 years ago, and simply plans their financial life accordingly, rather than praying for a great crash. And besides, prices in Sydney have hardly moved for 5 years anyway, and there are as many cheap/affordable suburbs as there are really expensive ones, so it's really hard to understand down here what all the fuss is about.....

I still reckon there is a high probability the median house price in Sydney will have ticked up slightly this quarter when the stats come out.

Cheers,

Beej


----------



## kincella (23 March 2009)

Beej, 
seems like frenzied discussions about house prices....more so on the keen thread...going on this weekend...this site...or just the same people egging it on...


----------



## Jikx (23 March 2009)

Question to all those Housing bulls.

How can prices possibly be mantained if:

1. Credit availablity has been constricted massively?
2. Unemployment rate keepy going up?

Even people with relatively stable jobs, the banks are more reluctant to lend and do so at a lower level. Whatever the demand is for housing, the fact that the amount of money that people can borrow has dropped a lot translate to much lower prices?


----------



## Knobby22 (23 March 2009)

From Steve Keens blog. You can have a look at his graphs supporting the case on the site. http://www.debtdeflation.com/blogs/

FHB Boost is Australia’s “Sub-prime Lite”Published in March 22nd, 2009 Posted by Steve Keen in Debtwatch56 CommentsThe First Home Owners Boost (as it is officially known) has certainly given the Government bang for its buck. By spending roughly $200 million of its own money to date, it has added about $3 billion to the housing market. But the additional $2.8 billion has come from increased mortgage debt taken on by those most vulnerable to a serious economic downturn, at a time when the latest “unexpected” increase in unemployment indicates that, like it or not, the global downturn is coming our way.


America tried a similar trick in 2000, when the collapse of the DotCom bubble threatened to cause a serious recession: it was called Subprime Lending. There should be little doubt now that that scam–which at the time received substantial government backing–simply delayed the day of reckoning, and made the eventual crisis much, much worse.

With Australia’s belated version of Subprime-Lite, we appear to be making the same mistake (The Sunday Telegraph made this issue their page one lead today–”House Price Crisis Looms”–and followed up with the feature Our home-grown sub-prime crisis). It’s on a smaller scale, and the borrowers aren’t so transparently uncreditworthy. But we are attempting to avoid an economic crisis caused by too much borrowing, by encouraging the poorest in our community to take on yet more debt.

Very few of those who’ve received the FHOB would qualify as Subprime as it was defined in America–a borrower actually had to have a poor credit history to get a Subprime loan. But First Home Buyers are, almost by definition, young and newly in the workforce. They will be amongst the first to lose their jobs when the downturn bites.

So while The Boost may give a temporary fillip to the bottom end of the housing market, the construction industry, and the economy, when unemployment continues its unexpected (there’s that word again!) rise, many First Home Buyers will be at the head of the dole queues. And as well as being unemployed, they will also be homeless and bankrupt.

Had they not been enticed into the housing market at absolutely the worst time by a misguided Government policy, they would still have lost their jobs. But at least they would not also be facing bankruptcy as well.


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## kincella (23 March 2009)

reply to jikx.....just because someone cannot afford to buy a house for say 500k....why do you deduce a seller would have to drop their price.....tell the buyer to go find a house he can afford....plenty around...
at a lower price.....no one owes the buyer anything at all....
so would you sell a house for say 450k...just because the buyer says he cannot afford the 500k...but there are other buyers there willing to pay the 500k....which would you do ?
and obviously this is not happening with houses at that price atm....they are being snapped up...


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## apra143 (23 March 2009)

Knobby22 said:


> So while The Boost may give a temporary fillip to the bottom end of the housing market, the construction industry, and the economy, when unemployment continues its unexpected (there’s that word again!) rise, many First Home Buyers will be at the head of the dole queues. And as well as being unemployed, they will also be homeless and bankrupt.
> 
> Had they not been enticed into the housing market at absolutely the worst time by a misguided Government policy, they would still have lost their jobs. But at least they would not also be facing bankruptcy as well.




We can only hope that the lenders paid close attention to the borrowers credit history, employment stats, etc.

It is the worse possible time. Should've let the housing market drop more than it did, waited till employment figures levelled off and then entice the buyers back in with stimulus/incentives. What we have seen the government do is simply delay the inevitable.

Oh well, hope I am wrong.


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## Glen48 (23 March 2009)

In USA you must state what is wrong with a House:
http://patrick.net/housing/contrib/asshole.jpg


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## moXJO (23 March 2009)

I have had yet another acquaintance buy a house. He borrowed the maximum he could (min deposit) after going to a variety of lenders. Funnily enough it was the CBA that gave him the most ($380k). He is now stretched to the limit on a single wage. And his wife is talking reno's before christmas.
He has been trying to explain there is no more money. 

I often worry as this seems to be the norm with a lot of my friends. But if they can make the payments then best of luck to them. Not for me to rain on their parade. 

How long can this go on in this environment I wonder


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## MACCA350 (23 March 2009)

moXJO said:


> I have had yet another acquaintance buy a house. He borrowed the maximum he could (min deposit) after going to a variety of lenders. Funnily enough it was the CBA that gave him the most ($380k). He is now stretched to the limit on a single wage. And his wife is talking reno's before christmas.
> He has been trying to explain there is no more money.
> 
> I often worry as this seems to be the norm with a lot of my friends. But if they can make the payments then best of luck to them. Not for me to rain on their parade.
> ...



I've had a few agents mention they've had many FHB begging numerous lenders trying desperately to get finance for properties  

You'd think that should tell them something, seems to me much of this FHB boost is being taken up by those who are borrowing to the hilt and will be repossessed given a slight change in interest rates or circumstance. 

cheers


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## Jikx (23 March 2009)

kincella said:


> reply to jikx.....just because someone cannot afford to buy a house for say 500k....why do you deduce a seller would have to drop their price.....tell the buyer to go find a house he can afford....plenty around...
> at a lower price.....no one owes the buyer anything at all....
> so would you sell a house for say 450k...just because the buyer says he cannot afford the 500k...but there are other buyers there willing to pay the 500k....which would you do ?
> and obviously this is not happening with houses at that price atm....they are being snapped up...




Well, I will give you the essential logic of what I'm arguing. Fundamentally, the amount of money people have to buy houses is dropping - across all levels. From the bank's point of view: 

1. They will lend less, that being lower debt to income and/or equity. General decrease in risk taking.
2. Rising unemployement, and greater risk that people they lend to cannot repay the lown.
2. House prices are dropping, which means they have greater risk that they cannot recoup money per 1. and 2.

This is affecting all people. Doesn't really matter how much you earn, the banks will now lend you less than previously. Now keeping that in mind, it's not that there'll be just a few buyers who could not pay as much as before, it's all buyers. The anecdotes show it (per above posts), and the lending levels show it. It's happening. 

Now to touch on supply side of the housing debate. There are a number of private property players who are absolutely borrowed to the hilt, hitting 90% debt/equity. There's actually a lot of single property owners in the same situation. Supply will be added once unemployment starts rising, and these homes are forclosed. Banks will be very unwilling to allow refinancing as well.

You have the twin effects, increased supply, decreased demand all stemming from the banks risk avoidance and increasing unemployment. Our housing market will be extremely hurt by this, because the price of housing is supported by so much debt.

Essentially, less debt = lower house prices.

You'll see this happening towards the end of the year, when the impact of unemployement starts flowing through the economy. The magnitude on housing is anyones guess, but I'll make a punt at 30%.


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## gfresh (23 March 2009)

None of my friends (early 30's) can afford a job loss amongst either partner. None would have enough savings to get them by for more than a couple of weeks paying the mortgage.


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## Glen48 (23 March 2009)

I think most FHO think the 20-30K some how goes into their pockets and they are that much better of and mortgage payments the same as rents low I R, house prices low  there is no reason to buy and if you borrow to the hilt the more appreciation you will receive....sadly it is entrapment and because they in hock to the eye balls they won't be spending any where except to pay the rent to the Bank/s.


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## Beej (24 March 2009)

gfresh said:


> None of my friends (early 30's) can afford a job loss amongst either partner. None would have enough savings to get them by for more than a couple of weeks paying the mortgage.




Seriously? They haven't even got ahead on their mortgage payments at all? Even with the lowering of interest rates? The "standard" way to recession proof yourself is pay off as much of the mortgage as you can in the good times, and then if you find yourself in a worst case scenario (unemployment, illness, injury etc), you at least have a large buffer there that you can you use while you work out the next step in your strategy - be that find a new job/career, start a business, or sell up etc etc.

Cheers,

Beej


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## kenny (24 March 2009)

It worries me to hear these stories of couples and families choosing to "mortgage themselves to the hilt" with what seems to be coming up on the economic horizon. Do the lenders still consider any risk analysis of job security and such anymore? It might be nice if they mentioned such risks quietly to the applicants to think over even if they do qualify for the huge loans.

Beej, I agree with you in thinking that the median house price will tick up this quarter. If it does, it will almost certainly be due to the abnormal influence of the FHBG. Drilling into the data will probably reveal the gains made will be significantly limited to the sub $600's categories of residential properties and sadly bought on a high LVR.

In chatting to some REA's, the consensus seems to be almost a desperation by some FHB's to secure the grant even if it means compromising on the choice of property. Bizarre.

Cheers,

Kenny


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## UBIQUITOUS (24 March 2009)

Beej said:


> Seriously? They haven't even got ahead on their mortgage payments at all? Even with the lowering of interest rates? The "standard" way to recession proof yourself is *pay off as much of the mortgage as you can in the good times, and then if you find yourself in a worst case scenario (unemployment, illness, injury etc), you at least have a large buffer *there that you can you use while you work out the next step in your strategy - be that find a new job/career, start a business, or sell up etc etc.
> 
> Cheers,
> 
> Beej




What buffer? You're contradicting yourself.

If you pay off as much of your mortgage as you say, then when you lose your job, you have NO BUFFER as you stupidly paid of your mortgage instead of saving it elsewhere.

If weekly income goes from $1000 to $0, where is the buffer?


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## TradeDaily (24 March 2009)

Youre ahead of your repayments and therefore can redraw monies to tie you over - otherwise you might have an offset account and dip into that until you get back on your feet. same diff.


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## kincella (24 March 2009)

couple of points....gfresh, I thought the Qld market was still overheated...so what price ranges are your friends buying at...and they are spending two incomes, with no savings ???

if all this talk amazes some people...are you also amazed at the speed the stock market jumps....is it the young and restless again...or reckless attitudes


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## Trevor_S (24 March 2009)

kincella said:


> are you also amazed at the speed the stock market jumps....






> *Mr Market is manic-depressive and the prices he offers fluctuate wildly as his mood changes.* But the good news is he cames back day after day with a new offer and you are under no obligation to either buy from or sell to Mr Market on any given day. Your challenge is to not be distracted by Mr Market's erratic behavior and to take advantage of outstanding opportunities presented by Mr Market as they arise.




Benjamin Graham


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## Beej (24 March 2009)

UBIQUITOUS said:


> What buffer? You're contradicting yourself.
> 
> If you pay off as much of your mortgage as you say, then when you lose your job, you have NO BUFFER as you stupidly paid of your mortgage instead of saving it elsewhere.
> 
> If weekly income goes from $1000 to $0, where is the buffer?




You really don't understand how mortgages work do you??? See below:



TradeDaily said:


> You're ahead of your repayments and therefore can redraw monies to tie you over - otherwise you might have an offset account and dip into that until you get back on your feet. same diff.




Wot he said! Either method works. If you are say 5 years ahead of your contracted repayments then you can stop paying the mortgage for years if you need to  (or fund payments interest only out of your offset account), and not have the bank coming a knocking..... try doing that with your land-lord when he asks for your monthly rent cheque!

Of course the renter can also have saved their pennies for a rainy day, but they will have paid tax on any interest earned, and their savings will not be reducing the rent they pay in the future. The home owners savings reduce their "rent" (ie interest payments) for ever, tax free, plus provide that buffer if required when hard times hit.

Beej


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## gfresh (24 March 2009)

kincella said:


> couple of points....gfresh, I thought the Qld market was still overheated...so what price ranges are your friends buying at...and they are spending two incomes, with no savings ???




Ok, to explain a bit more fully.. I know about 3 couples that purchased about 3 years ago, similar situations, and in that time they haven't really made much of a dent in the principal, as you generally don't in the first 5 years unless you make fair extra payments. 

I know things were tight in 2007 when the average interest was around 8%, about 12 months after they bought and were still paying off weddings, honeymoons, etc. I would say they'd be getting more in front in the last 12 months as rates are coming down, but I know previously they have not been in the position to have an extra $200/wk+ to simply put into their mortgages... not everybody is in the legal profession out there 

Loans would have been about $310k w/ 5% deposits which is fairly standard these days. Incomes would be around $100k combined. 

Don't really live extravagant lives, but do holidays, spend a bit on clothes, have bought all new furniture, going out, and have newish cars... nothing I don't do, but I don't have a mortgage. Seems pretty standard to me. 

But at the end of the day, if there were a job loss take out ~$800 of a combined ~$1600 wage (after tax).. mortgage repayments + rates + body corp (apartments) around $450/wk.. they're be left with $350/wk for 2 people to live on including everything else such as health insurance, house/contents insurance/phone bills/internet/petrol/car servicing/food .. I guess with rates at current levels they'd be ok for a while, but it would be pretty tight.. if rates rose, forget about it..


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## kincella (24 March 2009)

gfresh...newish cars etc hmmmm

...on ACA ch 7 last night..a woman...a thrift planner or something went down a whole street somewhere...sat down with the mums and dads and taught them how to reduce wastage in their budgets...most threw away the credit card to begin with...almost all were saving on average about 15,000 pa...or roughly 300 pw, cut out the takeaways etc, planning meals, planning expenses...some people had never budgeted before ?????

in the case of your friends...the biggest item is either the mortgage or the rent....so if they were renting ...how would they be any better off 
and their interest bill should have dropped about 9000 pa  over 700 pm
maybe they have car loans...and credit cards...and wow holidays too....
they can cut the fat from their budget if they wanted to ????

I know of a group of young ones in Melb....they all married, had first child etc and bought a house around the same time.....they all threw away the credit cards when they started saving for a deposit for their houses....they all practice being thrifty....its a group of about 40....
they go camping instead of the big cost hols, grow vegies , still party but at each others house...not at bars....oh and they are a pretty happy bunch


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## gfresh (24 March 2009)

Yeah, I know.. but it is the sort of life people want to live these days. It's not the only way of course, but it seems to be the way most people want to be. 

People see a car older than 5 years old as "problems", and a bit of a fashion accessory at the same time. Women are especially bad when it comes to impulse buying on due to all the marketing pressure, and media bombarding them all the time to buy this and that or to be a certain sort of person. People just don't want old stuff.. I know I cop a bit of flack from them for being a tight ****, and not spending on some things.  

It's all too easy to get into contractual agreements as well - say 24 month phone contracts because the iPhone or whatever is the latest cool thing, or they want a laptop, foxtel, or they want this.. it all adds up to some high fixed weekly spends. 

Renting probably wouldn't be much difference I agree at the moment.. but either way, many are living this life out there, it's not like it's unusual. The unusual thing is actually people living a simpler life, not having all the gadgets and gasp, saving.


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## kincella (24 March 2009)

gfresh...so it comes back to choices..so if they lose the house...its their choice...or go bankrupt..
there was a 60 minutes segment about these young women...new cars, 5 credit cards...earning about 500pw...spending 1500 pw...with no intention of paying it off...had credit card bills of 60-70k's...they said they were happy to go bankrupt...they were looking for a wealthy man to marry them later...
unbelievable attitude to credit....obviously not thinking about needing a house mortgage one day
so your friends may lose everything anyway...including the lap tops, games etc if they lose their jobs....
the choices will be taken away from them...
geez talk about throwing the dice....

back to that group of 40...they used to rent in the inner subs, do the caffe latte etc and spent all their money each week.....
One couple asked my advice...they felt they were in a rat race, and could not see their way out...I  suggested the plan, 'how to change your life forever'
...start a budget, and savings plan....buy the house outer suburbs....so much cheaper, forget about the dream home until they are older and have more income etc....they saved stacks on the rent to begin with...(they moved and rented in the outer suburbs) 
that couple passed it onto the others....they all agreed if they were all together in the outer suburbs,,,they could do the same things...but it would be easier, cheaper and less stress....
some wanted to stay...but eventually most of them followed each other...
now they feel powerful...not powerless


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## Uncle Festivus (24 March 2009)

kincella said:


> gfresh...newish cars etc hmmmm
> 
> ...on ACA ch 7 last night..a woman...a thrift planner or something went down a whole street somewhere...sat down with the mums and dads and taught them how to reduce wastage in their budgets...most threw away the credit card to begin with...almost all were saving on average about 15,000 pa...or roughly 300 pw, cut out the takeaways etc, planning meals, planning expenses...some people had never budgeted before ?????




Thrift is the enemy of the RE bull. Without the unrestrained spending/credit people have gotten used to, the economy contracts and then....we have the situation we are in - having to artificially prop up the RE market in the misplaced view that it will kickstart the economy ie push economics.

All we have now is a government pushing a group of people into home ownership at the very time any one of the margins could be compromised to their detriment - a very tenuous situation for all?


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## Beej (24 March 2009)

Uncle Festivus said:


> Thrift is the enemy of the RE bull. Without the unrestrained spending/credit people have gotten used to, the economy contracts and then....we have the situation we are in - having to artificially prop up the RE market in the misplaced view that it will kickstart the economy ie push economics.
> 
> All we have now is a government pushing a group of people into home ownership at the very time any one of the margins could be compromised to their detriment - a very tenuous situation for all?




I don't agree with the underling assumptions that are required to accept your statement and conclusion. Everyone I know who owns real estate has always been very thrifty - far more so than their peers who are still renters. That's how come a large proportion of housing is actually owned outright with no mortgage (50% in the suburb I live in). These owners are the people who worked hard to save a deposit etc, pay off their mortgage and so forth - often foregoing unnecessary expenditure and luxuries to do so. Ie what percentage of long term renters have say a savings account or a share portfolio worth $500k+ outright? I'll bet it's nowhere near the percentage of home owners that own a house worth $500k or more free and clear!

It's actually quite funny that so many people here think of the people with mortgages/houses as the imprudent debt driven consumers when in my experience it has actually always been the opposite! I think it comes down to a missing gene amongst the property bears; the "house = security/stable lifestyle" gene or something? Ie Some people don't understand the intrinsic value that the majority of the population see in owning your own home. Therefore rather than see home owners as prudent long term planners with an eye on their future financial freedom, they are seen as reckless over-leveraged consumers who epitomise all that is currently wrong with the world! I think the opposite is in fact the case....

Perhaps you could apply these negative labels to a small minority of home owners and highly leveraged investors, but I think it is incorrect to tar the majority of mortgage holders and home owners with that brush.

PS: How exactly is the R/E market being artificially propped up in reality? The FHOG boost is a mere extra $7k over and above what was already there to compensate for GST driven inflation anyway, far less than the stamp duty that still applies in many states. It provides an incentive, but only a small one IMO in the grand scheme of things. The primary factors driving the market currently are interest rates plus pent up demand. Demand is very real, and interest rates are not "artificially" low. Ie interest rates are not low to try and save housing, they are low to provide stimulus to the economy during a period of contraction. The effects on the housing market of those monetary policy settings are just a bonus, but also very predictable in this part of the economic cycle, especially when you consider the unsatisfied demand.

So QED I do not think your contention that "thrift is the enemy of the R/E bull" is correct at all. Quite the opposite in fact.

Cheers,

Beej


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## Junior (24 March 2009)

Beej said:


> Perhaps you could apply these negative labels to a small minority of home owners and highly leveraged investors, but I think it is incorrect to tar the majority of mortgage holders and home owners with that brush.




If highly leveraged investors are in the minority, how come household debt in Australia is at an all time high?


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## GumbyLearner (24 March 2009)

Junior said:


> If highly leveraged investors are in the minority, how come household debt in Australia is at an all time high?




Say it's not so Junior.


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## kincella (24 March 2009)

clue...household debt is not just a mortgage on the house...it includes all debt in that household....ie...car loan, credit cards, personal loans, store cards etc, margin loans..........everything lumped in together


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## Beej (24 March 2009)

Junior said:


> If highly leveraged investors are in the minority, how come household debt in Australia is at an all time high?






GumbyLearner said:


> Say it's not so Junior.




What's the household debt to GDP ratio currently? It's about 95%-ish (and coming down - so by the way we are past the all time high). So on average each household carries about $120k debt (based on $1Trillion in GDP and about 8M AU households).

Average household income is in the order of $80k-$100k, so the actual average debt to income ratio is in the order 1.2-1.5 times (or less) the average household income. Remember that includes credit card debt as well, which is an extremely misleading figure due to the number of people who use credit cards aggressively but never pay any interest (like me). In addition to those figures, we also know that the average mortgage is about $250k, which gives us an idea of the "skew" in the over-all figures away from non mortgage holders to mortgaged home owners.

I don't think that paints the picture of the majority of people being multiple-property-holding-highly-leveraged-speculative-investors-mortgaged-to-the-hilt at all!

Most of the growth in debt is in IMO is more down to people (be they property owners or renters) buying new cars on finance, feeling free to spend up on holidays and electronics etc etc due to the "wealth" effect that the rising housing market, share market (super funds etc etc) created, in addition to rising incomes and the feeling of job security. Now that the many of those factors have gone, unsurprisingly, household savings have now started to dramatically increase ($15B in Dec alone). But surprisingly to the property bears, this is NOT translating into any significant falls in property prices, and has even produced currently an increase in demand for property at the lower end and mid-range. This does NOT surprise me at all, for the reasons I hope I have explained in this and my previous post.

Cheers,

Beej


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## Uncle Festivus (24 March 2009)

Beej said:


> So QED I do not think your contention that "thrift is the enemy of the R/E bull" is correct at all. Quite the opposite in fact.




Um, I'm not sure I said anything about home owners being thrifty as such, the comments were on the consumption economy in general. 




Beej said:


> PS: How exactly is the R/E market being artificially propped up in reality?




All you RE permabulls need to get together and agree on a few things  ie is the FHG helping to sell homes or not? If it is, then it's an artificial stimulis ie the market is not finding it's own level. If RE was such a good thing why have any of these government handouts and tax concessions at all - why not let it stand on it's merits like everything else does? A simple request that not many can answer, apart from the usual 'cronic shortage' mantra?


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## kincella (24 March 2009)

uncle...you did say...'thrift is the enemy of the RE bull'....afraid I dont see it that way at all...we can all look at the same thing...but see it differently

thrift is the RE bulls best companion...for eg; I and a heap of friends are bullish on property as a long term investment....say we had planned to sell a portion of the portfolio this year.... since the GFC , we have changed our minds and the props are taken off the market....they will return when the price is right....
in the meantime we are thrifty with our funds....we can afford to hold onto the props for longer, or for as long as necessary

those prop holders who are not thrifty...are forced into selling in the wrong market at the wrong price....
I also see the young ones who are buying props, pratice being thrifty....the forced savings scenario....they intend to hold the prop for a long time...


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## sinner (24 March 2009)

I decided to go back and look at what the media has reported about mortgage default rates for the last few years:

2007:
http://www.news.com.au/business/story/0,23636,22202830-462,00.html


> ...Home lenders lodged claims for $210 million worth of bad loans in the 12 months to December compared with only $49 million in 2005, according to the Australian Prudential Regulation Authority....




2008:
http://www.abc.net.au/lateline/content/2008/s2430809.htm


> ....MICHAEL TROY: The defaults are occurring despite the lowest interest rates in three years and analysts fear the problem will spread further and quicker if unemployment goes up....




2009:
http://www.brokernews.com.au/contents/news/34452/details.aspx


> More people are losing their home as a result of defaulting on their mortgage, according to a new Datamonitor survey, which also found that people are taking advantage of recent interest rate cuts to pay off more of their mortgage than they are required to each month...




Hmm, seems like Aus mortgage default rates are in a trend. I will leave it as an exercise to the reader to determine the direction.

and here is a tidbit, not just Keen saying sub-prime lite:


> “If prices drop, we’ve got a problem. If interest rates go up we have a problem. If unemployment goes up we have a problem”, Marcus North from Fujitsu Consulting told the 7.30 Report. “If all those three things come together that’s a perfect storm and we have a crisis.”
> 
> Should unemployment and interest rates both rise, as occurred in the 1974 economic crisis, North argued that Australia had “all the ingredients” for a subprime mortgage crisis similar to the US. “We are going to see defaults rising. We are going to see people having negative equity and they will struggle to pay the mortgage that they have”, he said.


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## robots (24 March 2009)

hello,

great opinions from those people just like yours and mine, fantastic

thankyou
associate professor robots


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## MrBurns (24 March 2009)

Having sucked so many into this bubble housing market Rudd would need extra body guards if interest rates were to rise, so Rudd's popularity being more important than the interests of Australia as a whole one would think there's no chance of interest rates rising, yes I know interest rates are out of his control, but not out of his influence.


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## Uncle Festivus (24 March 2009)

robots said:


> hello,
> 
> great opinions from those people just like yours and mine, fantastic
> 
> ...




Huh?


kincella said:


> uncle...you did say...'thrift is the enemy of the RE bull'....afraid I dont see it that way at all...we can all look at the same thing...but see it differently



Seems I am not explaining it too well. In a vibrant spending economy, like the one we just had, the wealth effect was just that - the rising common wealth lifted all asset prices?, but now we have the opposite. Generally, and I am not targeting _responsible_ RE owners at all, people being thrifty & not spending depletes the velocity of money in society, and does have an effect on property. I just wonder how RE would fare without all the hand holding from the government? 

Let's have a show of hands from the Perma Bulls - are you buying or selling? Selling/offloading to the FHB's while you can perhaps?


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## kincella (24 March 2009)

sinner thanks for the links...
the one for 2008 was good...dated the 26.11.08...talked about interest rates...well after rising to an average 10% interest rates had only been dropped for 2 months...and not all of it had been passed onto the consumers...nor had it been passed on until Nov in some cases...but Troy states....lowest rates in 3 years.....hmmm... truth.....in fact they were the highest rates in over 20 years
extract.......................
MICHAEL TROY: The defaults are occurring despite the lowest interest rates in three years and analysts fear the problem will spread further and quicker if unemployment goes up.

next..the 2009
st george repossessed 132 homes for the month up from 80 odd in the boom years...so if all our banks were similar...then say 30 lenders, thats about 30,000 homes pa...
but in the good times there were 20,000 pa being repossesed....???what the
................................................................................
Repossessions (and repayments) on the rise
By Larry Schlesinger | Monday, 23 March 2009 
More people are losing their home as a result of defaulting on their mortgage, according to a new Datamonitor survey, which also found that people are taking advantage of recent interest rate cuts to pay off more of their mortgage than they are required to each month.

According to the survey, St.George repossessed 132 homes in March, compared to an average of around 80 during the boom times - other large banks have experienced similar increases.

Lenders are reluctant to repossess homes in Australia. Some banks offer temporary relief such as interest-only payments and payment holidays.

........................................................................................
and this one out now....where in heaven do they come up with these massive figures....the headline is 30,000 homes repossessed by dec 09
...ok so even I can figure that one out....but look at these figures of over 150,000 homes....what are they smoking ??
and if you google...fujitsu reports...same thing over the years....massive dire figures...but the reality is nothing like it.....30,000 is 1/5th of 150,000
...........................extract
Despite the dire prediction, the Fujitsu Mortgage Stress report shows a massive 41 per cent decline in the number of home owners facing potential sale or foreclosures from 164,590 homes in February to 96,532 in March due to Federal Government handouts and lower interest rates.  Maybe they are talking about the US default rates.....they turnover 5 million homes sales per month
I give up......
hehehehehe

http://www.news.com.au/business/money/story/0,28323,25235255-5013951,00.html


----------



## kincella (24 March 2009)

festivus....
handholding by the govt ??? 


*the govt gets the money back in stamp duty and other taxes almost immediately....*
so while some of you complain...look through the deal to see how it works 
well maybe its just the state govts....but it still goes back into those govt coffers....in fact the money barely changes hands....the grant is not handed over until settlement date....and on the same day the govt takes it all back with the other hand.....
pretty nifty if you ask me.....
and the state govts were supposed to abolish same taxes since they received the gst....well they still get the gst...extra...and did not stop the taxes...

 21,000 for a new house, or 14,000 for an old one..against a median price aust wide of about 450,000....its not open to everyone...just fhb's


----------



## Uncle Festivus (24 March 2009)

kincella said:


> festivus....
> handholding by the govt ???




Yes, and the rest ie negative gearing etc = reduce your taxable income, or, not sharing the burden of societal living? Why should the act of buying an investment property, as opposed to constructing a new, economy enhancing dwelling, receive such preferencial tax treatment? 

If they (the gov) wanted to build a sustainable economy then they should only make it attractive for those who create new things ie build houses/accomodation or manufacture things. All else would flow from that, instead of wasting potential tax revenues on subsidising property flippers/investors?

Make it a requirement that all migrants can only live in new dwellings - creating jobs and easing the competition on the native population? There is plenty of land, all it would take is for the state governments to get out of the back pocket of developers who like the status quo of restricting new releases to prop up their prices.

Either that, or governments are just plain incompetent, which is a distinct possibly


----------



## gfresh (24 March 2009)

Many ministers have a property portfolio and have a vested interest. There was a while ago a list of some ministers (NSW I think?) and their listed properties. Many held multiple properties.


----------



## kincella (24 March 2009)

festivus....
...the govt stopped building and providing public housing in the 1970's
....whose money was used to pay for that now ???? yes it was us the taxpayers.....
so the tax breaks go to the private market to provide housing for the public.... the private investor provides a far better and more comfortable house than the govt funded thing ever was....and better cost affective
or more economical

next...there may be plenty of land....but Vic has a 2030 plan...its not the developers but the state govts have locked up the land, the state will not allow xxxxx amount of land to be built on....it wants everyone to live in high rise, using the existing facilites....
nsw may be similar....they release so little at a time....and charge huge taxes
state govts and fed govts are very very incompetent.....
so its not as easy to look around and see huge areas of land.....you need a permit to build on it....and thats where the obstacles begin...
I dont know about the other states....but they all seem to follow each other


----------



## singlefished (25 March 2009)

Beej said:


> PS: *How exactly is the R/E market being artificially propped up in reality?* The FHOG boost is a mere extra $7k over and above what was already there to compensate for GST driven inflation anyway, far less than the stamp duty that still applies in many states. It provides an incentive, but only a small one IMO in the grand scheme of things.







Beej said:


> Now, is there increased buyer activity (in Sydney/Melbourne)?? The answer is clearly yes. It is now undeniable that the FHB grant boost, plus the low interest rates, plus probably the sentiment that prices have been flat to falling for some time now (especially in western Sydney), have resulted in large numbers of FHBs who have been sitting on the sidelines coming into the market with gusto. The bears on this thread tried to deny this was happening for months at the end of last year - even as posters like myself and others pointed out the early indicators, including weekly auction results etc, our own experiences etc, that were showing this was starting to occur.
> 
> And now IMO the early indicators are showing that not only is the FHB activity continuing, *the impact of that is flowing through the rest of the market.* Higher priced properties are starting to sell, prices are rising in the low end and many mid range suburbs, as indicated by the rising median price in the weekly auction results.





I guess you bias your discussion based on who you're responding to?

So, the extra $7K/$14K incentive becomes *LESS* significant after a few days of stock market gains and vice versa if it falls right?


----------



## Beej (25 March 2009)

singlefished said:


> I guess you bias your discussion based on who you're responding to?
> 
> So, the extra $7K/$14K incentive becomes *LESS* significant after a few days of stock market gains and vice versa if it falls right?




Que? Both quotes say basically the same thing? So I guess I don't see the point you are labouring to make (maybe splitting a few hairs? )? If you go even further back into the thread you will find my outlook for the market was the same even before the FHOG boost was announced - the boost was just icing on the cake. 

The major driving factors in the current market IMO are low interest rates now really kicking in on top of existing pent-up demand in that FHB segment, with the FHOG boost adding to that, but not the root cause by any means. 

The activity in the FHB segment is now starting to show signs of flowing through to the mid and upper price ranges as time goes on (from looking at auction results and sales in the area's I watch closely). The forces acting in the opposite direction are low consumer confidence, concerns about job security, and actual unemployment - clearly the later still has a lot to play out, but based on watching the market through 1991/92/93 when unemployment last rose significantly, I don't expect the impact of this to be as great as many here are expecting, but I think these factors will stop us from entering any real boom or high price growth phase until the economy is in recovery mode.

Beej


----------



## kincella (25 March 2009)

copied this from another forum....this is a fhb....and he sounds pretty happy
..................................................................................................

mate... i asked the same question a few weeks ago. should i buy or not. i decided that we would rent for another 6 months. then i got a phone call about this house in north lakes qld (the area i wanted to live). my wife and i went and check it out that day. we fell in love with it. a big corner block 775sm(big for north lakes), new pool, 4 bedrooms, outdoor living area, even a garden shed. we knew the owners wanted to sell it quick. we put in a offer well below their asking price and we got the house. mate what a feeling, so stoked. im not an expert and you do what you feel is right, but keep looking and if you see your dream home buy it.
cheers
gizzy


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## Trevor_S (25 March 2009)

kincella said:


> and he sounds pretty happy




and why wouldn't he be, as a FHB he has no idea what he is doing  
Ignorance is bliss.  

Did he stop and ask why the price was reduced so much, will it come down further ?  If the deal is as good as he espouses, does he realise he has probably just started to bring the median house price down, setting a new floor ?  He has bought his dream house as a first house, doesn't that strike you as a little "odd" ?  I guess every PPOR I have ever bought has been purely for business reasons and I have never had a emotional attachment to a house, the best place I have ever been is here.




and it's just a shack, nestled in the rainforest, alongside a pristine creek in the rainforest of NQ.

All of that said, best of luck to him


----------



## Glen48 (25 March 2009)

The joys of renting a house from the banks.
Average salary is $60,658


Average house price is $450,000 - that's 7.41 times the average salary


Assuming "Mr Average" has managed to save a 10% deposit, he still needs a mortgage of at least $405,000 - unless he adds the cost of stamp duty to the loan, which in Victoria would be nearly an extra $24,000.


So, assuming all that, Mr Average will have a mortgage of $429,000. If he takes out a 1-year introductory variable rate of 4.71%, his monthly repayment will be $2,436 per month. That's coming out of his after tax salary of $3,961. That's 61% of his after tax income spent on the roof over his head.

By the end of the first year he will have paid $9,000 off the principal, and $20,000 in interest. By the end of the second year he will have paid a total of $17,500 off the principal and $44,000 in interest.

So by that time Mr Average will have paid $494,000 for his house, which even if property prices stay the same, will only be worth $450,000. And he will still have a loan outstanding of $412,000.

If Mr Average was forced to sell the house and managed to get the same price of $450,000, he would repay the loan of $412,000 and have $38,000 remaining. Of which about a third would go to the real estate agent.

So he gets back $26,000. And because he's paid $44,000 in interest over that period he's actually in the red for $18,000 on the deal. Which means he has less money than when he started, and because he's not a first home-buyer anymore he doesn't qualify for the government handout the next time he buys.
Money morning.


----------



## kincella (25 March 2009)

oh come on glen...mr average will not get a loan for that amount to begin with...that loan needs two incomes
the bank will not lend an amount that requires 70 % of your income
the banks work on about 30%  of income to pay the monthly loan...
currently even with high prices..the average is 32% of income...it was published some where this week....
fairy land stuff talking about an income of 60.000 against a loan of 450k


----------



## Beej (25 March 2009)

Glen48 said:


> The joys of renting a house from the banks.
> Average salary is $60,658
> 
> [snip]
> ...




What drivel! Really - please post on the house prices to fall thread if you really must post utter rubbish like that!

Here's just a start as to why:

1) Mr Average probably also has an average household which means a household income of $80k-$100k, a wife and 1 or 2 kids.

2) If Mr Average doesn't already own a house (and the odds are he actually already does), then he would be a FHB - FHBs typically purchase a house in the lower 30% bracket, rather than the median (or even average) house. That means he is more likely to be buying a house or unit for around $300k-$350k, not $450k. People who buy the median house tend to be either higher income earners or 2nd home buyers upgrading.

3) You haven't accounted (as usual) for the rent Mr Average would otherwise have paid had he not bought his house. Mr Average would pay average rent, which is about $400/week - $20,800/year. So if renting instead of owning, over the same 2 year period he will have paid $41,600 in rent - so the difference is only $2,400 in the outcome from your example (which presumes no change in house price).

4) Buying a house is a long term proposition - anyone who flips a house in less than 2 years would be lucky to not lose money. But over periods of 10 years plus they are certain to be way ahead as compared to the alternative.

I've worked up a spreadsheet that I might post later that compares the renting vs the owning scenario for a FHB buying a house for $390k, and it projects forward year by year over 20 years. In all but the most apocalyptic scenario's for house prices (or most fantastic investment return assumptions for the renters spare cash) the home owner ends up way WAY in front after 5 years or longer (the longer the better!).

Beej


----------



## 2BAD4U (25 March 2009)

Trevor_S said:


> and why wouldn't he be, as a FHB he has no idea what he is doing
> Ignorance is bliss.



I've been staying out of this thread because I wanted to get off the merry-go-round, but seriously Trevor that is a very condescending statement to make and typical of the assumptions in here.

Just to save you all the time:

CTRL + C = Copy
CTRL + V = Paste

Because that's all everyone has been doing for 220 pages.  Bye.


----------



## lioness (25 March 2009)

I was just wondering has anyone done a spreadhsheet for owning one property(your PPOR) and then upgrading to a bigger one and keep updating against owing 3 or more rental properties of the same money outlaid?? Taking into account CGT free vs CGT, interest deductibility, land tax vs no land tax etc etc. Which strategy is the most worthwhile?


----------



## Kez180 (25 March 2009)

lioness said:


> I was just wondering has anyone done a spreadhsheet for owning one property(your PPOR) and then upgrading to a bigger one and keep updating against owing 3 or more rental properties of the same money outlaid?? Taking into account CGT free vs CGT, interest deductibility, land tax vs no land tax etc etc. Which strategy is the most worthwhile?





Way too vauge, Generally speaking the higher your tax bracket the more benefit you will gain from the neg gearing on the investment properties, Mainly depends on the rental yeilds for the properties, your risk tolerance and about a million other property specific factors...

Having non deductable borrowing is silly, at the same time negative gearing as a concept is a bit of a stretch at the moment as well as it relies heavily on an increasing property market and lets face it who knows where it is going at the moment..

~Kieran


----------



## kincella (25 March 2009)

negative gearing is fine....just another means of providing housing for those who choose to rent...and the renters have been growing each year...in the 1950's it was split 50/50 now its 70 owners to 30 renters...roughly 10% of rental accommodation is provided by the govt...aka housing commission houses and flats...the balance is provided by the private investor

the housing market will recover and be fine....
oh and the way all our 'newbie govts' worldwide are printing money and throwing it around...I would think those holding the houses should be in an even better position...when this all washes ashore....


----------



## Bill M (25 March 2009)

robots said:


> hello,
> 
> great opinions from those people just like yours and mine, fantastic
> 
> ...




hello robots, i was watching the today tonight program this evening and I saw a guy in melbourne hanging off the back of a truck whilst he was riding his pushie along, trying to get a free ride he was. unfortunately he fell off in front of the news crew and i am concerned, was that you? are you ok?

let us know if you are ok.

thankyou,
bill m

ps. how is st. kilda? over here, things as usual.


----------



## Bill M (25 March 2009)

Following article confirms what I've been saying here for the last 4 Months.
-------------


*Grand time to be buying first home*

FIRST-HOME buying is reaching fever pitch at the moment with hundreds of young people turning their backs on exorbitant rents and getting into their own home.

*Agents up and down the peninsula report that anything under $500,000 is selling like hot cross buns with the favoured suburbs being Dee Why, Manly, Fairlight, Narrabeen and Collaroy. *

FULL STORY HERE


----------



## Julia (25 March 2009)

Bill M said:


> hello robots, i was watching the today tonight program this evening and I saw a guy in melbourne hanging off the back of a truck whilst he was riding his pushie along, trying to get a free ride he was. unfortunately he fell off in front of the news crew and i am concerned, was that you? are you ok?
> 
> let us know if you are ok.
> 
> ...


----------



## singlefished (25 March 2009)

Beej said:


> Que? Both quotes say basically the same thing? So I guess I don't see the point you are labouring to make (maybe splitting a few hairs? )? If you go even further back into the thread you will find my outlook for the market was the same even before the FHOG boost was announced - the boost was just icing on the cake.




Sorry Beej, but the 2 statements posted are actually quite contradictory and far from similar... and it's certainly not a labour, all I did was copy and paste so couldn't be easier :

One post states that the FHOG boost (_nobody can deny that this isn't "artificial"_) combined with the low interest rates is _flowing through to the more expensive sectors_.

The other post declares that _the FHOG is negligible and is insignificant in the big picture._

Therefore..... your question of *"How exactly is the R/E market being artificially propped up in reality?"* has been answered in the first statement and contradicted in the latter.

Q.E.D.

The Government clearly wouldn't have introduced the additional stimulus if they thought that the lowering of interest rates on their own would solve the housing problems..... but, the combination of a cash boost _in tandem_ with the ongoing lowering of interest rates has certainly had the desired effect and upped activity in the FHB part of town and can most definately be considered an artificial propping, especially if you believe it to be flowing through to the more expensive market sectors.

I don't believe the problems in the economy have yet been resolved and I know you are realistic enough (and the Government) to recognise the current economic downside risks... so with interest rates alone not being enough to stimulate, how can all the current activity not be considered artificial.

It can't really be explained by the pent up demand argument either, example: look at domain.com, search Parra and surrounds with a max price of $450K, update to only show uncontracted, sort by price, over 400 listings.... have a tick through the first few pages showing the lowest rungs of the ladder in an extremely well serviced satellite. There is such a glut of cheap unsold/uncontracted property that to argue demand is outstripping supply is unrealistic.



Anybody read this yesterday???

*30,000 great Aussie dreams 'to die'*

MORE THAN 30,000 homes will be repossessed or foreclosed by the end of the year, a report says.

http://www.news.com.au/business/money/story/0,28323,25235255-5013951,00.html


Fujitsu Consulting apparently but nothing on their website yet... so don't shoot the messenger


----------



## Taltan (25 March 2009)

Glen48 said:


> So he gets back $26,000. And because he's paid $44,000 in interest over that period he's actually in the red for $18,000 on the deal. Which means he has less money than when he started, and because he's not a first home-buyer anymore he doesn't qualify for the government handout the next time he buys.
> Money morning.




didn't Mr Average pay a 45k deposit and 44k interest before he got back his 26k so he's (89-26) $63,000 in the red


----------



## Beej (26 March 2009)

singlefished said:


> Sorry Beej, but the 2 statements posted are actually quite contradictory and far from similar... and it's certainly not a labour, all I did was copy and paste so couldn't be easier :
> 
> ....
> 
> Q.E.D.




*sigh*. Not QED at all. In the first post I sated that the ACTIVITY in the FHB market segment is beginning to show signs of flowing through to upper segments:. Here's what you actually quoted me as saying:



			
				Beej said:
			
		

> And now IMO the early indicators are showing that not only is the FHB *activity* continuing, the impact of that is flowing through the rest of the market. Higher priced properties are starting to sell, prices are rising in the low end and many mid range suburbs, as indicated by the rising median price in the weekly auction results.




It doesn't matter whether that's primarily, partly, or not at all due to the FHB grant boost. Get it? You are now trying to twist those words to mean:



singlefished said:


> One post states that the FHOG boost (_nobody can deny that this isn't "artificial"_) combined with the low interest rates is _flowing through to the more expensive sectors_.




So please given that you are quoting me verbatim at least try and comprehend what the meaning of the words i actually wrote are!

Now the second part, you are now twisting my statement to mean:



singlefished said:


> The other post declares that _the FHOG is negligible and is insignificant in the big picture._




When in fact, as originally quoted by you, what I wrote pertaining to the FHBG boost was:



			
				Beej said:
			
		

> It provides an incentive, but only a small one IMO in the grand scheme of things.




I think there is a big difference between suggesting the the grant boost is perhaps only a small incentive relative to the other major factors (pent up demand, stable prices and low interest rates), and your twisting of that statement to now mean that I said the impact of the grant is "negligible and insignificant"



> Therefore..... your question of *"How exactly is the R/E market being artificially propped up in reality?"* has been answered in the first statement and contradicted in the latter.




I think this question still stands - the grants are having an impact but it is my contention that the fundamental factors are the primary drivers right now: demand, low interest rates, stable/fallen prices.  Rising unemployment, low consumer confidence etc are the factors that counter these fundamentals, so I think the end result will still be only small changes in median prices on lower sales volumes until we see economic recovery at which time watch out! (2011 perhaps?).

Beej


----------



## kincella (26 March 2009)

*Some suburbs that have risen almost 50% last year*

oh dear, its not all doom and gloom, well not for every body....

hehehehehehe
..........................................
They included the exclusive Sydney harbourside suburb of McMahons Point, where house prices jumped 47.4per cent to a median price of $1.675million in the 12-month period. 

Greenwich had a similar 49.8 per cent rise in unit prices to $490,000, giving the north shore suburb the distinction of having Australia's largest price increase. 

http://www.theaustralian.news.com.au/business/story/0,28124,25242049-25658,00.html


----------



## satanoperca (26 March 2009)

Hi Kincella,

Thanks for the link to the Australian article but I am a little confused with the reporting.

I apologise for the formating.

"Exclusive Portsea topped the housing list in Victoria, recording a 38.6per cent increase to record a median price of $1.455million." The Australian

```
RPData on Portsea. 
Portsea    Mornington    Peninsula LGA   
 period     % Change     % Change  
 
 2009     -53.6%          -7.3%   
 2008      50.5%           10.7%  
 2007      -15.5%          6.9%   
 2006      20.4%           8.7%  
 2005      1.5%            1.6%
```
-

So yes it went up last year and come down the same amount this year. Once again only half reporting by a reporter.

"Greenwich had a similar 49.8 per cent rise in unit prices to $490,000, giving the north shore suburb the distinction of having Australia's largest price increase. " The Australian

```
RpData
               Greenwich    Lane Cove LGA  
  period       % Change  % Change  
  2009          0.0%          7.8%  
  2008          30.1%        9.7% 
  2007         -22.9%       -0.6% 
  2006         -6.0%          4.0%  
  2005          3.4%          3.2%
```
-

Hardly something to crow about if you are a long term investor, previous two years showing negative growth for Greenwich. Housing in Greenwich down -13.6% for 2009. Looks more like over a 5 year period, nothing more than house pricing increasing in line with inflation + 1-2%.

"The Snowy Mountains township of Jindabyne recorded the state's second-biggest jump in house values, up 37.9 per cent to a median price of $482,000. " The Australian

```
RPData 
recent median sale prices
                             Jindabyne          Snowy River LGA   
 period                 median price        median price   
 January 2009        $ 475,000           $ 297,500   
 December 2008     $ 475,000           $ 297,500   
 November 2008     $ 475,000           $ 475,000   
 October 2008       $ 490,000           $ 187,500   
 September 2008    $ 552,500           $ 452,000   
 August 2008         $ 370,000           $ 188,500   
 July 2008             $ 510,000           $ 126,000   
 June 2008            $ 510,000          $  127,500  
 May 2008            $ 510,000           $ 290,000  
 April 2008            $ 380,000           $ 205,000   
 March 2008           $ 579,000          $ 345,000   
 February 2008        $ 579,000         $ 452,000
```
-

Looks like the median price has been falling if anything. Nothing stella there.

While it is interesting an article trying to show incredible house growth, it would also be interesting seeing the worst performing suburbs in Australia for a more balanced view.

Only time will tell how what trend the housing market is currently in - to early to predict. It would seem with the benefits of FHBG, low interest rates & low unemployment, overall the housing market is holding ground or showing slight falls on average. 

I wonder how the market will react if any one of the following changes :
1) FHBG is removed
2) interest rates more up again, low interest rates are great for mortgage holders, crap if you are retired, yes retirees deserve a break to.
3) Unemployment rises to around 8%. Already showing signs of steady increase.

Cheers

Benjamin


----------



## kincella (26 March 2009)

I expect the median to go down in the suburbs where all the fhb are...the bottom pickers...suburbs I watch, they bought everything available at the bottom of the market...none of the usual medium houses sold nor the high end

the article I posted was talking of the higher priced suburbs...


----------



## satanoperca (26 March 2009)

What I was showing was what was reported from the RPdata source in the Australian did not correlate with RPdata. The stats did not match up.

It is this type of reporting that neither helps the bulls or the bears in their debates on housing issues. 

For one of the areas that I study, RPdata shows a 30% increase for houses in Port Melbourne. This is far from reality, the bottom end $400-600K has shown small decreases of approx 5%, $600K-1M approx 5-15%, over the $1M prices have dropped significantly but cannot provide any numbers as this is not my area.

Cheers


----------



## singlefished (27 March 2009)

Beej, please go back to post #4382 , read ALL of what was originally quoted without the ensuing whittling effect of the last few posts or my one line summarising of your statements (which you refer to as twisting...?)

The contradiction....



			
				Beej said:
			
		

> *It is now undeniable that the FHB grant boost, plus the low interest rates,* plus probably the sentiment that prices have been flat to falling for some time now (especially in western Sydney), *have resulted in large numbers of FHBs who have been sitting on the sidelines coming into the market with gusto.*






			
				Beej said:
			
		

> *It provides an incentive, but only a small one IMO* in the grand scheme of things.





I fail to see how you can argue that the additional incentive has such a small part to play in the grand scheme of things when it is *UNDENIABLY* contributing _with gusto_ to the most active sector of the property market???


Would the increased activity have been apparent without the FHB boost, we shall never know.

Will the activity increase or decrease if the additional stimulus is removed? We may well find out in the 6 months following the budget.

I'd be inclined to agree with your sentiments (basically fundamentals supporting the market) if FHB activity remains high if stimulus is removed.

Are you prepared to accept that the fundamentals are not supporting the market if FHB activity declines under the same stimulus removal scenario?

I have a feeling the Government will maintain the boost for new residential construction ($21K) and remove it from the established property market (back down to $7K) and if this plays out (or is removed completely) it will shed some light for all to see....


----------



## kincella (27 March 2009)

I believe the low interest rates are the biggest incentive for the fhb...and there are kids out there with savings/deposits who would have bought anyway...but now sooner...due to the low interest rates...

oh and some of us can relate to this book just released...
making millions the fun way...

I will not buy the book, since like some of my friends here, we have been there and doing that....

I note she states 10 mill gross and 4 mill equity...so leveraged to 60%....
for those interested..here is the ACA snippet

http://aca.ninemsn.com.au/article.aspx?id=793902
and here's the authors web site

http://www.sallycouper.com.au/Making-Millions-the-Fun-Way.html


----------



## aleckara (27 March 2009)

singlefished said:


> Would the increased activity have been apparent without the FHB boost, we shall never know.
> 
> Will the activity increase or decrease if the additional stimulus is removed? We may well find out in the 6 months following the budget.
> 
> ...




That depends. A lot of first home buyers are now spooked into buying in thinking that the price can't go down because the government will give out grants. A lot of them were probably willing to wait before as they wouldn't get into it just before a downturn (and it would be stupid to).

Not all FHB's are stupid. They see the government propping up house prices and get scared thinking if I dont' get in now all the other FHB's will get the properties that I can afford. One man can't fight the government. They were hoping prices will fall, but now they realise they can't fight the government. btw before the FHB grant Western Sydney was doing poorly, now it is doing very well with the FHB grant.

Even if the FHB grant is removed the supply of good properties has been snapped up in the short term. I expect some momentum of panic buyers after the grant is pulled. Although I don't think Rudd will get rid of it - it has been too successful. When you give a vulnerable group in society a bone they will take it even if it is a very high risk proposition since it is better than not having a home at all. A big risk is better than no possibility at all. A person with means wouldn't be tempted as much by this which is what makes it sadder.


----------



## Beej (27 March 2009)

singlefished said:


> Are you prepared to accept that the fundamentals are not supporting the market if FHB activity declines under the same stimulus removal scenario?




Yes.

My one caveat is that I do expect FHB to slow down in the second half of the year regardless as the employment situation worsens etc. So the current FHB proportion is 25% plus. If it remains above 20% then I would argue the fundamentals were still driving a high level activity. If that rate drops back to < 20% - especially if back to 15% or less (as it did during the first half of last year when interest rates peaked etc), then I would say I was wrong and the main driver currently was likely the FHOG boost. So let's see what pans out! 

PS: I agree with your speculation that the government will probably maintain the new home boost, but remove it for existing dwellings.

Cheers,

Beej


----------



## kincella (27 March 2009)

lets look at it from another angle....almost no tradies on this site...too busy I guess...
but if keeping part of the population in work and providing jobs will help our economy  than why not ???
tradies and the building industry have been hit hard...those people need jobs too...and they spend just like everyone else....so some where along the chain your job may depend on that industry....whether you are in IT, retail, tourism etc
are any of you just as unhappy with the govt handing out millions of dollars to the car industry ??? been bailing out that industry forever....and why ??? to keep jobs in OZ...regardless if the manufacturer is making a car no one wants or needs...big gas guzzling things...instead of efficient cars....

I believe the govt should provide the grant for new homes only....but the rest of the fhb's might whinge


----------



## gfresh (27 March 2009)

Beej said:


> If that rate drops back to < 20% - especially if back to 15% or less (as it did during the first half of last year when interest rates peaked etc), then I would say I was wrong and the main driver currently was likely the FHOG boost. So let's see what pans out!




I think it's pretty obvious what the situation will be in the FHB segment of the market... and it will be like a tap being turned off! This segment I would think would then remain very subdued for at least 12 months, way below 20%. 

FHB who would have bought anywhere in the next 2 years, are now structuring their whole plans around buying before the extra boost ends.. so I don't see where any more are going to come from. There are only a few cashed up whackos like myself that explicitly waiting until *after* the grant ends to jump in. 

Have to love the ACA stories, maybe they should put up a few who leveraged to the hilt, borrowed into the sharemarket, and lost their life savings.. oh wait, that's a bit negative isn't it. Easy to make money in the last 7 years in property, no doubt about it, even a monkey could do it without any real skills whatsoever. Buy and wait for the value to go up, go to a bank that will throw you more money like confetti every 12 months because everybody else has been doing the same around you, and away you go..how clever.


----------



## singlefished (27 March 2009)

Beej said:


> Yes.
> 
> My one caveat is that I do expect FHB to slow down in the second half of the year regardless as the employment situation worsens etc. So the current FHB proportion is 25% plus. If it remains above 20% then I would argue the fundamentals were still driving a high level activity. If that rate drops back to < 20% - especially if back to 15% or less (as it did during the first half of last year when interest rates peaked etc), then I would say I was wrong and the main driver currently was likely the FHOG boost. So let's see what pans out!
> 
> ...




We'll have to be careful though, if the the @rse really falls out of the rest of the market and FHB activitity declines but at a lesser rate, %ages of FHB activity could be seen to have risen.

Cross that bridge later


----------



## kincella (27 March 2009)

gfresh...hindsight is a wonderful thing...apparently some monkeys did not make a profit...assuming those foreclosures mentioned this week...in the boom times st george had average of 80 a month....now in the bad times..its jumped 50%


----------



## singlefished (27 March 2009)

gfresh said:


> FHB who would have bought anywhere in the next 2 years, are now structuring their whole plans around buying before the extra boost ends.. so I don't see where any more are going to come from. There are only a few cashed up whackos like myself that explicitly waiting until *after* the grant ends to jump in.




And me.... but with almost 25 years of savings and 12+ years of living rent, expense and at times TAX free (throughout the Middle East & Asian regions at employers cost) the sector of market we are looking at is seldom touched by FHB's. I'm just waiting for the global economic environment to show some evidence of sustainable improvement before purchase though.


----------



## Glen48 (27 March 2009)

ABC last night claims FHO scheme has helped 30K purchase their own home and are they are now set for life and part of the dream waiting for the price to double by 2019. I see on ACA some 50 yr old woman has 60 homes .. well done.
Now the recession is over according to the experts all is rosy.


----------



## MrBurns (27 March 2009)

Glen48 said:


> I see on ACA some 50 yr old woman has 60 homes .. well done.




Married that many times ? WOW !


----------



## Uncle Festivus (27 March 2009)

ABC Radio PM program - 

http://www.abc.net.au/pm/content/2008/s2527313.htm



> MARK COLVIN: The Reserve Bank's latest report card on Australia's financial system shows that the share of bad loans on the books of the banks more than doubled last year, and bad loans to business more than tripled.
> 
> The number of Australians unable to pay their mortgages also soared. At least 20,000 households are now 90 days or more behind on their loans; an increase of about one third in the space a year.
> 
> .........




http://www.abc.net.au/pm/content/2008/s2527312.htm



> MARK COLVIN: The Reserve Bank has warned home buyers about the dangers of too much debt.
> 
> The head of the Reserve Bank's Economic Analysis Department says because of low house prices and interest rates, buyers need to consider whether they'd be able to continue paying their loans when rates rise.
> 
> ...


----------



## gfresh (27 March 2009)

How is this? rates are at record lows? unemployment is only just picking up off it's very lows? first home buyers are still buying?

couldn't have anything to do with people taking on more than they can really afford would it? surely..


----------



## MrBurns (27 March 2009)

Seems everyone knew that except Rudd and Swan, I mean they wouldnt deliberately suck young preople into a festering property bubble would they ? just to make themselves look good ?, like sending youg people to the front line as canon fodder ?, no surely not.


----------



## robots (27 March 2009)

Bill M said:


> hello robots, i was watching the today tonight program this evening and I saw a guy in melbourne hanging off the back of a truck whilst he was riding his pushie along, trying to get a free ride he was. unfortunately he fell off in front of the news crew and i am concerned, was that you? are you ok?
> 
> let us know if you are ok.
> 
> ...




hello,

apologies for the poor posting performance this week, have been an avid reader though

wasnt me Bill M (silly free-loader), i am ok and appreciate the concern, 

have been down at parents place in Mt Martha and never take passwords with me so havent been able to log on

back home now in St Kilda, man we got the cars burning it up around Albert Park, AFL again at the G so all things good as in St Kilda BillM (property wise as well)

welcome back robots

thankyou
robots


----------



## Glen48 (27 March 2009)

Mr.B 
If the young ones had a choice between FHO and the front line... the front line would be a better choice at least you can get a DSHL... if you survive I think Rudd is more worried about being a 1 termer than any thing else.House prices in USA went up:
http://patrick.net/housing/contrib/existing_house_sales.html


----------



## kincella (27 March 2009)

wondered where you were Robots...missed your daily pieces....

are they hornets out there buzzing round right now ????
noisy critters...bad enough the squeals from the cars all day
but a perfect autumn day in Melb...as usual

now about the interest rates....I will probably load up a bit more...get a few jobs done around an old house...needs a new roof...some outdoor entertaining area...
seems like a good idea...with even lower rates on the horizen...more sense to do it at low rates then at high rates....
apparently others are using the low rates to pay off debts....smart cookies...most of them
cheers
http://news.theage.com.au/breaking-...g-low-rates-to-repay-loans-20090327-9dx1.html


----------



## nunthewiser (27 March 2009)

kincella said:


> seems like a good idea...with even lower rates on the horizen...more sense to do it at low rates then at high rates....
> apparently others are using the low rates to pay off debts....smart cookies...most of them
> cheers
> http://news.theage.com.au/breaking-...g-low-rates-to-repay-loans-20090327-9dx1.html





LOL and SOME are borrowing even more money and gettin further into debt because of the low rates ..........

blessem 





sunshine and lollipops


----------



## robots (27 March 2009)

hello,

gee i thought it was tuff to get a loan these days but plenty people getting them, didnt CBA want 10% in "genuine" savings

oh well have a bob each way, another great week brothers

how we looking, still 7x average income to average price? oh well

the internet back working in the UK yet

thankyou
robots


----------



## Uncle Festivus (27 March 2009)

Glen48 said:


> Mr.B
> If the young ones had a choice between FHO and the front line... the front line would be a better choice at least you can get a DSHL... if you survive I think Rudd is more worried about being a 1 termer than any thing else.House prices in USA went up:
> http://patrick.net/housing/contrib/existing_house_sales.html




House _sales_ went up - prices still going down?


----------



## kotim (27 March 2009)

on he 27/3/09 there was an article in the Age newspaper in relation to the RBA saying that there are 20 thousand plus homes at least 3 months behind on their mortgage.

Does anyone have any info  according to past history on what sort of  implication that number has, or can direct me to charts etc of relative interest.


thanks


----------



## Bill M (28 March 2009)

robots said:


> back home now in St Kilda, man we got the cars burning it up around Albert Park, AFL again at the G so all things good as in St Kilda BillM (property wise as well)
> 
> thankyou
> robots




Good to see you back mate, things still hot around here. Now they are talking about crowd control at auctions and open for inspections, check this out.
------

CROWD control and impromptu silent auctions are becoming common with properties up to $500,000. 

With so much demand in the $350,000 to $500,000 range several agents are recommending auction campaigns rather than private treaty when it comes to selling. 

*People are realising too they are paying the same in rent as they would to buy so they figure they might as well be paying off their own home,’’ he said.* 

FULL STORY HERE


----------



## robots (28 March 2009)

hello,

melbourne auction results:

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

a HUGE 77%, this just fantastic, amazing

thanks Enzo for putting up the results top effort brother

a another great day across Australia, the sun shining bright where i am and hope it is for others

might buy 2 latte's and a serve of bacon & eggs in the morning

well done

thankyou
robots


----------



## kincella (28 March 2009)

good on you Robots...this really is one of the better user friendly sites....with some friendly users too...
yes good results...no fires, floods...gorgeous autumn days in lovely old Melb....and the GP humming in the background....
and a 20 mill jackpot on tatts...just bought a ticket...just in case I might be lucky...
cheers:sheep::sheep::sheep:
ps I like the faces on these skipping sheep


----------



## Beej (28 March 2009)

Sydney auction clearance rate was 66% today; 187 sales / 283, median sale price $683.5k. A few big $$$ sales in there as well ($4M Mosman, $3.9M Bronte - haven't seen many like that for a while).

http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Cheers,

Beej


----------



## IFocus (29 March 2009)

robots said:


> hello,
> 
> melbourne auction results:
> 
> ...




This is good advice Robots might wander down town Mandurah and do just that have a good weekend


----------



## kincella (29 March 2009)

Ifocus...forgotten now...but is that anywhere near Port Geographe ? Axiom properties had a big development with marinas...down there
Bacon and eggs is on the cards for me too today...might be a bit late for it at the kiosk on the beach...otherwise a nice feed in Toorak...
Krakatora in toorak rd, sth yarra used to do it for about $4, Funkies in toorak its about 10, and the italian place about 15....
or Como...its very dog friendly over there too...and just around the corner...
cheers


----------



## pilots (29 March 2009)

IFocus said:


> This is good advice Robots might wander down town Mandurah and do just that have a good weekend




You think Mandurah is bad, go to Busselton and Dunsborough, we looked at some houses last week, one sales rep told us he had 53 houses on the market that the owners would not have a for sale sign out the front of the house.
I think the poo poo is about to hit the fan in the west soon when it comes to house prices.


----------



## nunthewiser (29 March 2009)

pilots said:


> You think Mandurah is bad, go to Busselton and Dunsborough, we looked at some houses last week, one sales rep told us he had 53 houses on the market that the owners would not have a for sale sign out the front of the house.
> I think the poo poo is about to hit the fan in the west soon when it comes to house prices.




GERALDTON WA......

yesterday auction with reserves at 90k on blocks selling for 220 a year ago .utakarra

4th april .. auction with reserves at 70k for blocks selling at 120-180k a year ago .cape burney

april .auction with reserves at 70k for blocks selling 140-220k a year ago .. acacia ridge 

think theres one more "bargain basement "auction happening in april but cant recall from top of head 

lol bet them ppl that bought house and land packages in these estates a year or 2 back not feeling so great 

but hang on i read here that we still in a boom ???


----------



## gfresh (29 March 2009)

I thought every property purchase was the instant path to riches? Shows as with any form of investment, being selective is still very important.. you can still lose on property. 

http://www.smh.com.au/national/flat-news-for-resale-of-firsttime-apartments-20090327-9e5g.html



> PEOPLE who bought and sold units in new apartment projects in Parramatta, Waitara, Liverpool and Meadowbank are among the biggest losers of the property downturn, a report on the resale value of Sydney properties shows.
> 
> *In a survey of 1120 houses and units that were sold and resold between January 2000 and the end of last year, 28 per cent sold for less the second time around.*
> 
> ...


----------



## pilots (29 March 2009)

nunthewiser said:


> GERALDTON WA......
> 
> yesterday auction with reserves at 90k on blocks selling for 220 a year ago .utakarra
> 
> ...




Just drove down West cast road in Perth, a year ago you could not find a block or a house for sale over looking the sea, now you can have any thing you want, it looks to me that it is the VERY rich that is going down fast.


----------



## Jikx (29 March 2009)

pilots said:


> Just drove down West cast road in Perth, a year ago you could not find a block or a house for sale over looking the sea, now you can have any thing you want, it looks to me that it is the VERY rich that is going down fast.




Well typically it's the holiday house that goes first during a recession, then the investment, and finally the family home


----------



## robots (29 March 2009)

gfresh said:


> I thought every property purchase was the instant path to riches? Shows as with any form of investment, being selective is still very important.. you can still lose on property.
> 
> http://www.smh.com.au/national/flat-news-for-resale-of-firsttime-apartments-20090327-9e5g.html




hello,

yes that has been the case for a while now g, only look back to 03-04 in Melbourne when southbank and docklands hit the fan over resale price, and the whole "off the plan" issue arose 

with Uk just going through this very same issue,  

yet people buying old stock ie. 70 or 80's joints are sitting on very tidy $

going forward if "investors" dont start buying "off the plan" again those holding existing stock will be sitting pretty

thankyou
robots


----------



## Fleeta (29 March 2009)

robots said:


> hello,
> 
> yes that has been the case for a while now g, only look back to 03-04 in Melbourne when southbank and docklands hit the fan over resale price, and the whole "off the plan" issue arose
> 
> ...




Robots, another beautiful day in Melbourne today, no doubt you were enjoying a coffee in St.Kilda somewhere - what do you think about 'upsizing' in the current market, i.e selling $400k house in outer suburb and buying $800k house in inner suburb? Is it better to do this when there is more supply in the market??


----------



## robots (29 March 2009)

hello,

yes great move as long as the numbers stack up financially for people,

as gfresh has highlighted it is very important to choose a good property, 

this cover's numerous issue's such as:

location, style, architecture, size, 

selling and then buying needs to be undertaken in a matter of months to "keep" things in the same market as such

friend of mine went from St Kilda (400k prop) to sth Melb (800k prop) but rented for a year in between at which point some reasonable rises occurred lifting the purchase price for sth melb place

i havent seen the numbers, but i know around st kilda supply is very low at the moment, the press is also reporting multiple bidding is starting to appear at many auctions 

hope this is of assistance and more than happy to answer any further questions people may have 

thankyou very much
robots


----------



## Fleeta (29 March 2009)

Thanks Robots, keep up the good work and enjoy the last week of daylight savings. Great to see the footy starting and a good year for the Saints coming up...


----------



## robots (29 March 2009)

hello,

yes will do, 

since Thursday everybody has already forgotten about the GFC, doom & gloom, G20, printing presses etc etc

life is still rolling on in all its glory Fleeta

thankyou
robots


----------



## IFocus (29 March 2009)

kincella said:


> Ifocus...*forgotten now...but is that anywhere near Port Geographe ? Axiom properties had a big development with marinas...down there*
> Bacon and eggs is on the cards for me too today...might be a bit late for it at the kiosk on the beach...otherwise a nice feed in Toorak...
> Krakatora in toorak rd, sth yarra used to do it for about $4, Funkies in toorak its about 10, and the italian place about 15....
> or Como...its very dog friendly over there too...and just around the corner...
> cheers




Geograhe is about 2 hrs further south (Busselton), a marina development down there has a massive problem with sea weed at the entrance gassing off not sure who the developers are.

Mandurah has bigger and more extensive canal developments plus units at a number of sites lots of multi mil $ weekender / holiday homes not lived in full time. 

Wife's cousins brought canal block for $250K on sold later for $1 mil plus others brought canal blocks built units 3 levels one per level sold two and paid for the top level etc


----------



## IFocus (29 March 2009)

nunthewiser said:


> GERALDTON WA......
> 
> yesterday auction with reserves at 90k on blocks selling for 220 a year ago .utakarra
> 
> ...




Saw that Nun boom / bust central up there currently also know people who brought into Hopetown before BHP shut Ravey down. 

It will be interesting to see Perths Listing levels for March, rents still seem strong and the FHB's are buying up stock in Mandurah.

The economy has held up much better than my wildest dreams long may it continue, I still think we are in for a hit as the numbers keep trending down.


----------



## kincella (30 March 2009)

*banks slashing deposit rates to 1.5% or 2%*

in anticipation of the big rate cut due next week...

***so much for holding cash....then you have to pay tax on the miserable earnings......pity the poor pensioner trying to live on his interest......

extract.........

THE MAJOR banks are aggressively repricing their deposit books ahead of next week's expected rate cut by the Reserve Bank.

With the political pressure mounting on all banks to pass on the full benefit of further easings of monetary policy, two of the major banks have taken drastic steps to protect their funding margins by slashing deposit rates. 

From this morning, National Australia Bank will slash the rate it pays on three month fixed term deposits from 4.2 per cent to 2.1 per cent. 

The NAB move comes after more aggressive repricing by Commonwealth Bank in recent weeks in which it slashed its three month fixed term deposit rate from 4.2 per cent to 1.5 per cent. 


http://www.news.com.au/heraldsun/story/0,21985,25259667-664,00.html


----------



## Beej (30 March 2009)

New home sales up again in February:

http://business.smh.com.au/business/low-rates-grants-spur-new-home-sales-20090330-9fzc.html



> *Low rates, grants spur new home sales*
> Chris Zappone (SMH)
> March 30, 2009 - 9:35AM
> 
> ...




Cheers,

Beej


----------



## gfresh (30 March 2009)

T minus 3 months.. 

Shows the government needs to double the grant for new homes, and remove the grant for existing homes. People want a discount, they have to buy new place, with the accompanying boost to construction employment, and related industries.


----------



## kincella (30 March 2009)

but most new homes are out in the suburbs..and the kids dont want to live out there....houses already 200k cheaper out there...so they dont need 21k plus all the other benefits...saw one advert last night ..take off 40,000 for fhb

I would suggest a flat 5000 gift to fhb.....but only if they top it up with cash for the rest of the deposit....no difference between now or old homes...make it fair for everyone....plus a 6 month history or regular savings... so they dont get a temp loan to fib their way
ps I disagree with it anyway...was only supposed to be a temp thing for the gst


----------



## gfresh (30 March 2009)

Well they have to make it attractive enough so they *do* want to live there  I know they are not ideal in terms of facilities or transport though, but it doesn't help there is no real reason to live in a new home if that is what the Government is trying to do.  

Not sure in Melbourne these days, but I know in QLD most home+land packages are low $400's. An established house within 10km from the city can be found for low 400's. There isn't too much incentive to go for the housing-estate house, especially when you are being subsidised to buy an established property.


----------



## kincella (30 March 2009)

gfresh...
qld is like another world....400k's and 10k from the city ??....not in Melb...you need to go out 60klm's to find a cheaper established house in the 400k range....and the new ones are under 300k...but its further out....
but then again only a half hour by the freeways to the city....try narre warren in the south....or places north...around 250k's for an old home...was an hours drive, now with freeways its half the time....
I mean how cheap is that...its like a tree change half an hour from the city....and everyone using pub transport...trains...they are overloaded, and it will be fixed if we get a liberal govt back in

save 100k on mortgage and travel an hour each day round trip...
but 400k sounds a good deal for only 10k's out....


----------



## Uncle Festivus (30 March 2009)

Hmmmm...... interest rates at 1.5% you say, new house construction boom....surely make a bit of a dint in the 'chronic shortage' argument? A glut of homes, immigration cut's, and a recession.....prices will go through the roof for sure 

Beer & skittles through rose tinted glasses....perhaps too much beer?

I did my own visual survey of the state of the recession - I walked down George St Sydney today. Usually shoulder to shoulder around the main dep stores, but today mostly tourists with camera's and plenty of room. And talked to a girl who was going for a job interview after getting put off with 1 weeks notice after 10 years service. She said there's just so much competion for every job going, hardly makes it worth while. The downturn is hurting badly, and we are not even officially in recession yet!


----------



## kincella (31 March 2009)

some of us have been bunkering down since Jun 07...why...history shows there is always a negative for the economy when there is an election looming...and we were looking at the big 3...ours the UK and the US

did my last spending in May 07.....then started putting the money away for all those rainy days on the horizen...
thank goodness I did...had some idea just how bad the new govt would screw things up....and sure enough rate rises to almost 10% within a year....unbelievable...
ps I had survived the 18% rates of the former labor govt....
so had some idea of what may be in store.....
so asset protection became a priority


----------



## Beej (31 March 2009)

kincella said:


> some of us have been bunkering down since Jun 07...why...history shows there is always a negative for the economy when there is an election looming...and we were looking at the big 3...ours the UK and the US
> 
> did my last spending in May 07.....then started putting the money away for all those rainy days on the horizen...
> thank goodness I did...had some idea just how bad the new govt would screw things up....and sure enough rate rises to almost 10% within a year....unbelievable...
> ...




Hi Kincella - good strategy. But re the political commentary, to be fair you know the rate rises mostly occurred under the previous governments watch and were pretty much their responsibility?? Or do you also "credit" the current government with "getting rates down" to 5%?? (which you would have to do if you are also going to "blame" them for 9/10% rates in the first 6 months of their first term!) 

Cheers,

Beej


----------



## moXJO (31 March 2009)

Beej said:


> Hi Kincella - good strategy. But re the political commentary, to be fair you know the rate rises mostly occurred under the previous governments watch and were pretty much their responsibility?? Or do you also "credit" the current government with "getting rates down" to 5%?? (which you would have to do if you are also going to "blame" them for 9/10% rates in the first 6 months of their first term!)
> 
> Cheers,
> 
> Beej




Or the conspiracy theory
Do you blame the RBA for pandering to labor, and raising rates during an election when they were not needed. Only to drop them and then brown nose Rudd’s spending polices. Hmmmm


----------



## kincella (31 March 2009)

just wondering with all this emphasis on the fhb's...where are all the sellers going to ??? what are they doing ??? surely not all heading out to live in a tent in the bush...
so I think those sellers will be upgrading to the next bigger house.....due purely to the low interest rates and lower prices...some will even get their dream home...you know the ones who settled for the little place out in the burbs for their first homes....
some of the stuff that comes out of the media everyday...seems just so one sided...so you should be asking what is on the other side of the equation...

lets see....those upgraders can probably afford a bit more now...due to the lower rates


----------



## kincella (31 March 2009)

beej, to be fair yes rates were rising under Howard...to slow the economy...but to go up by 3% within such a short term under labor...was wrong...they never waited to see how the economy was slowed by it all...
it appeared to be all hyper with labor.....focus on china and resources, but back in the real world things were already slowing down....
take the average mortgage holder at 250k...rates at 7% was an interest bill of 17500...at 10% it was 25,000 or another 700 pm plus to find....that was grossly unfair to all..
people like myself with a couple of properties...meant that rise was magnified...5 times... with no offsetting income or benefit to  balance against the rises..
like I was not earning a resources based hyper income that would have lessended the impact....
I know quite a few people who have lost a job purely from an interest rate perspective....and that was instigated before the GFC....they have found jobs since....but outside of their career paths


----------



## satanoperca (31 March 2009)

Kincella,

All the upgraders including myself that I know are not looking at upgrading at the moment but rather consolidating debt. No good upgrading if properties are falling, just increase potential losses.

The FHB is the only market alive it would seem at the moment.


----------



## Beej (31 March 2009)

kincella said:


> beej, to be fair yes rates were rising under Howard...to slow the economy...but to go up by 3% within such a short term under labor...was wrong...they never waited to see how the economy was slowed by it all...




Hi Kincella. mostly fair points, and I don't want to stay off topic for too long! However....

1) Let's not re-write history! Rates only went up three times after Labour got to power federally - 0.75% in total, vs 9 rates rises from the bottom under Howard - 2.25% in total. The bulk of the 3% rise that got us to 9/10% mortgage rates were under Howard, and the upward trend was driven by government fiscal policy response to economic circumstances under his watch. Here is a graph of RBA cash rates over time:







2) "They" are the RBA, not the government. The RBA is meant to be independent remember.... That's actually what annoyed me so much about much of Howards election rhetoric - statements like "rates will always be lower under a Liberal government". Anyone that knows anything about economics laughed at this assertion, and the current situation shows it for the complete lie that it was. It was just pandering to the ignorant masses....



satanoperca said:


> Kincella,
> 
> All the upgraders including myself that I know are not looking at upgrading at the moment but rather consolidating debt. No good upgrading if properties are falling, just increase potential losses.
> 
> The FHB is the only market alive it would seem at the moment.




I upgraded late last year (sold PPOR plus one IP), as did my sister/brother-in-law, plus I know several other people who see/saw this market as a fantastic upgrading opportunity. If you look at the Sydney and Melbourne auction results posted regularly here, you will see the median price and volume of properties sold at auction has risen significantly this year compared to last half of 2008. The numbers of $1M+ and even $2M+ sales have been steadily increasing all year. That is a pretty clear forward indicator to me that there is a lot of upgrading activity flowing through now, and this looks more like it is building momentum rather than losing it. Last weekends Sydney auction median price was the highest since mid last year at ~$685k. 

Based on the data so far this year, it looks like the optimum upgrading opportunity (ie, lowest change over cost, best availability of decent property and minimal buyer competition = maximum opportunity for price reduction/negotiation), was around Nov/Dec last year in Sydney. Of course this year may well provide similar conditions again, but right now things are a little "warmer" than last year in nearly all price segments.

Cheers,

Beej


----------



## ryang57 (31 March 2009)

haha why dont we all abstain from common sense

now this could have been determined in 2007 and years before hand even

When you get newpaper articles - housing unaffordable

that means it is "u-n-a-f-f-o-r-d-a-b-l-e"

that means people do not buy - the only thing which increases prices is another buyer 

that means there is a widening gap between incomes and asset values, which matters significantly, because most of those incomes are going toward paying off the debt towards those assets.

EVERY TIME IN HISTORY THIS HAS EVER HAPPENED, HOUSE PRICES HAVE CRASHED - because this is a pattern that happens at the end of a boom cycle. 

Its basic common sense for anyone familiar with traae cycles.... some people seem to want to live in fantasy land and just deny basic common sense... good luck with that 

No matter the commodity. There are always winners and losers. People make money off of people losing money. Not everyone can make money on a commodity in the realms of speculative investment. Eventually it has to go down, and go down big if it has not for a while, to enable the winners. common sense. use your brain given to you. There is always a downside, to correct the over speculation, and house have been overspeculated for decades.


----------



## kincella (31 March 2009)

oh dear...a gung ho new comer who looks intent on stirring things up in here....
insulting people will get you no where
but good luck anyway


----------



## Beej (31 March 2009)

Again, not sure whether to post this here or in the prices to fall thread:



> *Your house is safe, RBA says*
> Chris Zappone
> March 31, 2009 - 11:29AM, {_SMH 31st Mar 09_}
> 
> ...




http://business.smh.com.au/business/your-house-is-safe-rba-says-20090331-9hji.html

So the RBA is not predicting any boom or anything in the short term, but as many argue here, they are suggesting that any great crash in house prices is very unlikely in Australia for the reasons stated, which mirror many of the arguments made on our ASF threads.

Also an interesting stat from the article - current mortgage arrears rate = 0.5% (ie 1 in 200 loans). Of those even only a small percentage will result in a default and mortgagee sale. This is a TINY rate compared to the US and the UK:



> Mr Battellino said that in spite of the slumping economy, the 90day arrears rate on housing loans is only 0.5% "which is broadly in line with its longrun average'' but well under countries like the US and Britain.




Cheers,

Beej


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## singlefished (31 March 2009)

kincella said:


> just wondering with all this emphasis on the fhb's...where are all the sellers going to ??? what are they doing ??? surely not all heading out to live in a tent in the bush...
> so I think those sellers will be upgrading to the next bigger house.....due purely to the low interest rates and lower prices...some will even get their dream home...you know the ones who settled for the little place out in the burbs for their first homes....
> some of the stuff that comes out of the media everyday...seems just so one sided...so you should be asking what is on the other side of the equation...
> 
> lets see....those upgraders can probably afford a bit more now...due to the lower rates




There's a good chance that a decent proportion of sales are investors dumping their IP's and won't be requiring to pull out the camping gear.

I don't think you'd be safe to assume that it's only upgraders selling into the current market.... and I'm pretty sure there's a lot of IP owners out there who could be facing unemployment who, unlike yourself, aren't quite as bullish as they used to be given the state of the economy.


----------



## satanoperca (31 March 2009)

Beej said:


> http://business.smh.com.au/business/your-house-is-safe-rba-says-20090331-9hji.html
> 
> So the RBA is not predicting any boom or anything in the short term, but as many argue here, they are suggesting that any great crash in house prices is very unlikely in Australia for the reasons stated, which mirror many of the arguments made on our ASF threads.
> 
> Also an interesting stat from the article - current mortgage arrears rate = 0.5% (ie 1 in 200 loans). Of those even only a small percentage will result in a default and mortgagee sale. This is a TINY rate compared to the US and the UK:




Interesting, how I read it is; yes we are better off than other countries for a number of reasons, but we are going to see housing prices fall, just not as much as other countries. It sort of like one having a cold and the other pnumonia, both are sick, just one sicker than the other.

Also, while default rates are low, they are on the increase which is surprising given the low interest rates and will increase if the prediction of unemployment rising to 8% this year becomes reality.


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## MR. (31 March 2009)

14/3/09


lioness said:


> Beej,
> 
> Yes, that's what happened. No pre-auction offers but 5 FHB's who were dead keen and turned up but all froze on the day(probably because it was bucketing down with rain!).
> 
> ...




Lioness,

How close have the offers been?


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## Glen48 (31 March 2009)

Spoke to a debt collector today (he was working for me) he told me no one has any money and they are having a hard time trying to collect money, things have turned for the worst in the last few months.
I guess if they repo any thing it is pointless sending it of to auction.


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## robots (31 March 2009)

hello,

good evening to you brothers, coming to you loud and clear from sunny Mt Martha 

check check: www.rpdata.com.au

wow, house prices to keep rising for years well and truly, units up 3.6% in Melbourne, houses up, great results across australia

fantastic, well done to all out there and the research from the likes of Beej, Big Bill M, King Kincella, Robots, Gfresh and other ASF punters appears to be a true indication

spot on crew, bricks and mortar, bricks and mortar, bricks and mortar

thankyou
robots


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## robots (31 March 2009)

hello,

coming to you loud and clear from sunny Mt Martha, I hope you can all hear me

wow, 12-18mths on from the sub-prime, 6mths on from gfc and the best hit RE took was -3% or so last year on the medians

i know i know its going to take another 12mths, 18mths, 24mths it always follows the stock exchange, always follows the stock exchange

internet back up and running in the UK yet?

yes we different alright, no guns, no crack, no stooges just good clean honest living, Paradise

thankyou
robots


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## Snakey (31 March 2009)

robots said:


> hello,
> 
> good evening to you brothers, coming to you loud and clear from sunny Mt Martha
> 
> ...




Its called a bulltrap... wake up and smell the roses


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## Beej (1 April 2009)

Snakey said:


> Its called a bulltrap... wake up and smell the roses




Oh dear - another thread irregular posting irrelevant stock market based analysis and trying to apply it to the residential housing market - which is a completely different beast as discussed over and over in this thread.... Eg, for a start, you can't live in your shares.....

Beej


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## moXJO (1 April 2009)

Beej said:


> Oh dear - another thread newbie posting irrelevant stock market based analysis and trying to apply it to the residential housing market - which is a completely different beast as discussed over and over in this thread.... Eg, for a start, you can't live in your shares.....
> 
> Beej




Its based more on emotion, not shares.
Tulips anyone?


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## Beej (1 April 2009)

moXJO said:


> Its based more on emotion, not shares.
> Tulips anyone?




Oh - you can live in Tulips can you???? 

Beej


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## moXJO (1 April 2009)

Beej said:


> Oh - you can live in Tulips can you????
> 
> Beej




Doesn't Bob Brown and all those lefties


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## kincella (1 April 2009)

hmmm....sounds like the 'manufactored crisis' that Obama was a fan of all these years....is snowballing....and engulfing all in its path.....

probably never seen so many scaredy cats...all huddled together, hiding behind their screens....joining in  the chorus, peddling manufactured stuff, and spreading it around......

meanwhile out in the real world...well life just goes on
:sheep::sheep::sheep::sheep::sheep:


----------



## moXJO (1 April 2009)

kincella said:


> hmmm....sounds like the 'manufactored crisis' that Obama was a fan of all these years....is snowballing....and engulfing all in its path.....
> 
> probably never seen so many scaredy cats...all huddled together, hiding behind their screens....joining in  the chorus, peddling manufactured stuff, and spreading it around......
> 
> meanwhile out in the real world...well life just goes on




You really love property huh:


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## Glen48 (1 April 2009)

Terry Mc Crann? tells us there is no need to reduce rates and the RBA should keep rates on hold...I think things are worst than the RBA realise and we should get another 1%... the G20 are praising Rudd for his ability to keep Oz strong and doing the right thing they must not know about the FHO however housing is still strong apart from being in a recession all is rosy.


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## TradeDaily (1 April 2009)

Maybe we should start a thread called "Milk prices to keep rising for years" and you guys can come on there and argue how obsurd such a notion is...


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## kincella (1 April 2009)

good one...but then you would have them all saying...cows have been around for 100's of years..so why should the milk cost more now...it should be the same as 100 years ago....you know 5 cents a pint or something...

or we could try it with a cars thread....do they question why cars cost more today ?


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## satanoperca (1 April 2009)

I think you will find cars are cheaper today in comparison to average wages than they were 25 years ago, largely due to mass production become highly efficient and an oversupply - just have to look to the US.

I don't think anyone is trying to argue that housing should costs the same as 25 years ago unless inflation is taken into account + 1% p.a for CG and then there might be some discussion.

Kincella, while you have debated the merits of housing as an investment long term extremely well, most people are not looking towards the long term but rather is housing something to be purchased now or in the next few years.

Like all asset classes, housing growth over the last decade has been pushed along by cheap and easy credit, economic growth and low unemployment. These three conditions are changing and it is hard to believe that housing is not going to reset itself like the other asset classes.

Would you please answer this : Would you suggest that I should buy a PPOR at the moment or wait until the true effects of the GFC are understood with reasons for your decision?
Renting at the moment is still cheaper for my family than owning again.
Both my wife and I work as professionals with one child and have no debt.

I will not regard your reply as financial advice, but an opinion.

Cheers


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## moXJO (1 April 2009)

I'm not too sure if you guys are saying there are no cycles in housing based on sentiment or what?

Or that the normal rules of snakey's chart don't apply, when they obviously  did at the height of the boom with buyers going mad. And subsequently, valuations are now a lot less then what they were in my local area and surrounds.

I think satano summed it up in his post. 


Cars don't apply, you can live in your car


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## TradeDaily (1 April 2009)

> think you will find cars are cheaper today in comparison to average wages than they were 25 years ago, largely due to mass production become highly efficient and an oversupply - just have to look to the US.




and housing is dearer today because of an undersupply, increased immigration and dealing with a finite resource (land)... 



> Or that the normal rules of snakey's chart don't apply, when they obviously did at the height of the boom with buyers going mad. And subsequently, valuations are now a lot less then what they were in my local area and surrounds.




they do apply however I would say they are a lot more 'cushioned' because of the factors mentioned in my comment above. If you are waiting for house prices to come down 50% then I think you are misguided...


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## kincella (1 April 2009)

satanoperca...
Its your decision...based on your situation, goals etc....and that of your partner that is important.
I think this year is probably the hardest to predict.....interest rates going down is a huge window IMO, but your job is more important atm....no one needs to rush into housing...plenty of time for things to be sorted out....and return to normal...but subdued...
I state on a regular basis..there will always be a bargain out there, or affordable housing...seek and ye shall find is my motto...
I would like to see anyone thats been wanting to buy a house...to keep saving that deposit....when you know your job is safe...then go looking...and probably spend at least one day every weekend for 3 months..going to inspections to guage first hand what is available....
I dont care about waiting for a huge drop, or picking the bottom of the market...you have a price range and you find the best in that range...and you do it to suit you...

I am in a  different position to the young ones...I am semi retired,  I have a passive income for support....I do not rely on a job...(might have to rethink that one and consider more work) I have backup plans...plan b and plan c...
but the similarity we do have is the need for housing and in my case a solid income for full retirement.
If you have read my other posts recently....I have another 30 odd years to go, and self supporting...so my choice of investment is paramount to my success.
:sheep: because I like sheep.....other times I would prefer a flying pig


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## robots (1 April 2009)

hello,

coming to you loud and clear from Mt Martha, hope everyone is well its a great environment down here on the Mornington Peninsula

how is Keen's bet with Rory going?

will probably just keep rolling over the term like many with their own predictions of DOOM, another 12mths, another 12mths, another 12 mths

oh well, great sunny day on the cards for tommorow

thankyou
robots


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## kincella (1 April 2009)

Hi there Robots....lovely 30 degrees here again today....
only some of them are going through this fabricated crisis....and even though I like cats....there sure are some 'scaredy cats' out there in the jungle.....
oh yes...a gain OZ wide last year of 3%...and yesterdays news of gains in Melb and Syd...which to me are the most important states, if ones looking for direction....on anything...
I just want those pesky interest rates to drop again next week..and then it will be a small party again for some of us
cheers
:sheep: just cause I like them too


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## satanoperca (1 April 2009)

Kincella,

Excellent reply - well balanced and thoughtful - thank-you.

I am studying and attending auctions most weekends. I will purchase again when things stabilize. I am not trying to pick the bottom of the market but rather trying to determine what is the right price to pay. My decision last year to sell my PPOR was largely due to family requirements, an apartment on the tenth floor is no good with a 3 year old that likes to climb and needs a backyard.

I believe that paying off your PPOR makes life easier later in life, giving you some security and is only part of an overall investment portfolio. 

Robots,

While it would seem that there is some disdain of Steven Keen, if you have read his papers, they do highlight that Australia has to much of a love affair with debt and this debt has largely fueled growth. While his predictions seem a little to extreme they are not totally unrealistic. It would seem that the slow down in the economy has just started, retail sales down for the first time in eight years, unemployment rising, major trading partners in recession, 18 years since the last major downturn. It is to early to make judgment whether he is right or wrong. If he is only half right 20% drop in property prices, a lot of people are going to be affected along with property prices and the rest of the economy.

Maybe a discussion on whether property prices increasing above inflation each year is beneficial for greater society might be appropriate. I for one would like to see a nation less obsessed with property and more focused on productivity and innovation. A clever country that also has great riches to dig up and sell to the rest of the world would be nice and remove any government that thinks giving borrowed money to the masses to spend is a good idea.

Cheers


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## numbercruncher (1 April 2009)

/Yawn ........


" House prices to keep rising for years "


Nope not a shred of evidence exists yet.


Happy debating folks


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## robots (1 April 2009)

satanoperca said:


> Kincella,
> 
> Excellent reply - well balanced and thoughtful - thank-you.
> 
> ...




hello,

in his opinion, he can cop it sweat just like me and everyone else, its all just discussion and debate,

hey Satanoperca, i think from memory you might be owing me a slab of ruskies and chicken parma after the stats out from Rpdata, houses up units up

this sunday, got room on the pack rack of the pushie, couple of ocky straps

i might fast from tonite and save up for the counter meal

thankyou
robots


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## kincella (2 April 2009)

just another 2 cents worth.... interest rates started to seriously rise almost every month from Jun 07.....and only started the drop back in Oct 08...
thats about 16 or more months of pain for a lot of people....including all the small businesses....who really are the bulk of the employers in this country...

using my own situation as just a small example.....I kept my 'cash for the rainy days' situation and added to it...that was before Jun 07...one needs to have some there no matter...just in case etc...
Well the incessant rate rises certainly ate into that cash supply...it seemed relentless, month after month.....and I did not see the stock crash coming as large as it did....so the 2nd back up plan also deteriorated very quickly....
so for a small business that had been modest with a good supply of cash for back up...has eventually succumbed to the conditons...mainly associated with the high interest rates....its coming up 2 years now....

after nearly 2 years, with no relief in sight....backup cash gone...then the only solution is to let staff go.....most owners do not do that lightly....
there would not be too many of the employees who would have cash backing to tie them over for very long.....so of course houses will be the first thing to go............
I would say we have held up very well so far, and for so long....
the low interest rates just might save us for now....but it will be a slow ride back to easy street


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## enigmatic (2 April 2009)

You may have noticed that more and more mining jobs have been disappearing, although not related to every job this does have an impact throughout the country.

For those that have been working away for a year or two and decided to buy a flash new home,boat,car mainly on debt. Well for the lucky few they will find a new job in the mining industry or City usually with lower pay.
those that don't find a new job will soon start selling there cars and boats and luxury goods which they bought on debt to start covering there huge loan repayments, which the dole itself may not even cover let alone living cost.

This will mean that Car and boat and all those other nice goodies that were purchased using debt will be dropped in price causing prices of these items to drop.

Now for those not working in the mining industry working on a medium paying job just scraping through day to day well soon everything they will own will be worth less and if no income is available it wont be long till they will be forced to sell and start renting. 

more and more people will be moving to the outer skirts for a cheaper home not worrying about having the city lifestyle and worrying more about afforablity.. down goes city house prices..

Or Maybe i have gone over the top and everything will be rosey, heck 1 year ago i thought my job was safer then some Bank vaults now it seems the security is down and the vault door is open just waiting for the goods to be taken away..


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## Uncertain Times (2 April 2009)

First post so please be gentle.

Prices will continue to rise as demand is currently exceeding supply. Especially for affordable housing which is where most FHB are spending there donation from the taxpayers of Australia.
However an article I read the other day discussed the baby boomers (BB) downsizing from potentially $600k-$1mill properties to townhouses or retirement villages. This is going to really gain momentum over the next few years as they have had super wiped out by the GEC/GFC and need to boost there retirement savings.
So we then should see demand for townhouses and retirement village rise and an increase in supply of houses wished to be sold by BB's.

The BB's are going to cause quite a few problems in Australia as they have done over time. What impact will that generation have on house prices at an already uncertain time. 2015-2025 should start to see that generation drop off in increasing numbers statistically. What effect will that have on the economy?


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## Glen48 (2 April 2009)

That's assuming they can sell and the BB can get their 600 1M  price tag there will be  lot who end up with not much after 40 50+ yrs of working.


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## gfresh (2 April 2009)

I agree with the downsizing, and think it's effects will be important. Get it right and it could be very profitable for investors. I agree townhouses will become attractive - low overheads, managed secured gated complex (often), small garden to take care of, likely to be newer with less maintenance costs. Beachside areas and those close to hospitals and facilities would be prime. 

There has been some talk of older generation being "scared off" the sharemarket forever, and any of their extra money going into property investment. However I don't think it would be so simple... 

Who is going to lend to retirees with no income, probably 20 years left to live (too short to pay off a bank loan, never mind if the old kipper drops off early)? Also their retirement investments/super payouts/capital base has been slashed, meaning tying up too much into property may not be advantageous. 

Which retirees are going to use property for income generation, as yields do not provide cash-flow positive properties except in the most rarest of situations presently? 

This crisis has really changed the dynamic of this generation and their spending capacity for years to come, I think anyhow.


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## kincella (2 April 2009)

Uncertain,
all those babes, immigrants and children will take up the slack...
and your years may be out a bit..they start dropping off at age 79 in  2025, not so much earlier...so there is another 14 years to wait
most of us are planning to be here another 25-30 years....
and I suggest the former fhb will upgrade to their dream homes...again taking the slack from the boomers selling to go for the tree change
biggest problems may be for the kids...cannot live at home in the city if the old's have gone into the hills
and there will be people like myself..not going out to the hills and trees, stay in the city


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## gfresh (2 April 2009)

But Kincella, what about the changes these days with Gen Y happy with smaller and lower-maintenance apartments or the like? closer to facilities, no garden to take care of, walk to the tram/train. Many are having less children, if not at all. 

The old 3/4br for 3-4 kids Aussie life is almost becoming a thing of the past. So a lot of those free-standing houses will be removed, sub-divided into townhouses, and large profits will be made. 

Not sure, just some thoughts anyhow. 

Demographics is always interesting


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## Beej (2 April 2009)

numbercruncher said:


> " House prices to keep rising for years "
> 
> 
> Nope not a shred of evidence exists yet.




Will there are actually quite a few "shreds of evidence" - see below (from http://www.rpdata.net.au/news/rp/RP...erty_Value_Indices_release_Mar_09_FINAL.pdf):



> Key Statistics
> latest monthly indices, property values are experiencing a recovery from the National dwelling values up 1 1% over first two months of ‘09
> modest 3 per cent falls seen in 2008. The findings confirmed that over the first two months of 2009, national dwelling values increased by 1.1 per cent with most of the capital gains coming in February (refer attached tables).
> 
> ...




So as observed and stated by many (including myself) on this thread weeks/months ago, prices have been stabalising and rising slowly in Sydney and Melbourne since the end of last year. And there are now quite a few "shreds of evidence" emerging, other than observation/anecdotal evidence (of which there is plenty) to prove this is the case. Re your question above, there is certainly a lot more evidence emerging to support stabalising and rising prices (in terms of national averages anyway for what they are worth) than evidence to support any great across the board national crash in prices aka US or UK etc.

Perhaps we should really stop some of the great generalisations here about the property market as a whole, and instead look at specific regional markets more closely? It seems a very different story is emerging for Darwin, Melbourne and Sydney + Adelaide vs Perth and Brisbane?

Year/Year figures to Feb now showing only small price declines for Sydney, Melbourne and Adelaide (which occurred mainly in the middle of last year - old news), big gains for Darwin and more significant falls for Perth and Brisbane:



> Sydney Melbourne Brisbane Adelaide Perth   Darwin  Canberra
> -2.17% -1.75%   -7.18%    -1.01% -7.15% 10.72% -3.69%




So if you live in Perth or Brisbane, then prices have fallen quite a bit over the past year, and are still falling. However if you live Darwin, they have risen strongly. If you live in Sydney or Melbourne, they fell slightly during the mid/end of 2008 (more in higher price ranges than lower), and have now stabalised in higher price ranges and are rising in lower ranges. The trends seem to be quite different in the different regions, so perhaps people watching the market should consider this when thinking about whether it's a good time to buy or sell?

Cheers,

Beej


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## kincella (2 April 2009)

Beej, on another site a fellow poster said...3 tradie mates...2 stopped doing quotes...too busy...the 3rd put on extra staff to cope...the legal faternity are pretty busy with conveyancing....
friend looking at delays of 10 weeks to receive offer from the banks...
meet with the bank and hand over infor.....wait 4 weeks before they can look at it...then the usual time to process and make the offer....

some kids with pre appovals and settlement dates are stressed out with the delays...hello..can they put on extra staff to cope ?


----------



## enigmatic (2 April 2009)

could someone explain how the medium price is calculated as it seems to me that it could only be based on the current markets opinion of housing prices thus if low end houses arent selling as much then upper end houses are then surely the upper market would pull the price up and this obviously is reversed if the lowwer end of the market is selling more houses? 

Just another question to get my head arround how SIGNIFICANT 1.0% rise is.


----------



## Beej (2 April 2009)

enigmatic said:


> could someone explain how the medium price is calculated as it seems to me that it could only be based on the current markets opinion of housing prices thus if low end houses arent selling as much then upper end houses are then surely the upper market would pull the price up and this obviously is reversed if the lowwer end of the market is selling more houses?
> 
> Just another question to get my head arround how SIGNIFICANT 1.0% rise is.




Median price = if you lined up all the houses sold over the sample time period, from cheapest to most expensive, the median price is the price of the house that sits right in the middle of the line. So yes if a lot of expensive houses vs fewer cheaper houses are sold, then the median can go up, and that does not necessarily mean individual house values rose. Conversely, if more cheaper houses are selling, then the median can go down, but again, that may not mean values of individual properties have fallen....

Over-all the median is a more stable statistic than the average (or mean). Ie it is effected less by a change in the mix of sales than the average price is.

For example, say 10 houses sold, 7 for $350k, 2 for $500k and 1 for $1.5M. The median price is $350k. The average price is $445k.

Now let's say 6 houses sold for $350k, 2 for $500k and 2 for $1.5M. The median is still $350k, the average is now $610k. Notice how the change in mix of sales left the median unchanged but the average went up?

Understanding the above, ie the median will be effected less by a change in mix of sales in a sample vs the average, it can still be influenced, so the important thing to look at are the trends in median prices, ie how they change over periods of time. That should also answer your question about the significance of a 1% rise - you have to look at that in context of the trend and that small rise might indicate a change from a downwards to a flattening or rising trend.

PS: Also remember when looking at quarterly stats 4 x 1% rises in a row = 4.06% annual rise. Rising prices can creep up on you faster than you think.....



kincella said:


> some kids with pre appovals and settlement dates are stressed out with the delays...hello..can they put on extra staff to cope ?




That nearly happened to me last year when I was buying my new place! Everything was pre-approved etc (mainly I was just swapping the security under existing facilities, no new finance etc), but the bank only just managed to get the final documents done and accounts etc set-up ready for settlement 2 days prior to my contracted settlement date!!! That was a close one.... They put it all down to being swamped with new loans to make...

Cheers,

Beej


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## kincella (2 April 2009)

enigmatic....when in doubt try the google search...

........................................
Easy explanation of the sample median
As an example, we will calculate the median of the following population of numbers: 1, 5, 2, 8, 7.

Start by sorting the numbers: 1, 2, 5, 7, 8.

In this case, 5 is the median, because when the numbers are sorted, it is the middle number.

For a set of even numbers:

As an example of this scenario, we will calculate the median of the following population of numbers: 1, 5, 2, 10, 8, 7.

Again, start by sorting the numbers: 1, 2, 5, 7, 8, 10.

In this case, both 5 and 7, and all numbers between 5 and 7 are medians of the data points.

Sometimes one takes the average of the two median numbers to get a unique value ((5 + 7)/2 = 12/2 = 6).

http://en.wikipedia.org/wiki/Median


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## gfresh (2 April 2009)

Beej said:


> That nearly happened to me last year when I was buying my new place! Everything was pre-approved etc (mainly I was just swapping the security under existing facilities, no new finance etc), but the bank only just managed to get the final documents done and accounts etc set-up ready for settlement 2 days prior to my contracted settlement date!!! That was a close one.... They put it all down to being swamped with new loans to make...




I don't quite get it to be honest. Volume of sales is probably 50% of the boom period and yet they are having trouble coping? Something doesn't quite stack up there in terms of lenders really being "swamped" with applications...

I think the true reason is closer to them applying a lot more scrutiny to each and every loan granted.. no automated approval system, like a couple of years ago


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## Glen48 (2 April 2009)

It cost 40% more than your mortgage payment to own a house.

It is the ultimate contest in the field of Australian investment. Which is better, shares or property?
Both have their cheer squads. And both can easily pull out a pile of statistics and charts "proving" their argument is right and their opponents are wrong.
Our view is that it is a nonsense argument. The fact is, they are both wrong. And furthermore, the race for spruikers on each side to outperform each other is partly behind the bubbles in both markets.
In reality you shouldn't compare shares against property. They are both completely different types of investments. They are not comparable. In a normal, undistorted free-market they would each provide a different set of returns based on growth and income.
Unfortunately, both markets have become so distorted by taxbreaks and leverage that it is almost impossible to know what the true rate of return on either asset should be. All anyone can do is guess. But one thing we know for sure, an asset value cannot consistantly achieve double digit gains year after year.
Even a small cap company will return to modest growth after its initial spurt.
On the one hand you have the share spruikers. Those that claim the only way to invest in shares is to buy them and hold them forever. This case is most frequently argued by those with a vested interest. That is fund managers and financial advisers.
The more money you give them and the longer they hold it, the more money they make for... themselves.
You've seen the chart from Vanguard showing returns of three million percent from buying and holding shares. That's if you happened to buy your portfolio in 1898 and held it through to today. Happy 101st birthday to you if you have.
But for many investors, after a year and a half of pain they are taking the decision to exit the stock market, perhaps forever.
The trouble is, now is exactly the wrong time to get out of the stock market. Instead, what most investors should be doing is taking a look at their portfolio and - in the words of fund managers - rebalancing it.
You see, for years fund managers have brain washed the investing public into believing buy and hold is the only strategy. That you should split your assets between blue chip shares, cash, fixed interest and listed property.
Except, they've got it all wrong. That's the formula to make average and below average returns. If you're happy with that then go for it. If you're only after 3% per annum then you shouldn't invest in something providing 10%, because you'll take a bigger hit if things turn out wrong. But if you want to make above average returns you have to play the market differently to the fund managers.
Don't get me wrong, this isn't all about getting one-up on Wall Street, Collins Street or Martin Place. And it isn't about earning more than your neighbour or your work colleagues. This is about getting a better return on your investments. I wrote recently that the 'rule' about diversification was 
just fund manager spin. There is a simple reason why that's true, and I'll get to it shortly.
As an investor, you want your investments to do one of two things: grow, or provide an income. Sometimes you get lucky and you can have a bit of both. But not usually. In fact, if any investment offers growth and income in the one investment then take a second look to make sure you aren't being conned. Those investments are out there, for instance, a small company we tipped in the Australian Small Cap Investigator last October looked too good to be true with a 9% yield and the potential to more than double in price. So I checked the figures again, and the numbers did stack up.
Let me make one thing clear. I'm not saying that investing in small cap shares is better than investing in property. They are different investments with different returns. In other words, you should match your investment based on the returns you want rather than trying to get higher returns from an investment that can't provide it.
In order to understand investing we need to take a step back and see how an economy works. In very simple terms you can split businesses into two areas - companies that make things (products), and companies that provide a service.
You then have entities that buy those products or services. They are either other businesses or individual consumers. (We'll leave government out of this to keep it simple - if only we could do that for real!)
Over time some companies will do better than other companies. It could be for a variety of different reasons - a better product, a cheaper product, better marketing, etc. Also some companies will fail and go out of business.
But new companies will emerge. They may fill the gap of the failed companies by copying their technology. Or, as frequently happens, a new company will improve on an existing product or service. This may (but not always) increase demand for their product and allow the company to grow.
The existing companies will then have two choices. To either adapt their own business to follow suit or stick to what they have been doing. Either way, it is a decision that could either ruin the company or allow it to remain in business to grow further or at least maintain its market share.
Over time new companies will replace the old, get taken over by the old, or they will take over the old companies themselves.
And that's how you can achieve above average returns. Sure, it does mean taking on more risk - the fund managers have got that much right - but without risk there is little reward. And if you want higher returns you need to understand there is higher risk.
That's the problem with the recent trend in the property market. We're not saying it isn't a good investment and property investors haven't done well over the last twenty years or more. What I am saying is valuations have got "out of whack" with reality. Property values have increased for all the wrong reasons. Thanks to property spruikers, negative gearing, and the belief that property values always rise, the reality has become lost amongst the dream.
Think about it, throughout time, housing has been built and bought as somewhere to live. Or built and bought by a landlord for someone else to live in - whether its a nineteenth century industrialist building terraced houses for factory workers, or country gents building cottages for labourers, or even modern day landlords building well-appointed units in Docklands.


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## Glen48 (2 April 2009)

But, do you see the difference? Industrialists didn't build thousands of terraced houses in the north of England because they thought the price would rise allowing them to sell them off at a profit. They built them because they needed people to work in factories. People would only move from the countryside to the cities if they had somewhere to live.
What better way to indenture the workers than giving them a house in return for working in the factory. If they play up or complain then they're out of a job and a house.
The point is, property was not the investment for the industrialist. Property was merely a way of securing labour that could work in the factory to manufacture the products. That was how the industrialist made his money. Owning the land and houses was a bonus, and a liability.
Suddenly things changed. More and more people started owning their own homes, which meant that more and more people wanted to own their own home. The banks realised there was good money to be made in lending money against property - providing they didn't lend too much of course.
But once the floodgates are opened it takes a lot of effort to close them again. The banks were willing to increase the amount of money they loaned. Property owners now wanted to buy a beach house to complement their home. "If the rich can do it, why can't I?"
And then before you knew it, everyone wanted to be a property developer. Units, townhouses and apartments were springing up everywhere. The promise of easy money was too hard to refuse. And don't worry about rental income being high enough to cover the mortgage, because negative gearing means you can get away with undercutting yourself.
In fact, why not make the rental income so cheap that it's cheaper to rent than buy!
Besides, property investors aren't interested in the income, it's the capital gains that count. Because property prices always rise.
There is little doubt that property values have risen very healthily. If you'd bought a block of land in the 1970s or 1980s you would have made many times your money on the investment. So why shouldn't that be the case now? Why shouldn't a property bought today increase in value by the same amount over the next twenty years?
Well, that brings us right back to productivity. When you buy shares in a small company you are buying the rights to share in its current and future profits. It is making something that has a demand in the market, and that will be used by the end user. The company can keep making the product until a better product emerges and the business starts to decline.
However, when you buy a property, sure there may be a demand for it now, but what about when a better property becomes
available, will it be in such high demand then? Will it not also start to decline?
What is the productive output of a house that causes it to continue rising in value?
Take a look at the chart below...


￼
Source: http://www.debtdeflation.com/blogs/
It displays the growth in property prices in Australia since 1890. Now, we don't need to go back that far, so let's take the period from the early 1970s. Since then, the house price index has risen from just over 100, to more than 350 today. And that's removing the impact of inflation.
But the real spike doesn't start to kick in until the 1990s. That's when the credit bubble really started to take off. Can we really believe that the credit excesses will cut the stock market in half yet leave the property market almost completely unscathed? Even though property has been just as leveraged as shares.
Yet that is what the property spruikers claim.
But for some investors and the economy, things could just be about to get a whole lot worse. Because just as the stock market is cruising around the lows - in our opinion - the property market is still close to a record high.
Lured by the belief that property prices always rise, many investors are closing the door on the stock market and opening the door on the property market. And they're doing so at exactly the wrong time. Not only are property prices near record highs but interest rates are at record lows.
That is a recipe for disaster once interest rates start rising again. In the recent Australian Small Cap Investigator newsletter I took the decision to tip a property trust as a short term punt. That's because I believe we are approaching a short term "Super Spike" in the property market as demand and supply converge.
It won't last for long. Soon interest rates will rise, government subsidies to prop up the property sector will run out and the glut of over-priced and over-appointed new property developments will be awash over the economy. Hopefully, just before that happens I'll tell Australian Small Cap Investigator subscribers to bail out of the property trust as soon as they can.
Meanwhile, while all this is happening, many - but not all - small companies will continue producing, servicing and making money. That's why it is the worst possible time to leave the stock market and buy property.
Remember, the saying is "buy low, sell high." Buying low is not something that could be said for the property market at the moment.
Kris Sayce
for The Daily Reckoning Australia


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## Glen48 (2 April 2009)




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## enigmatic (2 April 2009)

Please thats is slightly insulting that you would think I dont know the difference between mean and median.

Although maybe it was from my poor choice of questioning what i was went was were do they get there sample group from as this can change the outcome quite heavily.

Beej cheers for your insightful answer although not exactly what i was looking for, you stated if you lined up all the houses sold over a time sample this statement is what my questioning is directed you state "if" does this mean that is how it is calculated or is a random selected group obtained and the median over that sample used.

For example to show i Understand the concept of mean and median
note used 000's
Sample Group 1:100,200,300,400,500,600,700
Sample Group 2:100,100,100,400,450,460,470
Sample Group 3:100,100,100,200,300,400,400,400,400,400,400,900,900,5000

Mean:
Sample Group1:400
Sample Group2:297
Sample Group3:714

Median:
Sample Group1:400
Sample Group2:400
Sample Group3:400

so obviously in all sample groups the median ended up being 400 although not entirely the same, significant outlier are therefore excluded this can be show in sample group 3 although this can be applied on either spectra of the scale. It is all possible that the increase in price is only due to the change in number of high priced houses being sold due the inability to service there loans, note a while back a post which showed an intial dip and then a recovery followed by a server downturn this reminds me of that exact example were the illusion of house prices increase can be seen only due to the change in who is selling offcourse more are buying these homes dont think I am forgetting that but this is likely to come from those of us who currently dont believe there job is in jeopedy and are buying the max they can afford at the current low rates. Only to find they cant afford it when rates return to there past values.

Just a thought.. 
Oh and i think they teach you about mean and median in primary school although I could be mistaken..


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## Beej (2 April 2009)

Hey Enigmatic - no insult was intended, thought that's what you were asking! 

Now I am even more confused about what it is you are actualyl asking though?

Glen48 - that is one of the most poorly written and confusing housing bear articles I have seen in a while! My head is still spinning trying to figure out what it is actualyl on about! LOL.

Cheers,

Beej


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## kincella (2 April 2009)

lets clarify something about the banks being swamped.....its CBA firstly...they are offering the best deals, they are the biggest lenders and last year there was probably about 30 + 100's of brokers...all busy in the background.....putting the paperwork together......
but those brokers went to financial heaven...

people are dealing direct with the banks...hence thats why they are so busy...


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## glads262 (2 April 2009)

Glen48 said:


> View attachment 29121




This just says it all, doesn't it. EVERYONE on this forum, including me, has only seen the very end of this graph. We know nothing different. Look at the property crash in 1987. Barely a blip.

EVERYONE take note. Prices do not always rise. 

Supply greater than demand?? Yeah right. This can turn in a very short space of time. 

IE demand - Average number of people living in a house in Australia?? about 2. Does anyone on this forum have a boarder, rent out their top floor or basement, have a relative living with them? Chances are NO.

This is what exists everywhere else in the world. Anyone been to UK??

To reduce all this "excess demand" all that has to happen is:

1. Immigration reduced - ALREADY HAPPENING

2. Government building more social housing - ALREADY HAPPENING

3. People with two homes (ie holiday homes etc) selling one - ALREADY HAPPENING

4. Unemployed people moving in with relatives - GONNA HAPPEN

5. Low paid moving in with relatives - GONNA HAPPEN

6. First home owners being reposessed and moving back with parents who could probably use the board money - GONNA HAPPEN

7. 2 pensioner friends who cannot afford their rent on their own anymore - move in together - GONNA HAPPEN

HOUSES ARE NOT AN INVESTMENT. INCOME IS EATEN UP BY INTEREST. CAPITAL GAINS ARE NOT SUSTAINABLE AT 10% A YEAR!


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## enigmatic (2 April 2009)

I still understand how people get to much over there head, been looking for houses for a few months now and everytime i see something slightly better for slightly more it just seem to make you think hmm what if I just pay a little more.

Any how more to my question.

If the housing market is slowing down for a moment just say a year and then it goes full tilt again. 
what are the advantages and disadvantages of spending closer to the upper end of your budget.

For example if you could borrow up to $750,000
then is borrowing 650,000 pushing your luck 
or is it about buying a good house at a low price at a good time to buy.

or do you go the other way and buy something say 450,000 
find that you can easily manage the payments.. pay extra buy the house earlier and much cheaper and then look at the second more expensive house which may now cost 1million+ 

I will not take and information as advice


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## Trevor_S (2 April 2009)

http://blogs.news.com.au/couriermai...ouriermail/comments/how_many_homes_are_there/



> Amid calls for government support, and warnings of a severe housing shortage, it’s interesting to see some analysts think we have an oversupply of property in Australia.


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## moXJO (2 April 2009)

Trevor_S said:


> http://blogs.news.com.au/couriermai...ouriermail/comments/how_many_homes_are_there/




Interesting reply under that



> The information is readily available via the ABS site. 1996 dwellings = 7,175,237, with 679,165 unoccupied (9.5% vacant) and population 17,752,829. 2001 dwellings = 7,790,079, with 717,872 unoccupied (9.2% vacant) and population 18,769,249. 2006 dwellings = 8,426,559, with 830,376 unoccupied (9.9% vacant) and population 19,855,288. I would estimate that we now have about 9,100,000 dwellings, with 900,000 unoccupied (9.9% vacant) and population 21,000,000. And with 100,000 homeless we have 9 empty properties for every homeless person.
> 
> Noel George Butlin wrote a book in 1964 called “Investment in Australian Economic Development 1861-1990”. He wrote about the 1880s era, which was our second largest property bubble. In his book he states the figures demonstrating that the number of dwellings built exceeded the needs of population growth. In 1891, the census vacancy rates was about 7% in both Melbourne and Sydney, which Butlin described as excessive. The average Melbourne property fell 50% during the 1890s, and Sydney prices fell an average of 40%.
> 
> ...


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## singlefished (3 April 2009)

Hedonic Price Index Question....

I don't have a clue what a hedonic index is so after noting that RPData uses hedonic price indexing I thought I'd check it out.

Headache!!!!

Now, the best explanation I could find in layman's terms is linked below :

http://moneyterms.co.uk/hedonic-pricing-model/

Now, lots of complex stuff floating around on the internet about this, certainly no shortage on a google search. Terms like hedonic regression pop up with a bit of an explanation in wikipedia :

http://en.wikipedia.org/wiki/Hedonic_regression

So now I'm getting more confused....

I may be getting this wrong but I'm now thinking that a hedonic price is a real price (for example a median price) that has been adjusted according to a set of criteria.

So, is there anybody here who can verify if this is an easy laymans example or not?

_A hedonic price model would take the median price of units in a city, for example, and if the majority of units sold were :


close to the CBD
had good public transport
decent shopping within close proximity
nice view out the front window

Then these units would be considered more desirable than the median unit and an upward adjustment to the hedonic price would occur. This hedonic price is compared month in and month out to form an index which is then represented on RPData as a percentage gain.​_Could be completely wrong with all of the above but trying to get my head around why it is supposedly better than comparing month on month medians....


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## kincella (3 April 2009)

the refinancing may have something to do with the new inititaves for the US housing market just released last week

my prediction today...
after checking the sold props and whats on the market today...for the suburbs that I watch closely
...I am calling the property market direction, it has officially left the bear cave and has now entered the bull ring....
and it has everything to do with interest rates
:sheep;


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## Beej (3 April 2009)

singlefished said:


> Hedonic Price Index Question....
> 
> I don't have a clue what a hedonic index is so after noting that RPData uses hedonic price indexing I thought I'd check it out.
> 
> Headache!!!!




So the bottom line is it seems the RP Data index is an attempt to track like for like house and unit price movements/trends, which would not be able to be skewed in the way median price statistics can be based on the mix of sales over a particular period. 

In a way that's exactly how individuals attempt to gauge a local market I would think. Ie you tend to look for what similar properties sell for over time based on your knowledge of the local area and what makes one property more or less desirable (and therefore valuable) than another.

Like anything, it's data point to consider along with all the other data (liek ABS median house price stats, APM house price stats etc etc).

Cheers,

Beej


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## kincella (3 April 2009)

Beej, thats exactly what we do when looking to buy....compare compare compare
there were only a couple of bargain priced props in Toorak back in Oct 08....and the cheaper priced ones noted recently have all sold anyway...
they were not what I was looking for... I could understand why they were cheaper, only one bedroom etc

saw a for sale sign last evening on a very dilapidated block, the usual for that type is for one buyer to attempt to buy the whole block...then bulldoze it
which is what was done to the neighbours 2 doors up...

small section of a popular but busy street...less than 200 metres long section due for over haul...all those awful old 1950 cheapskate blocks of units....and there has been no maintenance....not ever..by the look of them

still quite a bit of building activity going on around me here....they bulldoze and build brand new units developments...4 within a 200 metre radius....have not been out and about further to see...expect similar though


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## robots (3 April 2009)

hello,

good evening fellow ASF members, back in St Kilda after a fine week in Mt Martha 

life plodding along well,

Easter next week and as usual the fun is happening on Good Friday RCH day at Telstra Dome

once again ABBAration is playing at 12pm at the stadium so get down there and enjoy some fine tunes

Satanoperca is going to bring down a slab to celebrate the latest results out from RPdata and we might get some kebabs also

thankyou
robots


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## kincella (3 April 2009)

evening Robots....sun shining again in Melbourne town...after that terrific rain...guess you must be pretty happy with the way its all going on the housing front....
copy from another of my posts somewhere today
.......................................................................................
...I am calling the property market direction, it has officially left the bear cave and has now entered the bull ring....
it has everything to do with interest rates
cheers
:sheep:


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## Adam A (3 April 2009)

Oh Kincella 

There is nothing so blind as those who cannot see


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## robots (3 April 2009)

hello,

yes great rain Kincella, 20mm around town

the interest rates are having a massive affect, spot on brother

just plodding along like you man on the housing front, amazing how time rolls on and before you know it 1yr, 2yr, 5yrs, 10yrs have passed

and the simple steps you make early in life have a Massive snowballing affect and you end up living large, walking the dog, riding the pushie 

enjoying the ABBAration concert with a free slab and kebab from Satanoperca

splendid

thankyou
robots


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## kincella (3 April 2009)

Adam A....totally agree
unfortunately I am an 'old timer' when it comes to property investments....
and as I have another 30 odd years in front of me....I am looking forward to repeating all those wonderful moments all over again


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## nunthewiser (3 April 2009)

> Homebuyer stress fuels soaring repossession rate
> 
> 3rd April 2009, 6:00 WST
> Property repossessions in WA have soared after recent job losses, with home seizure court cases up more than 140 per cent in the past year.
> ...




Sunshine and lollipops anyone?


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## nunthewiser (3 April 2009)

> Treasury says jobless rate to rise
> 3rd April 2009, 18:53 WST
> 
> The Australian economy still faces a difficult time despite the efforts of world leaders to kick-start global growth through a ground-breaking agreement at the G20 Summit in London.
> ...





mmmmmmmm my last post seemed to have not attracted the attention of the sunshine and lollipop crew........

this post should set there minds at ease 

sunshine and lollipops guys ...... i read it right here


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## kincella (4 April 2009)

Yawn....
glass half full or half empty.....
7% unemployment or 93% employment
so you are banging on about 7% unemployment
we say its wonderful there is 93% employed
currently the ratio is 5% versus 95%
 :sheep::sheep::sheep::sheep:


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## Beej (4 April 2009)

nunthewiser said:


> Sunshine and lollipops anyone?




I think most have have said we expect the market to struggle more in Perth than the major east coast cities anyway haven't we? The RP data posted earlier shows Perth  and Brisbane as suffering at the moment, while other cities are seeing a flat or growing market. Which is hardly surprising given the MASSIVE boom both cities saw over the past few years while Sydney/Melbourne etc were basically stagnant.

Cheers,

Beej


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## robots (4 April 2009)

hello,

http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html

what Scott doesnt understand is that people are starting up the "ultimate" savings plan ala paying off the mortgage

and this is clearly supported by stats out from ABS that home owners are 6x more coined up than renters

another dismal story out of the US this morning, yes we are different alright, no 9mm's at Bunnies here

thankyou
robots


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## kincella (4 April 2009)

Morning Robots, Beej and friends,
yes saw that article, the barefoot investor, ordinary, pedestrian type advice IMO....
agree with Robots...the best saving plan is the 'forced saving plan', no ifs or buts, pay the mortage each month, similar to paying rent, but with the bigger long term benefits...
That Friday night show on 7...house and garden or whatever it is....the guy doing the gardens came 3 rd in the big garden competition.....
he did a kids retreat garden, more for the bigger kids than the toddlers, wonderful idea...and I thought, the renters cannot do things like that, or if they did with permission....its a lot of money to walk away from...
I may appear to be biased to home ownership, but the rainbow at the end has such a bounty, and the gold bullions along the way...are just too good to miss out on, like the treat above.

Reminds me, bought the house before my 21st, conveniently there were paddocks across the road, so I bought myself a horse, and then another, and another etc....then converted the 4 car garage into a saddle room, feed room etc, taught the 2 children to ride horses, reschooled horses for friends and others, taught other children to ride horses....
I would have been hard pressed to find a rental, that would have provided the synergy to resume my horse hobbies, in such a convenient location.

Of course as the years went by, the mortgage reduced, the interest became less and less, my career took off, and the mortgage was a mere blip, it was nothing compared to my friends who were still partying and renting their lives away.


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## Trevor_S (4 April 2009)

kincella said:


> I may appear to be biased to home ownership, but the rainbow at the end has such a bounty, and the gold bullions along the way...are just too good to miss out on, like the treat above.




I don't think you are alone there, many see the advantages of owning their own home in Australia. I think the debate comes down to, is this a crazy time to buy with prices so historically high and to my mind they are VERY, VERY high.  

Not being a seer I don't know if prices will come down, one assumes that eventually there will be a reversion to the mean and prices should come down (should being the operative word).  I don't buy (no pun intended  ) any of the arguments about oversupply, immigration etc they are all furphies.  Aside from a few very desirable places, housing prices are based purely on ease of access to debt.  

Years ago I used to think people would see the fundamental business value in a house and only spend what is economically sensible. I now realise this was a mistake and people will spend whatever the bank will give them and they will often try to sway the banks to give them more then they can afford (and then blame the bank, witness the Storm thread for evidence of that) if it goes pear shaped.

To me, the median house price is like the price of Gold (Au bugs can agitate all they want for a return to Brenton Woods), there is no fundamental reason behind it's pricing, it bears little resemblance to supply/demand and is mostly about emotion.  If you get enough buyers convinced housing or gold will stay high, then it will.


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## kincella (4 April 2009)

Trevor.....
I agree there are expensive houses out there...but if you are active in looking for one...there are bargains to be had...you just have to seek them out..

the low interest rates are the biggest incentive...so one can afford to pay a bit more for the house, and the low rates may show it is comparable with....

a cheaper house with high interest rates......that has always been the case with housing....rates go up and prices come down.....rates go down and prices go up ....
I think prices have come down quite a bit....or did until last Oct....
so the buyers back in Oct got the best deals, cheaper prices and then the lower interest rates kicked in...the double whammy


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## singlefished (4 April 2009)

kincella said:


> Yawn....
> glass half full or half empty.....
> 7% unemployment or 93% employment
> so you are banging on about 7% unemployment
> ...




OK, will use small numbers in this example so I don't have to pull out the calculator.

It's already discussed in numerous places on this forum that in general it takes *2 incomes* to service the average household mortgage. The good ole days of single income households that you remember kincella are now all but gone...

Lets take 100 households as an example. The 2 required incomes paying off on these mortgages represents 200 employed individuals to service repayments on these 100 properties.

Now, lets hypothetically assume that unemployment rises to 10%. That would equate to 20 people losing their jobs. It's probably also quite fair to assume that the majority of these 20 people reside in 20 different properties.

So, we now have 20 properties out of 100 that could have gone from dual income onto single income mortgage repayments. Some could have gone from dual income to no income.

It would also be fair to assume that a majority of these single income households would likely now struggle and have the realistic opportunity of defaulting.

So simplistically, we're actually looking at *double* the number of households being affected by unemployment which in this example would represent a whopping *20% of properties* or statistically *1 in 5 households* currently servicing a mortgage.

The Government has already stated that it will be >7% unemployment when treasury next releases their figures in the coming budget. Just take their new figure and double it for a rough indication of households now going into extreme mortgage stress.

_Yes, 10% unemployment is a hypothetical figure.
Yes, some of these households will get by on 1 income.
Yes, low interest rates play a significant factor in all this.
Yes, not all properties are currently being serviced by a mortgage_

How will the Investment Property market fare if some of the above households were also holding IPs?
What about if 20% of renters struggled with their rent repayments....

The wonderful 93% employed statistic doesn't look so rosy if it represents 14% or 1 in 7 households currently servicing a mortgage does it?

*IMO*

:sheep:


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## tech/a (4 April 2009)

singlefished said:


> OK, will use small numbers in this example so I don't have to pull out the calculator.
> 
> It's already discussed in numerous places on this forum that in general it takes *2 incomes* to service the average household mortgage. The good ole days of single income households that you remember kincella are now all but gone...
> 
> ...





Your making the assumption that none of the "20%" will not be re employed before default and that they don't have enough savings to avoid default.

Your equating unemployment to defaulting mortgages.
Which would equate to bankruptcy in this country.

Flawed argument.


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## gfresh (4 April 2009)

$60k wage after tax is approx $900/wk .. so assume one partner loses a job, leaving this as sole income. 

Assume the average loan remaining is $300k (I think stats show it's lower than this).. the majority have owned homes more than 5 years and hence have made significant payments into principal. Payments on $300k @ 5.30% is $384/wk = 42.67% after tax wage. Little painful, but livable as long as you are frugal. 

Leaving $516 for everything else - that's plenty. Remember the banks will let you go back to IO if you are in genuine hardship meaning you might be able to reduce to  ~$305/wk for a few months. Oh yeah, partner will get unemployment benefits which is somewhere above $200/wk too. 

I see the real problem is the cost of providing for children (subsidised via government payments), and keeping other debts near zero. Anybody sensible that has adequately prepared for this recession by paying down these debts should be able to get through. The question is how many are the sensible ones? 

Situation gets messy for the situation where the partner works part-time, and in recession hours are cut right back, or laid off completely. Then the main bread winner gets laid off too. Then you've got problems.


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## Beej (4 April 2009)

tech/a said:


> Your making the assumption that none of the "20%" will not be re employed before default and that they don't have enough savings to avoid default.
> 
> Your equating unemployment to defaulting mortgages.
> Which would equate to bankruptcy in this country.
> ...




Yep - totally, for the reasons you state, PLUS the example also presumes that 100% of the 20 people that got laid off are home owners with a big mortgage - ie RECENT home purchasers. 33% of the population rent for a start, then another 33% own their homes outright with no mortgage. Of the remaining 33%, only a proportion of them have a "new"/large mortgage that absolutely requires both household incomes to service it - ie many people have had their mortgage for years and paid a lot of it down, plus probably paid less for their house because they bought a long time ago. So let's assume half of the 33% with mortgages need the second income - so far our potential defaulters are only 5 out of our original 100 households in the original example.

Then you also have to consider that unemployment tends to effect certain segments of the population more than others - with young people (who tend to be renters not home owners) and older workers (who tend to be the no mortgage home owners) often representing a high proportion. So that would probably bring our 5/100 down to 2/100 or so. And then you get to Tech/a's point that even for those 2 to eventuate in a defaults and mortagee sale those people would have to have not found a new job, had no savings, or buffer in their mortgage etc etc.

These are all the reasons why the potential impact of rising unemployment on house prices (through an envisaged rise in defaults), is hugely over-estimated by the property bears here. It's also why the mortgage default rate in Australia is so tiny compared to countries like the US.

Cheers,

Beej


----------



## nunthewiser (4 April 2009)

Beej said:


> These are all the reasons why the potential impact of rising unemployment on house prices (through an envisaged rise in defaults), is hugely over-estimated by the property bears here. It's also why the mortgage default rate in Australia is so tiny compared to countries like the US.
> 
> Cheers,
> 
> Beej






> Homebuyer stress fuels soaring repossession rate
> 
> 3rd April 2009, 6:00 WST
> Property repossessions in WA have soared after recent job losses, with home seizure court cases up more than 140 per cent in the past year





yes m8 its all a dream


----------



## Beej (4 April 2009)

nunthewiser said:


> yes m8 its all a dream




You want to post the actual numbers? 140% of a poofteenth is still a bee's dick away from nothing!


----------



## nunthewiser (4 April 2009)

Beej said:


> You want to post the actual numbers? 140% of a poofteenth is still a bee's dick away from nothing!




scroll back m8 already posted the media article which was conveniantly ignored before



> Homebuyer stress fuels soaring repossession rate
> 
> 3rd April 2009, 6:00 WST
> Property repossessions in WA have soared after recent job losses, with home seizure court cases up more than 140 per cent in the past year.
> ...


----------



## gfresh (4 April 2009)

Rather than guessing, the current 90 day arrears rate is 0.5%, or 1 in 200.


----------



## Beej (4 April 2009)

nunthewiser said:


> scroll back m8 already posted the media article which was conveniantly ignored before




Yes I know but I wanted you to analyse the numbers to prove your argument - which you can't, and here's why:

Population of WA = ~2M. So let's say there are 750k households (based on AU average of 2.6 persons per household). Someone has to own each house (even the rented ones) and the article doesn't pertain just to owner occupiers: So, 250k of those homes would be owned outright, 250k rented out and 250k owned by OO with mortgages.

Defaults up from 164/quarter to 400/quarter - so let's say an annualised rate of 1600/year. *That's 0.32% of mortgaged properties defaulting* - tiny tiny tiny!!! And "up 140%" from an even tinier 0.13%. The long term average default rate for AU is about 0.5%, So really if you are going to use data like that to try and predict a house price crash you will need to show a MUCH higher default rate to demonstrate some factor that hasn't been seen by the housing market many many times before without any great crash.

Remember that as unemployment rose during 1991/92/93 to 11% house prices in most cities actually went up! When unemployment was 7% back in 1999/2000 a huge property price boom was underway. Go figure....

Cheers,

Beej


----------



## nunthewiser (4 April 2009)

gfresh said:


> Rather than guessing, the current 90 day arrears rate is 0.5%, or 1 in 200.




and thats in a period of historically low intrest rates and free money gifts....... wonder what happens when they rise ?


----------



## singlefished (4 April 2009)

Wow, I find it hard to believe that even the more optomistic on this threat cannot even concede that there are valid points raised by my post which are of no real concern... given the 42,000 recent FHB purchases (possibly up to 84,000 individuals clearly stated by yourselves as the most likely sector to be affected by unemployment) and realistically a fair percentage of individuals who have entered the market over the last couple of years who have been servicing high interest rate mortgages with no chance to get ahead on their payments.

I can acknowledge it's a simplistic scenario based on hypothetical figures that is bound to contain flaws, posted to provoke amicable discussion due to it's relevance, but to be completely written off, well....

Well done!!!!


----------



## nunthewiser (4 April 2009)

Beej said:


> You want to post the actual numbers? 140% of a poofteenth is still a bee's dick away from nothing!






No that is the question you asked me beej

i do hope u have some factual evidence to back up YOUR numbers just quoted instead of the same ole same ole glossy opinions that get bandied around instead


----------



## singlefished (4 April 2009)

Beej said:


> Remember that as unemployment rose during 1991/92/93 to 11% house prices in most cities actually went up! When unemployment was 7% back in 1999/2000 a huge property price boom was underway. Go figure....




We didn't have a such a large credit bubble or GFC back in the good ole days is what I figure...


----------



## MrBurns (4 April 2009)

Went to an Auction today, a bit like the casino, if the Chinese weren't there the place would be empty.

I know the agents they said it's like that all over so the Chinese are buying, is that a hint ?

Did it sell ? the agents said it wouldn't.

They say volumes are ok but prices are are way down, so there you go, and they expect it to get worse.


----------



## nunthewiser (4 April 2009)

singlefished said:


> Wow, I find it hard to believe that even the more optomistic on this threat cannot even concede that there are valid points raised by my post which are of no real concern... given the 42,000 recent FHB purchases (possibly up to 84,000 individuals clearly stated by yourselves as the most likely sector to be affected by unemployment) and realistically a fair percentage of individuals who have entered the market over the last couple of years who have been servicing high interest rate mortgages with no chance to get ahead on their payments.
> 
> I can acknowledge it's a simplistic scenario based on hypothetical figures that is bound to contain flaws, posted to provoke amicable discussion due to it's relevance, but to be completely written off, well....
> 
> Well done!!!!




wasnt written off by me , in fact was a well thought out post ..... in my view hardly flawed at all seeing as the "supreme court" figures and the honcho from REIWA seem to agree 

but hey there not glossy opinions so i guess they could be viewed as flawed in here


----------



## kincella (4 April 2009)

hmmm...have I got this wrong....250,000 houses in the mortgage belt...of which 1600 pa under stress....that is around half of 1%... or 0.05% not even 1% or  actually .0064....
or is my calculator playing tricks again 1600/250,000

and nunthewiser...guess we ignored it as we thought it sounded miniscule
well I did anyway..


----------



## kincella (4 April 2009)

I just have to keep posting optimistic posts, cause I am an optimistic person, but others may be  pessimists....and they may take the opposite view..... 

you know the proverb about the blind men and the elephant...each saw/thought something different.....
I copied this post below....................

I have just come back from shopping...
 there on glenferrie rd, just past malvern rd, 9 big developments out of 11 old mansions....figure they have 200' frontages each at least....all together in a row.... may go back tomorrow with less traffic and have a closer look.... 4 have been bulldozed down..the rest have all the mesh around them....
so when the going gets tough...the tough get going...

they must have had the finance to get started, they must think its a good time to get going on building....they might be property bulls....or just ordinary folk who know what they are doing



--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ? 

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell to the inexperienced.


----------



## Beej (4 April 2009)

singlefished said:


> Wow, I find it hard to believe that even the more optomistic on this threat cannot even concede that there are valid points raised by my post which are of no real concern... given the 42,000 recent FHB purchases (possibly up to 84,000 individuals clearly stated by yourselves as the most likely sector to be affected by unemployment) and realistically a fair percentage of individuals who have entered the market over the last couple of years who have been servicing high interest rate mortgages with no chance to get ahead on their payments.
> 
> I can acknowledge it's a simplistic scenario based on hypothetical figures that is bound to contain flaws, posted to provoke amicable discussion due to it's relevance, but to be completely written off, well....
> 
> Well done!!!!




What exactly is the point you are trying to make then? What sort of impact do you envisage rising unemployment to have on house prices? Please quantify your view.

All I am saying while pointing out the flaws in your admittedly simplistic example, is that rising unemployment will not IMO have a dramatic impact on prices. It does create downward pressure yes, and if a defaults also rise to levels significantly above current levels (like 3/4/5% or higher like in the US) then that downward pressure would be very significant. However, I don't think, for the reasons I and others have stated, that defaults will rise to anywhere those levels as unemployment rises from 5% -> 7/8%. If we get to 12%+ in the short term then I'd be pretty interested. In the meantime the upwards forces are winning and starting to push prices in many area's up again.

Cheers,

Beej


----------



## robots (4 April 2009)

hello,

good evening and best wishes to all, another great day by the looks of it:

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

to effort Enzo for getting the results up and its definitely a surprise to many the resilience of bricks and mortar, bricks and mortar, bricks and mortar

a MaSsIvE 78% clearance rate on this fine day here in Melbourne 

great to be alive, walking tall around this fine country

well done

thankyou
robots


----------



## singlefished (4 April 2009)

Beej said:


> What exactly is the point you are trying to make then? What sort of impact do you envisage rising unemployment to have on house prices? Please quantify your view.
> 
> All I am saying while pointing out the flaws in your admittedly simplistic example, is that rising unemployment will not IMO have a dramatic impact on prices. It does create downward pressure yes, and if a defaults also rise to levels significantly above current levels (like 3/4/5% or higher like in the US) then that downward pressure would be very significant. However, I don't think, for the reasons I and others have stated, that defaults will rise to anywhere those levels as unemployment rises from 5% -> 7/8%. If we get to 12%+ in the short term then I'd be pretty interested. In the meantime the upwards forces are winning and starting to push prices in many area's up again.
> 
> ...




What requires quantification? I have provided an opinion and supported that with a simple example. And where did I state anything about the effect it was going to have on house prices????

All commentary was initially referenced to "YAWN" unemployment rate and it's potential effect on individuals "currently" servicing a mortgage.

My initial hypothetical figures were whittled down to 2 in 100 "possibly" have a chance of defaulting and it was then agreed with tech that the argument was flawed and the impact of unemployment was hugely over-estimated.

The above quoted post subsequently outlines a scenario whereby possibly as low as 3 in 100 "actually" defaulting could be significant yet the previously quoted feasibly realistic figure of 2 in 100 "possible" defaults is of no consequence....

Not really much of a margin for error there if the economy is so finely balanced.

The initial example is extreme and simplistic in it's nature and was clearly outlined as so. It was posted to highlight the fact that households servicing a mortgage these days generally require *2 sources of income* to service the average mortgage and that even though a low unemployment figure of 8% may result at the end of the day, the implications of a low unemployment rate are far more reaching than during previous economic downturns because of this.


----------



## Beej (4 April 2009)

robots said:


> hello,
> 
> good evening and best wishes to all, another great day by the looks of it:
> 
> ...




68% in Sydney in good volume, lot's of higher priced sales once again ($1M+), including a couple of ~$3M and a $5M sale at auction:

http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf

Beej


----------



## satanoperca (4 April 2009)

Singlefish, an interesting illustration to the current issues of most family households with a mortgage -two incomes are required to service the debt. More interesting how increasing unemployment could have a potential multiplier effort on defaults over the previous recession.

In the previous recession were it was not prevalent to require two incomes to service the debt, 10% unemployment would have resulted in 10 mortgage defaults in Singlefish's simple example. With two incomes required, this defaults to 20.

_It would be interesting if someone had some stats on the number of people of working age in 1990 who were employed compared with today. I assume that that _

Kincella, I agree the figures look very small, but if Singlefish's example is somewhat correct, then 1% change in unemployment in 1990 would have had a smaller impact on mortgage defaults than a 1% change today. I think this same situation was also seen when interest rates increased to 9%, it had a similar effect to when interest rates were in their teens in the 90's.

If two incomes are required to support the debt to acquire a home, is it affordable?

There must be a tipping point whereby unemployment rising results in realestate prices decreasing due to increased defaults and fire sales. Eg. 5% unemployment <1% defaults, 10% unemployment <4% defaults, 20% unemployment defaults - a hell of a lot.

As unemployment increases, employees are not the only group under stain, business owners are generally not as affluent and not looking to invest profits in any other asset than keeping their business alive as it generates them their greatest cash flows.

I know of several small business owners that would love to take advantage of some realestate buying opportunities at the moment but are more concerned with keeping their often well established business afloat through as the RBA announced, a recession.

I think Singlefish's example presents the idea that if two incomes are needed to services a mortgage, then an increase in unemployment will see greater mortgage defaults than seen in the 90's which leads to the issue, is housing affordable and are prices going to see a correction due to the current economic situation?

Went to several auctions today in South & Port Melbourne, good results for those properties with realistic prices, just below peak prices. Quite a few discerning buyers around, just no one being silly.

Cheers


----------



## kincella (5 April 2009)

Mortgage relief for up to a year will be available..to be announced today..

another rate cut coming this week......alls safe and well in the resi market
next problem you want to focus on is ??????
just put it forward and some of us will try to find an answer for you...


http://www.theage.com.au/national/mortgage-relief-for-jobless-20090404-9sjg.html
:sheep:


----------



## kincella (5 April 2009)

state govts building hundreds of new homes...for the homeless...

so just in case you or your mates lose their jobs, and you cannot negotiate the mortgage relief,,,,you become homeless.....we have an answer for you,
20,000 new homes for the homeless by 2010
hehehehehehe....I think that is a really tall story.....I just cannot see them building that many homes...in just over a year or lets say 2 years...
the state govt takes that long to fiddle with red tape for the land, the roads, and everything else
but it makes enlightened reading for their followers
:sheep::sheep:
http://www.theage.com.au/national/government-plans-to-build-667-new-homes-20090404-9sjn.html


----------



## satanoperca (5 April 2009)

What next, the Government using taxpayers money will pay your mortgage if you got yourself into to much debt and can no longer service it.

How about some greater attempts to make housing more affordable by the Government so that FHBG and mortgage relief are not required.


----------



## kincella (5 April 2009)

satan opera....please read the article....
and no..the taxpayers are not paying the mortgage for the unemployed....

the banks will allow interest to be capitalised and added to the loan balance....
the relief is between the banks and the mortgagee...
all the pm has done is ask the banks to provide this relief...


----------



## robots (5 April 2009)

satanoperca said:


> What next, the Government using taxpayers money will pay your mortgage if you got yourself into to much debt and can no longer service it.




hello,

government already using taxpayers money for those who dont want to work and contribute in society i.e. dole, disability pension (not all but alot)

got to share the love Satanoperca, its all about fairness 

ps. Dan Murphy's have ruskies on special at the moment $64/slab

thankyou
robots


----------



## Beej (5 April 2009)

satanoperca said:


> What next, the Government using taxpayers money will pay your mortgage if you got yourself into to much debt and can no longer service it.




What next?? The government to use tax payers money to provide rental assistance payments to those who lose their jobs and failed to provide a paid off home for their family to live in during the good times, because they kept waiting for property prices to fall 50% so they could buy in Paddington instead of Penrith? 



PS: Thanks satanoperca for expanding on singlefesheds posts/points. I can see what you guys are trying to say - more double income mortgages could be like the period of low interest rates where you don't need as big an increase as in the past (in unemployment vs interest rates) to get the equivalent level of mortgage stress/defaults. Those are valid points - but I think it is clear that the government is hell bent on ensuring that we don't have a US style housing market crash (ie stability is good), plus they also have their eyes on stimulating a housing (building) led economic recovery, as this is often been the event that has pulled the AU economy out of past recessions. Housing affordability will in the longer term be addressed by building more lower cost housing IMO, not by a price crash.

PPS: Just to put some FHB numbers in context, 42000 FHBs taking up the grant boost = 0.5% of Australian homes purchased by FHBs in the past 6 months. It's not that many. Even if 1/4 defaulted in the next 2 years that would only add about 0.2% to the aggregate default rate. (Calc based on 8,000,000 AU households, 1/3 mortgaged OOs, assume FHBs are OOs).

Cheers,

Beej


----------



## robots (5 April 2009)

satanoperca said:


> What next, the Government using taxpayers money will pay your mortgage if you got yourself into to much debt and can no longer service it.
> 
> *How about some greater attempts to make housing more affordable* by the Government so that FHBG and mortgage relief are not required.




hello,

man, i thought you telling us its come off 10% based on the research you are doing in your area, so isnt it now more affordable?

forget the Government, do your own thing 

plenty of joints out there in everyone's price range across australia

ps. Satanoperca, i wouldnt mine going to that pub on Kings way that does the best parma'a in Aus on collect day, you in?

thankyou
robots


----------



## kincella (5 April 2009)

so now that we have eliminated mortgage stress from the argument ....
what other issues are there out there, that will create a 40% drop in prices

I am waiting to hear from the people who are actively out there at inspections looking to buy a home.....


----------



## robots (5 April 2009)

hello,

look out brothers, Numbercruncher is online

anything else we can help people with?

thankyou
robots


----------



## robots (5 April 2009)

hello,

http://www.theage.com.au/national/clearance-rates-best-in-2-years-20090404-9sji.html

how time flies when you having fun,  bonafide thread

people in already are smashing the mortgage, people buying are getting best rates in 45 yrs, paradise man

the internet back up and running in the UK yet?

thankyou
robots


----------



## Ruincity (5 April 2009)

From robots article.

"But buyers' advocates and property analysts are cautioning that the sustained high in the clearance rate could not be understood apart from the extremely low stock levels, with just 3144 properties put up for auction for the year to date, half last year's level."

People simply aren't selling at the moment, this is something that I would like you realestate permabulls to elaborate on..  Why is this?

I agree that it seems the first home buyers region seems to be faring ok. 
This is artificially propped by the FHB grant as we are all aware. 
Yes this could have a flow on effect to the upper range as well. 

Couple of stories from the road.

Yesterday I inspected a trashy 2 bedder unit in elsternwick, asking price was similar to when I was looking last year at $430.  One thing I did notice is I saw the youngest looking prospective buyers I have ever seen...

I then proceeded to an Auction in Sth Melbourne asking price was $570-600 four seperate bidders in the end resulted in a final sale price of $630.

I have a friend who bought a unit in Collingwood for around $310 exactly a year ago.  Relationship has gone sour and they want to sell, realestate are saying that he will be looking at around 400k.  
Place is an absolute dark shoebox, will be interested to see what they end up with.


----------



## satanoperca (5 April 2009)

robots said:


> hello,
> 
> ps. Satanoperca, i wouldnt mine going to that pub on Kings way that does the best parma'a in Aus on collect day, you in?
> 
> ...




It is not over until the fat lady sings. The first quarter stats are not out from the ABS until May. Have to wait until the second quarter results expected in July/August to declare a winner. Those results published by RPdata only included January with Feb being indicative only.

Parma sounds good on collect day. I have judged you wrong Robots, always thought you would be a VB man not ruskies.

For those interested in price trends for suburbs of Melbourne, get Sundays Age for a blow by blow account of housing prices.


----------



## robots (5 April 2009)

satanoperca said:


> It is not over until the fat lady sings. The first quarter stats are not out from the ABS until May. Have to wait until the second quarter results expected in July/August to declare a winner. Those results published by RPdata only included January with Feb being indicative only.
> 
> Parma sounds good on collect day. I have judged you wrong Robots, always thought you would be a VB man not ruskies.
> 
> For those interested in price trends for suburbs of Melbourne, get Sundays Age for a blow by blow account of housing prices.




hello,

push bike riding alcopop drinker Satanoperca, ruskies all the way, keep an open mind

1 up though bro, so i wont be buying

if its a draw?

thankyou
robots


----------



## robots (5 April 2009)

Ruincity said:


> From robots article.
> 
> "But buyers' advocates and property analysts are cautioning that the sustained high in the clearance rate could not be understood apart from the extremely low stock levels, with just 3144 properties put up for auction for the year to date, half last year's level."
> 
> ...




hello,

great work ruincity,

people are just sitting put, not moving and it is occurring for both OO's and renters 

good property is still selling well anything which has an "issue" is in the doldrums

thankyou
robots


----------



## kincella (5 April 2009)

Ruincity...the answer you are looking for was addressed by Robots...but I will add my 2 cents worth....the market up to 600k is hot...so 630 is not too far over the top with 4 bidders...
oh and another 2 cents.....Melbourne is probably the most conservative place on earth......so dont expect wild fluctuations.....
and voted the most liveable city in the world...(forget about the train fiasco bit here)
so everyone wants to live here....if they could....


----------



## satanoperca (5 April 2009)

robots said:


> hello,
> 
> push bike riding alcopop drinker Satanoperca, ruskies all the way, keep an open mind
> 
> ...




More along the line of red wine drinking, convertible driving Satanoperca.

What exactly are you 1 up on, the finish line is still months away.

If it is a draw, go to the pub, eat parma and drink beer.

Cheers

Kincella, I am actively looking at buying again. The bargains in the bayside suburbs of Port and South Melbourne have disappeared in the last month. There was a few around late last year. For properties priced well, they are selling quite quickly under 800K. The last week has seen a lot more come onto the market over the previous months and only time will tell how the market will react.


----------



## apra143 (5 April 2009)

Once again, delaying the inevitable:
Government, banks join forces on mortgage rescue plan



> The Australian Bankers Association's David Bell says the Commonwealth, NAB, Westpac and ANZ banks will postpone home loan repayments for up to 12 months for people in hardship.




House prices to keep rising for at least one more year


----------



## robots (5 April 2009)

hello,

Satanoperca post#3524 from other thread:

"Picking the few suburbs (those will high FHB - government assisted) does not strengthen your arguement that house prices are not falling. 

I reviewed the Sunday Sun list of property prices per suburb. Interesting some suburbs did Ok and some did not so well, the last qtr being more telling to the slide into recession that is now facing us.

Even our beloved PM sees we cannot swim against the tide any more. Given this statement, is property the only thing that is going against the current trend for assets - I hardly think so.

Like Steven Keens bet, how about we have a fun wavier to keep everything in good spirits. *I will bet you that house and apartment prices in Victoria based on median will be negative after the 2nd qty results are released. This would be deemed a fall, how much, as long as it is negative. If I loose I will buy you a case of your favourite beer and vise visa. To finalise the deal, we meet in a pub in sunny St Kilda (a great place to live i agree), have a few beers and a meal and leave with our bounty.*

On the issue of renter over mortgage, please factor in a value for if property prices fall, even 5%. I would rather be the renter - times are a changing.

Cheers

Benjamin"

just transferring to king of property threads, considering the results so far a big drop is required

house and apartments too, so if one positive one negative, robots collecting

paradise, the ruskies on the way 

thankyou
robots


----------



## satanoperca (5 April 2009)

http://www.news.com.au/business/money/story/0,28323,25288384-14327,00.html

Maybe not something new but does link up with the mortgage relief topic. Banks may give mortgage holder the chance to delay payments for up to one year but the devil is in the detail which has not been released yet. If it will result in them going into negative equity do you think the banks will be so willing to grant relief. 

Kincella, you asked what could cause a drop of 40%, if banks started rationing credit and reduced LVR's to say 60%, you would see a drop in housing that could result in a bad negative feedback loop, even though this is unlikely, part of it may be a possibility resulting in a large drop in RE prices. 

Just have to look at the commerical property sector lending where banks have started tight rationing and overseas banks are slowly pulling out of the sector due to trouble back home. Macquarie has recently been caught by this problem, tight credit, lower asset values and higher interest rates. Unless RUDD bank steps in with a helping hand. 

The next federal budget will be interesting and it's effect on the confidence of the general public - back into the red we go. 

I assume that this relief will not be available to IP's but I could be wrong.


----------



## kincella (5 April 2009)

Robots...I would like to ask a favour of you...when you are cycling around your fav suburbs...would you please take note of how many building developments are taking place....I was amazed at the group over in glenferrie rd...as stated yestrday...and I will take a closer look today..
what we are looking for is the real story...of whats happening out there on the ground...
cheers
when talking about location.... I only like certain streets...not the whole suburb...so need to add to my list....
I also like the top end of Mathoura Rd...near Toorak Rd...I note the penthouse was sold....hardly on the market for 2 minutes


----------



## kincella (5 April 2009)

satan opera...
couple of things...firstly how did you come up with your nick name ???

then the problem with commercial is, all the macca's and gpt's went out and purchased good properties...then loaded them to the hilt with debt...
so when the group goes bust...instead of affecting 10 properties it affects 20 or more each trust...
however..since we are not all tarred to the one brush.....I believe there will be plenty of interest from cashed up players ready to take on a commercail property.....
the smsf have been busy in the market the past 5 years...its an evolution to moving on from the traditional stocks, cash and resi market....

the office sector is usually the first to take a hit....and I for one would not bother , but there have been some terreific examples I could have taken up and made a load of money on.....

some good opportunities out there coming up...for those people with some cash and a longer term view


----------



## singlefished (5 April 2009)

I think we should start 2 new threads since the goalposts keep on moving

*House prices with Government intervention

House prices without Governement intervention*

:

It's pretty fair to say that nobody really factored in how the Government would play their cards. Which I suppose is a good thing, nothing worse than a predictable Government IMO!

Budget time will be interesting for sure. I wonder what other surprises Lindsay Tanners little glove puppet will provide us with...


----------



## kincella (5 April 2009)

just wondering if I should look at the auctions and maybe find me a little s/h audi roadster.... for me and the dog...
otherwise might have to go looking for a new car with zero interest rates....a green car of course...


----------



## satanoperca (5 April 2009)

Kincella,

Google Satanoperca, you will find that it belongs to a species of amazon fish, referred to by the natives of the area where it is found as the devil fish even though it is non aggressive and peaceful. Living in an apartment, a dog is not a good choice for a pet, so I keep a large community fish tank based on an Amazon river biotype. 

I have been down Hawthorn way recently and there seems to be a lot of residential development. I assume that most of what is under construction has been in the planning process for several years. It will be interesting to see in the next six months how much new development gets underway. The banks have already changed their lender criteria for commercial developments catching out even well resourced developers.

Audi roadsters are a really nice car and can be picked up second hand quite cheap at the moment, also look at Mazda MX5. Great car to drive, lots or fun, reliable, good value and a good time to buy going into winter.


----------



## satanoperca (5 April 2009)

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5527137.ece

Found on another site.
This mortgage relief could have a negative effect on the property prices.

Yes, I know we are different in Australia.

Cheers


----------



## overlap (5 April 2009)

robots said:


> hello,
> 
> Satanoperca post#3524 from other thread:
> 
> ...




For a moment there I thought you'd put together some coherent reasoning.
But you were just quoting someone.


----------



## IFocus (5 April 2009)

singlefished said:


> I think we should start 2 new threads since the goalposts keep on moving
> 
> *House prices with Government intervention
> 
> ...




LOL Singlefished yes I didn't factor how effective the Gov intervention could be holding the market up but I also though unemployment would have been higher too.

So far the contraction in the economy has been trending down but at a nice steady rate giving the Gov plenty of time to adjust policy accordingly.

May budget should spell out a clearer picture of Treasury's expectations for rest of 09 and into 2010 cannot see it being pretty as Gov talking unemployment up currently.


----------



## MrBurns (5 April 2009)

Mortgage relief will just postpone the housing crash a little and put the banks under a lot of financial pressure.

Nissan 350Z are great, dunno if thats in the price range though.


----------



## satanoperca (5 April 2009)

robots said:


> hello,
> 
> just transferring to king of property threads, considering the results so far a big drop is required
> 
> ...




Yes a massive drop <2%, to bet this years 1.1% rise based on January figures and indicative February figures from the RPdata. 

ABS figures come out in May, then you can chaulk one up on the board if positive.

IFocus, the may budget will be interesting. I think it will present a picture to average Joe that all is not what it seems resulting in reduced consumer confidence as he/she sees the billions of dollar the Government is in the red and how serious the current situation is if we wish to maintain our current standards of living in this great country.

Cheers


----------



## robots (5 April 2009)

hello,

dont forget the apartments, they in the bet you made which I gladly accepted

no worries Kincella i will report

thankyou
robots


----------



## kincella (5 April 2009)

Robots, thank you
oh and is it just me, or is there a growing number of posters on here, actually in the market and actively looking to buy a house...?

remember when you buy....expect to keep needing a roof over your heads for the next 60 years for 30 year olds and less for the older ones....
thats a long time to be holding property...or turning it over on a regular basis..7-10 years....I dont know of many who do change....most people I know have been in the same house since marriage...I am in the 20 year group
cheers


----------



## singlefished (5 April 2009)

IFocus said:


> May budget should spell out a clearer picture of Treasury's expectations for rest of 09 and into 2010 cannot see it being pretty as Gov talking unemployment up currently.




It will be telling for sure. I think that treasury has maybe had a bit of a shock at the projected unemployment rates so the budget will be massively skewed to hopefully keep the economy intact. I hope Turnbull will give up on his political jousting, delay & point scoring tactics ~ it hasn't done him much good in the polls and could likely be construed as counter productive especially if the Government really goes out on a limb.

Lindsay Tanner, the beady eyed accountant that he is, has my approval with the keys to the purse strings however... Comes across as confident, competent, hard working and reasonably honest as a politician.




MrBurns said:


> Mortgage relief will just postpone the housing crash a little and put the banks under a lot of financial pressure.




I'm not so sure now. I can see a few of the smaller banks feeling slightly vulnerable but mortgage relief will take away a bit of worry and provide somewhat of a floor throughout the stressed parts of the market. Prices certainly won't be booming again for a long time but they wont be massively dropping under duress from stressed unemployed homeowners looking for a quick sale.

I still think there is a load of downside for sure and some sectors will certainly see declines over the coming year but nothing that will blow your socks off.





kincella said:


> just wondering if I should look at the auctions and maybe find me a little s/h audi roadster.... for me and the dog...
> otherwise might have to go looking for a new car with zero interest rates....a green car of course...




A nice little TT, 5~6 year old, less than $30K. I wouldn't pay any more than $15K for anything over 9~10 yrs.

Or you could go the R8 route if you're really wanting to splash out. $210K for 2008 model on carsales with only 10K on the clock. Don't get a green one though, Audi always looks best in silver


----------



## singlefished (6 April 2009)

Bit of bad news for FHB's :



> Banks slashing maximum loan ratios
> 
> MORTGAGE lenders are slashing loan ratios in a bid to protect themselves against falling house prices.
> In the past fortnight, Commonwealth Bank, Bankwest, ING, Challenger, Citibank and Suncorp have all cut their maximum loans from 95 per cent to 90 per cent of the property value - and may cut further. ANZ cut its maximum loan to 90 per cent last November.
> ...




http://www.news.com.au/business/money/story/0,28323,25288384-14327,00.html

FHB purchasing power will effectively be halved now based on their current savings... and if the banks stop accepting FHBG as part of the deposit?

I wonder how the Government will tackle this.


----------



## numbercruncher (6 April 2009)

Ahhhhhh so its looking like credit is the ultimate fundamental after all huh ?? 





> House prices to keep rising for years





And I had dinner with the tooth fairy .....


----------



## robots (6 April 2009)

hello,

looks like you need new glasses Numbercruncher:

rpdata.com.au

straight up on the home page

paradise, things can be hard to accept, just try and keep yourself occupied, read  a book, go for walk or something

your fearless leader has walked, the team is slowly realising the situation

thankyou
robots


----------



## metric (6 April 2009)

yes. house prices will keep rising for years in australia. immigration, increasing population, building material price increases, history, etc.

there may be dips and bumps, but yes ultimately rising.


----------



## Uncertain Times (7 April 2009)

With LVR on the way down it will start to ease the demand side of the market. If the banks return to the old days they may even start looking at only lending against the full time male income as the female will be out of the work force at some stage as the FHB start having kids in a couple of years.
I can remember both parents and in-laws telling me the bank would only lend up to 30% of one full time wage. So if things start getting tighter in the lending then FHB will be heading back to renting whatever they can find.
Perhaps that will be good for the investor but they may also find it harder to lend money as banks cap the amount they are willing to lend.
You will always see growth in certain areas and around Swinburne Uni in Hawthorn there is a massive undersupply of student accomodation hence the large development going up but how much of these will be built over the coming years due to commercial loan issues.
So there may be continuing supply problems but demand will be restricted due to issues with the supply of credit.
Uncertain times ahead.


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## kincella (7 April 2009)

good point here from Terry Ryder property market forecaster....
extract...........................

Property prices in Melbourne, considered underrated, are also set to increase in value by 2020.

A Mitcham home, valued at $250,000 in 1999, is now valued at $450,000 - by 2020, it has been forecast to be worth $900,000.

"Melbourne tends to be underrated by the market. It's got the strongest population growth of any city in Australia and that's a consistent long term trend with Melbourne because of overseas migration," Real Estate Tim Fletcher said.

"It has the cheapest residential land amongst the major cities and its overdue for a really big spike in values. There's no logical reason why Melbourne houses should be cheaper than Darwin or Perth's or Brisbane - certainly there is no reason why they should be $100,00 cheaper than Sydney's."

http://au.todaytonight.yahoo.com/article/5481349/money/value-home-2020


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## satanoperca (7 April 2009)

Hi,

Saw the spruik last night, property doubles every ten years.

Maybe Kincella you have access to some historical figures on Mitcham for the last 40 years to see if the theory works in reverse, would be interesting to see if it stacks up.

2020  900K
2009  450K
1999  225K  
1989  112.5K
1979  56.3K
1969  28.1K

Cheers


----------



## hunter and co (7 April 2009)

How do you explain the areas that have gone up 500% in the last five to seven years.A bubble?


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## kincella (7 April 2009)

satan...Mitcham Vic or SA ??? 
fhb prices in 1986 were 67400
see the link for 1986 to 2006

I believe the median price in 69 was about 12,000
and that prices tripled every 10 years....
thats the only way I can match the 12,000 up with 1989 as per the chart

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


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## MACCA350 (7 April 2009)

They seemed to ignore that if it's a PPOR then what happens in 10 years when you sell..........live on the streets and blow all the 'profits' on booze and pokies 

With PPOR you don't really make a 'profit' you only really profit with IP

cheers


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## Beej (7 April 2009)

MACCA350 said:


> They seemed to ignore that if it's a PPOR then what happens in 10 years when you sell..........live on the streets and blow all the 'profits' on booze and pokies
> 
> With PPOR you don't really make a 'profit' you only really profit with IP
> 
> cheers




That is partly true, however you do reap a "yield" in terms of lifestyle/no rent etc (once your PPOR is paid off). And then if you have played the game and upgraded a couple of times, when you retire you downsize/tree-change etc and that frees a lot of capital up that you can use to help fund retirement.

Cheers,

Beej


----------



## Uncle Festivus (7 April 2009)

kincella said:


> good point here from Terry Ryder property market forecaster....
> extract...........................
> 
> Property prices in Melbourne, considered underrated, are also set to increase in value by 2020.
> ...




Well one major reason is that you have to live in the place!

Valued at....worth..... he's short on reasons why it's going to go to $900k, other than "its overdue for a really big spike in values"? That's really reassuring, and he's an expert?? Don't you property people know that it's all a function of excess credit/money supply - and that's the problem right now, there is none - it's a global credit contraction. That's why we have all these babysitting grants and tax rorts to keep the property jalopy above water. First the commercials, now the privates.

It's pretty obvious that the property industry & the Gov are getting more interdependent each day to prop each other up - the Gov will have to keep the $21k pork pie going otherwise there will be a bigger crash than what is already coming. Thanks Kevin for the freeby, care of the rest of the Australian current & future taxpayers - I'll give you a big approval in the next poll.

Beer  :drink:& skittels:kiffer:


----------



## kincella (7 April 2009)

festivus....you dont get it...the govt have not build any new public housing since the 1970's...that used to be paid with our taxes......
only last week they said they will start again...20,000 houses over next 5 years.....big deal
and who would be the more efficient providor....the govt with all those awful
little boxes, no resale value


----------



## MACCA350 (7 April 2009)

Beej said:


> That is partly true, however you do reap a "yield" in terms of lifestyle/no rent etc (once your PPOR is paid off). And then if you have played the game and upgraded a couple of times, when you retire you downsize/tree-change etc and that frees a lot of capital up that you can use to help fund retirement.
> 
> Cheers,
> 
> Beej



Agreed, but if you are selling and buying in the same market waiting 10 years won't make much of a difference since all the values increase so your only really moving sideways in the same market.

cheers


----------



## Beej (7 April 2009)

Uncle Festivus said:


> It's pretty obvious that the property industry & the Gov are getting more interdependent each day to prop each other up - the Gov will have to keep the $21k pork pie going otherwise there will be a bigger crash than what is already coming. Thanks Kevin for the freeby, care of the rest of the Australian current & future taxpayers - I'll give you a big approval in the next poll.
> 
> Beer  :drink:& skittels:kiffer:




This has always been the case! As Kincella said, there is the public housing vs supporting the private sector to produce most/all housing side of the relationship (negative gearing, tax breaks etc). As for the FHB grant, my dad told me on the weekend that in 1966 he got a $750 grant to buy his first house! That's about $20k in todays dollars! I never got anything like that when I first bought in 1992, and I had to pay full stamp duty! These things come and go at various times. So really nothing has changed, nor will it - so if that's what you are waiting for you will probably be waiting a loooooong time in this country!

As for the global credit contraction, there are certainly issues globally for various reasons, and they do impact Australia to some degree, (mainly the contraction we are currently seeing due to dampened consumer confidence and a reduction in international trade), however I think your views are an over-simplification of what is actually going on and why. Additionally, credit for residential housing loans in AU has been INCREASING for the past few months, see: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument. So there goes your argument right there!

Oh yeah that's right I forgot, we are 6/12/18/24/36/48/60 months behind the US, the world is ending, every one is going to lose their jobs etc etc etc..... 

Cheers,

Beej


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## enigmatic (7 April 2009)

Can you explain to me how you can consider this trending upwards.
Your comprehension and understanding is much needed


----------



## enigmatic (7 April 2009)

And yes I know it appears to be trending upwards however this is always expect when you have a free fall which can be seen by the May 08 seasonally adjusted figure being much lower then the moving avg lets just wait 2-3 more qtrs to see the direction of the trend.


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## Uncle Festivus (7 April 2009)

Beej said:


> Additionally, credit for residential housing loans in AU has been INCREASING for the past few months, see: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument. So there goes your argument right there!




Let's see the whole dataset -

http://www.abs.gov.au/ausstats/ABS@...CA2575780017B5D2&0&Jan 2009&16.03.2009&Latest

Even without charting the data, it's obvious the grants/loans/tax breaks are getting out of hand with the bounce from the low's, & hence the moves by the creditors to reign them in, and moves to give borrowers 'holidays' if they get into trouble - the start of moral hazard here, take the risk, the government will bail you out if it goes wrong? Is the Government game to take away the stimuli and let the market go cold turkey? I don't think so.


----------



## Beej (7 April 2009)

enigmatic said:


> Can you explain to me how you can consider this trending upwards.
> Your comprehension and understanding is much needed




Well for a start, all I said was the last few months showed an increase. Tomorrow data for Feb is being released - I'll discuss the emerging trend with you then 

PS: The auction clearance rates, increasing median prices in Melb/Sydney, ongoing FHB activity etc etc over Q1 09 all indicate to me that there is a pretty good chance that the finance figures from tomorrow will show yet another increase for Feb - possibly a pretty decent one. Want to call it the other way then and we will see who was right tomorrow???

Cheers,

Beej


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## enigmatic (7 April 2009)

Not really interested in month by month basis or even qtr by qtr.

Currently the overall market has a belief that this is the end of the down turn so I'm reasonably confident that the trend will appear upwards I'm more interested in what happens once lending tightens and the FHBG is removed.


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## MrBurns (7 April 2009)

You cant defy gravity forever, once the doubling of the FHBG stops in June you will see the market hit a brick wall.


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## Beej (7 April 2009)

MrBurns said:


> You cant defy gravity forever, once the doubling of the FHBG stops in June you will see the market hit a brick wall.




Except gravity for property prices pushes prices upwards - not downwards! It is property price falls that actually defy gravity! Looks to me like gravity is back in control in Sydney and Melbourne at least. You can deny all you like - wait for the FHBG boost to removed etc, I think all will be surprised by the resilience of the property market. Interest rates are the major factor.

Beej


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## roofa (7 April 2009)

I think this is relevant to your current discussion.



http://www.news.com.au/heraldsun/story/0,21985,25300375-662,00.html


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## Uncle Festivus (7 April 2009)

Beej said:


> Interest rates are the major factor.
> 
> Beej




Unemployment is THE major factor. If you don't have a job interest rates don't mean much to you.


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## nunthewiser (7 April 2009)

Uncle Festivus said:


> Unemployment is THE major factor. If you don't have a job interest rates don't mean much to you.




bingo


----------



## Beej (7 April 2009)

Uncle Festivus said:


> Unemployment is THE major factor. If you don't have a job interest rates don't mean much to you.






nunthewiser said:


> bingo




Discussed ad nauseum here over the past few pages. You believe that if you like, but historically rising unemployment actually has not had much of an impact on house prices at all - certainly far less than the property bears here are expecting. The last major boom (1999) started while unemployment was 7%. From 1991-1993 the unemployment rate rose to 11% yet median property prices increased over that period. Go figure!

Beej


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## MrBurns (7 April 2009)

Low interest rates are what fueled this bubble in the first place, somehow sometime soon it will all become clear.

Massive unemployment will counter the interest rate factor and prices will fall, the catalyst will be the end of the doubling of the FHBG, until then there will be a frenzy of activity to get in before the end of June, if Rudd continues the bribe he will go down like Whitlam in a flurry of incompetence.


----------



## Beej (7 April 2009)

MrBurns said:


> Low interest rates are what fueled this bubble in the first place, somehow sometime soon it will all become clear.
> 
> Massive unemployment will counter the interest rate factor and prices will fall, the catalyst will be the end of the doubling of the FHBG, until then there will be a frenzy of activity to get in before the end of June, if Rudd continues the bribe he will go down like Whitlam in a flurry of incompetence.




But Mr Burns you seem to be forgetting that the FHBG was started by your heroes Mr Howard and Mr Costello all the way back in 2000!!!  Were they incompetent as well or do you only use that label for Labor politicians? Me I think they are all equally capable of incompetence, whatever the political flavour  Come June all that will happen is the boost to the grant will be removed. I reckon they might even keep it for new houses. If this happens how would that fit in with your "forecast"??

Cheers,

Beej


----------



## nunthewiser (7 April 2009)

Beej said:


> Discussed ad nauseum here over the past few pages. You believe that if you like, but historically rising unemployment actually has not had much of an impact on house prices at all - certainly far less than the property bears here are expecting. The last major boom (1999) started while unemployment was 7%. From 1991-1993 the unemployment rate rose to 11% yet median property prices increased over that period. Go figure!
> 
> Beej




um maybe have a look at the income verses mortgage size around that time to m8 , maybe you may notice the multiples were a tad less 

anyways.. no point discussing anything other than sunshine and lollipops these days as only leads to a sore finger


----------



## MrBurns (7 April 2009)

Beej said:


> But Mr Burns you seem to be forgetting that the FHBG was started by your heroes Mr Howard and Mr Costello all the way back in 2000!!!  Were they incompetent as well or do you only use that label for Labor politicians? Me I think they are all equally capable of incompetence, whatever the political flavour  Come June all that will happen is the boost to the grant will be removed. I reckon they might even keep it for new houses. If this happens how would that fit in with your "forecast"??
> 
> Cheers,
> 
> Beej




The grant will drop by 50%, the only reason they're rushing in now is because of Rudds incompetant distribution of our taxes, if there's not cheques in the mail there's grants for everybody, boosts his popularity and sends us broke, but I digress, the halving of the FHBG will tip it over the edge, bye bye to the last of whats been inflating the bubble.


----------



## Beej (7 April 2009)

nunthewiser said:


> um maybe have a look at the income verses mortgage size around that time to m8 , maybe you may notice the multiples were a tad less




Not in Sydney so much: 1992 median house price $180k, average full time wage <$30k. Multiple = 6x plus. Current Sydney median house price $525k, average full time wage $65k (latest ABS stats), multiple = 8x. Interest rates in 1992 - 10%. Interest rates now - 5.x%.

EDIT: And rates just cut by another .25%!

So the multiples are not that different. If you consider the different inflation and interest rate environments, plus consider total HOUSEHOLD income rather than just a full time single income, then your point becomes quite moot.

Cheers,

Beej


----------



## satanoperca (7 April 2009)

The FHBG come June should be continued only for new homes and reduced back to the original $14,000. This at least stimulates new development, employees people etc. An even better idea would be change it from a grant to a low interest loan, similar to HECS. I think it is ridiculous that FHB using the grant and no deposit savings of their own have been able to purchase homes, that is just asking for trouble if the economy slows or interest rates return to the mean.

If the grant is removed I would expect to see a heavy reduction in the number of FHB in the 3rd & 4th Qtrs. Much of the demand has already been pulled forward already as FHB's are scared that the grant might end come end of June.

The changing in lending criteria by the banks will also have an impact on FHB's if the grant no longer can be used as a deposit along with the reduction in LVR's to 80-90%. If this is the case, I would expect suburbs that have seen increases in the last six months due to FHB will see half of those gains lost in the 3rd and 4th qtrs of this year unless we see a reduction in IR.

Not all people are effected by housing prices changing, eg my parents who are retired and own their house outright. They don't care if it goes up or down, they need a place to live and will not be selling in the near or distant future. They do care about current interest rates however, the being to low and the ROI is crap at the moment along with the lose in capital from share loses last year.


----------



## nunthewiser (7 April 2009)

Beej said:


> Not in Sydney so much: 1992 median house price $180k, average full time wage $30k. Multiple = 6x. Current Sydney median house price $525k, average full time wage $65k (latest ABS stats), multiple = 8x. Interest rates in 1992 - 10%. Interest rates now - 5.x%.
> 
> So the multiples are not that different. If you consider the different inflation and interest rate environments, plus consider total HOUSEHOLD income rather than just a full time single income, then your point becomes quite moot.
> 
> ...





um sydney is not a whole country , but what i can remember is a different story when it came to buying in perth and melbourne........ a lot less of a multiple compared to now ..


----------



## MrBurns (7 April 2009)

Well I for one am sick of buying other peoples homes for them through my taxes, no one did that for me.


----------



## Beej (7 April 2009)

nunthewiser said:


> um sydney is not a whole country , but what i can remember is a different story when it came to buying in perth and melbourne........ a lot less of a multiple compared to now ..




Yes well houses used to be cheap in big country towns. Then they grow into cities like Sydney, and they get expensive, and stay that way..... hope you didn't miss the boat!

Cheers,

Beej


----------



## nunthewiser (7 April 2009)

Beej said:


> Yes well houses used to be cheap in big country towns. Then they grow into cities like Sydney, and they get expensive, and stay that way..... hope you didn't miss the boat!
> 
> Cheers,
> 
> Beej




now that was a very immature post beej and had completely nothing to do with the point at hand .

i did well actually


----------



## MrBurns (7 April 2009)

Beej said:


> Yes well houses used to be cheap in big country towns. Then they grow into cities like Sydney, and they get expensive, and stay that way..... hope you didn't miss the boat!
> 
> Cheers,
> 
> Beej




They dont stay that way at all, they drop then recover, when there's a bubble it bursts and thats what's going to happen here, but with extra bursting power helped by Kruddonomics, prices will recover but only when the economy is fixed not patched by Dumb and Dumber.

Miss the boat ??? LOL spoken like a gold Coast property developer, from the poorhouse.


----------



## Beej (7 April 2009)

MrBurns said:


> LOL spoken like a gold Coast property developer, from the poorhouse.




Yep - I've got my white shoes on today too! 



nunthewiser said:


> now that was a very immature post beej and had completely nothing to do with the point at hand .
> 
> i did well actually




Sorry - I'm in a good mood today. The first part of my comment was relevant though! Glad you did well


----------



## kotim (7 April 2009)

Beej effectively 91-93 was part of the last "boom" in house prices prior to the most recent one in the 2000's.  But after 1993 house prices went backwards and then sideways for between 6-10 years depending upon where you live.  Not only that rent peaked in 1993 in many places and then went down to sidesays for quite a few years.


----------



## Beej (7 April 2009)

kotim said:


> Beej effectively 91-93 was part of the last "boom" in house prices prior to the most recent one in the 2000's.  But after 1993 house prices went backwards and then sideways for between 6-10 years depending upon where you live.  Not only that rent peaked in 1993 in many places and then went down to sidesays for quite a few years.




Not sure where you get that data from? The previous boom started in 1987/88 and prices rose rapidly up until 1989/90 (they more than doubled in that 2-3 years). There were then some falls through 90, followed by a flat-ish period from 1992 through to about 1993/94 (there was some moderate growth, but nothing dramatic). It was also difficult to buy a decent house in the early part of this period as there wasn't much good stock on the market and volume was thin. In 94/95 things started to take off and that was really the start of the most recent boom, which in Sydney at least pretty much finished in 2004. I think it may have started later and finished later in some other regions, and maybe still going in Darwin as we type!

Here's an article I've posted before that shows Sydney median prices (with some interesting historical commentary) up until 1994:







I see the current period (the year just gone - ie start/confirmation of recession, beginning of rising unemployment, rapidly falling interest rates etc) as being very similar to 1990 - moving into that 91/92 type period this year and next - setting up for the next real boom in 3-5 years time.

Cheers,

Beej


----------



## robots (7 April 2009)

hello,

good evening, just back from tennis tonite (close match, two sets to one Robots way at end)

wow, my money renting rate is going down again, this is amazing

and people suggest getting out of debt, hahahaha

another reduction, paradise

I wonder if Rudd can fix the internet in the UK as well?

thankyou
robots


----------



## kotim (7 April 2009)

Beej it travels up the east coast, I can tell you that North Qld which obviously gets the boom last in the East Coast was getting good price growth through to 1993, but that was effectively the end of it.  The boom up there only started again in 2003 and that was after the boom had obviously allready started much further down the east Caost and worked its way up.


----------



## Uncle Festivus (8 April 2009)

robots said:


> hello,
> 
> good evening, just back from tennis tonite (close match, two sets to one Robots way at end)
> 
> ...




And, your RE friendly bank buddies have already indicated that the parties over - no more reductions due to the high cost of funding. Find out where all this housing 'credit' is coming from & you will see why the debt binge will shortly come to an abrupt halt, and property will be the worst place to park spare cash. Game, set & match to irrational unproductive debt 

Debt is being called in........


----------



## robots (8 April 2009)

hello,

lowest rates in 49yrs, yes thats right man 49yrs

i hope many follow your opinion and do nothing with property, building is still well down and this is fantastic

people who can afford property will buy and if rent out will get a "real"return, no management, no part paid shares just fantastic real yield

next cut will be 0.5% by RBA

thankyou
robots


----------



## MrBurns (8 April 2009)

These cuts are now only to benefit the banks, whats your credit card interest rate now ? 198% ? 

*Thats 6 times the official rate* and the Govt lets them get away with it


----------



## Uncle Festivus (8 April 2009)

robots said:


> hello,
> 
> lowest rates in 49yrs, yes thats right man 49yrs
> 
> ...




We caught on to your flame game several years ago Bot's so we know you can't be deliberately saying these things. 

Bottom line is, any more interest rate cuts will go straight to the bottom line of the banks profits, not to mortgage holders.

If only I could short RE??


----------



## MrBurns (8 April 2009)

MrBurns said:


> These cuts are now only to benefit the banks, whats your credit card interest rate now ? 198% ?
> 
> *Thats 6 times the official rate* and the Govt lets them get away with it




I meant 18% of course


----------



## Judd (8 April 2009)

MrBurns said:


> I meant 18% of course




Hey, MrBurns.  That is the nominal annual rate.  An annual rate of 18% is 0.049315% daily - they do charge interest on that basis - so applying the formula

f = ( 1 + i )m - 1

where "f" is the Effective rate and "m" is the number of compounds per year,

18% is actually an effective rate of 18.45% - pundits please correct my calculations should I be wrong!

Adds up in actual coins paid to the bank as you probably can guess.

Since we have no credit card debt, no mortgage or any other debt, on a personal basis I could not give a toss.  People can get as deep in debt as they wish provided they are prepared to wear the consequences (although there are such a number of bleatings about (Storm, Westpoint, mortgages, and so on and so forth), it does seem that the sheep don't like the nasty (interest rate/credit crunch) weather or, indeed, the wether.  Poor wether.


----------



## sinner (8 April 2009)

Uncle Festivus said:


> We caught on to your flame game several years ago Bot's so we know you can't be deliberately saying these things.
> 
> Bottom line is, any more interest rate cuts will go straight to the bottom line of the banks profits, not to mortgage holders.
> 
> If only I could short RE??




The banks do not have a lot of choice, they need to finance new lending to keep the debt ball rolling.


----------



## Temjin (8 April 2009)

robots said:


> hello,
> 
> lowest rates in 49yrs, yes thats right man 49yrs
> 
> ...




Robots, if you were the RBA, would you reduce the short term interest rate to 0% as well as manipulate the long term interest rate to go lower as well? Then mandate laws to the banks that they should pass on the full interest rate cuts or else they get a huge fine or jail time for the CEOs?

Perhaps that would give everyone of us with a mortgage loan of less than 1% and be able to fix it significantly longer too. How wonderful is that!!!!

Oh by the way, in case you are wondering, the Federal Reserve in the US are doing exactly that right now.  (except the law for huge fine or jail time for banks' CEOs) Perhaps you should go there and enjoy their 50 years + historic low fixed 30 years mortgage loan rate.


----------



## robots (8 April 2009)

Uncle Festivus said:


> We caught on to your flame game several years ago Bot's so we know you can't be deliberately saying these things.
> 
> *Bottom line is, any more interest rate cuts will go straight to the bottom line of the banks profits, not to mortgage holders.*
> 
> If only I could short RE??




hello,

yes and we still be at 49 year low, paradise

i rode the increases and i will ride the decreases as well

building starts are way low and I hope it continue's long into the future, gee havent heard Bot's for a while

brings back memories of that guy who had "St Kilda units -50% 2009" as his sig

if I went to US i would go and pickup a bullet-proof vest first and wear it 24hrs of the day, atrocious country

thankyou
robots


----------



## kincella (8 April 2009)

evening Robots...
it was a bit warm here in Melb today...
all's rosy atm, but obvious the RBA was not listening to the scary stories  or the IMF...little by little...month by month
sorry for the pensioners, gee they have to be a bit savvy though....using an internet account for the higher rates....
I have to stay here and play catch up over easter...got a bit of work to do
no fun ...
ps realise I am not adding much to the forum, just part of the cheer squad
cheers


----------



## robots (8 April 2009)

hello,

evening Kincella, fabulous day and the clear blue sky out the window should lead to another superb day tomorrow

chapel st will be pumping, its great mixing it with all the cats on the street

thats right Kincella, month by month, year by year the time rolls on and those on the ride looking good, great long term hassle free investment

thankyou
robots


----------



## kincella (9 April 2009)

*melb new suburb in the heart of it all [B

this will be very popular..near Maribyrnong....for those who love the city life...hehehe

7500 jobs, 3000 new homes....guess that will help a bit with our 1500 new people per week coming to Melb.................................................

A new suburb creating 7500 jobs and more than 3000 new homes will be developed on a former defence site in Melbourne.

The federal and Victorian governments are working together to buy the 128-hectare former Department of Defence site in Maribyrnong, in the city's west.

http://www.theage.com.au/national/new-suburb-for-melbournes-west-20090409-a1c0.html*


----------



## kincella (9 April 2009)

just wondering if some of you may like to just copy your posts on housing over onto the sister site....www.aussiepropertyforums.com

so drum up interest over there...and since you already made the post here its simply just copy it....
I am not intereted in the stock market atm....purely property
I often copy something posted here over there...
that site just needs some help to get going...
cheers


----------



## Uncle Festivus (9 April 2009)

robots said:


> building starts are way low and I hope it continue's long into the future, gee havent heard Bot's for a while
> 
> thankyou
> robots






kincella said:


> A new suburb creating 7500 jobs and more than 3000 new homes will be developed on a former defence site in Melbourne.






> *AUSTRALIA'S unemployment rate has climbed to 5.7 per cent, with nearly 40,000 workers losing their jobs in March.*
> Economists had forecast the unemployment rate to rise to 5.5 per cent with more than 30,000 workers cut from the market.



Building starts low........3000 new homes. Maybe you 2 should get your stories to line up while at the spa getting your daily massage by Swedish goddesses feeding you grapes and truffles . There's 40,000 less home buyers gone....


----------



## investedz (9 April 2009)

Uncle Festivus said:


> We caught on to your flame game several years ago Bot's so we know you can't be deliberately saying these things.
> 
> Bottom line is, any more interest rate cuts will go straight to the bottom line of the banks profits, not to mortgage holders.
> 
> If only I could short RE??




I think you can sell call options on your property... that's one way of shorting RE

EG.The idea is to sell a contract to a speculative buyer, to give him/her the right to buy your property at a certain price, by a certain date.

So if your property is worth $400k and you think the market is gonna go down, you can sell to the potential buyer the right to buy your property off you for $450k, which may expire in say a year (or any date you like) and that contract might cost the buyer around say $20k.

If the property falls in price to say $350k by the contract expiry date, the buyer wouldn't bother buying the property off you, leaving you with the $20k premium for selling the contract.

Of course with all things you short sell, the risk is if the price of underlying asset rises, and you would end up having to sell your property for 450k when the value of it rises to say 500k.


----------



## robots (9 April 2009)

hello,

yes 3000 new homes in 2012, great stuff

thankyou

robots


----------



## kincella (9 April 2009)

evening Robots, 2 more developments noticed...only due to stuck in traffic...flying too fast with crazy easter drivers to notice much...
both probably 10 units each....
thats about 11 different ones so far....lets see how many  I find, when I can have a good look around
its the little ones here and there.....little by little and bit by bit...we all keep moving along....
while the scaredy cats react to the 'bad news press only'....

recall an associate many years ago....he lived in Toorak and just loved it...no super in the old days...so he just kept buying a unit here and there...he had 10 units..all different streets in toorak....all just small nice units...that he could afford...at a minimum today thats @ 500.000 or 5 million in assets...
they would be all paid off by now....
he never waited for the bottom of the market etc....just buy another when you can afford it was his attitude
cheers


----------



## Trevor_S (9 April 2009)

http://www.domain.com.au/Public/Art...ionalIndex&headline=The_suburban_battleground



> Falling property prices mean bargains for some and heartache for others. Eight weeks ago, professional golfer Terry Pilkadaris came home from the local course and told his wife, Monique, he'd been advised to sell their Melbourne home and investment property. Immediately.


----------



## kincella (10 April 2009)

many years ago...when I was about to change my life quite dramatically...which I did...I read the book...'the power of positive thinking' by Norman Vincent Peale.....and I often read parts, highlighted, on a regular basis, to keep my spirits high...I have used it as one of the greatest tools to help inspire others.....

this morning on glancing over highlights...I came across some bits that seemed appropriate to the arguments we have on this thread......

words from the book by - Norman Vincent Peale

attitudes are more important than facts...any fact, however difficult, or seemingly hopeless...is not so important as our attitude to that fact...*facts may defeat you before you do anything about it*

and this piece....
lack of self confidence, people become content with something less than that of which they are capable....*and so they go crawling their way through life...defeated and afraid...*


----------



## Uncle Festivus (10 April 2009)

kincella said:


> many years ago...when I was about to change my life quite dramatically...which I did...I read the book...'the power of positive thinking' by Norman Vincent Peale.....and I often read parts, highlighted, on a regular basis, to keep my spirits high...I have used it as one of the greatest tools to help inspire others.....
> 
> this morning on glancing over highlights...I came across some bits that seemed appropriate to the arguments we have on this thread......
> 
> ...




Cheer up Sheepy , there's still time to sell your property investments before the plunge. 

Do I detect a hint of concern at the deteriorating economic climate?

"Facts may save you from ignoring common sense" UF 

Hmmmm..... those facts you say........is the real unemployment rate 11% or 6%? What should the attitude be then? Ignore facts and buy regardless or play it safe & wait? Sowing the seeds of doubt?

Technically it will never get better than this for property investors, so why then do the stats show they are not buying into this? Any of you bulls bought investment property this year - still no show of hands then?

This will be my last post here, I promise


----------



## IFocus (10 April 2009)

kincella said:


> many years ago...when I was about to change my life quite dramatically...which I did...I read the book...'the power of positive thinking' by Norman Vincent Peale.....and I often read parts, highlighted, on a regular basis, to keep my spirits high...I have used it as one of the greatest tools to help inspire others.....
> 
> this morning on glancing over highlights...I came across some bits that seemed appropriate to the arguments we have on this thread......
> 
> ...




Hi kincella my take on positive thinking is that the point to doing so is that it is the state of mind where you see opportunity or where your thinking is in a higher state and hence make better judgments.

As a result it may lead to seeing an opportunity to buy or to sell or do nothing

Asking quality questions lead to quality decisions  

This is different to being positive that house prices always go up IMHO.


----------



## kincella (10 April 2009)

trevour....sounds like the golfer was already in panic mode, ready to sell out...but theres a bit there that sounds ridiculous....*within 4 days he had the house and unit ready for sale...*
and the idea that they will rent for 18 months and then pick up another bigger better house for a discount of 300,000.....I know of people who have done similar.....and now they are so far out of the market they will never get back in...
see my post today headed 'mortgages and the middle class'...  63% of the middleclass do not have a mortgage...and the others its less than 100k's
so good luck
there will be margin calls, business loans and other reasons.... to sell the family home when they get into a mess.....but I dont see an all out assault on the million dollar homes...only 5% of the total house sales in that price range


----------



## kincella (10 April 2009)

was it 8 blind men and an elephant...and each saw it differently....
I am the contrarian.... those little pearls of wisdom are for the 'scaredy cat brigade'
and the answer to both of you.....I am not selling my IP's...I have another 30 years of life to fund....
I intend to buy more props....but the buying range is only up to 400k's...and in case you had not noticed....that is the hottest range in props right now...
plus the fact the banks are taking 6 weeks or more to approve a loan, so even if I found a prop...I could not sign unless I had the subject to finance clause in there...which most agents do not like

regarding positive thinking.....
it has nothing to do with house prices.....which go up anyway...and since records have been kept to prove it....I am happy with that together with my experience....
so if its not broke dont fix it
cheers


----------



## tech/a (10 April 2009)

> I know of people who have done similar.....and now they are so far out of the market they will never get back in...




Exactly the case with one of our tennents.
When he first came to us he said he wanted to rent for 2 yrs before he built in the area.He owned/s an Auto Barn Business and is a AAA tennent.
That was 6 yrs ago.

I agree with those here who hold the view that times will never be better.
Interest rates at 50 yr lows
Houses now selling in some areas at a discount.
Grants

But hey the "Keep waiting" crew will do just that----scared to death.


----------



## kincella (10 April 2009)

I know a few bloggers on other sites....they called the top of the housing market in 2000....and up to 2002 and sold their homes....waiting to buy back in....now they cannot afford to....the market kept going higher

oh and that book was first published in 1953....they did a survey of 600 uni students..75% said they lacked self confidence....can we assume they are any different today...

wonder with all these jobless figures...how many have a plan B...?
notice the kids under 18 news today all losing their jobs.....
for the homebuyer groups that is not good news....those kids dont have a mortgage yet...so no homes lost there...and the middle class do not have much in mortgages
cheers


----------



## michael_t_f (10 April 2009)

I would say about 50% of "middle class" couples I know would not be able to afford their mortgage on one wage.


> 63% of the middleclass do not have a mortgage...and the others its less than 100k's



 I find those percentages hard to believe, a lot people in the boom refinanced their house to buy IP and toys or upgraded to flasher houses. 
Here on the Gold Coast the houses  in the 400k range have already dropped at least 5% upper class suburbs even more. And this is with the fhg and rate reductions. I'm waiting until June to see what happens with the fhg before I buy anything.


----------



## pacestick (11 April 2009)

Havent  really followed this debate but thought you might be interested in knowing that at least one major bank  when doing valuations for mortgages in the south eastern newcastle area is finding that their valuation is less than the price people are buying at therefore no loan granted my source is pretty reliable


----------



## robots (11 April 2009)

pacestick said:


> Havent  really followed this debate but thought you might be interested in knowing that at least one major bank  when doing valuations for mortgages in the south eastern newcastle area is finding that their valuation is less than the price people are buying at therefore no loan granted my source is pretty reliable




hello,

what sort of property Pacestick?

special word out to Knocker, hope you enjoying the easter break

thankyou
robots


----------



## numbercruncher (11 April 2009)

> 63% of the middleclass do not have a mortgage...and the others its less than 100k's




Where do you people pluck this rubbish from ? This statement = 100pc of the " middle class " have mortgages less than 100k  ?? 

Whats the financial measure of "middle class" anyways ?


----------



## moXJO (11 April 2009)

tech/a said:


> Exactly the case with one of our tennents.
> When he first came to us he said he wanted to rent for 2 yrs before he built in the area.He owned/s an Auto Barn Business and is a AAA tennent.
> That was 6 yrs ago.
> 
> ...




Its taken a few years for prices to drift down in my area, so waiting is not always bad. Agree it does seem like a good time with interest rates so low.


----------



## kincella (11 April 2009)

its the valuers fault...the banks do not actually do the valuation....and the valuer worries about being sued....seen this before and had to fight them to get it right

happens more often in the regional areas...only one or two valuers in town...
couple of years ago I had a case of a ridiculous valuation...the valuer said he could only go by the sales in the area in the last 3 months.....hardly any sales in that period...about Sep 06...and the sales that had gone through were in virtually housing commission areas, were substantially inferior properties....explained that to the bank and they gave me the amount....

at one stage there was only one valuer in town....he did the same with my commercial prop....later found out he was spending a lot of time in court being sued for valuations from both sides of the fence..

years ago some banks sent their managers out to do a drive by valuation....but have not been aware of that going on myself
never had a problem with a valuation when buying a property...just problems when refinancing or building a new dwelling


----------



## kincella (11 April 2009)

numbercrucher...you always sound angry...why is that...
and the rubbish you refer to....well guess you could not be bothered to check out the source for youself...or read the article...it did not say 100% of middle class
 middle class was stated as having disposable income of 70.000pa
but here is the link again
https://www.tai.org.au


----------



## enigmatic (11 April 2009)

Far out a disposable income of 70k is pretty high

Even at a 100k i dont think my disposable income comes even close to 50k I must be a low class citzen well will be soon.


----------



## pacestick (11 April 2009)

robots said:


> hello,
> 
> what sort of property Pacestick?
> 
> ...


----------



## kincella (11 April 2009)

well 'tide turns for coastal props'....plenty of buyers under the 500-600k mark....most of us like coastal props if we can get it
http://www.theaustralian.news.com.au/business/story/0,28124,25319014-25658,00.html


----------



## robots (11 April 2009)

pacestick said:


> robots said:
> 
> 
> > hello,
> ...


----------



## robots (11 April 2009)

kincella said:


> numbercrucher...you always sound angry...why is that...
> and the rubbish you refer to....well guess you could not be bothered to check out the source for youself...or read the article...it did not say 100% of middle class
> middle class was stated as having disposable income of 70.000pa
> but here is the link again
> https://www.tai.org.au




hello,

yeah Numbercruncher, just relax man, take it easy 

take the dog for a walk, 

great day yesterday, Chapel St was pumping as usual Kincella 

so much for the doom & gloom, another 6mths, 12mths,24mths will roll on

special word out to some old favorites: knocker, pepperoni, chops hope you all having a great easter

thankyou
robots


----------



## kincella (11 April 2009)

Robots, yesterday afternoon about 4.00 pm my little dog started acting really strange...followed me everywhere, shivering, tail down, looked quite sressed....I thought did she know we are going to have an earthquake or something ?...(dogs send messages to each other)
finally woke up it was the heavy haulage dump trucks with trailers going past every half an hour, probably sounded like thunder plus (she is not usually scard of the thunder)...and then buses with similar loud noises were running instead of the trams ????
the dump trucks working flat out on good friday....???? guess if I look I will find another empty block today...
the trucks were still at it at 9.00pm when I went to bed....
cheers


----------



## robots (11 April 2009)

hello,

yes they fixing the tram tracks along Toorak rd down your way Kincella, 

all the better for those ultilizing the Metlink system

you may have take dog down to KFC today for a treat 

thankyou
robots


----------



## kincella (11 April 2009)

ok, 
so I did not add the two together to figure it out.....whereabouts are they working on it ??
so it was probably same thing last year at easter....we had no access to toorak rd, could not take the car out...for about 4 days....I knew nothing until they blocked off the road....
yes I thought I may take her for a walk down the beach too...have a coffee at the kiosk if its not too cool

ps note Obama believes the recession will be finished by Sep 09....only 6 months to go....he is trying to talk it up
but we have been in recession since may 07
cheers


----------



## robots (11 April 2009)

hello,

i think its between orrong and kooyong rd, toorak 

thankyou
robots


----------



## kincella (11 April 2009)

thanks Robots...I will head off in the other direction today then....and were you aware the big retailers are not open tomorrow ???
I read an article last week mentioned that was the case in NSW...called safeway and they said closed here in vic....
I do most of my other shopping on sundays...as a rule...parking is easier


----------



## pacestick (11 April 2009)

robots said:


> pacestick said:
> 
> 
> > hello,
> ...


----------



## robots (11 April 2009)

pacestick said:


> robots said:
> 
> 
> > pacestick said:
> ...


----------



## Glen48 (11 April 2009)

This post should be call houses keep selling for yrs as long at the FHOG is around. Any one heard David Koch sold his house and is now renting???


----------



## robots (11 April 2009)

hello,

and goodluck to Kochie, thats the great thing about our country you have many options in life

all with there own advantages and disadvantages, unlike other countries you dont need a bullet proof vest to get a bag lollies from down at 7-eleven

thankyou
robots


----------



## kincella (11 April 2009)

story david koch selling up to go renting.....hahahahaha
psst...maybe kochie took some of his own bad advice and had to sell to cover other losses

and the story about the golfer becoming a renter yesterday...

but then again, eddy mcguire bought an 11 million prop in toorak just before xmas.....
can anyone pick the differences above ????
the one with the most money is buying...and those with the least  are selling.....thats right,
thats how the world goes....why 5% own 95% of the worlds wealth

the difference between chiefs and the indians....or the queen ant and the worker ants


----------



## MrBurns (11 April 2009)

Eddys house is now worth $8M


----------



## kincella (11 April 2009)

Mr Burns...its all the other sweet things about living in Toorak that are part of the parcel....then by the time Eddy wants a bigger house...this one will be worth 15 mill....cause there are boundaries that define Toorak from the other burbs ...and luckily not everyone wants to live in Toorak....
ps neighbour tells me Rose Porteous went back to WA....


----------



## MrBurns (11 April 2009)

kincella said:


> Mr Burns...its all the other sweet things about living in Toorak that are part of the parcel....then by the time Eddy wants a bigger house...this one will be worth 15 mill....cause there are boundaries that define Toorak from the other burbs ...and luckily not everyone wants to live in Toorak....
> ps neighbour tells me Rose Porteous went back to WA....




Toorak is too far in for me Kew is close enough and Rose ??? WA isnt far enough


----------



## robots (11 April 2009)

hello,

check:

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

for info on the top end, but by all reports the "trophy" homes are still holding up well in Toorak and Brighton

you get some great commentary out of these guys, not as precious as others

thankyou
robots


----------



## kincella (11 April 2009)

Robots, thank you for that link...top pick
and noted this........

Last week, 534 auction results were recorded. 420 sold and many column inches were devoted to their details in various publications. Meanwhile, over in the other world, 589 private sales barely rated a mention.


cheers


----------



## enigmatic (11 April 2009)

Looking at that top end trends looks like the top end are falling.. 
normally robot you dont post anything usefull unless its for your case of house prices going up.. have you jumped to the dark side.


----------



## Glen48 (11 April 2009)

Rose Porteous a fine up standing example to a Migrate done good, hard working Australian citizen, good house keeper, good eye for R E ,  never had any thing handed to her...sadly her husband die and she collected a few small item.


----------



## robots (11 April 2009)

enigmatic said:


> Looking at that top end trends looks like the top end are falling..
> normally robot you dont post anything usefull unless its for your case of house prices going up.. have you jumped to the dark side.




hello,

no on usual path,

the commentary from M&K is great, accurate and what many have been saying

good property is selling well, anything with an issue has a little trouble

they respond to emails like Enzo from REIV (still waiting on reply from Debtwatch & SQM Research)

looking forward to collecting the slab of ruskies and chicken parma in a few months time

thankyou
robots


----------



## enigmatic (12 April 2009)

From that site it looked more like the top end was having trouble selling and usually never got there Reserved price maybe I just miss read it..
Although I must admit i have been looking at places for the last year now and things are definitely cheaper plus I definitely can afford more.. The pleasures of waiting a few months...


----------



## kincella (12 April 2009)

Robots....I see they are renovating one of my fav buildings....the old white Georgian style ??  opposite the Sandbar cafe/kiosk....was it a bikies place or something before...

chapel st still busy as ever....not sighted one empty shop yet....then went down to st kilda and up to Kerfed Rd....every man and his dog was down there today...some had 2 dogs...  back up punt rd to Toorak Rd west.....the wood fired pizza is gone...and the fabulous little Delirium cafe (think its been gone awhile. only there for office workers...closed at 3.00pm daily) that part of Toorak Rd is always iffy...due to the 'clearway' conditions which cruels any parking and shopping after 4.00pm
now, admittedly I was driving and eye on the traffic so I could have missed some...
but its nothing like the predictions the kids were looking for...you know the stuff...just like the US...whole streets empty...houses going for a song...

in fact, only 3 SOLD signs so far for the whole trip....and one 'for sale'  for a unit...it could have been Rose'...it was that building just near cromwell rd....

in fact it appears quite normal....that area/trip I take is the usual route and there are hardly ever any for sale signs up.....I guess  everyone who moves in stays for a long time....

cheers


----------



## enigmatic (12 April 2009)

I can never understand what your post hidden message is kincella

Maybe I just shouldnt look to deep and just gloss over your posts but you have produced Some good Gems the rest are always about something not related to the thread..

was reading up about GDP in USA but relates back to Australia as we now have a negative GDP growth per qtr it was stating that normally house prices dont drop during a recession as the impact of the Negative growth is usually masked by the inflation.. 

Not so this time.. so maybe we are in for a down turn in property price


----------



## robots (13 April 2009)

hello,

good morning and hope everyone having a great easter break,

yes Kincella that section of Toorak Rd has been hit quite hard, many empty shops, some re-do's sitting empty as well

the quality cafe's are still doing well but the retail shops it that area are in trouble,

chapel st still pumping and I expect another fine day today, i guess its all about location location location

who knows what will happen enigmatic, with most people only ever being owner-occupier's life will roll on

anybody visiting Melbourne get down to the Transport pub at Federation square, no ruskies there but i normally get a couple of long decks

might even meet Satanoperca on collect day there

thankyou
robots


----------



## enigmatic (13 April 2009)

sounds good robot the pub that is little to far maybe 6hours to far..
Still in search for that house.. and deciding to buy what i want now or buy a smaller on the cheap place.. such a tough call..


----------



## kincella (13 April 2009)

enigmatic...no hidden message...just have faith...the world is not about to fall in a heap....tough times...yes...revise your expectations....get tough on yourself if need be to survive....
Melbourne is the most liveable city...I am biased in this respect...


----------



## enigmatic (13 April 2009)

Most melbourne Goer's are although then so are Sydney goer's and Perth goer's..

I'm personal West oz through and through so I'll be biased but i still think house prices arround here have a fair of slowing down to be had.


----------



## kincella (13 April 2009)

WA and QLD went higher than the rest of us...so of course I can understand your slightly sour sentiment........are you activley looking at house inspections ??? you really need to do that for at least 3 months...to find out the difference in prices...
I have found bargains in any market....due to ...divorce,  retirement, and relocations , it creates an urgency imo...my motto is ..seek and ye shall find...

consider going out a bit further for the cheaper props...do not expect to afford your dream home as your first home, you can buy the dream home later, I do not see any sense of urgency now....just keep your eyes open...
if there is a risk about your job ...leave it until the risk is deflated


----------



## enigmatic (13 April 2009)

Oh I definetly should be able to afford my dream home later the decision is if i spend 400-500k on my first place or 600-750k on my first place.. 

Yeah Little sour about the prices of places in WA especially based on distance its become extremely expensive close to the City compare to the outter suburbs which have made the prices seem cheaper then they are..
Even a cheap home close is way above 600k.


----------



## enigmatic (13 April 2009)

And about looking at inspections i have been quiet busy working away for the last year and a half so havent really had much time only been reviewing places over the net.. will be starting my 3-6month inspections in a month.. hoping the bargins keep on coming.


----------



## enigmatic (13 April 2009)

Job is semi secure but then again there are few jobs that are secure in the current market.. Just waiting for some sort of sign that things should be alright and I will be happy to spend an extra 100k or so on a house..


----------



## kincella (13 April 2009)

I would be damned if I would consider paying anything over 350-400 for a house...said it 100 times...you can buy a house on the outskirts of Melb 1/2 hour to the city on the tollways....for under 300,000...more like 250.000

no way  would I become a mortgage junkie...got better things to do with my life

daughter will only live in a house...not a unit...why  ??? just so..the children never venture outside to play...too busy stuck to the tv or games....
units are 100 a week cheaper than a house...she struggles...but will not change ????


----------



## enigmatic (13 April 2009)

I do not plan to have my mortgage for life either Kincella, pay it off hopefully with in 6-10years.. I would be hard pressed to find a house close to 350k in Perth that is even half decent..
Were I'm living now the house would cost 450k and most places arround it would be similar price and yet for me to get to work which is only a stones throw from the city (South Perth) Im looking at 1hour 20mins some mornings 50mins return.. No money I save can cover the loss of time each day and the anger driving to work causes me.

heck if I lived at work that would technically be 100dollars extra a day (2000 a month)
thats one nice house that i can afford not including reduction in traveling cost.


----------



## robots (15 April 2009)

hello,

here we go, here we go:

http://www.theage.com.au/national/lending-to-housing-investors-plunges-20090414-a699.html

finance and building numbers down for investors this is fantastic, hope it continues long into the future

thankyou
robots


----------



## kincella (15 April 2009)

investors...still a healthy 8 billion...down from 12 billion....so its dropped 30%,
nothing wrong with those figures....the rest of the economy plunges 50-90%
:sheep:


----------



## satanoperca (15 April 2009)

robots said:


> finance and building numbers down for investors this is fantastic, hope it continues long into the future
> 
> thankyou
> robots



t

You sure you have the right thread. 
Fantastic, the market is being held up by FHB's, investors are standing on the side line with IR rates being the lowest in 40 years, the only way is up for RE prices, get on now, in one or two years you will be priced out of the market.

Just to be shot down, are investors staying away from RE at the moment because NG has become almost ineffective from a tax reduction viewpoint?


----------



## robots (15 April 2009)

hello,

hello and good evening,

i heard the Residex results are out, anybody got them? how Melbourne go?

Satanoperca, i am getting excited about that slab of ruskies and chicken parma with vegetables coming up

prices to keep rising forever and ever

thankyou
robots


----------



## nunthewiser (15 April 2009)

robots said:


> prices to keep rising forever and ever
> 
> thankyou
> robots





LOL

sunshine and lollipops 


have a great evening


----------



## Beej (15 April 2009)

robots said:


> i heard the Residex results are out, anybody got them? how Melbourne go?




Just saw info on this on the ABC news, a bit light on detail but here's what Alan Kohler put up:

Residex data for March (quarter or month?)

* National house prices up + 0.6% 
* Melbourne best; up +1.6%
* Perth worst; down -1.9%

Will wait to find out more detail in newspaper articles tomorrow 

Cheers,

Beej


----------



## robots (15 April 2009)

hello,

thankyou

thankyou
robots


----------



## MichaelWhyte (15 April 2009)

Here's John Edwards report on the latest stats:

NSW leads the way

Happy days, though we're not out of the woods just yet.

Cheers,
Michael


----------



## robots (15 April 2009)

MichaelWhyte said:


> Here's John Edwards report on the latest stats:
> 
> NSW leads the way
> 
> ...




hello,

thanks Michael, you a true legend from Somersoft brother (along with all the other Kings, especially KeithJ)

fantastic report on the various situations across australia

Kimosabi is on the money

thankyou
robots


----------



## Beej (15 April 2009)

MichaelWhyte said:


> Here's John Edwards report on the latest stats:
> 
> NSW leads the way
> 
> ...




That is a very informative report with lot's of useful data and rational analysis. As expected most area's in the country now registering price growth for both houses and units, with only Perth and Brisbane (the real boom/bust states) holding the national stats back.

Thanks for posting!

Beej


----------



## kincella (16 April 2009)

Morning all, good news again today for Victorians...Brumby Govt taking over planning controls to speed up some major projects, to create 13700 jobs...in the building industry and create some more homes....
for the melbourne @ 5 million blueprint....

and thanks to the poster for the Residex newsletter....it certainly presents some sobering news....when compared to the drunken noise...of the world coming to an end of the past 2 years :sheep:

http://www.theage.com.au/national/brumby-sidelines-councils-20090415-a7gy.html?page=-1


----------



## robots (16 April 2009)

hello,

good evening, great day across Australia for everybody i hope

yes Harry Madden has jumped in to take charge of the planning department and keep things ticking over in Melbourne

anyone heard from Knocker? oh well, maybe still overseas at his villa

just in for the night to watch Grand Designs and Inspector Rex, so if any ASF members have questions then fire away

thankyou

Associate Professor Robots


----------



## kincella (16 April 2009)

evening Robots...good news just keeps coming...is the grand designs a repeat of least years show  ?


----------



## robots (16 April 2009)

hello,

great question

yes, Grand Designs is repeats but still good viewing/listening as i am in and out of the latest scientific journals,

i have to keep up with the reading since i was appointed an Associate Professor,

thankyou

Associate Professor Robots


----------



## kincella (16 April 2009)

Well there you go professor Robots....I am a fellow.....
cheers


----------



## numbercruncher (17 April 2009)

Hello Permabulls,


I see your preferred investment vehicle continues on its predictable trajectory .....



> *Property crashes as first-quarter home sales, prices and clearances slump*
> 
> The Australian Property Monitors group says Sydney and Perth showed the sharpest falls, with average prices dropping by more than $150,000.
> 
> ...




http://www.theaustralian.news.com.au/story/0,,25330870-25658,00.html


Sooooo early in the recession as well ......



> House prices to keep rising for years





Funny funny stuff, just keeps crackin me up no ends  - you will be lucky to get out of this without your Bank being nationalised let alone a road to easy riches ...... 

Thankyou and may the force be with you all


----------



## kincella (17 April 2009)

Hi there Numbercruncher....if you lived up to your nic....you would understand only the lower priced props have been selling for the past year....not middle and high end....so of course the median price will now only reflect the lower prices....you know how they calculate the median price don't you ?
we prop bulls are much smarter than the average bear.....we are not easily fooled.....
but good luck anyway:sheep:


----------



## kincella (17 April 2009)

just thought a little fun is appropriate....

I have a 100 year chart with property prices on the wall....even the dog gets excited and barks when ever we stop and check it out.....smart dog, she recognises we need patience with investing in that class......
plus she has a vested interest...its her retirement nest egg too....
cheers :sheep:


----------



## Beej (17 April 2009)

numbercruncher said:


> Hello Permabulls,
> 
> I see your preferred investment vehicle continues on its predictable trajectory .....
> 
> ...




We all know sales volumes are down, hardly surprising and predicted/expected by many here as the "standard" response by the property market to a stagnant market and recessionary influences. If you consider this properly you will realise that falling volumes of property for sale is one of the factors that puts a pretty solid resistance/floor under prices.

NC I know you like to focus on the negative side of the argument but did you read the following post and article on the previous page?? 



MichaelWhyte said:


> Here's John Edwards report on the latest stats:
> 
> NSW leads the way
> 
> ...




I didn't notice any response from you to that or any other similar article with stats indicting price rises/resilience posted in the last couple of weeks.

All reports so far (RP Data, Residex etc) are indicating median prices in most of AU sans Perth and Brisbane INCREASED in Q1 2009. This will be confirmed by ABS stats in a few weeks. You can deny this all you like but it will not change the facts that are presenting.

Cheers,

Beej


----------



## robots (18 April 2009)

hello,

greetings to all, wow look at this:

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

massive 78% clearance rate on great number of auctions, this is unbelievable

oh well

extra special thanks and congratulations to to many here for the on the ground reporting and research that has been undertaken in an unbiased fashion

thankyou
robots


----------



## kincella (19 April 2009)

Morning Robots...you are on the ball....thank you for the link each week

I was about to copy parts but see its copyright...so,,,,

note the number of private sales 928 is more than double the auctions 435
including the value PS 380 million versus Auctions 185 mill
median price of houses 530k, 77% cearance, med price units 427 k and 83% clearance rates...
noted a few sales in excess of 2 mill....
oh well guess we must be on another planet from the rest of the world to be consistently coming up with such good results...
cheers


----------



## Beej (19 April 2009)

Sydney auction clearance rate 65% for yesterday. 180/276 sold, median auction price $595k. Plenty of mid-higher end sales ($1M-$2M). From http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf.

Looks like Melbourne is still really kicking along! Sydney is steady as she goes.

Cheers,

Beej


----------



## kincella (19 April 2009)

Sydney has lower numbers and of course $$ worth in turnover....just wondering are they taking the houses off the market in sydney....or not putting them up for sale....what about the private sales....???? see Melb has double the number more than auctions
all very interesting


----------



## tech/a (19 April 2009)

robots said:


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





Yeh they will.

In 1967 my father bought a property in Adelaide for $9,800 and that was very expensive for the area and the time.(Blackwood) Last time I saw it sold was 1994 for $650,000.

My old man when I showed him had the same reaction as Nun.




nunthewiser said:


> LOL
> 
> sunshine and lollipops
> 
> ...




His only comment was
"If only I knew then what I know now!!

The irony for all those who are in the Nun Tribe is

*YOU DO KNOW NOW.*
Its only fear which holds you back and always will.

I really hope one day that Nun's handle changes to 
MUCHWISER.

Somehow I doubt that.


----------



## kincella (19 April 2009)

tech...your old man may not have worried so much about paying off the interest and capital in those days, if he knew how high it would be down the track............just pay off the interest...leave the capital...it will look after itself
might try that with the next little ones I buy...when I find them again


----------



## kincella (19 April 2009)

*Do some research before making that big tree / sea change *

article  today about the unhappy people, its a good read, and note they probably cannot afford to buy back into the city...note only 50 took part in the research...

I recall Corowa back in 2000...now this place was popular for city folk, weekends...with the golf club and Browns Winery
bought a house for my brother...he liked the area....I was stunned when I went down on Sundays... dead as a doornail...only a cafe and bakery opened...think the supermarket closed at 12 on Sat....
but over the years the tree changers arrived...and Corowa has grown up...a bit...population doubled or tripled....
so if I were doing a tree change...I would spend a few weekends there beforehand...to check it out...
I love the city...so no chance of change for me...never ever

http://www.theage.com.au/national/when-the-treechange-dream-turns-to-dust-20090418-aaun.html?page=-1


----------



## kincella (19 April 2009)

*New data plots boomers moving to the coast*

wow...I like Bernard Salt....not just as a demographer...but he is a charterd accountant...and they are imo a canny intelligent group

so planning where to invest for the next 2 decades...you will find some good infor in here...including links to the ABS site...but that one is copyright..so just read if for yourselves
cheers 
http://www.theaustralian.news.com.au/business/story/0,28124,25339677-25658,00.html


----------



## Largesse (19 April 2009)

anyone know where to find auction results that don't show up on that link robots posts?

there was a place i was looking at that was advertised to auction yesterday but didn't show up in the results


----------



## MACCA350 (19 April 2009)

Largesse said:


> anyone know where to find auction results that don't show up on that link robots posts?
> 
> there was a place i was looking at that was advertised to auction yesterday but didn't show up in the results



It's a conspiracy

cheers


----------



## Beej (19 April 2009)

Largesse said:


> anyone know where to find auction results that don't show up on that link robots posts?
> 
> there was a place i was looking at that was advertised to auction yesterday but didn't show up in the results




You can try realestate.com.au search for sold properties feature. Most likely though it was withdrawn and the result not reported, so see if it is still listed for sale on Monday.

Cheers,

Beej


----------



## johenmo (19 April 2009)

enigmatic said:


> ...yet for me to get to work which is only a stones throw from the city (South Perth) Im looking at 1hour 20mins some mornings 50mins return.. *No money I save can cover the loss of time each day and the anger driving to work causes me.* QUOTE]
> 
> Bold is mine.  I come from Perth.  Don't miss the traffic into the CBD. n S/Perth is not much further away than I am.
> 
> ...


----------



## robots (19 April 2009)

Largesse said:


> anyone know where to find auction results that don't show up on that link robots posts?
> 
> there was a place i was looking at that was advertised to auction yesterday but didn't show up in the results




hello,

can you bang up a link for the property Largesse and I will send of an email to Enzo Raimondo,

he will find out the situation

we need the details of the property

thankyou
robots


----------



## Largesse (19 April 2009)

robots said:


> hello,
> 
> can you bang up a link for the property Largesse and I will send of an email to Enzo Raimondo,
> 
> ...




http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105637865&f=10&p=10&t=res&ty=&fmt=&header=&cc=&c=43353865&s=vic&snf=ras&tm=1240126648


----------



## robots (19 April 2009)

hello,

will go past in the morning

thankyou
robots


----------



## Largesse (19 April 2009)

robots said:


> hello,
> 
> will go past in the morning
> 
> ...





Robots,

You are a true gentleman.


----------



## robandcoll (19 April 2009)

I have been following this thread now for a couple of months. My only advice is caution.

Rudd has guarenteed the big 4 and now extended a 1 year extension for repayments. Why?

Check your credit account and mortage, then check the real sellable price of your asset. Alot of people would be in the red. The area I live in has gone down $200,000 plus. Seaside resort south of Perth. House 3 doors up would have got $750,000 2-3 years ago. Sold for 460,000 and took along time to sell.

How many people have reinvested into propery or the boat and caravan on equity. Second mortages for the boats and caravans and the holiday homes.

Wait for the bottom of the market - July onwards looks real good as the first home buyer bonus will cease, but even I wouldnt dable. Long way to go yet and thats when you make your move. Remember what comes down must go up and that includes overvalued property prices which we still have and interest rates.


----------



## Trevor_S (19 April 2009)

I guess this guy will hope prices/rents keep going up, otherwise he will look be doing much soul searching in the years to come

http://www.somersoft.com/forums/showthread.php?t=51677

I must admit I don't "get" a business strategy that celebrates a $1900 loss per month that has to be topped up from the ATO and out of ones pocket, with all the self management and reno work he does, surely buying a business that makes actual money each month would be a better proposition ?...  Resi. Prop Investors claim it is a "business".  Would ANYONE buy a share in a business listed on the ASX that guaranteed to lose money every month ?  surely it's gambling i.e you KNOW you are going to loose, unless you get a payout (CG)

I am aghast at the slaps on the back and the good on ya's   I guess real estate agents love this sort of person.


----------



## nunthewiser (19 April 2009)

tech/a said:


> My old man when I showed him had the same reaction as Nun.
> 
> 
> 
> ...





LOL unreal . um dear tech i suggest you scroll through my posts here darl ..... i hold property, family home , rental, and land .... geez your a funny one and as usual taken ppls posts out of context YET again 

LOL unreal m8 , perhaps i should return the personal and toxic attacks you like to dish out so freely but then that would make both of us as pathetic as each other hey?

love ya work darl


----------



## nunthewiser (19 April 2009)

By the way tech/a .. ( apologys for my off topic post)

i have noticed lately a fair bit of angst and toxicity in a lot of your replies to various posters of late... everything ok ? contracts still ticking along? trading going ok ? machinery sitting there idle?


sincerely tho , do hope that the reasons for your latest toxic behaviour and obvious misreading of posts , is not too serious and we can have you back to your normal pigheaded self without the attacks as soon as you get whatever that ails you sorted

yours sincerely 

a concerned much wiser nun


----------



## singlefished (19 April 2009)

kincella said:


> we prop bulls are much smarter than the average bear.....we are not easily fooled.....






kincella said:


> the difference between chiefs and the indians....or the queen ant and the worker ants






tech/a said:


> Its only fear which holds you back and always will.





The condescension on this thread lately drips like honey from those with obvious vested interest ehh? Is it too complicated for you to come up with a compelling argument given the current state of the economy?

Statements like these really sound about as mature as "I dare you..."

Please, enlighten me! I'm obviously missing the apparently obvious signs that tell me the market is about to BOOM and potential buyers are on the cusp of missing the boat forever!!!

*What do I have to fear if I intend to enter the market when I see the economy starting to recover and the property market starts to move in the right direction. Why should I be buying in now?*

Do you really believe that prices are going to BOOM within the next 6~12 months with rapidly rising unemployment, tightening of lending criteria by the banks, etc? Are houses about to suddenly disappear into thin air and will become an even more "valuable" commodity???

At the moment I'm sitting pretty watching prices dropping in my target market by between 10 and 20 percent over the last 6 to 12 months. I've got nothing to lose and nothing to fear, I'm laughing actually since the timing is perfect!!!

The only real fear I can see is coming from those with a current vested interest, the people and sectors with the most to lose...


----------



## nunthewiser (20 April 2009)

yeah i dont think this sort of stuff matters these days hey?




> Bankruptcy up as job losses take their toll
> 
> 19th April 2009, 10:00 WST
> 
> ...




http://www.thewest.com.au/default.aspx?MenuID=159&ContentID=136805


----------



## kincella (20 April 2009)

singlefished...
I have never suggested anyone buy now....never ever...suggested to get it now.....so you must be taking the words out of context...because I have not seen anyone else suggest that either....for the past 4 months....
*we prop bulls only say we believe it is a good investment......
we like it...it works for us....*
and there have been enough compelling arguments about property, from both sides, on this thread for about 4 years....


----------



## Beej (20 April 2009)

singlefished said:


> Do you really believe that prices are going to BOOM within the next 6~12 months with rapidly rising unemployment, tightening of lending criteria by the banks, etc? Are houses about to suddenly disappear into thin air and will become an even more "valuable" commodity???




I don't argue the above - all I argue is that is no widespread massive crash brewing either. And I now point out that in fact in some areas and price ranges prices have been rising for the past few months. Will they keep rising given the economic environment in the short term (6-12 months)? Probably not - but they might. They might fall a little to. Doesn't look they will crash though......

There is nothing wrong with your strategy at all Singlefeshed, as long as you have a plan, actually observe the market first hand in your target area, and move when it works for you and you think the outlook/trend is right.

It's the forever negative property bears that will ultimately miss out on any up turn in the property market as they will never buy unless they see prices fall 40%+ - which will never happen.

PS: In the meantime, even I now think this FHB mini-boom may be getting out of hand as buyers rush to beat the June 30 deadline: http://www.smh.com.au/national/firsthome-buyers-swamping-banks-20090419-abgp.html



> *First-home buyers swamping banks*
> 
> LENDERS are struggling to keep pace with an unexpected increase in applications from first-home buyers, taking as long as a month to approve loans, which has led to some buyers missing settlement dates.




And then there is this little gem:


> A spokesman for the Commonwealth Bank, Steve Batten, said the bank had also taken on extra staff in its mortgage processing division. .
> 
> He said about half of all applications received by the bank for the first-home buyers grant in NSW required "a rework" because of insufficient or incorrect information provided on the forms, adding to delays. The figure was 90 per cent in Queensland.




So does that mean that QLDs are generally less literate than  NSWers? 

Cheers,

Beej


----------



## darnsmall (20 April 2009)

Beej said:


> It's the forever negative property bears that will ultimately miss out on any up turn in the property market as they will never buy unless they see prices fall 40%+ - which will never happen.
> 
> 
> Cheers,
> ...




why not? Shares crashed by more than 50% in some cases why not housing? If the US recovery effort fails and investors don't buy into a sick/plagued economy...If consumer and business confidence continues to remain low...why not?
If America falls, which will bring down Japan, Europe, China, more than what it already has. How will housing in Australia survive a massive crash?

I'm amazed at how many people are getting into debt at time of so much uncertainty. Even more amazed the govt and banks are offering to bail them out if it falls. The next 5 - 10 years will be a very interesting experiment in government economic policy.


----------



## kincella (20 April 2009)

years ago I read the book 'the 7 habits of highly effective people' to check to see if I had missed something in my life...
one of the good habits is ''to start with the end in mind'
that is my approach to property.....its the end result I am looking for...and those 20 or 100 year charts point to a pretty impressive result...

some of you might like to read the book....A fortunate life...by A B Facey...
he taught himself to read and write...went to war....lived through the depression etc...and was pretty happy with his life....
cheers
:sheep:


----------



## nunthewiser (20 April 2009)

kincella said:


> some of you might like to read the book....A fortunate life...by A B Facey...
> he taught himself to read and write...went to war....lived through the depression etc...and was pretty happy with his life....
> cheers
> :sheep:





brilliant book actually


----------



## kincella (20 April 2009)

nun..is that a first...that we can agree on at least one thing ???
the books was similar to the kid with polio...and I can jump puddles...inspirational for overcoming life's problems

this is interesting....is gen y that bad ?
the recession they...gen y... had to have

http://smallbusiness.theage.com.au/...es!-614121229.html?page=fullpage#contentSwap2

:sheep:


----------



## michael_t_f (20 April 2009)

Singlefished I agree, I am in the same boat and will not buy now.  Why would you buy now it seems like a perfect storm for disaster.
Rising unemployment, other assets halved in value, FHOG ending soon, way overpriced properties, Australians in record credit card debt, other countries property prices well down. There is no way these prices can be sustained let alone boom unless there is large wage increases which will not happen.
The best thing to do with property at the moment in my opinion is to only buy if you have a large deposit and you can positively gear your investment and think long term, these people with a fhog getting a 95% will get burned.
I would be spruiking the same as the bulls though if I was mortgaged up to my eyeballs  in overleveraged, overpriced
properties making no capital gains or if I was in the RE/mortgage industry.
I would like to have it explained to me by someone without an over biased opinion, with better expainations than "because my graph says so" or "property always goes up" or "in 1972....."


----------



## robots (20 April 2009)

hello,

Largesse, i went past that place and no SOLD sticker on it so dont know what has happened with that one, 

I cant believe it, it just doesnt make sense, this cant be right

yeah chill out brothers, relax man, crack a can and sit back

thankyou
robots


----------



## satanoperca (20 April 2009)

Hi,

While I agree that in the long term property is a excellent vehicle for investment but we are discussing now and it seems that while some are seeing the bottom the government really has no clue as to how deep this contraction will be or does have a clue but doen't want all those sheepie running towards the cliff. 

_Treasurer Wayne Swan warned last week: "The simple fact is that a global recession, and deep downturns for our key trading partners, make it certain that our own forecasts for growth and revenue in the Budget will be substantially worse than in UEFO", referring to the Updated Economic and Fiscal Outlook, released in February. _

http://www.theaustralian.news.com.au/story/0,25197,25359475-601,00.html

Given the huge debt the government is amassing and the continuing downgrading of the world and Oz economy, if this is a long recession, then prices will fall. It would seem at the moment due to the low volumes that people are holding back from selling on the hope that those green shoots will turn into money trees in the next 12months. 

At least the Chinese will still need our resources which would provide us with some cushioning.

Looking more at home, it would seem that RE prices in and around Port Melbourne have made a nice come back from the drop late last year. A couple of auctions that I have attended over the last few weeks have seen a good turn up of interested parties and several bidders, with good sales results. 

Thanks Kincella for the book reference, will purchase it and add it to the book reading list.

Robots, it would seem that you are edging ahead, start licking those lips, but don't get to excited just yet and no fasting, still have several months to go.

Cheers

Benjamin


----------



## robots (20 April 2009)

hello,

http://business.theage.com.au/busin...-a-boomtime-clearance-rate-20090419-abg8.html

and when you have suburbs which have a majority which go to auction not much you can do,

anyway, If i want X for property you can give me X, 

not much building going on to build another place, paradise

thankyou
robots


----------



## Beej (20 April 2009)

robots said:


> http://business.theage.com.au/busin...-a-boomtime-clearance-rate-20090419-abg8.html




Interesting article!



> MELBOURNE'S auctions bounced back after Easter with a 79 per cent clearance rate reminiscent of boom times, but agents suggested prices and clearances were being kept high by low stock.




I stated this would happen 1 year ago on this thread - exact repeat almost of what happened in 1991.



> Mr Fisher said March had been his agency's "best month in seven years" and April was looking fantastic.
> 
> "We've had quite a few buyers in that $700,000 to $1 million price range," he said. Obviously, the first-home buyers are out there, but the people who've sold to first-home buyers are now out looking themselves."




It's also been clear from looking at the auction results this year that this was starting to happen as well - the upgraders now more active as the FHB buying flows through. The boost to the market from the FHBs grant has quite a while to run through the whole market yet - probably to the end of the year and beyond even when the grant boost tap is turned off after June.

Cheers,

Beej


----------



## robots (20 April 2009)

hello,

thats right Beej, you spot on legend, get yourself a treat on the way home tonite man

i thought tonnes of properties for sale everywhere? but looks like people just staying put

thankyou
robots


----------



## kincella (20 April 2009)

robots, 
that is correct...have I told you about the multi multi millionare...who does property...in 1990 they were developing 100's of acres for building lots...he said all lots are now 'not for sale'..taken off the market....they will be put back on the market at my price...simple ..he was an individual...working alone...had amassed a massive fortune...old enough to retire...not interested in retiring....too interested in doing what he enjoyed...

it was not all about the money...but the money helped...a family memeber was very sick and dying....for 200k's  just for the operation, they took her over to the US where she had the operation to save her life...there would have been substantial travel costs, and follow ups probably cost over 300,000 all up.....nice to have that sort of money handy...to look after your family....

I have a large family to look after........through sickness...they appreciate all my work that makes their lives so much better.....lost my brother last year...I had helped him for years....

Satonopera....I mentioned 2 books...which one are you interested in ?


----------



## satanoperca (20 April 2009)

Kincella,

The first 'the 7 habits of highly effective people'.

Currently reading "Changing your Thinking" by Sarah Edelman. Looks at how we deal with everyday situations and how we can change our perceptions & beliefs to make the decision process more effective and your life happier. A simple and easy read with plenty of real life situations that you can easily relate to. 

I have been focused on removing procrastination from my life, getting there, only taken me hours to get these comments typed...

Cheers

Benjamin


----------



## kincella (21 April 2009)

he gives real life situations...I think it was in his book he talks about relationships...partner, children, colleages etc...and each must make a deposit, before they can withdraw....ie contributions....needed help around the house and thats how he got the children to help with the chores...ie by making deposits...
to be highly effective...you cannot spend too much time if the kids are playing up...
I found that bank idea very helpful with teenage children....
well I think it was that book...many years since I looked at it

the other book is a balance of plodding along, overcoming disabilites, and to achieve a good life...a fortunate life


----------



## kincella (21 April 2009)

down at the internet cafe..my new telstra wireless modem died, been playing up, every day,  for the 50 days I have had it...drops out every day.....grrrrrr
10 days for them to post me a new one.....hope its not coming from the phillipines....where tech support was located......
so I may not be around much until the thing is fixed
cheers


----------



## robots (21 April 2009)

hello,

no worries Kincella, hang tight brother and enjoy the evening

thankyou
robots


----------



## moses (21 April 2009)

I've just been re-reading the first 3 pages of this thread. Fascinating.


----------



## darnsmall (22 April 2009)

So what happens if it becomes harder for our banks to loan money from China? Is this a non issue, they'll find it/print it elsewhere? I can understand why China needs to still capitalise the US but why Australia?


----------



## Beej (22 April 2009)

moses said:


> I've just been re-reading the first 3 pages of this thread. Fascinating.




So moses - as this threads originator, what are your current thoughts? Where do you think the market is heading and how did the past 14 months fit in with your outlook/expectation back at the start of last year?

Cheers,

Beej


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## UBIQUITOUS (23 April 2009)

It's pretty obvious where the market is heading. Steerage passengers, last call to board RMS Titanic.

http://www.abc.net.au/news/stories/2009/04/23/2550219.htm?section=justin



> *Deadline looms for first homebuyers' grant*
> 
> Posted 1 hour 42 minutes ago
> Prime Minister Kevin Rudd has given a strong indication that the increase to the first homeowners' grant will not be extended past its June deadline.
> ...


----------



## MACCA350 (23 April 2009)

UBIQUITOUS said:


> It's pretty obvious where the market is heading. Steerage passengers, last call to board RMS Titanic.
> 
> http://www.abc.net.au/news/stories/2009/04/23/2550219.htm?section=justin



Sweet, I've been waiting for confirmation it won't be extended

cheers


----------



## Beej (23 April 2009)

UBIQUITOUS said:


> It's pretty obvious where the market is heading. Steerage passengers, last call to board RMS Titanic.
> 
> http://www.abc.net.au/news/stories/2009/04/23/2550219.htm?section=justin




It's good if they don't extend the boost. The FHB segment has moved from recovery to being a bit over-heated. 

However, although you are suggesting that "the bell tolls" for the whole market on this basis (yet again), IMO the boost has provided enough stimulus that it will keep flowing through the whole market for another 12-18 months at least. By then we should be out the other side of recession (hopefully).

Cheers,

Beej


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## gfresh (23 April 2009)

nope.. GONE.. hot off the press

http://www.news.com.au/couriermail/story/0,23739,25373652-952,00.html



> PRIME Minister Kevin Rudd has confirmed the first home buyers grant will not be extended past its deadline of June 30.
> "We've indicated that that will conclude in a very fixed and finite timeframe," Mr Rudd said in a Perth speech reported by Sky News.
> 
> "It's had a real effect. We're still measuring its full effect, but I think it's very important that as a community we understand that deadlines are imposed for a particular purpose.
> ...


----------



## dhukka (23 April 2009)

The data clearly shows that the FHB grants have propped up that segment of the market whilst investors continue to shy away. However, I think those expecting a collapse in real estate prices post June 30 will be disappointed. 

Unless I have misinterpreted Rudd's statements, the grants will still exist, they just won't be the souped up version.


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## kincella (23 April 2009)

Finally back...onto my old adsl connection...this time its only 35 pm for the 12gb....will not go into the trouble with telstras wireless bb....on the phone since 9.00am today until 6.15 tonight trying to get the new modem to work,,oh and the next g mobile phone well they could not get that to work as a modem either...think problems with vista....wait until you have to talk to tech support....they ask a question, you answer, then on hold while they ask a supervisor....that went on all day...
only went over to the wirelss as tls told me to and it was faster and cheaper....wowo...it cut out so many times a day...
enuff for now
cheers


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## kincella (24 April 2009)

while interest rates are low...so for a 400k house at 8% = 32,000 interest bill, compared to a 600k house at 5% = 30,000 greater buying power if thats what you want....for the same cost or similar
while rates were rising  it had less buying power....hence the prices were going down last year....
the blip on the radar...is if the govt keeps running up debt...then we lose the AAA rating and the banks would find the cost of borrowing higher...hence the interest rates may go back up.....bit like the game monopoly


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## robots (24 April 2009)

hello,

good to hear from you again kincella, tough going through times of hardship and most just get on with things instead of banging the hand out like the goons out the front of Coles looking for a free ride in society

some info on FHOG:

http://www.fahcsia.gov.au/sa/housing/payments/Pages/FirstHomeOwnersBoost.aspx

currently as of 1st July 2009, FHOG will revert back to 7k for both existing joint and a new joint, WOW 

anybody got any data on places for sale this year as opposed to last year?

thankyou
associate professor robots


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## robots (25 April 2009)

hello,

good evening and best wishes to all,

check this man:

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

HUGE 86% clearance rate today, this is just amazing

i am not sure what it all means but a massive result

anybody care to post some supply numbers compared to this time last year, 

if you got it, hold onto it brothers because not many more being built

anyone know if the internet working in the UK yet?

thankyou
associate professor robots


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## gav (25 April 2009)

Median prices pretty high on both houses and apartments there Robots


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## robots (25 April 2009)

hello,

yes some good figures Gav, 

you hit the gym today?

thankyou
robots


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## MACCA350 (25 April 2009)

> TOTAL AUCTIONS
> This week: 145
> Last weekend: 427
> This time last year: 363



Only 145 auctions
Only 40% volume of the same time last year and 67% less than last week........given the end of the FHB boost looming and such low volume I'm not surprised in the least with the clearance rate. Will be interesting post June 30

cheers


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## robots (25 April 2009)

MACCA350 said:


> Only 145 auctions
> Only 40% volume of the same time last year and 60% less than last week........given the end of the FHB boost looming and such low volume I'm not surprised in the least with the clearance rate. Will be interesting post June 30
> 
> cheers




hello,

sure will be when there is very very low stock around, 

you want something you have to pay, just like at the charcoal chicken shop

i know i know i know, it takes 12mths after the shonk exchange meltdown, no-one is going to have a job, and interest rates are going to 15%

thankyou
associate professor robots


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## gav (25 April 2009)

MACCA350 said:


> Only 145 auctions
> Only 40% volume of the same time last year and 67% less than last week........given the end of the FHB boost looming and such low volume I'm not surprised in the least with the clearance rate. Will be interesting post June 30
> 
> cheers




Macca, I noticed the volume levels too.  Some would argue volume should be higher, considering rising unemployment? (ppl being forced to sell)  It shows that people don't think they'll get what they want for their property, so why would they sell if they don't have to?  

Also, check out those median prices: 
Houses - $580K
Units - $411K

Those prices are out of reach for many First Home Buyers, especially now that the banks are raising their LVR and don't count the govt grants as part of the deposits.  I think that suggests that there would be less First Home Buyers than you think...

Robots, No gym today. Recovery is just as important as training, so I'm just resting up and eating lots


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## singlefished (25 April 2009)

gav said:


> Macca, I noticed the volume levels too.  Some would argue volume should be higher, considering rising unemployment? (ppl being forced to sell)  It shows that people don't think they'll get what they want for their property, so why would they sell if they don't have to?
> 
> Also, check out those median prices:
> Houses - $580K
> ...




_(I assume somebody forgot to tell Victoria that the rest of Australia was generally on holiday today right? Shhhhh, lets keep it a secret for next year too and the dumb @r$e REA's will do it again )_


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## gav (25 April 2009)

singlefished said:


> _(I assume somebody forgot to tell Victoria that the rest of Australia was generally on holiday today right? Shhhhh, lets keep it a secret for next year too and the dumb @r$e REA's will do it again )_




Wasn't just today, volume has been down for quite some time now


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## MrBurns (25 April 2009)

If it wasn't for the Chinese there would be no one at auctions in Melbourne, the last of the FHBG buyers are lining up before the end of June , after that all sectors of the market will be in decline.


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## ROE (25 April 2009)

robots said:


> hello,
> 
> i know i know i know, it takes 12mths after the shonk exchange meltdown,
> 
> associate professor robots




Shonk exchange already meltdown so only recovery from here
Shonk Resi exchange hasnt so only meltdown from here before the recovery


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## singlefished (25 April 2009)

MrBurns said:


> If it wasn't for the Chinese there would be no one at auctions in Melbourne, the last of the FHBG buyers are lining up before the end of June , after that all sectors of the market will be in decline.




MrBurns, you've just basically defined a word called "Kiasu" which I heard bandied about many many times over many many years in Singabore.

http://en.wikipedia.org/wiki/Kiasu

Here's a good example of where you'll see it in Australia :
When we used to live in Sydney you'd see this all the time at Circular Quay if you were wanting to catch a ferry around mid-morning or mid-afternoon. Old Chinese ladies gently barging their way to the front of the queue just before the gates would open and then subsequently charging down the access ramp like prop forwards with their bags tucked under their arms once boarding commenced - the reason, making sure they got a good seat inside the vessel with a nice view and plenty of leg room. And if one of their friends got left behind, well, no problem, just protect the desired seating from other passengers until they turned up... Very kiasu!


Sounds like the same is going on in Melbourne... Charging in head first to take advantage of the free money!!!

On a side note, if you get 2 or more kiasu parties turning up at an auction then you're laughing, they will bid to the death and you should make reserve no matter how high you set it as they wont want to lose face in front of eachother


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## MrBurns (25 April 2009)

Reminds me of a story about the Jewish in Melbourne , if you're at an auction with them and rhey want the property I've heard of cases where $10K will be dropped in your pocket to stop you bidding.

That was in the 70's


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## MACCA350 (26 April 2009)

robots said:


> hello,
> 
> sure will be when there is very very low stock around,
> 
> ...



Ever the optimist there robots
We had a look at a few more this week, there's plenty of properties up for sale, from the look of it people are deciding not to sell through auctions.......there's still volumes there in the market, just less going to auction. Many decent properties have been on the market for 3+, 6+ and even 12+ months. 

Had my eye on an interesting massive 95sq house(not completed but at lockup stage) on 6000sq mtr block being dropping down in price, still sitting there after 6 months or more, just not sure I want the hassle of finishing it off. 

Many other turnkey properties around, we've been looking at a few every week for the last 9months and there are still so many to look at, and new ones showing up every few days. So from what I have seen there are plenty of properties around, I have noticed that in the last couple months there has been an increase of those sold especially in the sub $500k range.

cheers


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## robots (26 April 2009)

hello,

no i dont believe many are selling through private treaty in the prime auction areas, and this is reflected in the numbers up for auction and the clearance rate

my barometer is the st kilda hill area and there is just no signs anywhere, fantastic

thankyou
robots


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## kincella (26 April 2009)

robots...private sales 718...its in that link...oh and note the houses over 1 mill selling


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## robots (26 April 2009)

hello,

yes the private sales are 718, and these are typically from areas where auctions are not held

the agents just want to get in the press

thankyou
robots


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## kincella (26 April 2009)

well I checked out a few of the suburbs....on average maybe one sale per suburb Vic wide


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## MACCA350 (26 April 2009)

Are there figures for how many houses are on the market in total week by week?

BTW robots, I'm watching the west, north west, and northern region for 4br houses around $500k

cheers


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## robots (26 April 2009)

MACCA350 said:


> Are there figures for how many houses are on the market in total week by week?
> 
> BTW robots, I'm watching the west, north west, and northern region for 4br houses around $500k
> 
> cheers




hello,

no worries,

some ASF members would often post the total number of properties for sale, they havent done this for a while 

many would extrapolate certain outcomes from the data, i wouldnt have a clue what it all means

thankyou
associate professor robots


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## MACCA350 (26 April 2009)

MACCA350 said:


> Only 145 auctions
> Only 40% volume of the same time last year and 67% less than last week........given the end of the FHB boost looming and such low volume I'm not surprised in the least with the clearance rate. Will be interesting post June 30



Just read Enzo's overview(usually just look at the figures), seems I'm not the only one with the above thoughts


> The fact that we have recorded the best result today since the end of 2007 is a reflection of the low number of homes on offer at auction and the impending end of the First Home Owners Boost and First Home Owners Bonus.




cheers


----------



## MACCA350 (26 April 2009)

robots said:


> hello,
> 
> no worries,
> 
> ...



That's unfortunate there are no real numbers for the total volume. Would love to see a graph of total volume and total sales over the last few years.

cheers


----------



## kincella (26 April 2009)

it was Anzac day for goodness sake....next week they have over 400 for auction and probably twice as many for private sale...and then there are the houses that never see an agent.....as the link below

just in case you are in the market for a 1 mill home ....some interesting advice on this site....
http://www.morrellandkoren.com.au/10years.html


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## kincella (26 April 2009)

macca....do a google..the information is out there...either the RBA or the ABS...I have posted it myself somewhere ...but to find it is too hard....


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## MACCA350 (26 April 2009)

kincella said:


> macca....do a google..the information is out there...either the RBA or the ABS...I have posted it myself somewhere ...but to find it is too hard....



Thanks, I'll have a look around.

cheers


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## Beej (26 April 2009)

Not many auctions scheduled in Sydney I think due to ANZAC day - but check this article out:

http://www.smh.com.au/national/new-buyers-flock-to-terrace-sale-20090425-aiuo.html



> *New buyers flock to terrace sale*
> April 26, 2009
> 
> FIRST-HOME buyers hoping to gain a foothold in the property market made up a large part of the 190 groups who visited 14 Gibbens Street, Camperdown, before yesterday's auction.
> ...




So there's a concrete example of an individual house that has appreciated 17.5% in 4 years during an over-all flat Sydney market period. 

Where's the crash boys??



MrBurns said:


> If it wasn't for the Chinese there would be no one at auctions in Melbourne, the last of the FHBG buyers are lining up before the end of June , *after that all sectors of the market will be in decline*.




Well I think you will find it will be shown that this prediction could not have been more wrong! 


Cheers,

Beej


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## kincella (26 April 2009)

agree Beej....and read my link today ...buyers advocates...said some houses never go to an agent...


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## robots (26 April 2009)

hello,

yes Beej, Keen should be on his way to Mt Kosciosko

thankyou
robots


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## singlefished (26 April 2009)

Beej said:


> Where's the crash boys??




When I want to see how Sydney is doing I always look at the suburbs I know best ie: the places I used to live/work/play before moving up to Brisbane.

Artarmon, Balgowlah & Parramatta to name but a few... -21%, -23% & +17% respectively.

Your crash is happening in the suburbs that have house prices way above what a traditional FHB can afford (probably a suburb just like yours actually )

I think it's fairly apparent that the boost at the lower end of the market is working like a charm and sustaining long term medians, but we all knew that anyway.

Here's the APM median for 2 suburbs I am currently watching in Brisbane, Ascot & Hamilton, -52% & -65% respectively.

You bulls really need to stop getting sooooo excited about the slightest glimmer of hope the media provides, open your mind to the bigger picture and smell the dung!!!


----------



## nunthewiser (26 April 2009)

singlefished said:


> You bulls really need to stop getting sooooo excited about the slightest glimmer of hope the media provides, open your mind to the bigger picture and smell the dung!!!





this is a quote borrowed from another thread i thought was kind of appropriate to some here 



> keep your hands over your ears, shout lalalala and everything will be ok.


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## kincella (27 April 2009)

can we believe anything the banks say....
it will be good if its true

In the lead-up to the new financial year we'll probably see more banks become competitive in the fixed-rate market," he said. "I think the gap between  variable rates and long-term fixed rates is going to narrow but its hard to say by how much." 

http://www.news.com.au/heraldsun/story/0,21985,25382107-664,00.html


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## kincella (27 April 2009)

we might not have a worry in the world soon....if we all get this pig virus....
then there will be plenty of houses available...hmmm does the virus need a body or can it linger in the house ?


----------



## nulla nulla (28 April 2009)

The housing market, like any market is driven by supply and demand. Unlike other markets the housing market is not one that will disappear as the product will never go out of fashion. With increasing population demand will be constant although values in any given area will fluctuate as the area becomes more or less fashioable. 
History shows that with the passage of time the currency buys less with each passing year (inflation?). In our own currency, the farthing, half penny, penny and two cent coins have all been retired. The five cent coin will be next. 
By default, housing values will appreciate as the currency depreciates. Ergo *housing prices will continue to rise for years*.


----------



## michael_t_f (28 April 2009)

The old supply and demand arguement. I agree, but don't see how this can be an arguement for prices rising. Don't you think if there is higher unemployment, no fhog, no rise in wages, no possibility of high capital gains in the short term, and we are in a period of deflation there will be less demand for this type of investment? All these things will contribute to higher supply as people move out and sell up as they lose jobs and lose interest in paying off there negative equity. Moving in with friends and family creating denser populated housing. All we have at best is a slower decline than other countries, that may not fall as much.


----------



## kincella (28 April 2009)

the opposite scenario has been the go for over 50 years now....less people per house...down to 2.46 last time I looked...
then I was worried about Gen X and Y...renting in the middle of the city, close to everything....how would they ever move out and buy...
apparently they did change...the latest sales out last week saw them buying out in the suburbs...where its cheaper....
so they are learning to play the game....they are not doing as some suggest and moving back home, or sharing...and increasing the numbers per household...
sharing a house when you have a family would be very hard with children involved...or they might end up divorced ...


----------



## nulla nulla (28 April 2009)

michael_t_f said:


> The old supply and demand arguement. I agree, but don't see how this can be an arguement for prices rising. Don't you think if there is higher unemployment, no fhog, no rise in wages, no possibility of high capital gains in the short term, and we are in a period of deflation there will be less demand for this type of investment? All these things will contribute to higher supply as people move out and sell up as they lose jobs and lose interest in paying off there negative equity. Moving in with friends and family creating denser populated housing. All we have at best is a slower decline than other countries, that may not fall as much.




We have experienced high unemployment, high interest rates, wage and price freezes (what a joke) in the past and the one constant is that, overall, housing prices continue to rise. There may be temporary falls in real estate values but at worst, those periods are merely times of temporary contraction as the less wealthy are weeded out of the market and the wealthy take advantage of the opportunity to consolidate their wealth for the long term future.


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## glads262 (28 April 2009)

nulla nulla said:


> There may be temporary falls in real estate values but at worst, those periods are merely times of temporary contraction as the less wealthy are weeded out of the market and the wealthy take advantage of the opportunity to consolidate their wealth for the long term future.




You could say the same for the sharemarket.

What you are basically saying is that all investments rise over the long term.

Its just more visable with the sharemarket, as its valued day to day.

Try graphing house prices, next to a graph of six monthly values of the sharemarket - probably more similar than you think (although they may not correlate)

Although, the sharemarket will be slightly more volatile, as it is higher risk and higher return.


----------



## Beej (28 April 2009)

glads262 said:


> Although, the sharemarket will be *slightly* more volatile, as it is higher risk and higher return.




Only "slightly" more volatile??? Try HUGELY more volatile..... and this makes using leverage to invest in shares inherently more dangerous/risky than using leverage for property (as MANY have found out in the past 18 months). Hence, although as you correctly state absolute returns are generally higher over the long term from shares, people don't tend to use anywhere near as much leverage, so if you account for the leveraged return, property can actually do EXTREMELY well -- but it's all horses for courses. 

That's generally why for most people purchasing and paying off their first house ASAP provides the best return over that initial period on the capital they actually have available (due to higher leverage), with risk from the leverage offset to a large extent by the fact the alternative is to bleed cash into rent anyway with no possible return from said rent. After the first place is paid off, you are then set up to invest in other asset classes with the ability (financially) to handle the risk.

Cheers,

Beej


----------



## kincella (28 April 2009)

interesting article...Investors on hold....they did some research....one in five are still waiting for lower prices,that means 4/5 are not expecting lower prices....
believe this article is not about FHB's

half the prop investors think things will be better next year, ...but they may miss out on the lower rates
consumer sentiment turning around

http://www.theaustralian.news.com.au/business/story/0,28124,25391261-5018055,00.html


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## Trevor_S (28 April 2009)

Beej said:


> Only "slightly" more volatile??? Try HUGELY more volatile..... and this makes using leverage to invest in shares inherently more dangerous/risky than using leverage for property




You don't think high levels of gearing are extremely dangerous in the Property Market ?  Look to the UK and USA for how dangerous high levels of leveraging into property can be.

I would say more dangerous with property ! but less volatile  leveraging in the property market is often cross collaterised with your PPOR, this is rare (but does happen ie Storm) in the share market) but very common in property.

That aside, 



> "I've seen more people fail because of liquor and leverage - leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing."
> - Warren Buffett


----------



## kincella (29 April 2009)

very interesting.....so if you have a home on a decent block....bulldoze it and build 6-8 stories high....with underground parking of course.....
they have been doing a lot of this in Toorak, Sth Yarra for ages.....

*Planning expert says Melbourne must destroy leafy eastern suburbs*
Article from: Font size: Decrease Increase Email article: Email Print article: Print Peter Familari

April 29, 2009 12:00am
MELBOURNE must destroy the bulk of its leafy eastern suburbs in order to thrive, a leading planning expert says.

The controversial proposal by Jason Black, president of the Planning Institute of Australia's Victorian division, has been offered as a solution to the state's transport and housing crisis by providing more accommodation in established areas. 

Target suburbs include Brighton, Camberwell, Balwyn, Ormond and Preston. 

Mr Black says spacious suburban blocks should be levelled and the homes replaced with three to six-storey apartment buildings. 

Mr Black said at a Melbourne planning summit yesterday: "We need to realise that some of the fundamentals driving the Government's 2030 development plan have changed and we need to rethink how we're going to go about delivering some of the objectives and the vision." 

The conference heard that metropolitan Melbourne would need an extra 850,000 new homes by 2036 if fertility and immigration levels remained the same. 


http://www.news.com.au/heraldsun/story/0,21985,25400503-2862,00.html


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## Beej (29 April 2009)

Trevor_S said:


> You don't think high levels of gearing are extremely dangerous in the Property Market ?  Look to the UK and USA for how dangerous high levels of leveraging into property can be.
> 
> I would say more dangerous with property ! but less volatile  leveraging in the property market is often cross collaterised with your PPOR, this is rare (but does happen ie Storm) in the share market) but very common in property.




When I say leveraging into property is "less risky" with a high LVR etc, I'm talking more about buying your first PPOR, rather than carrying on such a strategy into multiple investment properties or other asset classes (aka Storm etc).

When you buy your first home, you would have some sort of deposit, but in all but a few cases the LVR will still be high (80-90%). I don't see this as risky, as the alternative is a lifetime of paying ever increasing rent anyway - which simply means funding the majority of someone else's leverage play. So really with your first home purchase, the risk is very low compared to the potential long term financial benefit you would gain, when compared to the alternative, where you pay the cost of leverage (through rent) in effect with no potential gain at all. It's not like you are even "shorting" property by renting, unless you actually have the full amount sitting in the bank that would otherwise buy a house outright.

Cheers,

Beej


----------



## kincella (29 April 2009)

I like the theory...one can walk away from a rental prop...but not the same when they own a home with a mortgage......
is it walk away to another rental prop...or back home to mum and dad

home ownership is very popular worldwide....in australia its 70% and 30% renters....of which I guess about 20% are private investors the balance public housing 10%....so one could say about 90% invest in a home and , or a home and IP.....so in this respect most of us are :sheep:

those figures would need to be recalculated to take into affect...some owners have multiple IP's....001% the majority have only one...and some renters only have an IP but not a home...(which can become a home later)

for most of us the option of paying a mortgage compared to renting is a 'no brainer'....and the fact that house prices keep pace with inflation....and provide good capital growth in the long term......means its good for the economy....and the family....plus the kids inheritance down the track

I am not suggesting anyone buy a home or an IP....
Its just a personal preference of mine...and most of the population


----------



## kincella (29 April 2009)

I am refinancing....was given rates last week at 5.2 variable and 5.49 fixed...I was going to split it 50/50....since they are so slow doing the paperwork....the bank now wants 70% to be fixed and that rate has jumped to 6.59....so I will stay on the variable....taking a punt as per yesterdays article that fixed and variable would move closer...once the competition between the banks starts....


----------



## Taltan (29 April 2009)

Beej said:


> When you buy your first home, you would have some sort of deposit, but in all but a few cases the LVR will still be high (80-90%). I don't see this as risky, as the alternative is a lifetime of paying ever increasing rent anyway - which simply means funding the majority of someone else's leverage play. So really with your first home purchase, the risk is very low compared to the potential long term financial benefit you would gain, when compared to the alternative, where you pay the cost of leverage (through rent) in effect with no potential gain at all. It's not like you are even "shorting" property by renting, unless you actually have the full amount sitting in the bank that would otherwise buy a house outright.
> 
> Beej




You don't pay rent to leverage you pay it to meet a need for housing. When you buy a property you are also paying for that need via interest on a mortgage. When you buy you are foregoing the opportunity cost of usign that capital elsewhere. 

If say twelve months ago Mr X paid 500k for a property with a 50k deposit than he owes 450k mortgage, lets say Mr X has paid interest only of 6% since, thats 27k and the home is now worth 500k Mr X has paid 27k to be in the exact situation he was 12 months ago. Alternatively Mr Y has rented the same property for say 23k he is obviously better off by 4k. If the property is now only valued at 450k than Mr Y is better off by 54k. Likewise if the property is worth 550k  Mr X is better off by 46k. 

My point is that renters are clearly shorting on property by staying out because you can always go to the bank and take a loan later. I am not saying property is not a worthwhile investment, just that like any investment it needs to be the best use of capital for it to proceed.


----------



## nulla nulla (30 April 2009)

kincella said:


> I am refinancing....was given rates last week at 5.2 variable and 5.49 fixed...I was going to split it 50/50....since they are so slow doing the paperwork....the bank now wants 70% to be fixed and that rate has jumped to 6.59....so I will stay on the variable....taking a punt as per yesterdays article that fixed and variable would move closer...once the competition between the banks starts....




We went for the variable rate, with CBA, and opened a "miser" account linked to the mortgage. As well as paying more than the required monthly repayment we stashed any spare $ into the "miser" a/c. The benefit of having a reserve of cash in the "miser" a/c is that the balance is offset against the mortgage balance when the monthly interest is calculated. Amounts paid monthly over and above the monthly repayment requirement also show in the account as a credit available for redraw against the mortgage. From time to time this has been a cheap source of funds for the odd share parcel seen as a bargain or a trade oportunity. Once the trade has been completed, the funds go back to the mortgage and the profit stays in the portfolio. Cheaper than a line of credit or a margin loan.


----------



## enigmatic (30 April 2009)

Hey all just looking for a little bit of info.

Gone to the bank recently to organise my home loan at 4.85% variable with an offset account now my question is are there any advantages in me paying more then is fortnightly required. 

can I not just place any extra in the offset account (basically droping the loan the same amount)

If there is any advantages of paying extra to putting the money in an offset account could someone explain them.


----------



## Beej (30 April 2009)

enigmatic said:


> Hey all just looking for a little bit of info.
> 
> Gone to the bank recently to organise my home loan at 4.85% variable with an offset account now my question is are there any advantages in me paying more then is fortnightly required.
> 
> ...




As long as you think you have the self discipline to LEAVE the cash in the offset account, then you are better off putting it there IMO. It means that cash is available for sensible, productive spending in the future if you need it like extensions, renovations to your house etc, without the need to go back to the bank.

On the other hand, if you are the type who might be tempted to spend the available cash on say a new car or a holiday, then I would say you are better off putting the extra into the actual mortgage. It's still available to you there if you REALLY need it, but harder to get at as you would have to visit your bank manager 

Your call! be honest with yourself 

PS: Great mortgage rate you have negotiated there!

Cheers,

Beej


----------



## robots (1 May 2009)

hello,

some great results out yesterday from Rismark, 

its looking good to collect that slab of ruskies and parma from Satanoperca

this is just amazing, through the biggest economic event since the great depression with many calling it a bigger event than the GD and the worst result for *many with bricks & mortar* was -3% last year

i know its tough to accept but just keep yourself occupied, read the paper, go for a walk, ride the pushie

oh well, i guess some professors get it right and some get it wrong

does anyone know when the internet will be working again in the UK?

thankyou
associate professor robots


----------



## kincella (1 May 2009)

anyone recall steve keen's prediction of 40% drop in house prices ????
facts/truth coming through show 40% drop in interest rates.....and a drop in the median value of less than 3%.......I feel sorry for anyone who took note of that bad prediction.....

The slight recovery in Australia "has been driven by the 40% fall in home loan rates to 5.7%, which are now at their lowest levels since July 1968,'' said Christopher Joye, managing director of Rismark International.

http://business.brisbanetimes.com.au/business/house-price-rise-bucks-global-trend-20090430-aod4.html


----------



## kincella (1 May 2009)

Oh dear....now we have another Professor claiming 20% drops.......
extracts from the headline grabbing article to debunk the claims of same....

Christopher Joye, of funds manager Rismark, said despite the "unsubstantiated, hyperbolic claims of some renegades", the figures suggested a "slow house price recovery
He said an increasing number of buyers were investors "positively gearing" ”” looking to make money from rent rather than declare tax losses, as in the past. He cited the Reserve Bank's latest financial stability report, which suggested that the substantial gap between incomes and house prices was permanent.

and to debunk the theory about the grants.......

But Macquarie Bank economist Rory Robertson said this year's price growth was not primarily because of the grants.

"It's because interest rates have fallen into the 5 to 6 per cent range," he said. "The vast majority of home buyers with variable rate mortgages are suddenly enjoying rates lower than they ever had contemplated."
ps fhb's represent less than 30% of home sales

http://business.brisbanetimes.com.au/business/property-bubble-set-to-burst-20090501-ap5k.html


----------



## nulla nulla (1 May 2009)

Beej said:


> As long as you think you have the self discipline to LEAVE the cash in the offset account, then you are better off putting it there IMO. It means that cash is available for sensible, productive spending in the future if you need it like extensions, renovations to your house etc, without the need to go back to the bank.
> 
> On the other hand, if you are the type who might be tempted to spend the available cash on say a new car or a holiday, then I would say you are better off putting the extra into the actual mortgage. It's still available to you there if you REALLY need it, but harder to get at as you would have to visit your bank manager
> 
> ...





Using "netbank" with the CBA, you have access to the funds in the mortgage linked account ("miser") and the accumulated payments, excess to the mortgage monthyl/fortnightly requirements, without leaving your home.


----------



## satanoperca (1 May 2009)

robots said:


> hello,
> 
> some great results out yesterday from Rismark,
> 
> its looking good to collect that slab of ruskies and parma from Satanoperca




Don't start salivating just yet Robots. 

The devil is in the detail, please correct me if I am wrong.

"Released 30 April 2009
Property Value Index Release - RPdata

CLARIFICATION: On a quarterly basis (i.e., comparing the first quarter of 2009 with the fourth quarter of 2008), which is the method used by the ABS, Australian residential property values are up 0.1 per cent according to the quarterly RP Data-Rismark Hedonic Index. Quarterly index estimates are ‘transaction-weighted’"

Looks like they just scrapped through will the smallest of positive results. 

Still waiting for the ABS 1st Quarter stats to be released.

Overall, the RE market has held up incredibly well with the lowest interest rates in 30 years, unemployment still low, petrol prices still low, inflation dropping and government support and handouts everywhere.

I wonder if the sentiment in the community will change when the budget gets released this month and everyone releases our government has successfully put us in a large amount of debt. Don't worry the GFC hasn't effected our economy, we should be coming out of this recession next year according to the purveyors of truth - Gov.

Cheers

Benjamin


----------



## gfresh (1 May 2009)

Yeah.. I don't have any faith in a housing industry sponsored measuring system either, especially by ones such as RPdata. 

APM stats show it's not so good in the Sunshine State.. -6.1% over the year .. ouch

http://business.brisbanetimes.com.au/business/house-prices-continue-fall-20090501-ap6c.html



> *House prices in Brisbane have dropped half a per cent in the March quarter*, the fourth consecutive fall in value, steeper than the national average.
> 
> Confirmation that the property market is treading water came as official figures showed new loans to businesses are falling sharply, suggesting a rapid decline in investment.
> 
> ...


----------



## MACCA350 (1 May 2009)

Shouldn't the Reiv quarterly figures be out by now?
Actually just looked at the Dec quarter......
House Median down 9.7%(Dec 07-Dec  08)
House Median down 0.9%(Dec Q)

Unit Median down 5.2%(Dec 07-Dec  08)
Unit Median down 1.1%(Dec Q)

I must have missed that the full year for 2008 showed the Melbourne median drop nearly 10% .............Don't remember that being mentioned in the media much at all, seems to have crept quietly by...........although maybe I blocked it out with all the positives being thrown around lately

So when are the Reiv quarterly figures due out?

cheers


----------



## Beej (1 May 2009)

nulla nulla said:


> Using "netbank" with the CBA, you have access to the funds in the mortgage linked account ("miser") and the accumulated payments, excess to the mortgage monthyl/fortnightly requirements, without leaving your home.




That sounds more like an equity manager type set-up. Great if you have the self discipline to use it wisely! 



MACCA350 said:


> Shouldn't the Reiv quarterly figures be out by now?
> Actually just looked at the Dec quarter......
> House Median down 9.7%(Dec 07-Dec  08)
> House Median down 0.9%(Dec Q)
> ...




Don't know about the REIV figures, but the above doesn't fit with any of the other data sources (RP Data, Rismark, APM, ABS). The ABS figures up to end 2008 are here: http://www.abs.gov.au/Ausstats/abs@.nsf/mf/6416.0

They show a year/year (Dec/Q4 07 -> Dec/Q4 08) median price fall of -3.2% for Melbourne, and -3.3% for the national weighted index.

Cheers,

Beej


----------



## kincella (1 May 2009)

gfresh...would you rather the pig industry or the food industry people monitored the house/ property market ???
they are all the experts in each field....they know their own markets, industry etc

the pig/pork industry specialises in everything relating to that industry....so most of us have confidence in what the industry body states....
same as the housing/property industry


----------



## MACCA350 (1 May 2009)

Beej said:


> That sounds more like an equity manager type set-up. Great if you have the self discipline to use it wisely!
> 
> 
> 
> ...



That's a major discrepancy between the different data collation groups, what is the cause of such a wide variation? and which figures more accurately reflect the market? 

BTW here's a link to the Reiv quarterly figures I quoted: http://www.reiv.com.au/home/inside.asp?ID=1048&nav1=652&nav2=165&nav3=1048

cheers


----------



## Taltan (1 May 2009)

The REIV publishes its figures based on a survey of its members? This means any properties sold privately are not included. Imagine the ASX being published with a survey of CHESS sponsored holdings, the information is useful but certainly not reliable.

If anyone knows it would be interesting to know how APM, ABS, Rismark, RP Data etc. compile their figures? I would suspect ABS would be the most objective data, yet also the slowest to arrive


----------



## gfresh (1 May 2009)

kincella said:


> gfresh...would you rather the pig industry or the food industry people monitored the house/ property market ???
> they are all the experts in each field....they know their own markets, industry etc
> 
> the pig/pork industry specialises in everything relating to that industry....so most of us have confidence in what the industry body states....
> same as the housing/property industry




But not when they have a vested interest at seeing prices go only one way.. I wouldn't trust the Pork industry telling us pork is really good for you, and telling us there was a pork shortage when I can walk into any store and buy sausages. 

I'd be more for a Government or academic sponsored entity, although even they have some political or social interests, so not perfect either. That information should be available for free to every Australian for any property or area - sale price,  and address. That data could be based on sale prices based on stamp duty calculations by valuations offices. Therefore no room for agents to fiddle or "forget" to fail to report a low price as per RPdata. Who is auditing or checking their methodology anyhow? nobody I bet.. 

It's in the Government system somewhere, that I am paying for with my tax dollars, it's just not publicly available

ABS is not bad, but is a little general. It uses valuer general reported prices, amongst a few other things. 

ABS Methology for those interested - http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/F814197BA42AA038CA257226001CC76E/$File/64640_2006.pdf


----------



## Lancelot (1 May 2009)

Found this good article on Business Spectator today



> CONCRETE DETAIL
> 
> by Christopher Joye
> 
> ...




The link to the blog is here Why it Really is Different Here

Pretty compelling and well researched stuff, plenty of charts and links to support the evidence of "Why it is really different here"


----------



## Lancelot (1 May 2009)

And an article in The Age 


> *Bear sees light at the end of the cave*
> Michael Pascoe
> May 1, 2009 - 9:54AM
> 
> ...




The original comment from Gerard Minack can be found on Eureka Report here The worst is over


----------



## Lancelot (1 May 2009)

Gotta love todays picture from RP Data







Green Shoots


----------



## singlefished (1 May 2009)

Gotta love these property gurus trying to make bad data look good...



> Sydney house prices fall more than national average
> 
> http://au.biz.yahoo.com/090501/31/262py.html
> 
> ...




The simple fact of the matter is that a lot of the analysis provided through whatever media outlet is either biased for or against and data can be interpreted to suit whatever argument depending on who is reporting.

The facts are though that property is still generally trending down even with the lowest rates in many many years and artificial support by the government over the last however many months. Who would have thought...


----------



## Beej (1 May 2009)

Lancelot said:


> Found this good article on Business Spectator today
> 
> 
> 
> ...




That is the most awesome, well researched and comprehensive article on the current state of Aussie house prices ever! A MUST read for everyone, no matter which side of the fence you currently sit on.

Thanks for posting that link!

Cheers,

Beej


----------



## kincella (1 May 2009)

Lancelot, thank you for bringing that to my attention......
I have shown the others the charts which prove the US and the UK follow AUS...they do not lead us on housing....
oh and for 'gfresh'...see the ref about stamp duty...thats why in AUS we have accurate information about house prices...we all pay stamp duty on each house.....not so in the other countries...where it can be a hit and miss....
extracts from the link on Lancelot's post
................................................................

The RBA has been at pains to highlight the fact that Australia’s housing market has actually led the US and UK by three years with our boom ending in late 2003. Here, the RBA’s Dr Tony Richards recently commented: “The growth rate of house prices in the past five years has been well below the 8 per cent average annual nominal growth in household disposable incomes.”
First, the ABS provides historical house price index data going back to the mid 1980s on a city-by-city basis (as do many other index suppliers). 

Second, since state governments levy stamp duty on all residential transactions, Australia is in the fortunate position where government agencies – typically Valuers General offices – collect 100 per cent of all property sales data and make this available to index providers (who in turn purvey it to the public). 

Accordingly, Australian house price indices normally reflect 100 per cent of all sales. 
While there has been some critical commentary around the level of mortgage debt in the community, we estimate that the average Australian home loan-to-property value ratio is just slightly north of 50 per cent. That is, the average home owner with a mortgage has around 50 per cent equity in their home (*NB: according to the 2006 census, only around half of all home owners have any mortgage debt at all).*


----------



## kincella (1 May 2009)

and this article shows difference in the rate cuts between the countries...plus much more.....
I am about to say ...'I told you so to the bears'...but will give it a bit longer

Another critical factor is interest rates. The UK and USA banks have generally retained a large slice of the official rate cuts for themselves, rather than passing it on to the consumer as mostly happened in Australia (375 of the first 425 basis points worth of cuts were passed on). Furthermore, the UK and USA only started slashing official rates after their house prices were falling sharply and their economies were in serious trouble. The RBA on the other hand has been much more proactive, cutting rates aggressively, ensuring that most of the rate cuts are passed on, and since they were starting from a higher official rate position to begin with, they have had relatively more ammo left in the rate cut gun as well (and even if the banks to not pass on much more from now on, their profits will be increasing encouraging more lending
http://www.businessspectator.com.au...-Blogs-pd20090430-RL4WG?OpenDocument&src=srch


----------



## Lancelot (1 May 2009)

Whats this I see

http://www.yourmortgage.com.au/news/3000/default.aspx



> *London property prices rise for the first time in 12 months*
> 
> 30/04/2009
> 
> ...


----------



## gfresh (1 May 2009)

Most of shadow's arguments have been pretty well argued against in other forums with valid points, so I'm sure it will be deja vu reading any replies.  

His belief over population growth (looking at the now, rather than longer periods), is not a constant variable, nor is there any real reason this can't change.  Plus also the entire part endless migrants coming to Australia is also a little tenuous in a recession and demand for labour being less. I am sure if you looked at the UK 3 years ago migration  growth looked strong and their wages looked high. 

Rental vacancies again, you can argue that. I've never experienced a problem finding rentals. I can see multiple listings in any suburb I could care to name. Maybe the price is a little high for some, but that doesn't mean there is no vacancies. I don't believe there is any rental shortage, other than being told by home owners and the housing industry (not renters I know!).

Australians are more prone to interest rate policy than the UK/US/others as we have a very high percentage now on variable rates. Monetary changes more quickly flow through to our market. Yes this is a positive. 

He claims the US and UK are more heavily based around the finance industry...we are heavily based around the resource industry. Both can suffer heavily in a global downturn. Look at Russia for instance (oil instead of dirt). This doesn't really indicate we're any safer. 

Anyhow, while he does use data to support his claims, I think most of it can be argued against. I hope somebody has the hours to write together a good response, like he obviously has spent.


----------



## gfresh (1 May 2009)

> False claim number 13: ‘Fundamental supply and demand, population growth etc. is irrelevant. Availability of credit is the only factor responsible for house price growth.’
> 
> In 2007, house prices in Melbourne rose by over 20 per cent while prices in Sydney rose by only 8 per cent. Did Melbourne have twice the amount of credit available? No. Prices were driven by supply and demand, not availability of credit. Credit is equally available throughout Australia, but house prices do not rise by equal amounts in each city.




That's a piss poor argument to use against that one..


----------



## kincella (1 May 2009)

firstly the bad news....the new green star rating will add $10,000 to the cost of new homes from next year
http://www.news.com.au/business/story/0,27753,25413739-31037,00.html

now for the good news
China's manufacturing activity expanded in April to it's highest level for a year...

It sank to a record low of 38.8 in November due to the global financial crisis, but has improved continuously in the five months since, although it only moved above 50 in March.

This "sends a clear signal that real economic activity growth has been improving on a sequential basis from its trough last November," Goldman Sachs said.


http://news.theage.com.au/breaking-news-world/china-says-manufacturing-expanding-20090501-aq08.html


----------



## robots (1 May 2009)

gfresh said:


> *Most of shadow's arguments have been pretty well argued against in other forums with valid points, so I'm sure it will be deja vu reading any replies.*
> 
> His belief over population growth (looking at the now, rather than longer periods), is not a constant variable, nor is there any real reason this can't change.  Plus also the entire part endless migrants coming to Australia is also a little tenuous in a recession and demand for labour being less. I am sure if you looked at the UK 3 years ago migration  growth looked strong and their wages looked high.
> 
> ...




hello,

just like all the points put forward by the those who cannot afford property,

and guess what, prices still high in the sky man

paradise 

thankyou
robots


----------



## robots (1 May 2009)

hello,

and here in Melbourne being a developer is looking very very rosy, 12mth permits, super funds still loaning,

and 10k to get 6-star just helped the existing stock even more, hold on brothers

splendid

thankyou
robots


----------



## kincella (2 May 2009)

Gearing for a housing deficit....its a good article....aimed at investors

Building approvals have collapsed in the past year and completions in 2009-10 could fall below 120,000. Australia currently has one of the (if not the) strongest population growth rates in the developed world and even if skilled migration targets were cut to zero in the years ahead in response to fears of rising unemployment, underlying housing demand would still be 150,000 in 2010.

"We currently estimate that by mid-2010 Australia will have an unprecedented underlying housing shortage of 250,000 dwellings."

Put your money where the transport is

For people looking to take advantage of low interest rates to buy a residential property as an investment, Steve McKnight offers the following advice: "It should have three bedrooms or more and at least two bathrooms. Close to parks and schools is ideal.

"It should also be near public transport. The number of people catching public transport to get to work is going through the roof. In Sydney and Melbourne the train is better than any other form of transport, so people will want to have that flexibility of living in an area where they can walk to a railway station. And they will pay more for it.

"Aim for 680 square metres of land or better, to preserve the potential to sub-divide the property. And if you cannot afford to buy in an A-grade area, buy in the suburb next door. Gradually that A-grade area will price itself out, because people will not be able to afford to live there, and the B-grade area next door will move up in price."

http://www.brisbanetimes.com.au/articles/2009/04/27/1240684398016.html?page=2


----------



## Trevor_S (2 May 2009)

robots said:


> just like all the points put forward by the those who cannot afford property,




What about, points put forward by those of us that can ?   Like the stockmarket in early 2008, people were still buying overprices shares, I see people buying overpriced houses today  They are speculating that CG will keep compounding because the CF is sure as hell pretty shi_ty !, if no CG they are going to be left with a white elephant investment.  Some respond with "yeah but I am looking over the long term man".. sure, as do I in the stock market but I look for times when there is value before buying, buy then and hold for the long term (and yes I do sell), but not to buy when the (property)  market is "sky high", to use your words.

I only have two properties, having come back from 4 over the last few years but I have no debt on either of them, so I am not adverse to resi. property, I just don't see it as a good investment right now.



robots said:


> and guess what, prices still high in the sky man




Indeed, so you agree the prices are sky high but sky high prices does not equal a bubble, in your opinion ? that seems an odd stance to take.



robots said:


> paradise



Over inflated housing prices is not my definition of paradise, a decent return on my investment dollar is.


----------



## kingbrown (2 May 2009)

Well guys put this in the mix now ! 
Herald Sun here in Melb saying its REIV data 

*Victorian house prices suffer biggest drop in 40 years*
HOUSE prices have suffered their biggest drop in more than 40 years.

The median price has slumped 15 per cent -- or $75,000 -- since peaking 15 months ago, according to new Real Estate Institute of Victoria figures. 

And in a worrying trend, the rate of the falls has increased. 

there's even a interactive map 

http://www.news.com.au/heraldsun/story/0,21985,25415325-661,00.html


----------



## kincella (2 May 2009)

kingbrown...you are a bit late...thats already been posted on the 'losing' thread


----------



## Ruincity (2 May 2009)

Farout Kingbrown, Heaven forbid a balanced view in this bulls only thread...

Post with the flow or don't post at all it seems.


----------



## MrBurns (2 May 2009)

kincella said:


> kingbrown...you are a bit late...thats already been posted on the 'losing' thread





Ahh but it's so important to share the news around, i'm just scanning other threads to see if I can slot it in, I'm having flyers printed to go out St Kilda first 

No really, these are the figures that have not surfaced until now, everyone knew it was on the skids, the bottom end has been heavily subsidised and still falls, Rudd cannot hold up the entire housing market using tax payers dollars no matter how much he values his standing in the polls.


----------



## robots (2 May 2009)

hello,

looking forward to that flyer Burnsie i hope it has st kilda up 4% for q1 09 REIV stats

and looks like my inheritance is doing well with Mt Martha up 14% for q1 09 REIV stats

paradise

thankyou
robots


----------



## Lancelot (2 May 2009)

kingbrown said:


> Well guys put this in the mix now !
> Herald Sun here in Melb saying its REIV data
> 
> Victorian house prices suffer biggest drop in 40 years




*Nice to see you conveniently fail to mention the 10 best quarterly rises  as well, but I would expect nothing less.*


----------



## MACCA350 (2 May 2009)

robots said:


> hello,
> 
> looking forward to that flyer Burnsie i hope it has st kilda up 4% for q1 09 REIV stats
> 
> ...



After falling around 30% in the previous quarter St Kilda is down 1.5% yoy.
After falling around 18% in the previous half year Mt Martha is flat 0% yoy.

Looks like both St Kilda and Mt Martha have done better(3.2% and 4.7%) than the average when looking at the yoy results.

cheers


----------



## kincella (2 May 2009)

Just back from Chapel St.....I have never seen a bigger crowd...so what the hecks going on down there ???
Will someone pleasee tell them we are in a recession, and that they have to stop spending !


----------



## MACCA350 (2 May 2009)

Anyone consider these median prices may be skewed by a shift in the ratio between properties properties sold in the lower end and those in the higher end?

For example, take the two scenarios below. Everything is the same bar two removed from the higher range and two added in the lower range, changes the median, but one cannot really say that the values of those that sold have actually changed:

1.1M
1.0M
900k
800k
700k
500k
400k
300k
200k
=700k median


1.1M
900k
700k
500k
450k
400k
350k
300k
200k
=450k median

What's changed is the buyers opting for cheaper house, but that doesn't necessarily mean that the value of those properties have actually changed. 

Since there seems to have been a shift towards properties below 500k due to the end of the FHOG boost, the REIV median results could actually be masking a rise in what people are actually getting for their properties in the last quarter or two.

Not sure I'm conveying correctly, but I find myself thinking that the use of a Median method does not accurately reflect changes in actual home valuations..........please let me know if I'm just over thinking things, I tend to do that

cheers


----------



## kincella (2 May 2009)

you are correct....in the suburbs that I watch...the lower priced homes were selling at a premium to what they would have achieved in an ordinary market...and since there are so many selling in the 500-600 range....the median will reflect this lower range....it has nothing to do with the value of the house...
so when the media screams the median value is lower than last year....and a smaller number of homes were sold...most homes were purchased by fhb's....
it stands to reason...the median will be lower...
it does not mean the price of the house has dropped...in fact in some areas the price rose...


----------



## MACCA350 (2 May 2009)

So is there a method or report that does accurately reflect valuations?

cheers


----------



## MrBurns (2 May 2009)

kincella said:


> Just back from Chapel St.....I have never seen a bigger crowd...so what the hecks going on down there ???
> Will someone pleasee tell them we are in a recession, and that they have to stop spending !




They're all homeless.........wont be a joke for too much longer.

They're spending $rudds.


----------



## robots (2 May 2009)

hello,

good evening Kincella, the dog get a treat at KFC?

the joint is rocking alright, its amazing, great to be part of it all

thankyou
robots


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## MACCA350 (2 May 2009)

Just noticed at 4:50 in Enzo's video he shows a graph that compares their figures to the Valuer Generals and they seem to track quite closely and mentions that this shows that the REIV figures are very accurate to actual market movements. 
From what I understand, the Valuer General valuations are the ones used for governments and things like land tax and annual rates.......is this correct?

This would suggest that, even though the REIV figures are not directly derived from accurate valuations, they are a good representation of the movements of valuations.

cheers


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## kincella (2 May 2009)

Hi Robots...
yes the dog did get her treat...(3-4 weeks since last had some) its really just a tiny amount of meat...not enough for a meal.... 
since I lost a couple of kg's and inches I thought she should have a treat...she only weighs 4.5 kg..so she is a little tike
that Chapel st just buzzes all the time....the chemist was full... I thought they must be shopping for Mothers day...they have some good specials on perfumes for both sexes
cheers


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## kincella (3 May 2009)

***I am guessing....a fair number of people who prefer renting to buying/owning the home they live in....may have been influenced by their parents...and their  history....
majority of people who grew up in their own home...will copy their parents and buy....
the ones who grew up in rented housing will copy their parents and rent...
of course there are the ones in each group who rebel...did not like it and do the opposite
parental influence may be the deciding factor here ????

*** the other thing that some will scoff at...
a new show starting on ch 9...... for home renovations......
I will be watching....I love new ideas, I enjoy renovating myself, including interior design, and landscaping
whoo hoo....there are a load of people out there who will be renovating...with the low interest rates kicking in of course...and biding their time....until the market is right....
I would prefer to be renovating houses for a living.... so far I have been doing same on a  part time basis....maybe , just maybe I will make it my full time job....coming to cross roads...which road will I take....a big decision...requires a lot of thought and research....and a bit of gutz
cheers


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## MrBurns (3 May 2009)

kincella said:


> ***I am guessing....a fair number of people who prefer renting to buying/owning the home they live in....may have been influenced by their parents...and their  history....
> majority of people who grew up in their own home...will copy their parents and buy....
> the ones who grew up in rented housing will copy their parents and rent...
> of course there are the ones in each group who rebel...did not like it and do the opposite
> ...




If people knew how to invest properly they would rent and put the cash into investments, they could make much more than the appreciation on a house even with the tax, but people on the whole have no idea how to invest so they buy a house, it's forced saving.


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## Julia (3 May 2009)

MrBurns said:


> If people knew how to invest properly they would rent and put the cash into investments, they could make much more than the appreciation on a house even with the tax, but people on the whole have no idea how to invest so they buy a house, it's forced saving.




Mr B.  That's rather a generalisation, don't you think?   There are other reasons for owning a home than just the financial considerations.  We've discussed this before.

A home means much more to many people than just a profit making vehicle.
Rather it represents security (the landlord can't throw you out), and the various enhancements you make to the property add to the pleasure of living there.  When any mortgages are paid you don't have to worry about the landlord upping the rent exponentially.

I would always have a home to live in first, then left over capital can go into more property or other investments.


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## MrBurns (3 May 2009)

Julia said:


> Mr B.  That's rather a generalisation, don't you think?   There are other reasons for owning a home than just the financial considerations.  We've discussed this before.
> 
> A home means much more to many people than just a profit making vehicle.
> Rather it represents security (the landlord can't throw you out), and the various enhancements you make to the property add to the pleasure of living there.  When any mortgages are paid you don't have to worry about the landlord upping the rent exponentially.
> ...




I do the same as you BUT if I was a really savvy investor I wouldnt have $2M tied up in a place to live, I could do very very well elsewhere and the landlord could do as he liked the rent would be small change.

One day when all is done you would buy something and have a stack left over to live off.

People like to have the "security" of their own home because they havent got the know how to turn that money into multiples of itself, I'm one of them , not enough confidence or tolerance for risk.


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## Lancelot (3 May 2009)

MrBurns said:


> If people knew how to invest properly they would rent and put the cash into investments, they could make much more than the appreciation on a house even with the tax, but people on the whole have no idea how to invest so they buy a house, it's forced saving.




Would they?

Would you have suggested something like this?


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## Lancelot (3 May 2009)

MrBurns said:


> I do the same as you BUT if I was a really savvy investor I wouldnt have $2M tied up in a place to live, I could do very very well elsewhere and the landlord could do as he liked the rent would be small change.
> 
> One day when all is done you would buy something and have a stack left over to live off.
> 
> People like to have the "security" of their own home because they havent got the know how to turn that money into multiples of itself, I'm one of them , not enough confidence or tolerance for risk.





Who has a 2million dollar house?

You do realise that most people have to put a deposit on a house and pay it off, they don't just go out and pay cash from the millions of dollars they have lying around in the bottom of the cupboard.

If they DID have a few million lying around your comment makes sense, to rent and invest those millions elsewhere, but as they don't, they need leveraging to get a result.


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## MrBurns (3 May 2009)

Lancelot said:


> Who has a 2million dollar house?
> 
> You do realise that most people have to put a deposit on a house and pay it off, they don't just go out and pay cash from the millions of dollars they have lying around in the bottom of the cupboard.
> 
> If they DID have a few million lying around your comment makes sense, to rent and invest those millions elsewhere, but as they don't, they need leveraging to get a result.




Investing is not just shares, and rent is cheaper than mortgage payments, rates , taxes , maintenence , with the money left over you support your investments and enjoy the tax breaks.


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## Julia (3 May 2009)

MrBurns said:


> I do the same as you BUT if I was a really savvy investor I wouldnt have $2M tied up in a place to live, I could do very very well elsewhere and the landlord could do as he liked the rent would be small change.



Quite so.  I don't have 2M tied up in a home.



> One day when all is done you would buy something and have a stack left over to live off.



I don't know about "a stack", but yes there is enough left over to live off.





> People like to have the "security" of their own home because they havent got the know how to turn that money into multiples of itself, I'm one of them , not enough confidence or tolerance for risk.



So you're handing out advice that you don't take yourself, or am I misunderstanding you, Mr B?  If so, what's stopping you?


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## Lancelot (3 May 2009)

MrBurns said:


> and rent is cheaper than mortgage payments, rates , taxes , maintenence , with the money left over you support your investments and enjoy the tax breaks.




Really?

My repayments at 7.5% rates taxes etc  are way way cheaper than rent on a similar property.

I have been "investing" in this place for a few years now though to make it so.


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## Soft Dough (3 May 2009)

Lancelot said:


> Would they?
> 
> Would you have suggested something like this?




yes, over the long term the sharemarket is a great as an alternative investment.

Perhaps the last 3 weeks return would be a better graph to post?  Or does that not suit the bias of your viewpoint?

Remember it doesn't take as much of a percentage fall in house prices to wipe out as much in real $$ from regular investors, as in housing you will find more people more highly geared.


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## Soft Dough (3 May 2009)

Julia said:


> ]
> Agree.   Annual outgoings on this property would be under $5000.  That's under $100 p.w.   Rent on equivalent property would be around $400 p.w. min even in this regional area.




I have just moved again, and thought of purchasing a property for where I am for the next few years.

House = $400k -> interest = $446 per week, rates = $50 per week house insurance = $20 per week, depreciation = $120 per week.

= $636 per week
Rent = $350 per week

I do not expect any capital gain in housing over the next 3 years.  So why would I buy when I can rent?


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## MrBurns (3 May 2009)

Julia said:


> So you're handing out advice that you don't take yourself, or am I misunderstanding you, Mr B?  If so, what's stopping you?




Thats right and I told you why, it's not advice it's an observation and a true one at that Julia, just because we cant/dont do it doesnt mean others dont and very successfully too.


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## MrBurns (3 May 2009)

Lancelot said:


> Really?
> 
> My repayments at 7.5% rates taxes etc  are way way cheaper than rent on a similar property.
> 
> I have been "investing" in this place for a few years now though to make it so.




Add up ALL your expenses and you'll get a different result.


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## singlefished (3 May 2009)

Lancelot said:


> Really?
> 
> My repayments at 7.5% rates taxes etc  are way way cheaper than rent on a similar property.
> 
> I have been "investing" in this place for a few years now though to make it so.




How much would a FHB have to borrow to buy the same property today then (assuming 5% deposit)?


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## MrBurns (3 May 2009)

Soft Dough said:


> I have just moved again, and thought of purchasing a property for where I am for the next few years.
> House = $400k -> interest = $446 per week, rates = $50 per week house insurance = $20 per week, depreciation = $120 per week.
> = $636 per week
> Rent = $350 per week
> I do not expect any capital gain in housing over the next 3 years.  So why would I buy when I can rent?




Only dont but a house *if you're absolutely certain you can do beter in other areas, if not buy,* but not just yet the fun and games are about to begin there.


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## Lancelot (3 May 2009)

Soft Dough said:


> yes, over the long term the sharemarket is a great as an alternative investment.




As are properties. Should see what the 1970's stuff is worth now



> Perhaps the last 3 weeks return would be a better graph to post?




3 weeks?  I thought you said above sharemarket long term, make your mind up


> Or does that not suit the bias of your viewpoint?




My bias comes from the bears expertly advising me since 2003 to sell out of property and buy into shares.
Some of that "expert advice" was given just a few short months before that first major drop mid 2007, and at the time I was apparently crazy for suggesting prices were in a massive speculative bubble at the time.
Apparently I was even more crazy not to buy in near the bottom of that mid 2007 trough and was treated with derision by the "experts",Similar to the derision you offer now, 3 weeks of up must mean prices to the moon eh?

Luckily I didn't sell out and buy in at the time, it would all be gone now if I had listened to that "expert advise".

That expert has now lost all, wife, job, car any assets they had, everything.




> Remember it doesn't take as much of a percentage fall in house prices to wipe out as much in real $$ from regular investors, as in housing you will find more people more highly geared.




Remember that not everybody is as highly leveraged as you may think


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## Soft Dough (3 May 2009)

Lancelot said:


> As are properties. Should see what the 1970's stuff is worth now
> 
> 
> 
> ...




I didn't say property was a poor long term investment.

Just that the correction is coming, and that it will be problematic, even if it is merely prices not rising for quite a few years.

The average housing investor is geared to a greater extent than a sharemarket investor.

I like you trying to use the 3 weeks thing... but you know what I mean. Why did you not use the last 70 years for the sharemarket?

I do not care what inexperienced investors told you, I am an experienced investor and have not been hurt too badly by the sharemarket falls ( Unfortunately/fortunately I sold just before the first dead-cat bounce ). Each to their own, I just hope for your sake that the market doesn't capitulate, and for my sake that it does


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## Beej (3 May 2009)

Soft Dough said:


> I have just moved again, and thought of purchasing a property for where I am for the next few years.
> 
> House = $400k -> interest = $446 per week, rates = $50 per week house insurance = $20 per week, depreciation = $120 per week.
> 
> ...




Holy moola batman! rates $2500/year? Where the heck is that? I pay < $800/year ($15/week). Insurance $1000/year? I pay half that (unless you are including contents). And I live in Sydney! In a 1920s double brick house (they don't make em like that anymore!). Interest? Currently 5% is the norm, so your interest bill should only be $385/week. And your rent - $350/week for a $400k place? That's cheap by Sydney standards - you'd be paying $400/week here if you were taking out a new lease on a $400k place.

And depreciation of $6500/year? Again, very high figure. Most allow 1% for maintenance/improvements (which is really your depreciation), which is about $75/week in your example.

So using my more realistic figures as an alternative example, weekly owning cost = interest $385, rates $15, insurance $10, maintenance/depreciation $75. Total $485. Rent same place = $400/week. Difference only $85/week; let's consider this the ownership premium, ie, what you pay to not have to move in the next 3 years (or 20), to be able to paint a room or hang a picture if you want, add value through improvements, landscape or change the garden etc etc. PLUS, see a mere 1.1%pa appreciation in prices over 3 years and you have made that back anyway. In most cities houses and units in that price range have appreciated that much in the past 3 months! And that also assumes you have used no deposit to reduce interest payments etc.

Or your rent could go up.....

EDIT: And if you save most of that $75/week maintenance by doing work yourself and looking after your house properly, then the weekly cost in my example is almost the same for owning vs renting.....

So you could wait 3 years yes, and there is a chance you would end up ahead, but don't ignore the chance that you could end up worse off, both financially and in terms of having not had your own place for those 3 years as well. What if prices stay flat for 2 years then jump 5% in the 3rd year before you got your act together and bought back in?

Cheers,

Beej


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## Julia (3 May 2009)

Beej said:


> Holy moola batman! rates $2500/year? Where the heck is that?



I also pay a bit over $2000 p.a.   That's in Hervey Bay on about 900sq m.
Maybe Sydney rates need to rise to replace some of your problematic ageing infrastructure?


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## Beej (3 May 2009)

Julia said:


> I also pay a bit over $2000 p.a.   That's in Hervey Bay on about 900sq m.
> Maybe Sydney rates need to rise to replace some of your problematic ageing infrastructure?




Rates go to the local council - they take care of collecting the garbage, filling potholes in local roads only, maintaining the parks and other common area's, and provision of community services like libraries etc. My local council does all that just fine with their rate income thanks. It's the state level government who are responsible for the "aging" infrastructure (bunch of useless morons that they currently are!) 

Cheers,

Beej


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## MrBurns (3 May 2009)

My comments about investing rather than home ownership are only for the *very sophisticated investor*, not your average punter.

In almost all cases you should just buy a house and pay it off, it's safe, secure and you dont have to stay awake all night worrying about your investments.


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## Lancelot (3 May 2009)

MrBurns said:


> Add up ALL your expenses and you'll get a different result.




You would be wrong then

You must have missed the part where I said



Lancelot said:


> I have been "investing" in this place for a few years now though to make it so.




Meaning I have paid back large amounts of it and only have a small repayment left.  

My repayments/expenses are reducing considerably whereas my neighboring renters have had there rent only going one way.


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## Beej (3 May 2009)

MrBurns said:


> My comments about investing rather than home ownership are only for the *very sophisticated investor*, not your average punter.
> 
> In almost all cases you should just buy a house and pay it off, it's safe, secure and you dont have to stay awake all night worrying about your investments.




Burnsie - I actually agree with you on this point. As you say, few could pull off the active, well-advised investment management that would be required to stay ahead in that game with that level of capital (I don't think I could do it, hence I don't, so I keep my house!).

Cheers,

Beej


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## MrBurns (3 May 2009)

Lancelot said:


> You would be wrong then
> 
> You must have missed the part where I said
> 
> ...




Ok you've paid a lot back but what if that was in some other property that was receiving rent and you had the tax deductions that went with it.

A lot harder I know but the theory is correct., not for me I'm not that keen, but what if you were given a once in a lifetime investment opportunity, you'd sell the house no problems I bet.


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## MrBurns (3 May 2009)

Beej said:


> Burnsie - I actually agree with you on this point.




We must be getting old


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## Lancelot (3 May 2009)

singlefished said:


> How much would a FHB have to borrow to buy the same property today then (assuming 5% deposit)?




Does it matter?

When I purchased it, it cost me considerably more every week to buy compared to renting, but I took a more long term view on it.

But it would probably sell for around $360k and rent for $420/week

Minus a more realistic 10% deposit (I am always being told how cashed up the renters are) = $324k - FHBG = $310k @ 5.5% = $327/week

+ rates insurance maintenance (cost me about $3500k total) $67/week

TOTAL= $394/week. so cheaper than rent and extra could be put in the offset account

When rates go back up to say 7.5% in how many years? repayments will be $514/week (inc rates insurance etc) but rent will have gone up as well

So yes, it could again then be cheaper to rent than to buy.  For a while anyway.

Your point?


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## singlefished (3 May 2009)

Lancelot said:


> You would be wrong then
> 
> You must have missed the part where I said
> 
> ...




So you're the one that's wrong then!

How can you compare repayments based on a mortgage you took out years and years ago to the rent that somebody is paying now?

Compare apples with apples... base your figures on what these renters would CURRENTLY have to borrow to stay in the same property, not the purchase figures of a bygone era.


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## Lancelot (3 May 2009)

MrBurns said:


> Ok you've paid a lot back but what if that was in some other property that was receiving rent and you had the tax deductions that went with it.
> 
> A lot harder I know but the theory is correct., not for me I'm not that keen, but what if you were given a once in a lifetime investment opportunity, *you'd sell the house no problems I bet*




No, I'd leverage off of it.


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## Lancelot (3 May 2009)

singlefished said:


> So you're the one that's wrong then!
> 
> How can you compare repayments based on a mortgage you took out years and years ago to the rent that somebody is paying now?
> 
> Compare apples with apples... base your figures on what these renters would CURRENTLY have to borrow to stay in the same property, not the purchase figures of a bygone era.




Look up^^^


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## singlefished (3 May 2009)

Lancelot said:


> Look up^^^




good boy


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## Soft Dough (4 May 2009)

Beej said:


> Holy moola batman! rates $2500/year? Where the heck is that? I pay < $800/year ($15/week). Insurance $1000/year? I pay half that (unless you are including contents). And I live in Sydney! In a 1920s double brick house (they don't make em like that anymore!). Interest? Currently 5% is the norm, so your interest bill should only be $385/week. And your rent - $350/week for a $400k place? That's cheap by Sydney standards - you'd be paying $400/week here if you were taking out a new lease on a $400k place.
> 
> And depreciation of $6500/year? Again, very high figure. Most allow 1% for maintenance/improvements (which is really your depreciation), which is about $75/week in your example.
> 
> ...




I live in queensland, so yes $350 per week is the norm for a brand new 4 bedroom house.

um yes $2500 per year is what it costs for rates.
5.84% on the bank website = $450 per week interest only.
what does it cost to replace a kitchen 2 bathrooms, paint, carpets, general maintenance, curtains every 10 years again?  and not rubbish bunnings stuff, to the same quality as before, and by a builder.

and using your example, what if prices fall 15-20% over the next 3 years? that is more likely than a 5% rise imo.


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## kincella (4 May 2009)

softdough....it's more like wishing and hoping for a 20% drop....you are so funny...
I am happy for the renters...for whatever their reason....we all need renters...otherwise there would be no point in being a property investor
so as long as your sums do not add up....just keep on renting....you and the landlord will both be happy....you could not ask for a better outcome


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## Beej (4 May 2009)

Soft Dough said:


> I live in queensland, so yes $350 per week is the norm for a brand new 4 bedroom house.




Maybe for now. Certainly not the case in Sydney.



> um yes $2500 per year is what it costs for rates.
> 5.84% on the bank website = $450 per week interest only.




Nobody pays the standard variable rate - I get a 0.9% discount off standard variable at all times. At least a 0.5% discount should be available to anyone that shops around and asks for it.

As for rates - wow I thought living was supposed to be cheaper up north? Sounds like rates in NSW are far lower than in QLD......



> what does it cost to replace a kitchen 2 bathrooms, paint, carpets, general maintenance, curtains every 10 years again?  and not rubbish bunnings stuff, to the same quality as before, and by a builder.




For a start, you don't need a new kitchen/bathroom every ten years - maybe every 20. 1% over 20 years on a $400k place = $80k (inflation adjusted, ie in todays dollars). A new kitchen can be done easily for $10k-$15k (decent kitchen, but not top shelf). A bathroom reno is about the same - closer to $10k if you keep it sensible. (I've actually renovated 2 houses ground up so this is based on my experience, and I'm not a builder etc, just an average home reno punter!). 

So let's say $40k over 20 years for the new baths/kitchen. That leaves $40k for regular painting, curtains, carpets, a bit of plumbing maybe, new gutters as required every 20 years. Easily enough! Of course if you do a lot of the work yourself, then you wouldn't even need $80k to handle all that maintenance.

So the bottom line is I think a 1% allowance is more than enough. And for a more expensive house, if the higher price is more due to location than the house itself, the maintenance allowance as a % of cost is even lower.



> and using your example, what if prices fall 15-20% over the next 3 years? that is more likely than a 5% rise imo.




Well I don't think that's likely at all in Sydney. QLD? Who knows - maybe. If you really think prices will fall, as Kincella says stay renting, but I'm just providing the numbers based on my experience.

Cheers,

Beej


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## kincella (4 May 2009)

some of us older experienced people have been offering some good accurate advice about buying property....like the time I bought 2 sets of kitchen appliances at the june 30 sale all miele..stainless steel...normal price 12600 for 6300...I could have bought just one set...anytime during the year for the same price...big savings...
you can either do some more research into the costs...real capital costs and annual charges to find out the true costs....or just make excuses as to why renting is cheaper....read jan sommers books...about all the excuses people use as to why they should not buy a home

and then watch them squirm when prices go up...not down and they are priced out again.....
I have a theory...if you really want something...you will find a way of obtaining it


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## Julia (4 May 2009)

Beej said:


> Rates go to the local council - they take care of collecting the garbage, filling potholes in local roads only, maintaining the parks and other common area's, and provision of community services like libraries etc. My local council does all that just fine with their rate income thanks. It's the state level government who are responsible for the "aging" infrastructure (bunch of useless morons that they currently are!)
> 
> Cheers,
> 
> Beej



The local council here has also had some responsibility for raising dam level which has been vital for growing population.   And if an area is growing fast then obviously roads, more community facilities etc are required.
Rates are something I don't really mind paying if it means a better community.


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## Quincy (4 May 2009)

"If the government reduces the first home buyers' grant at the same time as forcing banks to tighten lending standards, the lower end of the housing market will face dramatic devaluations"

Article by Robert Gottliebsen, "Business Spectator" - see HERE


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## Soft Dough (4 May 2009)

Beej said:


> For a start, you don't need a new kitchen/bathroom every ten years - maybe every 20.




Well obviously we differ here. I have never, and will never live in a property where it is not basically refurbished every 10 years.

As for the "wishful thinking" comment by previous poster regarding price drops.  I hope you are not wishfully relying on prices going up or wishfully requiring that they do not come down


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## Soft Dough (4 May 2009)

kincella said:


> some of us older experienced people have been offering some good accurate advice about buying property....
> 
> just make excuses as to why renting is cheaper....read jan sommers books...about all the excuses people use as to why they should not buy a home
> 
> ...




Well I'm sorry that I can make 30%+ returns owning businesses and that I do not own properties and can therefore rent and get better alternative returns.

There is logic in renting at the moment, perhaps you do not believe that prices can fall, but they can.  Have a look at America and the UK, and remember that our houses are more overvalued than theirs. 

The only thing that is protecting the housing market is the huge injections of cash into the market by irresponsible tax cuts and FHBG.


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## kincella (4 May 2009)

unfortunately I dont read Gottliebism....I did many years ago and found him out of touch....just a bland follower for the sheep people

no wishful thinking on my part...I hold several IP's and intend to buy more and reno one this year...and to continue doing same for as long as I can...30 years of retirement in front of me.....oh and now some of my friends who put their money into shares...are really unhappy....but all of them own houses...most without a mortgage....and some have mutliple IP's like self..with manageable mortgages....all a pretty happy with the prop market....
  but expect to be even happier in the future....absolutely no gloom here, we leave that for the bears
cheers


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## dhukka (4 May 2009)

Beej said:


> All reports so far (RP Data, Residex etc) are indicating median prices in most of AU sans Perth and Brisbane INCREASED in Q1 2009. This will be confirmed by ABS stats in a few weeks. You can deny this all you like but it will not change the facts that are presenting.




I suspect there will be quite a bit of egg on face today. Although I guess you're right if by most of Australia you mean Canberra, Hobart and Darwin. Your constant claims that the Sydney property market has stabilized just don't hold water. Sydney and Melbourne both down more than double Brisbane during the quarter. Dec 08 quarter revised lower, oh yes, stabilization is here.


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## singlefished (4 May 2009)

dhukka said:


> I suspect there will be quite a bit of egg on face today. Although I guess you're right if by most of Australia you mean Canberra, Hobart and Darwin. Your constant claims that the Sydney property market has stabilized just don't hold water. Sydney and Melbourne both down more than double Brisbane during the quarter. Dec 08 quarter revised lower, oh yes, stabilization is here.




This will be like water off a ducks back I fear.... 

standard responses to include :

_"..... but we were expecting this"
"..... this is nothing new"
"..... median prices are not indicative of the values dropping"
"..... etc, etc, etc"_

Pity the figures don't reflect the exaberated falls outwith the lower/middle FHB sector.


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## kincella (4 May 2009)

speaking for myself..but know many others think the same...we prop bulls are pretty sure of ourselves...one eyed you might say....and some compelling numbers for most ....70% of the adult population are home owners.....thats double the amount of renters.....


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## Beej (4 May 2009)

dhukka said:


> I suspect there will be quite a bit of egg on face today. Although I guess you're right if by most of Australia you mean Canberra, Hobart and Darwin. Your constant claims that the Sydney property market has stabilized just don't hold water. Sydney and Melbourne both down more than double Brisbane during the quarter. Dec 08 quarter revised lower, oh yes, stabilization is here.






singlefished said:


> This will be like water off a ducks back I fear....
> 
> standard responses to include :
> 
> ...




Seems I don't need to bother typing a reply as there are plenty here happily putting words into my keyboard for me!!

PS: For the record, I am surprised by the ABS stats for this quarter, and it doesn't fit with what I have seen in the area's I watch or in the area's that people I know are currently trying to buy. Also there seems to be conflicting data with APM and RP-Data figures telling a different story - so I suspect that there is a fair bit of median skewing going on due to the widely acknowledged FHB mini-boom in the lower price segments. Having said that, I've never said prices can't fall; they certainly did during 1990 (last recession), before rebounding strongly a few years on. I am still confident that this time around things will prove no different.

Cheers,

Beej


----------



## Beej (4 May 2009)

Quote from SMH article on latest ABS figures: (http://business.smh.com.au/business/home-prices-plunge-despite-cash-boost-20090504-arzw.html)



> "We had believed that solid demand from first home buyers would have prevented a fall in house prices in the March quarter," wrote JP Morgan economist Helen Kevans.
> 
> First home buyer demand has increased since the Government expanded the grant in October, she wrote.
> 
> ...




Seem's JP Morgan's Helen Kevans had similar views on the market to mine. IMO her explanation seems logical given the conflicting data from other sources and the clear FHB mini-boom figures.

Either way, I didn't particularly enjoy my piece of humble pie that I just had to eat for lunch 

Cheers,

Beej


----------



## singlefished (4 May 2009)

Beej said:


> Seems I don't need to bother typing a reply as there are plenty here happily putting words into my keyboard for me!!
> 
> PS: For the record, I am surprised by the ABS stats for this quarter, and it doesn't fit with what I have seen in the area's I watch or in the area's that people I know are currently trying to buy. Also there seems to be conflicting data with APM and RP-Data figures telling a different story - so I suspect that there is a fair bit of median skewing going on due to the widely acknowledged FHB mini-boom in the lower price segments. Having said that, I've never said prices can't fall; they certainly did during 1990 (last recession), before rebounding strongly a few years on. I am still confident that this time around things will prove no different.
> 
> ...




I think you're right in that our houseprices will certainly again one day bounce back after the economy sorts itself out (whenever that may be...), there's only a few misguided individuals I believe who seem certain we're following the same path as Japan.

...but certainly what is worrying is the median skewing you mentioned due to higher volumes at the lower end. It seems REIV wasn't too far off with what they published only a few days ago.


----------



## kincella (4 May 2009)

its the median figures they are using
if they said 100 houses sold 50 @ 500 and 50 @ 400 the average would be 450...and if they could prove all houses were advertised at a higher price but sold for a lower price I would tend to agree with their figures

...if the majority of houses selling are in the 400-600 range and the middle number is 400 ...there you go...that is the magic figure they are all raving about.....but...it does not mean the price of homes in the 600k range has fallen in price....nor the 400k...which have probably increaed in price......
phoohey to the 1 or 2% figure...clutching at straws...playing scaredy cats again......
out to shopping now for some big sales....
cheers


----------



## numbercruncher (4 May 2009)

Hello,

" House prices to keep rising for years "


haha funny stuff .....




> House prices tumble 7 percent as job pressure grows
> 4/05/2009 12:00:00 PM
> By Emma Thelwell, ninemsn Money
> 
> ...




http://money.ninemsn.com.au/article.aspx?id=809366

Thankyou.


----------



## SBH (4 May 2009)

numbercruncher said:


> Hello,
> 
> " House prices to keep rising for years "
> 
> ...






May as well close down the thread boys. Seems the crash is playing to the script perfectly. FHOG? No problem, just a blip on the radar.. crash continues on regardless. Whod have thought australia had less power to stop a housing crash than US or britain? Every bear on the forum thats who! 

I wonder if rudd will let housing roll over die its natural death on budget night..........


----------



## MrBurns (4 May 2009)

SBH said:


> May as well close down the thread boys. Seems the crash is playing to the script perfectly. FHOG? No problem, just a blip on the radar.. crash continues on regardless. Whod have thought australia had less power to stop a housing crash than US or britain? Every bear on the forum thats who!
> I wonder if rudd will let housing roll over die its natural death on budget night..........




Rudd will prop it up as long as *YOU* still have money in your wallet to fund it.

House prices will rise again beyond their previous highs but in the meantime it will create great buying opportunities, not like the FHB's that were sucked into the bubble.


----------



## dhukka (4 May 2009)

Beej said:


> Seem's JP Morgan's Helen Kevans had similar views on the market to mine.




Yes, she was just as wrong as you were.


----------



## robots (4 May 2009)

hello,

looks as though they on some of Burnsie's cheech & chong gear at the ABS, amazing

just goes to show you cant trust the government, i am starting see what you all go on about now

oh well, lucky we have APM Property Monitors and RPData to get the proper results out to the community, paradise

i think we will use data APM or RPdata for the bet Satanoperca, what you think?

word out to ROE, thanks for the encouragement

thankyou
robots


----------



## nunthewiser (4 May 2009)

> The Australian Bureau of Statistics house price index - an average of prices in the nation's eight capitals - fell 2.2 per cent in the March quarter, the fourth straight quarterly decline.
> 
> Prices dropped 6.7 per cent annually.
> 
> Perth house prices were the hardest hit, dropping 3.6 per cent in the March quarter and 10.1 per cent over the year. In NSW, prices fell 2.9 per cent over the quarter and 7.3 per cent in the year to March.




http://www.thewest.com.au/aapstory.aspx?StoryName=570462



> Inflation is all but dead ... the recession is killing inflation and now that the Australian dollar has stabilised, Australia is confronting a greater threat of deflation, than any inflation risks," TD Securities senior strategist Annette Beacher said.



sunshine and lollipops boys ?


----------



## robots (4 May 2009)

numbercruncher said:


> Hello,
> 
> " House prices to keep rising for years "
> 
> ...




hello, 

"house prices keep rising for years"

rpdata.com.au
apm property monitors.com.au

paradise

thankyou
robots


----------



## MrBurns (4 May 2009)

robots said:


> hello,
> 
> "house prices keep rising for years"
> 
> ...




I agree


----------



## nulla nulla (4 May 2009)

Merely consolidation before the next upswing. Sorry fella's but that penthouse in Point Piper is going to remain a pipedream.


----------



## ROE (4 May 2009)

numbercruncher said:


> Hello,
> 
> " House prices to keep rising for years "
> 
> ...





Never fear house price double every 7 years..it just didn't go up this year or the year before  ..it maybe do a 100% growth on year 7  ....we are different we can do 100% in one year..
it goes down because my neighbour keep lowering his price  not because of anything else


----------



## MrBurns (4 May 2009)

nulla nulla said:


> Merely consolidation before the next upswing. Sorry fella's but that penthouse in Point Piper is going to remain a pipedream.




Next upswing - 5 years.


----------



## robots (4 May 2009)

hello,

just in case anyone missed the names of the websites i listed earlier:

*rpdata.com.au

apm property monitors.com.au
*
thankyou
robots


----------



## dhukka (4 May 2009)

Looks like the robot is malfunctioning, but that's what happens when you drive off a cliff looking in the rear vision mirror with beej whispering sweet nothings in your ear and kincella in the back seat with his ......... up your ..........


----------



## Adam A (4 May 2009)

rotflmao


----------



## robots (4 May 2009)

robots said:


> hello,
> 
> just in case anyone missed the names of the websites i listed earlier:
> 
> ...




Hello,

i have had numerous requests by PM for the links, so here they are again for those interested 

thankyou
robots


----------



## robots (4 May 2009)

hello,

sorry, sorry everybody i got one of the addresses wrong, so here they are in the correct format:

*rpdata.com.au

apmpropertydata.com.au*

apologies for the error

thankyou
robots


----------



## Soft Dough (4 May 2009)

robots said:


> Hello,
> 
> i have had numerous requests by PM for the links, so here they are again for those interested
> 
> ...




for the PM or from the PM.

Cause I'm sure he has no idea about what happens in the real world also.


----------



## So_Cynical (4 May 2009)

dhukka said:


> Looks like the robot is malfunctioning, but that's what happens when you drive off a cliff looking in the rear vision mirror with beej whispering sweet nothings in your ear and kincella in the back seat with his ......... up your ..........




That's Comedy Gold. :thankyou:


----------



## kingbrown (4 May 2009)

dhukka said:


> Looks like the robot is malfunctioning, but that's what happens when you drive off a cliff looking in the rear vision mirror with beej whispering sweet nothings in your ear and kincella in the back seat with his ......... up your ..........




CLASSIC dhukka !
I love some of the SHEEPLE on here he he !


----------



## ROE (4 May 2009)

http://www.theaustralian.news.com.au/business/story/0,28124,25426654-643,00.html?referrer=email

The media must got it wrong, damn it when am I going to double my money?
my money going down the toilet with -ve gearing and house price going backward sound like margin loan all over again. 

and I like to save this quote for future references

“The acute shortage of new homes and accelerating population growth will, however, prevent falls similar to those in weaker, offshore markets,” Ms Kevans said


----------



## MrBurns (4 May 2009)

ROE said:


> http://www.theaustralian.news.com.au/business/story/0,28124,25426654-643,00.html?referrer=email
> 
> The media must got it wrong, damn it when am I going to double my money?
> my money going down the toilet with -ve gearing and house price going backward sound like margin loan all over again.




Good ole'e Kev has supercharged this crash, just wait ill July


----------



## ROE (4 May 2009)

dhukka

ROTFL man I haven't done that since University IRC days 
that was time truly wasted with lot of ROTFL


----------



## dhukka (4 May 2009)

ROE said:


> http://www.theaustralian.news.com.au/business/story/0,28124,25426654-643,00.html?referrer=email
> 
> The media must got it wrong, damn it when am I going to double my money?
> my money going down the toilet with -ve gearing and house price going backward sound like margin loan all over again.
> ...




Ahhh yes, the old housing shortage chestnut, well here is some good news on the shortage front:



> *Renters scaling back*
> 
> THE threat of pay cuts and unemployment are driving a growing number of young Australians out of rental properties and back to living with their parents or into shared accommodation.
> 
> ...


----------



## kotim (4 May 2009)

Little story, in late 1991 bought a house for 113 grand In Townsville, at the time rent was 310 dollars a week, pretty good wellwithin 18 months I had people offer me uptwoards 150 grand for th ehouse but I was young and knieve and though at that rate I was going to be rich soon. 

Anyway that was the end of the boom, well lucky for me I got in during the boom and so did not pay exhorbaitant house prices.  I ended up selling that house for 137 grand in 2002 just before the start of the next boom, (stupid mistake in hindsight but that house had caused me a lot of pain and I was sick of the pain) but by then I wanted rid of it etc.  But the interesting thing was that my rent received was only 180 bucks a week in 2002.

So what do we know from my little story and other experience, first house prices go up and rent goes up as well, but then rent softens and goes no where fast for years until you have a new boom etc.  We are there now,  the rents have peaked and we are not going to see much rent rise in vast majority of places until we experience a new boom in a number of years time.

The problem is that even though generally property is a medium to long term investment none of us know our financial circumstnaces in 5-7 years time, you know families etc, blah blah blah and if you are not prepared for the hard years then a lot of pain will ensue.

Ultimatley who cares, we play the cards and make out own decisions and accept eh results be they good or bad.


----------



## singlefished (4 May 2009)

Last time I mentioned this you scurried around the floor like a cockroach looking for a dark crevice.

*C O N D E S C E N D I N G . . . . . . . *




kincella said:


> phoohey to the 1 or 2% figure...clutching at straws...playing scaredy cats again......





Please tell us, what have we got to be scared about?


----------



## kotim (4 May 2009)

That rent should be 210 not 310


----------



## numbercruncher (5 May 2009)

seems Winter has arrived ?

The Resident RE Permabulls have Hibernated ?

Maybe the budgets of the RE lobby groups are getting slashed and their army of Bloggers are off the payroll and vanishing ?


----------



## kincella (5 May 2009)

which perma bulls are you talking about ?? robots and beej, tech/a, were here yesterday..there are a few others who post from time to time...are there  others?
myabe they are busy at work,


----------



## kincella (5 May 2009)

singlefished...
"Last time I mentioned this you scurried around the floor like a cockroach looking for a dark crevice.

C O N D E S C E N D I N G . . . . . . . "

oh and when was that pray tell ?

 if you cannot debate the subject... a personal attack is your answer


----------



## Lancelot (5 May 2009)

numbercruncher said:


> seems Winter has arrived ?
> 
> The Resident RE Permabulls have Hibernated ?
> 
> Maybe the budgets of the RE lobby groups are getting slashed and their army of Bloggers are off the payroll and vanishing ?




Maybe they are getting ready to fly off on yet another renter subsidised holiday.

I know I am, 7 weeks in 9 days at my tenants expense then another  8 weeks over xmas. (and no, no borrowings, all CASH)

Lovely

I'll be thinking of you numbercruncher


----------



## kincella (5 May 2009)

good reply Lancelot....I know a few who either go skiing now, or go to the Sunshine in Qld or overseas for our winter....and the bean counters usually take a break before the new tax season starts
love the conspiracy theorists..about the bloggers here being RE Agents.....hehehehe....hard to believe we are just ordianary property investors.....how hard is that to believe.....apologies to any RE's, 
cheers


----------



## Beej (5 May 2009)

What a bunch of silly posts were made here last night! As Kincella says, please keep the discussion rational and avoid the personal attacks and purile commentary thanks....

On topic: A possible explanation for the difference between ABS figures and those from RP-Data and APM etc (from SMH article today plus also mentioned on ABC news and Lateline last night).



> The bureau's results jar with two other private sector surveys which had suggested house prices began to plateau earlier this year, supported by the boosted incentives for first-home buyers. By contrast, the bureau's survey suggested house prices sank another 2.2 per cent in the first three months of this year.
> 
> It is possible that because the bureau's survey does not include semi-detached homes and apartments, only detached homes, it does not fully capture this first-home buyer effect.




Semi's, terraces, townhouses and units are 30% of the market, and also happen to be probably 75% of the market for FHBs. I didn't know they were excluded from ABS figures.

So I am still not convinced that you bears should be jumping up and down with quite so much glee. If any of you (those who actually live in Australia and don't own a PPOR) ever actually go out try and buy a property in a lower price range, I think you will still be very surprised at the level of buyer competition and price pressure in that market segment right now for anything decent, despite latest ABS figures. Especially in Sydney....

If however you have $1M-$2M+ to spend, then you might find some nice deals around - but I am sure that none of you will take advantage of the market while it's there for you, and will still be here predicting a house price crash in 5 years when prices are 20%++ higher again than what they are now.....

So let's get some bear predictions on the table? How much do YOU predict prices will fall? What are your buy signals/levels? Do you think houses prices will be lower in 5 years or higher? By how much? Come on - put something out on the table for once instead of just sniping!

Cheers,

Beej


----------



## gfresh (5 May 2009)

The ABS figures show "houses" falling, and this is the segment I've definitely noticed becoming more available with more on the market under $450k in Brisbane. 12 months I couldn't even entertain the idea of a house, so all going my way so far. 

Pretty hard to predict these things, but I'll have a stab and say -12% for Brisbane peak to trough. I give it 3 years (2012), and prices will still be back to where they were in the Brisbane 2007 peak. So they'll drop back to -12% and then back up to where they were in about 2-3 years time. That'll effectively be a 5 year bracket where there was no growth. 

But these will just be "universal" figures, may not be applicable in all states or all types of housing, or all price brackets.


----------



## dhukka (5 May 2009)

Beej said:


> What a bunch of silly posts were made here last night! As Kincella says, please keep the discussion rational and avoid the personal attacks and purile commentary thanks....
> 
> On topic: A possible explanation for the difference between ABS figures and those from RP-Data and APM etc (from SMH article today plus also mentioned on ABC news and Lateline last night).
> 
> ...



Your not an economist/revisionist are you Beej? That is, great at creating an explanation in hindsight about what happened in the past (the narrative fallacy) but no better than a chimp with a pencil in his teeth at making predictions about the future. 

Now in your desperation you are resorting to the same tactics that the discredited fool Whiskers used - that somehow you occupy the moral high-ground because you have the guts/stupidity to make predictions about the future.  



> "Better to remain silent and be thought a fool than to speak out and remove all doubt.


----------



## singlefished (5 May 2009)

kincella said:


> singlefished...
> "Last time I mentioned this you scurried around the floor like a cockroach looking for a dark crevice.
> 
> C O N D E S C E N D I N G . . . . . . . "
> ...






post #4727 on page 237.

oh... and you've still avoided answering the question.

As Beej notes, a polite non-condescedning response without the elitist remarks would be appreciated thanks


----------



## Soft Dough (5 May 2009)

gfresh said:


> The ABS figures show "houses" falling, and this is the segment I've definitely noticed becoming more available with more on the market under $450k in Brisbane. 12 months I couldn't even entertain the idea of a house, so all going my way so far.
> 
> Pretty hard to predict these things, but I'll have a stab and say -12% for Brisbane peak to trough. I give it 3 years (2012), and prices will still be back to where they were in the Brisbane 2007 peak. So they'll drop back to -12% and then back up to where they were in about 2-3 years time. That'll effectively be a 5 year bracket where there was no growth.
> 
> But these will just be "universal" figures, may not be applicable in all states or all types of housing, or all price brackets.




I think you have got it pretty much sorted out.

except my prediction is 20-25% total fall, with prices returning to value 3-5 years after the trough.  That is assuming only 9% unemployment.

if it goes higher... ouch.


----------



## Taltan (5 May 2009)

singlefished said:


> post #4727 on page 237.
> 
> oh... and you've still avoided answering the question.
> 
> As Beej notes, a polite non-condescedning response without the elitist remarks would be appreciated thanks




I realised awhile back it is not possible to have a constructive argument with Kincella. Anything I have posted with figures comparing renting to buying is ignored or responded to with irrelevance (e.g. how many people are on chapel st today). The best you can get out of this thread is links to the permabulls articles like the one on business spectator


----------



## kincella (5 May 2009)

I avoided answering the question...because I have never stated the market is going to boom in the next 6-12 months.........


----------



## Beej (5 May 2009)

dhukka said:


> Your not an economist/revisionist are you Beej? That is, great at creating an explanation in hindsight about what happened in the past (the narrative fallacy) but no better than a chimp with a pencil in his teeth at making predictions about the future.
> 
> Now in your desperation you are resorting to the same tactics that the discredited fool Whiskers used - that somehow you occupy the moral high-ground because you have the guts/stupidity to make predictions about the future.




What a ridiculous comment and post! This ENTIRE THREAD (and the other one) is about individuals forecast/view/predictions of the future of house prices! If you are not interested in that why don't you follow your own advice not post anything further on the topic here at all?

Also, I hardly think that analysing some figures and trying to understand why different sources are providing such different information makes me a "revisionist"!

I'd come to expect better from you Dhukka, but with your last post you seem to have joined the group over in the corner jumping up and down with glee and with nothing more to contribute than purile insults. Disappointing......

EDIT: And in the meantime, some good news on the home building approvals front: http://business.smh.com.au/business/home-building-approvals-up-20090505-ata5.html



> Home building approvals up
> Chris Zappone (SMH)
> May 5, 2009 - 11:30AM
> 
> ...




So if there is anything to be happy about, it should be that the FHB stimulus seems to be NOT pushing up prices after all (if everyone believes the ABS stats and really thinks that the sub $500k range has NOT seen price increases in the last 3-4 months) and instead is seeing a nice uplift in home building, which will be both good for the economy in general, and also good for housing affordability long term by increasing the number of affordable houses (assuming the majority being built are FHB type homes).

Beej


----------



## Timmy (5 May 2009)

"Can we please refrain from name calling and personal attacks and get this thread back on track?

Nothing worse than seeing a potentially valuable thread descend into chaos through unnecessary conflict.

Please treat others with respect even if you disagree with them.

Thank you all for your co-operation."


----------



## Beej (5 May 2009)

... and yet more economic "revisionists" having a crack at why the ABS figures don't seem to line up with Q1 APM and RP-Data numbers OR actual buyer experiences/anecdotes in the lower end of the market: http://www.news.com.au/business/money/story/0,28323,25431147-5013951,00.html



> *Top end of market drags house prices lower*
> 
> By David Uren, The Australian
> May 05, 2009 12:00am
> ...




Cheers,

Beej


----------



## Knobby22 (5 May 2009)

"A year ago, it was twice as expensive to buy as to rent, whereas it was now cheaper to buy than rent in many suburbs."


So therefore, Beej,  rents will drop! 
Renters are leaving the market. Others are sharing or going home to parents to save.
People are reducing their debts in this climate as unemployment goes eventually to double figures.

Have a look at Steven Keens blog.
http://www.debtdeflation.com/blogs/


----------



## Beej (5 May 2009)

Knobby22 said:


> So therefore, Beej,  rents will drop!
> Renters are leaving the market. Others are sharing or going home to parents to save.
> People are reducing their debts in this climate as unemployment goes eventually to double figures.
> 
> ...




In the short term they might fall, sure. But in the long term rents will only go one way.....

PS: Steven Keen must be just another one of Dhukka's "monkey's with a pencil in his mouth", as he has the gall to make predictions about the future....... I think Keen's predictions are way wrong. Time will tell, and I look forward to him loosing his bet with Rory Roberston!

Cheers,

Beej


----------



## enigmatic (5 May 2009)

> So if there is anything to be happy about, it should be that the FHB stimulus seems to be NOT pushing up prices after all (if everyone believes the ABS stats and really thinks that the sub $500k range has NOT seen price increases in the last 3-4 months)
> _*Not to sure if your having a go at people who believe the ABS stats or trying to have a dig at people saying that the stimulus is proping up house prices..
> If you dont believe the stats or you do either way it is basically common knowledge that the stimulus FHOG is proping up prices by more then the grant value itself*_
> 
> ...




I never understand people who will use figures to prove there case and the minute those figures no longer support there case they seem to have a go at how the figures are generated.. Just interesting..

WA is down arround 10% from peak now Lucky i didnt take that advice buying a year ago when i first started looking..


----------



## Beej (5 May 2009)

enigmatic said:


> Doesn't this housing affordability in the long term mean that houses prices will drop.. which kind of opposes your views on Realestate prices




I have consistently argued that the way that national or city level *average* and *median* house prices can and will fall/correct over the long term is through the provisioning of larger numbers of affordable new homes/units etc. That does not mean that the prices of established property in 100% built area's cannot increase at a rate in excess of the median trend. For those that are worried about long term affordability for the masses, there-in lies the solution, not in a great across the board price crash. No inconsistency there at all.

Also there is the other issue of the economy in general - a housing/construction lead recovery would be a good thing over-all for jobs/incomes/stocks etc etc. I don't just care about R/E you know! 



> I never understand people who will use figures to prove there case and the minute those figures no longer support there case they seem to have a go at how the figures are generated.. Just interesting...
> 
> WA is down arround 10% from peak now Lucky i didnt take that advice buying a year ago when i first started looking..




Hey, I'm only trying to understand why the data is different from ABS vs APM/RP-Data and other sources - not questioning it. Over the long term the ABS data is probably the best we have for recognising the trends. Based on the amount of discussion of the ABS data in the media re how it contrasts with anecdotal evidence of price rises in FHB brackets (which you acknowledge as being common knowledge), I am not the only person in the country asking such questions....

As for Perth, I have also consistently stated that I thought Perth was way over-done, and would never have bought into there in the past 2 years either!

Cheers,

Beej


----------



## dhukka (5 May 2009)

Beej said:


> What a ridiculous comment and post! This ENTIRE THREAD (and the other one) is about individuals forecast/view/predictions of the future of house prices! If you are not interested in that why don't you follow your own advice not post anything further on the topic here at all?
> 
> Also, I hardly think that analysing some figures and trying to understand why different sources are providing such different information makes me a "revisionist"!
> 
> ...




Oh dear, where to start, in between scurrying about trying to repair your own ego, stop and have real read of what I wrote. I don't object to people making forecasts, quite the contrary. I object to the idea that just because you make forecasts that somehow that elevates you above the unwashed masses that don't.   

The literature on so-called expert forecasts clearly shows that an economist is no better at predicting the future of the economy than a taxi driver, the same for stock market analysts.

It's amusing to watch economists show surprise when their forecasts aren't realized when all they need to do is take an objective look at their track record. What is even funnier is that despite being completely wrong they have perfectly rational explanations of why they were wrong, but funny how those explanations only come after the fact. The same as your now perfectly cogent explanation of why prices fell which was not even considered prior to the release of the data. Of course, it's all so obvious now. 

Who is the bigger fool? The economist who confidently forecasts the future without any reference to past performance or the taxi driver who shrugs and says I really don't know.

btw continually citing overpaid charlatans (ie economists) in support of your arguments does not bolster your case. If anything it detracts from it.


----------



## robots (5 May 2009)

hello,

good evening and hope everyone having a fine day

please just relax, its only debate and discussion with the money box crew getting all excited yesterday

having been away from the computer and when i logged on just now i have 378 pm's requesting those sites again, so here they are:

*rpdata.com.au

apmpropertydata.com.au*

thankyou
robots


----------



## kincella (5 May 2009)

uhmmm excuse me....anyone watching ACA...apparently Smart Investor mag...has a list of 700 suburbs  with the hotspots.....stacks of suburbs rose 50-70% last year and tipped to rise another 20% this year......its mind boggling stuff......think some got to over 70%...I will have to check out that mag tomorrow
cheers
ps now they have the women learning the trades, and doing their own reno's....good on them, going to classes etc


----------



## centex (5 May 2009)

kincella said:


> uhmmm excuse me....anyone watching ACA...apparently Smart Investor mag...has a list of 700 suburbs  with the hotspots.....stacks of suburbs rose 50-70% last year and tipped to rise another 20% this year......its mind boggling stuff......think some got to over 70%...I will have to check out that mag tomorrow
> cheers
> ps now they have the women learning the trades, and doing their own reno's....good on them, going to classes etc




What are you doing watching ACA Kincella? You seem far too smart for that


----------



## kincella (5 May 2009)

of course, but working back late tonight....and the dog was  watching the TV .....just caught my eye
the dogs loves the TV, if there are animals...specially her bros and sis's and cousins


----------



## nunthewiser (5 May 2009)

robots said:


> hello,
> 
> good evening and hope everyone having a fine day
> 
> ...





thanks robots that saves number 379

u got the abs report site too m8 ?


----------



## robots (5 May 2009)

hello,

no worries nun, like to keep the ASF forum informed

ABS, never heard of them

hang on, is that the brake and tyre firm?

thankyou
robots


----------



## robots (5 May 2009)

hello,

good evening, looks like I found the ABS site Nun is referring to so i thought i might take this opportunity to post all the links up in one hit,

here they are:

*rpdata.com.au

apmpropertydata.com.au

autobrakeservice.com.au*

thankyou
robots


----------



## robots (5 May 2009)

hello,

gee whats happened to all the bears tonite fellow ASF members?

thankyou
robots


----------



## nunthewiser (5 May 2009)

robots said:


> hello,
> 
> gee whats happened to all the bears tonite fellow ASF members?
> 
> ...




feelin feisty m8 ?

wanna  cook up some bears?

im still waiting for an answer to my other question earlier re lollipops


----------



## MrBurns (5 May 2009)

robots said:


> hello,
> 
> gee whats happened to all the bears tonite fellow ASF members?
> 
> ...




Well I think the verdict is in so there's no point pointing out the obvious anymore


----------



## robots (5 May 2009)

hello,

yes Nun, still sunshine and lollipops all round with the data supporting things are rolling along reasonably well

yes Burnsie, i know its difficult when you get numbers like those out from rpdata and apm when you have been predicting the opposite to occur

oh well, try and keep yourself occupied

thankyou
robots


----------



## Soft Dough (5 May 2009)

robots said:


> hello,
> 
> gee whats happened to all the bears tonite fellow ASF members?
> 
> ...




Bears are hibernating down below and waiting for opportunities.

The bulls are charging up the crest of a precarious hill, and can't see the bears as their heads are looking up into the sky, blissfully unaware of the sharp downward trajectory that their historically super-shortened legs are about to traverse, and it will be interesting watching them run down with their historically super-bloated bellies.


----------



## singlefished (5 May 2009)

Too many unanswered questions in this thread 

Party just kicked off in the other thread however ~ bulls don't like it over there


----------



## kincella (6 May 2009)

City yuppies keep shops afloat
so its not just Chapel st thats humming....Melbourne city is buzzing too...vacancies have dropped in the past year from 2.94 to 1.7%
whatever happened to that recession.....??? this is not whats supposed to happen....vacancy rates should be increasing ....not decreasing....
friend just came back from O/S...she said in London and wherever she travelled the restaurants and cafes and fashion shops were full again...same here in Melb....so she thinks its time to start buying some bargain stocks.......I am not so sure
she has enough props in Melb and Sydney

http://business.theage.com.au/business/city-yuppies-keep-shops-afloat-20090505-atyx.html


----------



## satanoperca (6 May 2009)

kincella said:


> vacancies have dropped in the past year from 2.94 to 1.7%
> whatever happened to that recession.....??? this is not whats supposed to happen....vacancy rates should be increasing ....not decreasing....
> http://business.theage.com.au/business/city-yuppies-keep-shops-afloat-20090505-atyx.html




That's it, the recession is over, an RE agent says vacancies are decreasing, it must be so.

I must have missed something with state and federal governments in huge deficits and unemployment rising and house prices down YOY.

The only way for property is up, up, up from here on in.


----------



## Lancelot (6 May 2009)

Knobby22 said:


> "
> Have a look at Steven Keens blog.
> http://www.debtdeflation.com/blogs/




Heres one from a Dean of the Paul Merage School of Business at the University of California

Does that hold more weight than an Associate from a 3rd rate western Sydney uni?

http://economicgoodnews.blogspot.com/

and some more stuff as backup

Its all good for some of us


----------



## kincella (6 May 2009)

satan....actually the RE agent confirms my own opinion.........I hold and am interested in buying more commercial property....only interested in the area around ' my patch' so I have been watching Chapel St....to see if there are any vacancies ...and shops for sale.....no there are none...and its not the whole of Chapel St I am interested in....that can be a mistake...
not interested in Toorak village shops....but I could be....actually any street with the 4.30 clearway....dooms traders...they may as well close at 4.30


----------



## dhukka (6 May 2009)

Lancelot said:


> Heres one from a Dean of the Paul Merage School of Business at the University of California
> 
> Does that hold more weight than an Associate from a 3rd rate western Sydney uni?
> 
> http://economicgoodnews.blogspot.com/




No, anyone who cites Bernanke as a source for future predictions was either born yesterday or has their head firmly entrenched in their rshole.


----------



## Lancelot (6 May 2009)

dhukka said:


> No, anyone who cites Bernanke as a source for future predictions was either born yesterday or has their head firmly entrenched in their rshole.




And all the other supporters on the links provided?

Are they all rsholes as well because they dont subscribe to your view?

I think the pigmen are winning.


----------



## dhukka (6 May 2009)

Lancelot said:


> And all the other supporters on the links provided?
> 
> Are they all rsholes as well because they dont subscribe to your view?
> 
> I think the pigmen are winning.




Here is the question you posed;



> Heres one from a Dean of the Paul Merage School of Business at the University of California
> 
> Does that hold more weight than an Associate from a 3rd rate western Sydney uni?




Again the answer is no, anyone who cites Bernanke as a source of credibility of economic conditions needs their head read. In a 2006 speech, after taking over as Fed head, Bernanke praised financial innovation and made particular note of sub prime mortgages as an example. He went on to say that financial innovation made the financial system more robust. 

In 2007 he said sub-prime would be contained and the resulting losses would be about $250 billion at most, the IMF now thinks the loses will be $2.7 trillion (not that the IMF has any credibility)  Nouriel Roubini says $3.6 trillion. 

Bernanke was a co-pilot that helped crashed the plane, yet this ivory tower fool think he's a useful source on how to fly planes.


----------



## Lancelot (6 May 2009)

dhukka said:


> Here is the question you posed;
> 
> 
> 
> .




And here is the next question I asked (and a statement)


> And all the other supporters on the links provided?
> 
> Are they all rsholes as well because they dont subscribe to your view?
> 
> I think the pigmen are winning.




Yet you fail to answer it and just rabbit on about the 1 out of the 105,000,000 others I linked to.


----------



## dhukka (6 May 2009)

Lancelot said:


> And here is the next question I asked (and a statement)
> 
> 
> Yet you fail to answer it and just rabbit on about the 1 out of the 105,000,000 others I linked to.




I gave you chance and now you've demonstrated you are a moron. I addressed the only question you asked, you didn't like the answer so you posed another and then claim that I failed to comment on it, that is, the question you posed after I answered the only question you asked. If you are mildly retarded I can accept your stupidity, otherwise you're simply a moron.


----------



## Lancelot (6 May 2009)

dhukka said:


> I gave you chance and now you've demonstrated you are a moron. I addressed the only question you asked, you didn't like the answer so you posed another and then claim that I failed to comment on it, that is, the question you posed after I answered the only question you asked. If you are mildly retarded I can accept your stupidity, otherwise you're simply a moron.





WTF?



> I addressed the only question you asked



 No you haven't, you are a liar, I asked another question, you fail to answer it and go off on a childish rant as bears usually do when made to look  silly.



> you've demonstrated you are a moron <snip>
> If you are mildly retarded I can accept your stupidity, otherwise you're simply a moron.




You sound like that anus/monkey boy/foundation/retarded ape/permanently high fellow from the GHPC circle jerk camp.

He likes calling people retarded as well, especially when proven wrong.

Grow up


----------



## dhukka (6 May 2009)

Lancelot said:


> WTF?
> 
> No you haven't, you are a liar, I asked another question, you fail to answer it and go off on a childish rant as bears usually do when made to look like silly.
> 
> ...




Listen retard, I answered your original question, you didn't like it so you posed another and at the same time build straw man arguments that I claim everyone is wrong if they don't subscribe to my world view. I didn't mention my world view, It has nothing to with my world view, the historical record clearly demonstrates that Ben Bernanke is clueless. 

Trying to backpedal by changing the question is disingenous, the rest of your links are meaningless in and of themselves. Just as someone offering up 100 links of bearish news would be. 

Pick out a link and present arguments in favour of and maybe we'll have a debate.  Otherwise, try lying down in front of a bus and realize your true potential.


----------



## numbercruncher (6 May 2009)

Hello,


Reliable sources tell me if you want a brand new apartment in Surfers Paradise, just offer 30pc below asking price and your offer will be snapped up ..... ie/ Typical 500k unit is now 350.


Have a nice realestate crash, erm I mean day 


Thankyou.


----------



## Lancelot (6 May 2009)

dhukka said:


> Listen retard, <snip> Otherwise, trying lying down in front of a bus and realize your true potential.




Yep, sounds like that anus/foundation/permanently high idiot from the GHPC circle jerk camp to me


----------



## dhukka (6 May 2009)

Lancelot said:


> Yep, sounds like that anus/foundation/permanently high idiot from the GHPC circle jerk camp to me




don't know who or what the GHPC is, but that bloke sounds like my kind of guy, got any links?


----------



## nomore4s (6 May 2009)

"Lets keep the name calling out of it please. This has been a long and somewhat interesting thread at times so lets try to keep it on track.

Please treat others with respect even if you disagree with them.

Thank you all for your co-operation."


----------



## nunthewiser (6 May 2009)

Geeeeeez "4",s u sure know how to kill a conversation


----------



## Lancelot (6 May 2009)

numbercruncher said:


> Hello,
> 
> 
> Reliable sources tell me if you want a brand new apartment in Surfers Paradise, just offer 30pc below asking price and your offer will be snapped up ..... ie/ Typical 500k unit is now 350.
> ...




Just hearsay from a bearforum or have you got examples?

Even if its true and someone who finished a project at the wrong part of a cycle liquidates stock or is an overleveraged owner who lost their job so cuts the price,this affects me how?

I don't want to buy in the Gold Coast area, it has always been overbuilt and overrated in my opinion.

Do you really think a couple of examples will affect the entire market of Australia?  What if I have no need to sell ?  What if my property is in some way more appealing or unique compared to others?


----------



## Lancelot (6 May 2009)

dhukka said:


> don't know who or what the GHPC is, but that bloke sounds like my kind of guy, got any links?




I thought you'd fit in


----------



## MrBurns (6 May 2009)

numbercruncher said:


> Hello,
> 
> 
> Reliable sources tell me if you want a brand new apartment in Surfers Paradise, just offer 30pc below asking price and your offer will be snapped up ..... ie/ Typical 500k unit is now 350.
> ...




Ohhh thanks I wonder about Port Douglas ? probably the same ?


----------



## nunthewiser (6 May 2009)

MrBurns said:


> Ohhh thanks I wonder about Port Douglas ? probably the same ?




and southbanks/portmelbourne


----------



## MrBurns (6 May 2009)

nunthewiser said:


> and southbanks/portmelbourne




Really ? now there's a sure thing long term investment, if you live to be 200 that is...........no really that's worth looking into.


----------



## Timmy (6 May 2009)

> you are a moron ... you're simply a moron.






> you are a liar,
> You sound like that anus/monkey boy/foundation/retarded ape/permanently
> Grow up






> Listen retard,




Guys ... this is ASF not a schoolyard/parliament.

Read this....







nomore4s said:


> "Lets keep the name calling out of it please. This has been a long and somewhat interesting thread at times so lets try to keep it on track.
> 
> Please treat others with respect even if you disagree with them.
> 
> Thank you all for your co-operation."




Last warning B4 we get nasty & y'all find somewhere else to post. OK?


----------



## robots (6 May 2009)

hello,

chill out brothers, take it easy man

we can all get along in relation to life, i like riding a bicycle you like rollerblading, no big deal

thankyou
robots


----------



## kincella (6 May 2009)

Robots...there were some really good posts in here today...look past the banter...and check out my posts tonight...see the pic of my dog...the one that goes to Chapel St for the KFC
cheers


----------



## Soft Dough (6 May 2009)

Lancelot said:


> Do you really think a couple of examples will affect the entire market of Australia?  What if I have no need to sell ?  What if my property is in some way more appealing or unique compared to others?




Keep convincing yourself that is different 

That way you can hold onto it and sleep at night.

but it would have dropped in value, as people have not got access to the money to buy it anymore.


----------



## Lancelot (6 May 2009)

Soft Dough said:


> Keep convincing yourself that is different
> 
> That way you can hold onto it and sleep at night.
> 
> but it would have dropped in value, as people have not got access to the money to buy it anymore.




You must have missed this bit



> What if I have no need to sell




Plenty of people still have access to money.

And so what if it drops in value, they have before and guess what?

It came back and went up even more


----------



## Soft Dough (6 May 2009)

Lancelot said:


> You must have missed this bit
> 
> 
> 
> ...




No I saw it.

But you would still have lost money.

ie try going and borrowing money from the bank using your house as security and use that argument when they value your house lower than what you think it is worth.


----------



## Lancelot (6 May 2009)

Soft Dough said:


> No I saw it.
> 
> But you would still have lost money.
> 
> ie try going and borrowing money from the bank using your house as security and use that argument when they value your house lower than what you think it is worth.





What

You make no sense, explain how I have lost money if I havent sold or have no intention of selling?

1)why would I want to borrow money
2) heard of LOC? I get houses revalued and LOC locked in when prices are rising, not falling
3) why do I need to borrow money again?
4) you are struggling


----------



## kincella (7 May 2009)

good article its about the :sheep: mentality

*Opportunities, but herd mentality keeps investors awayFont *Size: Decrease Increase Print Page: Print HOTSPOTTING: Terry Ryder | May 07, 2009 
Article from:  The Australian 
OUR kids want a cubby house and I'd like them to have one. A year ago I would have bought one without hesitation.

Today, because the economic atmosphere is crackling with fear and caution, the natural impulse is to avoid spending. But there's never been a better time to buy a cubby. Suppliers are desperate for business so they're cutting prices and offering extras. 

My ability to afford one is as good now as it was 12 months ago -- so my rationale is to invest in one, because it's a buyers' market. 

The average punter would, I suspect, delay action until the economy improved and confidence was higher. They would end up paying considerably more, because the cut-price deals and giveaways would no longer be there. This little scenario also encapsulates property today. The market should be busy with investors snapping up cut-price assets. With interest rates down and rents up, a self-funding investment is a probability. 

Here's why it's not happening: the dominant paradigm in property is that most investors do the opposite of what makes sense. They dive into the market when prices are high and run away when prices are low. 

Three decades of analysing property has taught me two things: one, most Australians think they understand real estate; and two, most Australian don't understand real estate. 

I refuse requests from friends and acquaintances for advice on property decisions, because the usual pattern is this three-step process: one, they ask me what they should do; two, they do the opposite of what I suggest, and three, they contact me to complain that they got a bad result. 

Other advisers and experts tell me this is a common pattern. 

The reason people seek advice and then take contrary action is that most think they know real estate. 

The average dinner party will comprise 50 per cent males, 50 per cent females and 100 per cent property authorities. 

This nation is teeming with experts. Some who are smart enough to know they're not experts are nevertheless silly enough to accept advice from family members rather than independent professionals. 

But there's another overriding characteristic: humans are herd animals and prefer to do what the pack is doing. Everyone wanted to be a buyer 18 months ago when markets were raging, prices peaking and interest rates rising. 

Today, with prices soft, interest rates low and competition weak, there's not an investor in sight. 

I've had enough conversations with wannabe investors and developers to know that most want to be wealthy -- or, at least, retire in comfort. Somehow they believe they can achieve this goal by being a pack animal. No one listens to those who have become seriously wealthy through investment -- such as Warren Buffett, for example -- who advise people to buy when others are selling, and sell when others are buying. 

If anyone was listening, the dominant force in real estate would be bottom-feeding investors. Everything that matters is in their favour at present. But the market leaders are first-home buyers. This kind of behaviour is being repeated across other forms of real estate. Developers with sites purchased and tenants signed up are deferring construction out of fear rather than common sense. 

Investors are hiding because they believe prices are falling everywhere, that the lucky country has no opportunities and that Australia is a hotspot-free zone. 

None of this is true. There are always hotspots to be found, in any climate. Australia abounds with opportunities -- what it lacks is people willing to grab them. Take a look at the following news ............................
end of extract...read the full article
http://www.theaustralian.news.com.au/business/story/0,28124,25438267-25658,00.html


----------



## satanoperca (7 May 2009)

Kincella,

Interesting read even if it was from a spruiker. 

I can only state what I am seeing in the areas that I am following and the reason why investors may not be in the market at the moment is that all the bargains have disappeared. It would seem in my price bracket (500-800K) prices have actually gone up in the last three months.

So, why would investors be rushing back with the prospects of little CG of the next few years and prices only marginally down on last year.

Maybe they are waiting to see how much debt KRUDD has got us into with his sophisticate ways of simulating the economy, cash hands, whoopee - soon to be announced in the soon to be released budget.

Being teaching my 3year old that two wrongs don't make a right. Maybe he can get in KRUDD's ear and explain debt got the world into this situation and getting into more debt is not going to get us out. 

Cheers

Day off today with my son, off to the play center, being a kid is so much fun.


----------



## kincella (7 May 2009)

Satan....exactly....most of us are waiting to see what is in the budget....one needs to be informed before making a move....super may be a problem...and that 30% allowance for equipment...has not been legislated...so business are holding off....its a silly situation to be in....all talk...blah blah blah everywhere....wonder why it was not put through and passed...to give business confidence they need...the libs agreed with it...
we can decide after next week....


----------



## gfresh (7 May 2009)

Nice, some civil debate once again  

The herd mentality definitely has a lot to do with it. When everybody talks about how much money they are making in property, when valuations are going up each and every quarter, when the media is all obsessed by it, it's easy for everybody to become caught up in, to want to be caught up in it. It's the Australian obsession. 

Then all the talk was of crashing prices, and the fear took over.. When it all slows down, and the easy money is gone, the attitude changes.. there is no longer the pressure to buy, buy now, as there is no instant gratification. Now that fear seems to be fading a little. Maybe it will be a false break, but who can say for sure.

This budget could be the most important in the last decade. It's going to be very interesting. There is talk of "tough decisions" but will they really be made? Not just small concessions. How would have the Liberals tackled this crisis? I still don't quite see what their position would have been/is now if they were running the show.. spend? tax cuts? do nothing? They seem quick on criticism, not big on ideas right now. Anybody can be a critic, it's easy


----------



## Soft Dough (7 May 2009)

Lancelot said:


> What
> 
> You make no sense, explain how I have lost money if I havent sold or have no intention of selling?
> 
> ...





Oh! i see.

so even though my MFS shares are valued at $0 and I bought them at $1.00, I haven't lost money as I haven't sold them yet.

Can you please explain that to my bank as I want to use them as security for a margin loan.

Thanks





Lancelot said:


> Plenty of people still have access to money.




You seem to think that when assets prices are falling that people still can access gearing vs those assets.  Perhaps you should ask your bank manager about this.

You need to remember that the housing bubble is fuelled by increasing debt, debt rising faster than historical rate.


----------



## Lancelot (7 May 2009)

Soft Dough said:


> Oh! i see.
> 
> so even though my MFS shares are valued at $0 and I bought them at $1.00, I haven't lost money as I haven't sold them yet.
> 
> ...




No, you have CLEARLY lost

On the other hand my property still has current valuations and LOC at 3 x purchase, so CLEARLY I have not lost



> You seem to think that when assets prices are falling that people still can access gearing vs those assets.  Perhaps you should ask your bank manager about this.




You must be "special" if you can speak to the manager.

I had a conversation with my personal banker only a few weeks ago, there was no issue with funding, they almost begged us to take money, almost.

Have you seen the latest figures for home borrowers many FHB's?  Apparently they have no issue with their funding either.


----------



## Soft Dough (7 May 2009)

Lancelot said:


> No, you have CLEARLY lost
> 
> On the other hand my property still has current valuations and LOC at 3 x purchase, so CLEARLY I have not lost




Oh so you admit that if the value of the house decreases you have lost money.... a bit of a backflip if you ask me.

( and btw, yes I mainly deal with the manager regarding loans, so that I don't have to jump through as many loops, as my situation is a little different  )


----------



## Lancelot (7 May 2009)

^^ Now your just trolling


----------



## Soft Dough (7 May 2009)

Lancelot said:


> ^^ Now your just trolling




Trolling because you can see what point I was making?

Just admit it, I'll still love you


----------



## satanoperca (7 May 2009)

Lancelot & Soft Dough, if you wish to be childish, my 3 year old needs someone to play with and is far more persuasive in argument than you too. No flaming, I'm made out of ceramic, I have already been fired.

Cheers

Keep it on track - house prices rising etc


----------



## Lancelot (7 May 2009)

satanoperca said:


> Lancelot & Soft Dough, if you wish to be childish, my 3 year old needs someone to play with and is far more persuasive in argument than you too. No flaming, I'm made out of ceramic, I have already been fired.
> 
> Cheers
> 
> Keep it on track - house prices rising etc




Bloody clownish some of these guys I agree

repeat after me - house prices rising etc

LL


----------



## Beej (8 May 2009)

More on what really happened to house prices during the first quarter of 2009. From http://www.businessspectator.com.au...e-prices-pd20090508-RU6AN?OpenDocument&src=is, here is an extract of an RBA report on monetary policy published today, and some commentary from Chris Joye:



> n the RBA’s Statement on Monetary Policy released today, the RBA concluded (p33): *“After falling modestly in 2008, nationwide housing prices were little changed in early 2009, although there is some variation in the range of available measures that use different techniques to control for changes in the composition of property transactions (Table 10).*”
> 
> In Table 10, the RBA shows five different measures of house price changes in the March 2009 quarter.
> 
> ...




And to help explain/understand the differences in the data, see the attached graph (from the RBA report).

So, I still reckon property prices were flat to up as reported by APM/RP-Data etc, in most cities (certainly Sydney, Melbourne etc), in the lower and mid price ranges. Possible exceptions are Perth and Brisbane and Perth. Next quarter numbers (including ABS) should provide a clearer picture and trend hopefully.

PS: It is also interesting to note how even though they have fallen more, the top 20% of the market rose a greater amount (in % terms) than the other market segments through 2007, and even after recent falls are still only at early/mid 2007 levels. This fits in with generally accepted real estate "lore" around Sydney circles; Ie, that the top end falls harder in a downturn (usually on very low sales volume though) but rises higher/faster in the good times.

PPS: The graph also shows that current market conditions provide the best opportunities to upgrade the PPOR (if you are already in the market of course), as clearly the "gap" between low-end and mid range property is far less than it has been for the past few years.

Cheers,

Beej


----------



## kincella (8 May 2009)

beej, if you are out there on the 'ground' checking the properties and prices you know exactly the situation....as a few here have attested to....

note ING still has commercial loans at 6% variable rates and some nice rates for 2-3 years....I have never had a rate this low...so looking to access some equity for a little spendathon...and reno's
sinces its commercial property....it will really test the valuer...lets see how low they can go
cheers


----------



## Taltan (8 May 2009)

Beej

I went to business spectator to read some of Chris Joyce's comments. Turns out he's the managing director at Rismark - Advanced Real Estate Solutions. Now he wouldn't have a self-interest would he???

Any guesses what the fishmonger told me once when I asked if his fish were fresh???


----------



## Beej (8 May 2009)

Taltan said:


> Beej
> 
> I went to business spectator to read some of Chris Joyce's comments. Turns out he's the managing director at Rismark - Advanced Real Estate Solutions. Now he wouldn't have a self-interest would he???
> 
> Any guesses what the fishmonger told me once when I asked if his fish were fresh???




You can dismiss his information offhand if you like - although you should be aware that he is a well respected individual and he + his company are consulted regularly by the government and the major political parties on issues related to the property market, housing etc. Regardless, I don't know who the hardcore bears WOULD listen to in regards to issues related to the property market? As anyone who actually knows anything about it or collects data, or god forbid earns a living from R/E etc is instantly labeled a spruiker and dismissed!

However - in this case, the data being presented is from the RBA - not Rismark. The full RBA monetary policy update can be founds here: http://www.rba.gov.au/PublicationsA...icy/Statements/statement_on_monetary_0509.pdf. The section of the housing market is very interesting indeed.

Cheers,

Beej


----------



## dhukka (8 May 2009)

Beej said:


> You can dismiss his information offhand if you like - although you should be aware that he is a well respected individual and he + his company are consulted regularly by the government and the major political parties on issues related to the property market, housing etc. Regardless, I don't know who the hardcore bears WOULD listen to in regards to issues related to the property market? As anyone who actually knows anything about it or collects data, or god forbid earns a living from R/E etc is instantly labeled a spruiker and dismissed!
> 
> However - in this case, the data being presented is from the RBA - not Rismark. The full RBA monetary policy update can be founds here: http://www.rba.gov.au/PublicationsA...icy/Statements/statement_on_monetary_0509.pdf. The section of the housing market is very interesting indeed.
> 
> ...




How much more can you embarrass yourself Beej? Do you actually understand what an objective source is? The guy uses hedonic regression methods, that should be enough to send off alarm bells in and of itself. And since when does consulting for the government actually instill credibility? Afterall it is the government that continues to pursue the bankrupt subsidization policy of the real estate industry.


----------



## Beej (8 May 2009)

dhukka said:


> How much more can you embarrass yourself Beej? Do you actually understand what an objective source is? The guy uses hedonic regression methods, that should be enough to send off alarm bells in and of itself. And since when does consulting for the government actually instill credibility? Afterall it is the government that continues to pursue the bankrupt subsidization policy of the real estate industry.




Dhukka you are the only one embarrassing yourself here at the moment with your personal attacks and name calling....

Once again - my post and the comments are from the *RBA Monetary Policy Update*, it is not Chris Joyes work. So criticise him all you like, but it's irrelevant with regards to the data and commentary posted.

Beej


----------



## explod (8 May 2009)

Beej said:


> Dhukka you are the only one embarrassing yourself here at the moment with your personal attacks and name calling....
> 
> Once again - my post and the comments are from the *RBA Monetary Policy Update*, it is not Chris Joyes work. So criticise him all you like, but it's irrelevant with regards to the data and commentary posted.
> 
> Beej




It seems to me that you are trying to convince yourself that property is ok, and maybe it is.   However there are enourmous amounts of real financial data that indicates all is not well.   Be objective and consider that property may be in for a siginificant correction before this crisis is over.  I am standing on the sidelines to see what pans out, there are much firmer investments elsewhere at the moment, when I am sure that we are rising off the bottom will be keen to get back in


----------



## kincella (8 May 2009)

rather than relying on the media or any other sources for information regarding house prices....do yourself a favour and go out there to open houses..and check out private sales and auctions...for anything you may be interested in below 1 million...see what you come up with...
Beej has been offering you some excellent information....
we all know most investors wait until everyone is doing it, before they jump on board and go for a ride....

wonder how many sales may have gone thru the past 2 months....since thats how long its taken to actually receive the paperwork for a loan....and I may be lucky to have it sorted before the end of this month...which makes it 3 months.. most borrowers are in the same situation....
and the best information I have gained here..is something outstanding....those stats do not include units or detached houses...how surreal...when that market represents 30% of the total market....
geez...what other industry only uses 70% to play god with the figures


----------



## explod (8 May 2009)

kincella said:


> rather than relying on the media or any other sources for information regarding house prices....do yourself a favour and go out there to open houses..and check out private sales and auctions...for anything you may be interested in below 1 million...see what you come up with...




I go to open inspections very often.   I work for a person who has been selling property down here for 45 years.  His brother-in-law is a real estate agent and 5 years ago I owned five properties in the Mount Martha area.

All I am saying is, there may or may not be a problem, but from what I do know it is not a time to be bullish yet.   That is why I am standing aside.

Open up to the big picture, we have enourmous equity contraction, and my take on money supply we will soon see a big increase in the cost of getting it, interst rates will be going back to Whitlam's banana republic days, if you remember,,17%.

A time to take a deep breath and stand aside.


----------



## robots (8 May 2009)

hello,

i thought we like Japan, US, UK etc so arent interest rates going down down down to 0.5-1%

in for the ride brothers

thankyou
robots


----------



## Soft Dough (8 May 2009)

robots said:


> hello,
> 
> i thought we like Japan, US, UK etc so arent interest rates going down down down to 0.5-1%
> 
> ...




Yes isn't it good to see that our reserve bank has watched and learned that keeping interest rates as high as possible when lending has got out of control is beneficial ( unlike in the US ).  Unfortunately they have learned this too late, but better late than never.


----------



## Beej (8 May 2009)

explod said:


> It seems to me that you are trying to convince yourself that property is ok, and maybe it is.   However there are enourmous amounts of real financial data that indicates all is not well.   Be objective and consider that property may be in for a siginificant correction before this crisis is over.  I am standing on the sidelines to see what pans out, there are much firmer investments elsewhere at the moment, when I am sure that we are rising off the bottom will be keen to get back in




Explod - At one level I don't really care what happens to property now in the short term - I sold some property late last year including my PPOR and bought an upgraded PPOR that we intend to hold for the next 10-20 years. Other property I hold will be held for a similar length of time - Ie until I retire and beyond. So in effect I personally have already achieved the goals I originally set out to when I first entered the property market 18 years ago.

You are correct that the market is far from healthy - I do not disagree. More out of personal interest than anything (driven mainly by being bombarded with bearish views from the media and some other people I know etc), I continue to maintain a healthy academic interest in the market. Out of habit I always keep a close eye on my local area and areas I used to own/live in. I also know several people looking at the moment. 

My observations of the markets I watch do not "gel" with the view that the market is currently falling over all, hence my interest in other musings from sources that are examining the issue. So far, at least as far as this quarters ABS figures go, there are some pretty heavy weight individuals and groups questioning those latest stats and presenting a similar view of the market to my own - including it now seems the RBA.

As far as property being in for a significant correction - in some areas perhaps this is true. In Sydney however, in real terms price have already fallen by 20% since the peak in 2003/2004 - so I feel that the correction has already taken place, or at least is in the final stages, rather than being at the beginning as many of the bears seem to think. I am trying to communicate this information so that anyone bothering to read forums such as this get a broader view than what they would get if all comments were dominated by the bears of the internet on this topic.

As for alternative investments - of course there are alternatives! I too am fairly heavily invested in equities - and my portfolio is now up over 30% from it's low point (with the help of a fair bit of pruning and active management through this downturn), which is nice, plus a lot of dividends have flowed in over the past 12 months while many were screaming to sell. If I focussed purely on the views of the uber-bears of the equities world, I would not have made a cent in the past 2 months from there, and would have crystallised a bunch of capital losses.....

Cheers,

Beej


----------



## explod (8 May 2009)

> I am trying to communicate this information so that anyone bothering to read forums such as this get a broader view than what they would get if all comments were dominated by the bears of the internet on this topic.




Most that have been on this forum for some time are fairly analytical compared to the general property investor who are led very much by the daily press which feeds on a bullish bias.  In fact generally from my take on it all, the bulls outway the bears on property who are howled down at every turn with not a lot of substance.  Along the beach front down here property will allways hold but one has only to move a short distance inland (1km) and most properties have been refinanced to the hilt just to keep kids in school and maintain a reasonable lifestyle.  Many rely on the building trade which has stopped in its tracks.   The loss of these and ancilliary jobs will not hit the ABS figures for some time.   The cantraction from October has not hit the bottom feeders yet either.  My take is that come July we will have a glaring problem all round.   The talk in the media seems to be jawboning in the hope that it may by some miracle go away.   Worth looking at all sides IMHO.


----------



## singlefished (9 May 2009)

kincella said:


> and the best information I have gained here..is something outstanding....those stats do not include units or detached houses...how surreal...when that market represents 30% of the total market....
> geez...what other industry only uses 70% to play god with the figures




So it must be the "massive" price boom in that particular 30% of the market which has led these analyists to believe prices have risen significantly when compared to ABS figures? The excluded 30% being the cheapest sector of the market remember....


You are aware that RPdata don't report "combined" house and unit data? They report house price medians *seperately* from unit price medians.

And there's your conundrum, a direct comparison can be made between particular sectors of the market, in this case detached houses, so apples with apples instead of apples with a basket of fruit.

So, what are the differences that could cause such a difference in their results?

RPdata define house medians below (basically assessed on land value), units are calculated differently.


> For residential houses a similar stratified model is used, but suburbs are grouped by their long term median “price-of-land.” That is, an estimate of land-value is obtained as sale price divided by land-size. This is then used to form the long-term price-of-land for each suburb, from which strata are created.




This from their hedonic methodology:


> The premise for this lies in hedonic theory which suggests that the value of a composite good – such as a house – is the sum of its components. Thus, by decomposing the sample of houses into their various structural and location attributes, the differences in these qualitative factors across houses can be controlled.




After spending over a year attending auctions and OFI's, there's nothing really that special about any of the particular property coming onto the market and I would go so far as to suggest a lot of crap has flooded the market over the last year and I'm guessing belt tightening has precluded a lot of places from receiving even a fresh coat of paint prior to presentation.

This would suggest that these analyists are being somewhat "optomistic" with the compositional changes and that their paramaters used to guage the values of the individual components are subject to the discretion of the person doing the modelling.

RPdata is also computed using only 40% of reported sales:


> RP Data-Rismark collects around 40 per cent of all sales live directly from agents. Testing proves that this information correlates almost perfectly with the final government data, which makes sense since the agents rely on it themselves.



http://www.businessspectator.com.au/bs.nsf/Article/What-went-wrong-with-the-ABS-pd20090507-RT7RU?OpenDocument&src=is&is=Property&blog=Concrete%20Detail


This reporting of sales is also subject to the discretion of the RE Agent selling the property. There is no statute or code of ethical conduct that insists REA's are required to submit ALL data, good or bad, to these private companies....

In your own words and corrected to suit RPdata analysis, "what other industry uses *only 40% of select data* to play god with the figures?"

Answer : *self serving property analyists with vested interest*

The good thing about ABS is that they use the same methodology every time with ALL the data, at the least, it provides a clear indication of the trend, either rising or falling in the particular property sector they are analysing.


----------



## kincella (9 May 2009)

Singlefished... I too have been saying that only low priced houses were on the market and selling for more than they would in a normal market.... I did not see the average ordinary middle range house on the market until some appeared last month....
I have never said to go and buy now....just suggested one keep a keen eye out, and an eye on interest rates....the interest rates being the most important....that gives more buying power....not talking just fhb, but upgraders and downgraders...'whether we see a rate of 4% variable, and a fixed of 5.5...thats up to those in charge...am thinking it could be a possiblity towards the later part of the year...I have taken variable at this stage, and hoping to fix into a 5 to 5.5 for about 5 years...
I do not see 12 or 17% rates....aim for a 6.5 -7% rate as a long term average as a guide


----------



## robots (9 May 2009)

hello,

http://www.theage.com.au/national/migrant-figures-jump-the-slump-20090508-ay0t.html

how can this be, everybody has been telling me the borders are closed because we in recession,

thankyou
robots


----------



## kincella (9 May 2009)

'they' must have been telling porkies....'they' may have fairies at the bottom of their gardens too.....
hehehehehe :sheep:


----------



## singlefished (9 May 2009)

Well, if rental vacancies are to be believed the new arrivals will be sleeping on the streets....

What's Australia got, some 9 million houses? 30% of these are rental so that would be approx 3 million on the rental market. 1% vacancy rate means only 30,000 available.

128,000 more coming in than going out over the quarter means they can slot in nicely at about 4.3 people per property.

So, are ABS stuffing their figures again or is it property analyists telling us porky pies about vacancy rates?

Just checked realestate.com ~ wow, still lots of rentals available!!!! Can't believe it!!!! I thought there'd be nothing left after that quarterly immigration figure!!!! WOW!!!


----------



## kincella (9 May 2009)

singlefished... without adding the immigration numbers...you forgot about the divorce rate..theres another one needing a prop, then the kids leave for uni, looking for a prop...kids from the country come to work in the city, a few olds die off, some kids move out of home to live alone or with friends...and the average people per house is 2.5
the professionals move around, the females like to live alone...the males do too but not as much as the fems....
suburb I watch about 100,000 population...say 50,000 houses...on average there are 200 houses for sale and 200 for rent...less than 0.5% of each...or less than 1% if both were vacant ....of those amounts only 10% might suit me


----------



## singlefished (9 May 2009)

That's the funny thing, even with the immigration figures and as you pointed out, divorces, students, deaths, 2.5 average per household, etc the rental vacancy rate over recent years always seems to fluctuate around the historic lows.

It certainly appears that rental vacancies are at their tightest when sales volumes take a dive.

We're certainly not building new accommodation fast enough (apparently) so where are these people residing if they're not on the street? The numbers just don't add up.

Like RPData's 40% of sales to summarise the whole market, maybe the rental vacancy rate is only 40% reported and mis-represented as being the whole of the market. It certainly wouldn't surprise me...


----------



## robots (10 May 2009)

hello,

good morning

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

great commentary from these buyers advocates who get out there and put in the yards every day,

some great results still coming in with another fine day on the auction scene yesterday, WOW paradise

oh well, its all no big deal if you *cant afford* or dont want to own a home just rent, easy

thankyou
robots


----------



## kincella (10 May 2009)

Morning Robots...thanks for the link....they do write some entertaining stuff on that site.....psst....our mates on the other side probably dont read this, or if they did ...would not believe it....
cheers
an extract ...................

What planet do they live on?

Median: “Median (mathematics), the value of the middle member of a set of numbers when they are arranged in order …”

That’s clear enough. But it’s nothing but misleading when applied to house prices and it is out-of-date, has little relationship to what is happening now and is not comparing like with like.

And then it leads to you-beaut headlines such as:

“Victorian house prices suffer biggest drop in 40 years.”

Sure did. But so what?

Delve a little deeper into the REIV’s stats and you’ll come across such useful information as Toorak houses dropping 26% in the March quarter and 33% over the last 12 months.

It is high time the REIV and its so-called experts learnt that judging property by median values is useless and they should go back and do a valuation course. Regrettably there is still a lack of real information accessible to the buyer with respect to the property market; and apparently that’s the way the REIV likes it.

It’s not rocket science: start with land value (position, area and outlook), then add improvements and factor in scarcity and desirability (or lack thereof). And ignore misleading medians.


----------



## kincella (10 May 2009)

some of us have been arguing about the number of vacant properties and the number of people per housing.... the number has been declining since the since the 1950's ...guess there were similar families to my own...dad mum and 4 kids....today its down to 2.46 thats either mum dad and half a kid, or a mum with 1 and 1/2 kids....sounds funny...
and of course there may be some temporary moves by the adult kids (apparently up to age 34) to move back home with mum and dad...ouch fancy dealing with a kid aged 34.....whilst the GFC is blamed for everything for the next year or so...
but when it returns to normal...the trend in the number per house will not grow,,,well not in the western world....there are other people that do take the olds into their homes...to help with childminding and other housework....
heres another story with some stats about women with choices about having children...
ps...I have no intention of living with anyone...young or old...I love my sole household with the dog...
http://www.theage.com.au/national/o...-special-treatment-20090509-ayov.html?page=-1


----------



## enigmatic (10 May 2009)

I always get confused by both kincella, robots, Beej comments never know if there trying to sell me that houses are on the up and up and every day I dont buy I miss out, Or that you should be patient and look for a bargin..

Kincella i think your point is that patient is important.

Any way Maybe rather then blaming us Short term Housing Bears, for looking at both sides of the coin you might want to look at both sides instead of playing the Houses will always go up card..

Reading a majority of your comments reminds me of a work mate who use to be in the Realestate industry for 20years before moving out..
He told me in early August 08 that I should be buying a house NOW. my reasoning for waiting was simple house prices would slow if not reverse allowing me to save money for a better deposit and lower loan at the same time I would be able to get myself a lower interest rate. 

What has started happening in the recent short term just that.
Now personally i dont see houses dropping to far from here although after the FHBG has gone an easy 14k-25k will drop of the lower end which is about the time I believe the Investors will start moving into the market. Which should be the time for some bargins.

After the FHBG is dropped the number of new homes will drop causing sales to be forced to drop there price to make a sale, younger house hunters will stay at home until job security is back, no point leaving home unless you can afford it and without an extra 7-14k deposit thats alot of weeks saving, banks aren't any were near as kind with borrowing lately.

Any way thats my Opinion after reviewing both sides of the story, and yes I agree in the short/Long term Median house prices are useless indicators However what is a good source of decision making is Logic.


----------



## enigmatic (10 May 2009)

The facts you provide kincella are always interesting though, I some how always seem to see the other side of the story or just mix your side up.

Renting vacancies being so low is an interesting fact that I haven't really looked into though, might be the thing that convinces me to get a Investment property aswell Rent being tight means there are plenty of people out there that cant afford to buy, unlikely going to change as were nearly at the best time to buy.. Cheap interest rates.

Interesting though that house which are rental have so few people in them which to my way of thinking means there is plenty of room for people to move into rentals. Unless you were talking about Homes at which point i Appologies.


----------



## kincella (10 May 2009)

you just do whatever feels right for you...we are not trying to talk you into buying....as I have said keep your eyes on it..re the interest rates...if you are really in a position to buy...

just being contrarian to the argument that if you wait long enough you will save 30-50% of the cost...that will not happen.. and if you are really in the market to buy...ie have deposit saved and ready for the committment....then you may be a little dissapointed if you keep waiting for the drop and it does not happen and in fact goes against you...thats all

but you will always be able to find the property that is right for you and affordable....just look harder, or change the goal posts for now

oh and the Vic govt is providing an extension to the  FHB grant to june 2010...of about $18000 metro and $22500 regional for new homes...$9000 for used homes...expect the other states to follow...
so forget the grant being axed...it will have an extension until the economy is back on track....
I suggest there will be some form of grant until 2012 or 2013 at the least..


----------



## nunthewiser (11 May 2009)

> More than 1.3 million households are suffering mortgage stress despite low interest rates, a new survey has found.
> 
> Independent market analyst Datamonitor found that almost a quarter of mortgage holders are experiencing mortgage stress, with first home buyers who bought in the past 12 months especially vulnerable.
> 
> Thirty per cent of these new buyers said they were facing mortgage stress, while 21 per cent expect they will have difficultly paying back their home loan over the next five years





http://news.ninemsn.com.au/article.aspx?id=812057


yep looking great out there brothers

sunshine and lollipops for everyone




> "Economic contraction and consumer concerns risk fuelling a vicious cycle."
> 
> The Reserve Bank of Australia (RBA) left the cash rate unchanged last week after its monthly board meeting, but had previously reduced the rate by 4.25 per cent since September last year.
> 
> ...


----------



## robots (11 May 2009)

hello,

good evening brothers another great day on the planet

check weekend report:

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

fine writings with the first 5-6 lines summing things up well, great report on proceedings over the weekend, great report

the sun still shining strong man, i cant believe it

thankyou
associate professor robots


----------



## kincella (12 May 2009)

Robots...thanks again...old money still around and insulated from margin calls and GFC...hehehehehe and paying nearly a million more than the reserve....

oh and my response to that is....what were the agents thinking to put the lower figures on them in the first place....if half a dozen bidders at the higher price....one would think the agents made the wrong call...and the buyers got it right.... there is something lovely about period homes....
have to wait to see what nasties are in the budget tonight,,,,but its getting closer to the 'I told you so' time....those lovely little interest rates that our opponents choose to ignore.....notice we have rent threads now
cheers


----------



## Beej (12 May 2009)

March housing finance figures released today: http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument

Very positive: +6.7% over-all; OO housing +7.3%, Investment housing +4.7%, New dwelling construction +13.7%.

It really looks like housing finance bottomed out late last year - total finance now growing strongly. We are now back to early 2008 levels. Plus it seems investors are now starting to slowly return to the market. Also good to see strong new dwelling numbers - I suspect that's primarily the FHBG boost at work there.

Cheers,

Beej


----------



## nunthewiser (12 May 2009)

i see as usual no one adressed my article and merely skip around it with other happy stuff

great work fellas 

sunshine and lollipops for all


----------



## kincella (12 May 2009)

nun....no point...your mates have got it covered on the other thread....
must admit I could not be bothered to read it....I just keep reading the other good news about the props....and I put that headline into what I term is 'junk' status from the media....everything today is more hyperbole that fact...its about grabbing headlines...to get news hits...to entice advertisers who are leaving...
just like any other junk they turn out about the GFC, politics, etc
there is probably 1.3 million people who will lose money on their margin loans, cfd's etc

its coming closer each day to 'I told you so status", but first, I have to wait to see what disasters are forthcoming in the budget tonight....


----------



## nunthewiser (12 May 2009)

kincella said:


> nun....no point...your mates have got it covered on the other thread....
> ....






sorry you must have me confused with someone else ...i have no mates 

funny how you guys try and discredit ANY data /media that contradicts your nice lil cosy fireside views YET spew the same media and data WHEN it suits

bless ya


----------



## satanoperca (12 May 2009)

Beej said:


> We are now back to early 2008 levels.
> Cheers,
> 
> Beej




Fantastic news, with unemployment rising, a huge government deficit looming, global economic contraction,  petrol on it's way up again, lets go for broke and get in as much debt as possible to build the bubble even bigger. 

Go Labour, you have the skills and balls to get us out of this mess just like last time and if you can't you can always blame Howard.

Cheers


----------



## kincella (12 May 2009)

nun...they are not mainstream media...they are property professionals...buyers advocates...the other ones I spruik about are actual stats from REIV,,again not mainstream media, the RBA, and ABS govt aka agencies...can you spot the difference;SHEEP:
http://www.morrellandkoren.com.au/topend/


----------



## Beej (12 May 2009)

satanoperca said:


> Go Labour




That's *Labor* (we are in Australia not the UK!) 

Personally, I don't see a rebound in housing finance after a slump anything to be too concerned about economically, quite the opposite in fact. Unless of course you are in the "wishing/preying for a house price crash" brigade..... 

Only a small proportion of Gen-Y own their own home; all that's happening at the moment is they are all (finally) getting with the program, along with the Gen-X laggards as well. Ie pent up demand is being fulfilled as the opportunity has arisen. I think this is especially the case in Sydney were in absolute/inflation adjusted terms prices are down 20% since 2004, plus interest rates are very low; the longer one waits the shorter the period of low interest rates will be..... many see all these factors as a strong buy signal, especially if they have been waiting for years to be able to buy.

To each their own of course - just keep abreast of the facts and the likelihood of various outcomes.

Cheers,

Beej


----------



## MACCA350 (12 May 2009)

Beej said:


> Ie pent up demand is being fulfilled as the opportunity has arisen.



I'd say there's a fair portion being pulled forward from future demand and many who simply couldn't afford to get in prior to the FHOG Boost and low rates.

cheers


----------



## Beej (12 May 2009)

MACCA350 said:


> I'd say there's a fair portion being pulled forward from future demand and many who simply couldn't afford to get in prior to the FHOG Boost and low rates.
> 
> cheers




This is point of differentiation amongst opinions. I think the desperate "no-savings-quick-let's-buy-a-house-while-the-grant-is-on" buyers represent a very small proportion of the current FHBs (but makes is good media play and so gets dis-proportionate focus), and therefore an even smaller proportion of all current home buyers: 73% of purchases last month were still non FHBs.

Here's a good article on these numbers by Adam Carr of ICAP: http://www.businessspectator.com.au...e-loans-pd20090512-RY5CR?OpenDocument&src=sph



> This shows that it’s more than just first homebuyers driving the market. As expected, loans to this segment were particularly strong, but it would be misleading to suggest that this is the only strong component. Non-first home buyers make up over 70 per cent of the market and loans here were up 4 per cent in the month – and of course I’ve already mentioned investors.
> 
> The RBA will be looking at these numbers with some satisfaction. The housing industry is one of the more interest rate sensitive sectors and it’s a positive that the response has so far been rapid. Moreover, when you look at the breakdown and see that loans for construction are rising rapidly (up 40 per cent from the trough and the highest since January 2002) – then we can be confident that this surge in lending will translate to greater housing construction activity, better overall economic growth and employment.
> 
> The result clearly ads weight to the argument that the Bank has done enough. I think it’s lost on many that other central banks around the world are cutting aggressively to counteract a breakdown in the transmission mechanism. This isn’t the case here – so it must follow that we don’t need to do the same. Housing construction looks set to turn sharply and this will do much to cap the rising unemployment rate.




And check out the attached chart from the same article - looks like we are returning nicely to the long term trend.

Cheers,

Beej


----------



## aleckara (12 May 2009)

Beej said:


> And check out the attached chart from the same article - looks like we are returning nicely to the long term trend.
> 
> Cheers,
> 
> Beej




Hate to say it but if the trend continues then I can't see house prices going down all too much. Don't get me wrong; I'm not too thrilled about it - but I'm not seeing signs of increased affordability anytime soon (only short term affordability due to the inflation lag).

Housing while people cite other factors such as population growth, and all that all these factors matter nothing when credit is unattainable. Credit (especially with house prices getting further and further away from wages) is the only real fundamental and all these other fundamentals really just drive demand for credit.

Wow Rudd really did achieve his aim. Other countries have money to lend but no one wants to borrow, and they are really trying to kickstart borrowing. Rudd really gave us an incentive to borrow a lot of money.


----------



## MACCA350 (12 May 2009)

Beej said:


> 73% of purchases last month were still non FHBs.



Do those figures cover just the private sector, or do they include business purchasers also?

cheers


----------



## Beej (12 May 2009)

MACCA350 said:


> Do those figures cover just the private sector, or do they include business purchasers also?
> 
> cheers




Hmmmm - they are for residential property only, which in 99% of cases would be private purchasers i would have thought? Or maybe it doesn't matter? They certainly do not include commercial property.

Cheers,

Beej


----------



## MACCA350 (12 May 2009)

Beej said:


> Hmmmm - they are for residential property only, which in 99% of cases would be private purchasers i wuold have thought? Or maybe it doesn't matter? They certainly do not include commercial property.
> 
> Cheers,
> 
> Beej



Right, I just thought they may have included all property sales.

cheers


----------



## kincella (12 May 2009)

I think you will find if the govt does build all those extra public housing they are promising both fes and the states........we will see a two tier pricing regime...very affordable houses a bit out of town....and very pricey homes in the middle of town...as that article, see Robots link, about the recent prices  and period homes....were very popular....if it was ordinary then forget it...no bids...
there would be no arguments if all would just buy what they can afford....
I doubt there are too many on this site who could afford a million dollar house


----------



## robots (12 May 2009)

nunthewiser said:


> i see as usual no one adressed my article and merely skip around it with other happy stuff
> 
> great work fellas
> 
> sunshine and lollipops for all




hello,

i was responding to your post Nun, everything I see is sunshine and lollipops

everywhere

people get caught out every day with financial/money matters

thankyou
associate professor robots


----------



## kincella (12 May 2009)

FHB scheme extended to Sep and then phased out by Dec 09.....
psst I think the State Govt's will follow the Vic Govt and introduce their own FHB scheme which will be very similar to the fed Scheme....
it provides jobs to the industry...everybody wins
forget the lollipops...think Champagne


----------



## robots (12 May 2009)

hello,

thanks Kincella

its a great ROI for States/or Feds and I know Soft Dough is big on ROI

maybe the state stamp duty issues and the FHB grant are being tweaked to put more responsibility back to the states

thankyou
associate professor robots


----------



## gfresh (12 May 2009)

ha, well at looks like I can't escape the FHOG no matter how hard I try!

Really would like to buy before the end of the year... so watch the market crash, say start of 2010 

Hopefully it slows down the stupid rush before June 30th, should be spread out a bit better. Doesn't leave much room for investors to pick up anything in the lower-priced segment though, I know a few have been waiting..


----------



## MACCA350 (12 May 2009)

kincella said:


> FHB scheme extended to Sep and then phased out by Dec 09.....



Wimps.........guess they realised if they cut it the market would go into cardiac arrest: ...........better to switch to morphine and wane the market off it's dependency hey

I really don't get why they have to keep throwing tax payer dollars in to keep inflating housing, they should cut it all off(both federal and state) and let the market stand on it's own...........IMHO it's turned into a vicious cycle that gets worse the longer it goes on. 

cheers


----------



## robots (12 May 2009)

hello,

its been going up and down since 2000 man with both the Feds & State doing there bit

wasnt an issue back in 2000, seems a major issue now though, strange

remember, soft dough said everything okay as long as government gets ROI, all about equality and the housing market should get assistance just like every other industry

thankyou
robots


----------



## kincella (12 May 2009)

and here I was already 'siked' up to become a little depressed...damn its back the the champers for me and the dog...
winners are grinners....


----------



## MACCA350 (12 May 2009)

robots said:


> hello,
> 
> its been going up and down since 2000 man with both the Feds & State doing there bit
> 
> ...



So why not get rid of it completly and never bring it back, and let the market run it's own course...........I mean isn't it supposed to be all about supply and demand, yet we've got someone playing creative accounting in the middle

IMHO if they never brought it in in the first place housing would be more affordable, seems like they've been using it over the years to stop the market from falling as it would naturally do due to economic climates, and since it doesn't drop as much it just keeps climbing higher as things recover<----------have absolutely no evidence of that, total guesstimate

cheers


----------



## kincella (12 May 2009)

macca...you are not getting it...its all about the jobs...+  employment...equals cash to spend = keeping the economy running
winners are grinners


----------



## robots (12 May 2009)

hello,

i think you should check what happened to residential property during the last recession, not much

safe as houses Macca, 

thankyou
robots


----------



## kincella (12 May 2009)

macca...think outside the square you live in..............the smart money is in housing....
even my dog knows that.....winners are grinners


----------



## profit off it (12 May 2009)

robots said:


> hello,
> 
> its been going up and down since 2000 man with both the Feds & State doing there bit
> 
> ...




Bob Hawke's Labor government introduced the 1st First Home Owner's Scheme back in 1983. It was means tested and you were eligible for the full grant if the combined income of all applicants was less than $24300. Depending on if you had dependants or not the grant ranged from $5000 to $7000. That would have been a huge chunk of the purchase price of a home back in 1983!

The link to the regulations for the original legislation is:http://www.comlaw.gov.au/comlaw/Leg...5698DB8F5238F51ECA256F700080A733?OpenDocument


----------



## saiter (12 May 2009)

kincella said:


> macca...you are not getting it...its all about the jobs...+  employment...equals cash to spend = keeping the economy running
> winners are grinners






robots said:


> hello,
> 
> i think you should check what happened to residential property during the last recession, not much
> 
> ...






kincella said:


> macca...think outside the square you live in..............the smart money is in housing....
> even my dog knows that.....winners are grinners




WTF is this BS? Three spruiking posts in the space of 3 minutes. Is robots and kincella the same poster?


----------



## robots (12 May 2009)

hello,

thankyou Profit Off It

there you go hey, way back in 83 when property was supposedly super affordable

thankyou
robots


----------



## lusk (12 May 2009)

robots said:


> hello,
> 
> i think you should check what happened to residential property during the last recession, not much
> 
> ...




Like most assuming that this recession is going to be like the last, doesn't take much to see that its not.



			
				 ; said:
			
		

> Toyota Motor, the world's top automaker, announced Friday a 4.4-billion dollar annual loss, its first ever, and warned it would plunge deeper into the red as car sales collapse during the recession.
> 
> Toyota lost 765.8 billion yen (7.7 billion US dollars) in the quarter to March alone, even more than General Motors, as it idled plants to ride out the *biggest crisis in its more than 70-year history*.




But the sun's still shinning and winners are grinners, just another day brothers!

Thankyou
Lusk


----------



## singlefished (12 May 2009)

kincella said:


> macca...think outside the square you live in..............the smart money is in housing....
> even my dog knows that.....winners are grinners




The money might be smart, doesn't necessarily mean the guy spending it is financially literate.



Beej said:


> I think this is especially the case in Sydney were in absolute/inflation adjusted terms prices are down 20% since 2004




I'm sure glad I didn't pump my $$$ into the Sydney market 5 years ago! I must be an idiot for not taking a 20% hit ehh?

On another topic, FHB boost extension... What did Swanny say tonight, 54,000 taken up the offer to date. Worst case scenario for the Government coffers is that every FHB takes the maximum $14K (for a new house).

$14K * 54,000 = $756M to date.

Allocated $1.5 Billion on 14th October. Not quite as successful as they had obviously hoped for or are making out it was, only half the allocation been taken up to date hence the extension.


----------



## robots (12 May 2009)

hello,

"the thing that differentiates my rhymes from yours is called originality"

word out to the true kings:

king kincella, Big Beej, Professor Robots

another great day

thankyou
associate professor robots


----------



## gfresh (12 May 2009)

~$800M is easy money, compared to the cost to bailout the banks if the housing market collapsed. I can see where they are coming from with the extra boost, even though I don't think it really helps FHB'ers, mainly everybody else.


----------



## Beej (12 May 2009)

The worst case for me should only be a bit of an unwelcome touch-up.....

PS: Re Sydney and 20% down in inflation adjusted terms - yes, possibly better places for cash if chasing absolute returns, although stock market won't have given that if you rode down with the crash. However, still not that bad as a) you have been hedged against inflation pretty well + be rent return (or rent saved) would be a significant amount over same 5 year period, so still OK in my books, with a view to future growth (and no-one will see the next boom coming until it has happened).

Cheers,

Beej


----------



## robots (13 May 2009)

hello,

fantastic budget night yesterday,

would like to thank Profit Off It for informing us in regards to the First Home Owners Grant

it was introduced in 1983, yes 1983, amazing, its been going strong for 26yrs

werent houses back then super affordable yet Hawke introduced the grant

oh well, have a great day, say hello to your neighbour and walk tall brothers

thankyou
robots


----------



## kincella (13 May 2009)

singlefished....they are disgusting remarks...I usually find that posters who cannot argue the point successfully...revert to a personal attack against another poster....its just disgusting


----------



## satanoperca (13 May 2009)

Keeping it back on track.

Sales volume in the areas I research has seen a dramatic increase in the last few weeks but it seems prices have gone up slightly over those that were around in late 08.

Only time will tell how this plays out.

Got to love a Labor government, spend, spend, spend, that will do the trick to get us out of the situation, it didn't work last time, maybe it will work this time. 

Definition of insanity : doing the same thing over and over again and expecting a different outcome.

Tall poppy syndrome still being encourage, tax the rich.

Beej, thanks for your continued contribution to this thread, whether I agree with your comments or not they are appreciated.

Cheers


----------



## Beej (13 May 2009)

kincella said:


> singlefished....they are disgusting remarks...I usually find that posters who cannot argue the point successfully...revert to a personal attack against another poster....its just disgusting




Kincella, even if a little on the crude side, I think it was meant as pretty tongue in cheek response to Robot's tongue in cheek "kings" post. It made me smile anyway!



satanoperca said:


> Beej, thanks for your continued contribution to this thread, whether I agree with your comments or not they are appreciated.




Thanks for the encouragement. Everyone is entitled to their opinion and view, but should always reserve the right to be proven wrong (including myself of course!). Civil discussion and debate is always appreciated, regardless of viewpoint.



profit off it said:


> Bob Hawke's Labor government introduced the 1st First Home Owner's Scheme back in 1983. It was means tested and you were eligible for the full grant if the combined income of all applicants was less than $24300. Depending on if you had dependants or not the grant ranged from $5000 to $7000. That would have been a huge chunk of the purchase price of a home back in 1983!




Re the history of the FHBG, as I think I have posted before, in addition to the above info, my dad told me that he got a $750 first home buyer/builder grant in 1966 when he and my mum bought/built their first home - that's probably about $10k-$20k in todays dollars anyway. 

So bottom line, government subsidy/encouragement to get people into their own homes is nothing new at all in this country (just like farming, auto industry subsidies etc have always been around). Maybe that's why we have such a solid property market and a 70% home ownership rate - one of the highest in the western world? I guess it also encourages building which is needed to support a growing population + the building sector has always been an important sector of the AU economy?




gfresh said:


> Doesn't leave much room for investors to pick up anything in the lower-priced segment though, I know a few have been waiting..




Gfresh - I think this is a real issue. I suspect if there was no FHBG boost/rush, that rental yields would have quickly hit the level that investors would have taken up the slack in numbers. Right now as you say I think potential investors are wary of competing with all the FHBs, and are still waiting to see what happens with rents and prices over the nest 6-12 months.

Cheers,

Beej


----------



## robots (13 May 2009)

hello,

good evening and hope everybody having a blast of a day

check this:

http://www.reiv.com.au/news/details.asp?NewsID=782

the rent thread clearly supports the situation

things just plodding along, not much happening for the inner ring, kincella has touched on these areas before when out mixing it with the public on chapel st

oh well

thankyou
professor robots


----------



## Go Nuke (13 May 2009)

DAM! The y extended the first home owners grant 

My partner and I were hopeing they would ditch it, or at least a part of it.
Its keeping the housing at our end of the market inflated...which im sure the government wants, but would

 rather have seen the prices come down in the lower end.

Housing in Brisbane is still way over priced imo compared to SOME other capitals.

30Mins out of Melbourne will buy you more than what you could get here in Brisbane.

Oh well....just keep saving and hope we can afford something other than a pile of S*%! for $400K near Brisbane.

People just need to stop paying such high prices for crap.

I had a guy whinge at me today about how he is going to be paying for women to stay at home and have babies. I tried to explain to him how do you pay a morgage/rent on one income these days??


----------



## Go Nuke (13 May 2009)

robots said:


> hello,
> 
> good evening and hope everybody having a blast of a day
> 
> ...





My realestate agent suggested I bump up the rent on my property by $10- $20/week...but I declined and told them just to increase it by $5.
Ive got good tennents and if the vacancy rate increases ...well Id hate to lose them and not be able to fill their void in my little old shack

There's more to the world than greed too.


----------



## gav (13 May 2009)

Go Nuke said:


> My realestate agent suggested I bump up the rent on my property by $10- $20/week...but I declined and told them just to increase it by $5.
> Ive got good tennents and if the vacancy rate increases ...well Id hate to lose them and not be able to fill their void in my little old shack
> 
> There's more to the world than greed too.




Good work.  I just moved into my first home yesterday after renting for 6yrs.  My rent contract finishes next month, and we received a letter saying it would be put up $20 per week.  The letter stated "it has nothing to do with you as a tenant, it is a reflection of the current rental market".  

I sent our 'notice to vacate' letter today.  I made sure I included that my mortgage repayments are actually $2 cheaper than continuing to rent 

Supply and demand - there will always be people who want to live close to the city...


----------



## Soft Dough (13 May 2009)

robots said:


> remember, soft dough said everything okay as long as government gets ROI, all about equality and the housing market should get assistance just like every other industry
> 
> thankyou
> robots




So please explain how the government gets a ROI on residential housing?

As far as I see it, it just pumps resources boom money into unproductive assets ( ie assets that do not generate a return for the country )


----------



## robots (13 May 2009)

hello,

tax

thankyou
robots


----------



## Soft Dough (13 May 2009)

robots said:


> hello,
> 
> tax
> 
> ...




And what tax might this be?


----------



## robots (13 May 2009)

hello,

income tax from all the work it creates, sorry forgot GST as well

thankyou
robots


----------



## Soft Dough (13 May 2009)

robots said:


> hello,
> 
> income tax from all the work it creates, sorry forgot GST as well
> 
> ...





You have to be kidding.

You seriously believe that without the FHBG being increased that builders would have zero work.  Most builders that I have approached have at least 6 months of work, and hey, if they got a little desperate they would just decrease what they charged, and hence stimulate housing organically.

Plus you are looking at this from a very narrow perspective.

You fail to recognise that money tied up in overinflated houses is what restricts spending, which not only generates GST, but also jobs in other industries, and investment in other industries which generates jobs and export opportunities.

What would subsidising value adding export industries ( eg steel ) to the value of income tax cuts and FHBG do for this country? .. oh, only result in incoming foreign money, which would be distributed through the economy, generating jobs, wealth and rivers of money for the government to pay off its debt.

Instead people put it into clay and wood which has no value for australia, and does nothing to help ensure future prosperity for the country

My argument extends back to the previous gov and the current one giving handouts of mining boom money.  Where is the ROI for the country if it is ploughed into houses, and is stagnating investment that the government then generates returns on?

Housing is just ploughing money that could be used for productive investment


----------



## ROE (13 May 2009)

robots said:


> hello,
> 
> income tax from all the work it creates, sorry forgot GST as well
> 
> ...




So you got $1000 you create 10 jobs in your backyard you get back
$200 bucks in income tax, so you lose a thousand bucks to make $200 bucks.
Nice I like your way of thinking  

Better you got $1000 buck you buy a candy machine, you then produce Candy to sell to the Australian children, not only that, you sell Candy to the Chinese Children and the yanks as well and you get more GST and Income from export then you can start to see real money coming to the coffer.

You don't think all the excess money the government has lately come from selling Iron Ore to Australian Builder is it? Look what happen when you just sell stuff into your own backyard? the damn thing collapse...
$210 Billion black hole in revenues coming from company that sell stuff oversea.

Why the Chinese Government funds has so much money? that exactly what they do, they make toys to sell to the Chinese, not only they do that they sell to the Yanks and to the Aussies and who ever else want to live it up and spent more than they earn..and if they keep doing it for a long time they end up owing your backyard... 

But that is just me looking at Australia as a country interest, not 
me too, me too, interest.


----------



## singlefished (14 May 2009)

kincella said:


> singlefished....they are disgusting remarks...I usually find that posters who cannot argue the point successfully...revert to a personal attack against another poster....its just disgusting




satire kincella, satire....
http://www.google.com.au/search?hl=en&safe=off&q=define%3Asatire&meta=




Beej said:


> Maybe that's why we have such a solid property market and a 70% home ownership rate - one of the highest in the western world?




Interesting point and checked to see how we compare. A quick search found 2 sources, one from 2000 & one from 2003.

http://www.nationmaster.com/graph/peo_hom_own-people-home-ownership
http://www.photius.com/rankings/homeownership_rates.html

Spain, Greece & Ireland win hands down with a whopping 85.3%, 83.6% and 83% respectively... (assuming the figures haven't changed that much over the last few years)

We'd have to be top 5 I'll bet and increasing with the FHB shift from renting to owning over the last few quarters.

9 million houses (say), 54K new FHB's = 54K less renters, could be up roughly 1.2% now, maybe over 2% by the time the FHB boost is phased out at the end of the year.


----------



## ROE (14 May 2009)

I love it, now we can really put the money where our mouth is.
http://business.smh.com.au/business/betting-on-the-house-20090513-b3cs.html

Just remember guys house price double every 7 years so always go Long Contract on this one 

but on the flipside I wonder what happen to house price when there is a flood of short contracts on the index and people can see where the market is putting their money on property.


----------



## Beej (14 May 2009)

ROE said:


> Just remember guys house price double every 7 years so always go Long Contract on this one




ROE you keep saying the above over and over and over again and again, but it really looks silly as nobody here is, or has, argued that. So really I'm not sure who your point is directed at other the well-battered straw man of your own creation?

Re that housing "futures" market, will be interesting to see if it get's enough liquidity to make it actually worth trading or using for hedging etc.

Cheers,

Beej


----------



## Soft Dough (14 May 2009)

ROE said:


> but on the flipside I wonder what happen to house price when there is a flood of short contracts on the index and people can see where the market is putting their money on property.




You can still use the often resorted to realestate argument that your house is "different" to what the index is measuring.  Seems to work well for everyone who hasn't tried to sell their mcmansion recently.

I think this will be awesome for the realestate market as it will introduce more volatility and help it return to trend levels.


----------



## kincella (14 May 2009)

if its like the warrants...and the market maker is absent...or cannot be bothered etc...used to find sometime when the market was up and I wanted to sell...there was no buyers and the opposite...
I can see more losing money on an index than anything else...maybe they will get liquidity
oh there is another thread on the indexs subject....but hey
about the satire I recognise it when I see it.... I still say it was disgusting...and it tells me heaps about the poster


----------



## robots (14 May 2009)

Soft Dough said:


> You have to be kidding.
> 
> *You seriously believe that without the FHBG being increased that builders would have zero work.*  Most builders that I have approached have at least 6 months of work, and hey, if they got a little desperate they would just decrease what they charged, and hence stimulate housing organically.
> 
> ...




hello,

thanks for your opinion, 

no houses/units arent overinflated in my opinion, maybe to you and others

the ROI for government on one humble house/unit is massive over many many years

thankyou
associate professor robots


----------



## Soft Dough (14 May 2009)

robots said:


> hello,
> 
> thanks for your opinion,
> 
> ...




Well your opinion flies in the face of historical trends.

As for ROI, I'm sure any educated person who reads these posts can make a judgement on where the money flow fallacies of residential housing are, and that it is wasteful, unproductive and hinders prosperity of all australians. Unfortunately people with interests in housing tend to have less appreciation of the reality of money flow and investment for future prosperity than people who invest in shares or businesses, as evidenced in your inability to respond to logical argument.


----------



## kincella (15 May 2009)

what a load of rubbish soft dough.....housing is a priority for educated people...cannot be bothered with the rest of your argument...its too ridiculous


----------



## Soft Dough (15 May 2009)

kincella said:


> what a load of rubbish soft dough.....housing is a priority for educated people...cannot be bothered with the rest of your argument...its too ridiculous




I think that it is reasonable for people to disregard my post regarding this as

a) I was being too aggressive, and this post is questionable too.
b) It probably hit too close to the mark, as it is logical and true

as to your post,

1. To own, yes it is a priority.

2. Educated in what is the question, there are an awful lot of intelligent people who have no clue about investment and economics, and hence 

a) why they use dodgy "professionals" to guide them
b) why they avoid more sophisticated investment vehicles
c) why they think that housing is a positive for the wealth of the country
d) why they welcome Kevin Rudd's poor policy regarding GFC


----------



## Beej (15 May 2009)

I find it amusing when financial market TRADERS complain about spending on housing being economically unproductive!

What economic value does active/short term trading of shares/options/futures add exactly???  What proportion of Australia's productive capacity (ie smart/capable people, businesses etc etc) devote their time and energy towards simply profiting from the allocation of capital, and the short term movements in various asset and commodity prices, rather than actually producing something with some lasting value from their labour?

At least when a house is built, it is something that has lasting value and utility and is directly related to the standard of living available to people who live in our country! The fact that high value is placed on this, plus the underlying land (which at the end of the day IS our country!), is no bad thing. Land ownership is not a right - we are lucky to live in a country where land/home ownership is in fact attainable to the majority of people.

Remember that even if house prices were to fall, they would still be equally as expensive to the majority - as the prices are driven by the underlying perceived value. All that changes is the number of $$$ that the buyers in the market have available to pay for what they want.

Cheers,

Beej


----------



## Soft Dough (15 May 2009)

Beej said:


> I find it amusing when financial market TRADERS complain about spending on housing being economically unproductive!
> 
> What economic value does active/short term trading of shares/options/futures add exactly???




100% agree, there is no productivity in relation to this.

What I am saying is that the money invested in it generates no ROI for the country, not like, say investing in businesses which not only employ people long-term but also increase money inflows into the country.


----------



## kincella (15 May 2009)

I can see soft dough has  no idea what he is talking about....lets start with all the taxes the govt receives from property...land tax, rates for the locals...stamp duty on mortgages...
then all the tradesman earn a living building repairing renovating....then all the businesses earn money selling furniture, white goods, sof furnishings...the list is endless 
then all those tradies and businesses spend money back into the economy...giving people jobs...spreading the money around
oh and you think you are educated....try pulling the other leg...see if that works


----------



## gfresh (15 May 2009)

Beej said:


> What economic value does active/short term trading of shares/options/futures add exactly???  What proportion of Australia's productive capacity (ie smart/capable people, businesses etc etc) devote their time and energy towards simply profiting from the allocation of capital, and the short term movements in various asset and commodity prices, rather than actually producing something with some lasting value from their labour?




Gives the traders extra money, which they can use to buy any number of things, just like builders do...Provides listed companies higher sources of funding at effectively free rates if they need to raise capital  I think share ownership does give encouragement for innovation by providing funding, and ingenuity for companies to try new things, try new products, and go into new markets. In theory anyhow! 

Housing is a basic function, it should not be speculative, or require a large proportion of a weekly spend on it. I thing long-term it actually has a detrimental effect on our economy as people spend too much money on this basic function, and not be encouraged to spend it on other more productive items.

As an example.. say I cleared $1000/wk which was close to an average wage. In today's world, say I require $400 to service an average mortgage or rent. 

Now say in mr fresh's imaginary world of roses, a nice home cost $200/wk in mortgage or rent. Now seeing as I have an extra $200 worth of "spare" money each week, what do I do with it? Sure, I could spend it, which provide some consumer benefit to the economy... but say I had most things I needed, maybe instead, as I had a whole extra $200/wk I would think "ok, I'm bored of what I am doing, maybe I should save or invest that money in something else". Now housing wasn't really a speculative thing in Fresh World, so there was no point using that money to buy an investment property.. 

Eventually, I have a good amount of "spare" money set aside so decide to try something different by starting a new business. That business goes on to create some brand new form of widget which takes the world by storm. Not only does this require materials that are required locally rather than exported (so we can buy widgets bought overseas instead of here!), it creates employment, and eventually brings money into the country by those in say Europe that love my widget. That money flows through to the rest of the economy, which provides further businesses, and encouragement for others to make further magic widgets that the rest of the world loves, and makes Australia a strong productive economy. 

By spending that extra $200 on housing we have a lot of extra houses and shelter that do not provide any further productive capacity.. none of which can be exported either.. so what!


----------



## Beej (15 May 2009)

gfresh said:


> Housing is a basic function, it should not be speculative, or require a large proportion of a weekly spend on it. I thing long-term it actually has a detrimental effect on our economy as people spend too much money on this basic function, and not be encouraged to spend it on other more productive items.
> 
> ......
> 
> By spending that extra $200 on housing we have a lot of extra houses and shelter that do not provide any further productive capacity.. none of which can be exported either.. so what![




Firstly - if you take this argument to it's extreme, who is to set what the "lowest cost" for "basic shelter" should be? Remember there is a point at which the shelter will become more and basic the lower the cost. Conversely the higher the cost the better the shelter could be. If you take this to the extreme, we could be like an old eastern block communist state where all property is state owned and we get "allocated" our concrete box to live in for free, then all our spare money can go into "more productive" things! However, we all now where this path leads us, so therefore we also know it's far better to let the market work this stuff out for itself through land values, house prices and rents. This is the most efficient way available to find the right balance, based on what people actually want, between price and quality of "shelter".

Regardless, I don't see housing per se as a "basic function" or just "shelter". It's an argument that I see bandied about a lot. I think in a very narrow sense, housing/shelter is a basic function yes - but only in that as a society it is in our interests that we ensure everyone has shelter/housing of some sort (ie doesn't have to sleep on the streets) - even if that needs to be provided via the government through welfare/public housing etc.

However, land/home ownership is a whole different matter. The right to shelter, or rather our obligation as a society to ensure everyone has it, does not translate into a right to land/property ownership, nor does it translate into the right to have the best located, highest quality home for some arbitrary minimal cost - whether buying or privately renting!

Property is an asset class that is at the very heart of our personal living standards, lifestyle etc. The location where you live, and the quality, size, amenity etc of the home you live in are major inputs to your quality of life and chosen lifestyle. Thus by it's very nature there is going to be an element of speculation in the value of such an asset - especially as there is also the potential for cash returns through a purely market set rental income. 

Part of that speculation is how much you might choose to spend on acquiring, maintaining, improving a property that you own, or invest in. The more money that moves towards property as an asset class, the better it will get, thus improving the standard of living available to us.

I don't know how well I am getting this argument across - but essentially what I am trying to say is the "market" has primarily determined the level of capital that is flowing through the property market right now (both prices and rental costs), based on what people want in terms of lifestyle and living standards and what they are prepared to pay for what is available. Anyone who thinks the amount of capital allocated is too high, or that it is unproductive, is primarily making a value judgment really, rather than an economic one IMO. 

Say houses were cheaper, and I used my spare money to buy say a second hand Ferrari, or a holiday home, or maybe a chalet in Chamonoix, or even just take a world trip, is that a more or less efficient use of my capital than if I had spent it on a house? Or a house renovation? Sure I might also chose to invest in a business etc, which would be seen as being highly productive, but I could also chose right now just to live in a cheaper area, free up capital and do the same thing. Ultimately I will decide what I spend my money on (as will everyone else re their money!) - and it will be about my lifestyle and investment choices, trade offs, chosen balance etc. Government policy and regulation etc can try and put incentives and penalties in place to encourage me to spent my money one way or another, but ultimately it will (or should be!) still my personal choice! Land/house prices are no different than anything else in this respect.

Cheers,

Beej


----------



## satanoperca (15 May 2009)

Hi Beej,

Interesting perspective, could you give me your thoughts on :

Does high property prices relative to average incomes make for a higher quality of living for all in society?

For another perspective of property have a read through some of the articles on 
http://www.earthsharing.org.au/

I live in my community and shelter in my home. What matters is what is outside my front door than what is necessarily behind it. 

Cheers.


----------



## Trevor_S (15 May 2009)

kincella said:


> what a load of rubbish soft dough.....




It isn't, do some reading... eg

http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13331109



> A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs. He observed that, in Europe, nations with high rates of home-ownership, such as Spain, had much higher unemployment rates than those where more people rented, such as Switzerland. He found this effect was stronger than tax rates or employment law.




We just have the odd situation in Aus where owing a house has become something to aspire to, and renting frowned upon and the tax law has supported home ownership over renting, taking money away from productive enterprise.


I used to be all for ownership when I was younger and naive but the more I read and looked upon what the rest of the World is doing, I realised it's only that way because it's been that way not because it is inherently better.


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## kincella (15 May 2009)

we all have choices...rent or buy...live in a cheaper suburb or expensive , there are plenty of choices in oz for everyone....its all affordable...
more expensive in the inner suburbs, surrounded with everything within your reach...
or go to the outer suburbs....its so much cheaper...
or is it you would like cheaper housing right in the middle of the city, surrounded with everything.....so does everyone else...hence the market dictates the prices...
there were some rally cheap houses up in Euroa a few months ago.....and loads of places like that....but not many jobs...
I believe there are loads of places around the 200k mark, just half hour from the city on the new freeways and tollways..and probably half that amount for a unit...how cheap is that...
your choice to move to another country if its that important to you...
me I just love Melbourne....


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## satanoperca (15 May 2009)

kincella said:


> I believe there are loads of places around the 200k mark, just half hour from the city on the new freeways and tollways..and probably half that amount for a unit...how cheap is that...
> .





Now that seems to be stretching the reality a little to much unless they have increased the speed limits on the freeways to unlimited - just had a look.

Cheers


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## kincella (15 May 2009)

well lets try and prove me wrong...firstly narre warren to toorak 30 mins and 35 klm's out
http://www.nowwhere.com.au/tourismv...comboAtt=none&comboVic=none&GoButton=GetRoute

and an extra 5 mins into st kilda road 43 klms
its 20 mins from toorak to the melbourne airport
heres Melton to St Kilda rd about 40k's

http://www.nowwhere.com.au/tourismv...comboAtt=none&comboVic=none&GoButton=GetRoute
and ringwood 31 k's and 31 minutes


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## kincella (15 May 2009)

now for the houses
Melton
brand new 209,000 what a beauty
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=12504997&s=vic&tm=1242375634

Narre Warren beautiful display home 187,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=11478477&s=vic&tm=1242375965

whoops Ringwood is more expensive...this one comes in under 300,000
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=95763738&s=vic&tm=1242376248


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## robots (15 May 2009)

hello,

good evening

top posts Kincella, the examples you provide is whats going on across a lot of Australia, you sum up the situation well

you also get a multiplication factor with renovation etc as new owners take over and polish the joint

soft dough, no big deal for me man, you have an opinion, so do I and plenty of others like Keen, Rory, Shadow, Beej, WayneL etc etc

thankyou
associate professor robots


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## lusk (15 May 2009)

kincella said:


> well lets try and prove me wrong...firstly narre warren to toorak 30 mins and 35 klm's out
> 
> 
> and an extra 5 mins into st kilda road 43 klms
> ...







kincella said:


> now for the houses
> Melton
> brand new 209,000 what a beauty
> 
> ...




Is that 30mins by plane?: For someone that is supposed to be from Melbourne you obviously have not driven during peak hour from any of these places.


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## kincella (15 May 2009)

well I do claim to be from Melbourne....Toorak actually, and no I dont drive to any of those places....
but hey,,,does everyone only travel during peak hour....give me a break
oh a client travelled the Narre Warren route to service his Melbourne clients..he used to say 30 mins drive..either way
I have used that route planner in peak hour to and from the airport....its never much more than the 20 minutes...as per the guide
now we are quibbling about the time ....
I was talking about how cheap house prices are lets see around 200k at 5% 10,000pa interest...about 200 pw...
anyway we can argue until the cows come home


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## satanoperca (15 May 2009)

lusk said:


> Is that 30mins by plane?: For someone that is supposed to be from Melbourne you obviously have not driven during peak hour from any of these places.




No we don't drive cars in Toorak, we have private jets to get around.

Does high property prices relative to average incomes make for a higher quality of living for all in society?

Cheers


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## Bill M (15 May 2009)

kincella said:


> now for the houses
> Melton
> brand new 209,000 what a beauty
> http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=12504997&s=vic&tm=1242375634
> ...




This is incredible value kincella, too bad I'm up here in "Steak and Kidney" paying double for that. Some people never learn.......... can buy your own place for $200 p/w.......... darn good value.


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## Beej (15 May 2009)

satanoperca said:


> Hi Beej,
> 
> Interesting perspective, could you give me your thoughts on :
> 
> Does high property prices relative to average incomes make for a higher quality of living for all in society?




Actually I think it does. But to be clear, what you state is not necessarily the goal either. The goal is to simply ensure that all in society have shelter. It should be up the each individual/family to work to improve their quality of living from that baseline - there are no fundamental "rights" in this regards - just look at countries like Indonesia, most in Africa etc to get my point in this regard.

Having said that, I have two more points in response to your question:

1) Yes, in fact higher house prices do improve baseline standard of shelter for all. As the standard of the typical/average house improves, so does that of the basic ones. Eg public housing tenants today would still demand/expect a standard of housing far higher than what they would have got in the past - as the bar has been raised significantly over the past few decades. Properties that today might be sold as a "renovate or detonate" special in era's gone by might have been typical/perfectly acceptable as places to live in as they are/were. Also consider why in AU we don't live in thatch huts or shanty towns like in much of Africa? I bet houses are cheap over there?

2) As any society becomes wealthier, it is inevitable that those at the top of the food chain will always attain more, live better and better etc than those at the bottom. Unless you have communism/extreme socialism, this will always be the case. So focusing on something like average income to median property price ratio's is always going to misleading IMO, as over time this stat is likely to rise. As Kincella points out re Melbourne, plus there is actually heaps of affordable housing even in Sydney where you can buy a house 45min-1hr from the city for < $250k - 3 beds, big back yard etc. That's only 4 x a single average wage or < 3 x average household income. Of course, as the houses get better, locations improve, move closer to CBD, beaches and other amenities, the prices go up. The market is very broad and there IS something there for everyone, and that's without even looking at what you can get units for, the market for which broadens the choice in the bottom/entry level end of the market even further.

So at the end of the day it's all about compromise and personal financial/lifestyle trade-offs and choices; (buy cheap or rent in a better location?), where you sit relative to the rest of the pack financially, and other factors which should be focussed on such as building more affordable housing if that's what people really want.



> For another perspective of property have a read through some of the articles on
> http://www.earthsharing.org.au/
> 
> I live in my community and shelter in my home. What matters is what is outside my front door than what is necessarily behind it.
> ...




Well I live in my community as well - but I spend most of my time when not at work in my own house. But maybe you don't have a family yet? I don't know - but to me a man's home is his castle, especially if you have a family!

PS: I'm no hippy either man! But "peace" to you! 

Cheers,

Beej


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## satanoperca (15 May 2009)

lusk said:


> But maybe you don't have a family yet? I don't know - but to me a man's home is his castle, especially if you have a family!




Yes, I have a great little ball of fun, a 3yr old boy. His quality of life does not amount to the value of the home that he lives in but about the amenities of the community he resides within and the time his parents get to spend with him. High RE prices have not helped his daycare carers being able to reside and hence work in the area he goes to daycare. Higher RE prices in the area have sanitized the area over ten years, removing economic diversity in residents which makes a community sound. High RE prices mean less time nurturing him while working to pay off a mortgage.

I find it hard to compare asset classes, eg residential RE and shares. We need shelter, how as an asset class it can serve the greater community efficiently and effective to create a high standard of living is difficult to derive a single and correct answer.

Property will always go up over a period of time for all the facts that you, Beej have pointed out over many post, how much it goes up, how quickly, why and to what benefit it serves greater society is up for debate.

Good evening.


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## MACCA350 (16 May 2009)

Bill M said:


> can buy your own place for $200 p/w.......... darn good value.



I think that's pushing it a tad. 
Working on a $200k loan with Westpac's Variable rate of 5.81% you'll be paying $270pw for 30 years to own it..........what's the chances you'll have these once in a lifetime loan rates for the 30 years......

If you look at the historical interest rates below, the average over the last 30 years looks to be around 10-11%..........if you work it on 10% over 30 years the repayments are $380pw

Link



So if someone is only counting on paying $200pw for the life of the loan, I'd say steer clear because they're almost guaranteed to be repossessed before the end of the loan term  

cheers


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## kincella (16 May 2009)

Macca...no one I know took 30 years to pay off a home loan....you start off small easy repayments, lock it in for as long as you can...concentrate on your career and job, within a couple of years you earn more and pay off the loan faster...then within no time...the loan repayments mean very little compared to your earnings...

some have a losing mentality and nothing will save them...

most are not like that...

I have a friend, she inherited the investment property, she has had the same tenant in for 20-30 years, when that tenant leaves..(probably at death) she will sell the house.....
why ??? she cannot be bothered dealing with an agent....hello....all the agent has ever done is posted her a cheque each month....
her mother brought the property in the 60's..cost about $5000...its worth a million today....she left it to the daughter.....
the daughter thought that was hard work ?????
she will put the money into the bank...to earn ??? 2-4%
how stupid some people really are....
oh and the friend inherited the million dollar family home from the spouse, cashed that one in, put the money in the bank, inherited the Toorak home of her mother and the house in Sth Yarra....she 
has never actually bought a property in her life.... she does not like bricks and mortar as an investment....hello there...she prefers cash....
she was lucky she locked in a term deposit at 8.5% (on my advice)
has about 30 years of retirment left, and only a million dollars in cash,...
things looking really glum for her next year...how to live on 30,000 instead of 85,000.when the term deposit expires...
she might be looking for a wealthy man to look after her.....


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## kincella (17 May 2009)

Auction clearance rates above 80%
Its the interest rates kicking in, and probably people have become immune to the bad news....they have been waiting for the opportunity and here it is..
extract follows.......

The news came as Melbourne's auction clearance rate surged this week to its highest level since the end of the 2007 property boom.

The Real Estate Institute of Victoria said that 82 per cent of the 434 properties up for auction sold, an increase of six percentage points in just one week.

It's the first time since December 2007 that the clearance rate has risen above 80 per cent on a non-holiday weekend, when stocks are unusually low. At the same time last year, just 64 per cent of properties sold.

http://www.theage.com.au/national/house-sales-surge-on-back-of-grants-20090516-b6sw.html


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## kincella (17 May 2009)

Oh no, this cannot be happening...or can it ?
sounds more like the news in 2004.....rather than 2009.......
I have to wonder how many more stories like this are out there...but not reported.....is it an exception rathere than the rule......we have had endless bad news about property...from the media....no wonder those on the ground have a different perspective.....

extract..................
*Beer-budget 'burbs reaping champagne proeprty gains*.....heheheh note the spelling error

Artist Ian McFarland said he sold his two-bedroom cottage in Ethelton, about 5km from Ottoway, for $361,000 recently to a first-home buyer. He received $121,000 more than he paid 2 1/2 years ago. 

"We could have made another $10,000 if we sat on the property for three to four months," McFarland said. "With two dogs and a baby, two inspections were enough. We got three offers on the second open inspection and we took the best one." 

He said he spent $4000 renovating the property. 

and this ..........

Paul Reynolds recently sold his house in Caboolture, 36km north of Brisbane, to a first-home buyer for $345,000 after he purchased the house in 2002 for $110,000. 

When asked if he thought he would make that sort of money on the property, he said "Gosh no". 

"I never expected it to go up threefold." 

The house originally had three bedrooms, but as part of his $50,000 renovations Mr Reynolds added a bedroom. 

http://www.theaustralian.news.com.au/business/story/0,28124,25490659-25658,00.html


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## robots (17 May 2009)

hello,

morning Kincella, amazing news 80% clearance rate, WOW just cant believe it

what a country

thankyou
robots


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## kincella (17 May 2009)

I know, I know,...but low numbers only mid 400 available....

I am supposed to be catching up on work today....think I had better take the dog over to the 'million paws walk' today,at Albert Park... let her socialise a bit, and support the RSPCA...maybe some brunch at the kiosk, then back home to work...
ps I note the RSPCA  has pet insurance now...must look into that....her eye is still not 100% after the accident with 'Plucka Duck" but it seems to be improving....
cheers


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## aleckara (17 May 2009)

Beej said:


> 1) Yes, in fact higher house prices do improve baseline standard of shelter for all. As the standard of the typical/average house improves, so does that of the basic ones. Eg public housing tenants today would still demand/expect a standard of housing far higher than what they would have got in the past - as the bar has been raised significantly over the past few decades. Properties that today might be sold as a "renovate or detonate" special in era's gone by might have been typical/perfectly acceptable as places to live in as they are/were. Also consider why in AU we don't live in thatch huts or shanty towns like in much of Africa? I bet houses are cheap over there?




I disagree. Houses are only expensive as the amount of credit available to them to purchase them Beej. Nothing to do with the cost of building or the standard of living - rather their is a shortage of lower priced housing in the first home buyer segment. In a shortage the price has nothing to do with the cost, just how much people have to pay to secure a property (and I mean where they are just at the breaking point). So I think your argument is weak here. An article recently compared houses across the world for around $300k from a Sydney prespective and they showed a rundown fibro shack for this price compared to some really nice properties elsewhere (London, France). Nothing to do with quality of the property.

High prices for anything isn't a good thing. Do you want more money but what you can buy with it to be worth less to compensate, or do you want your money to buy you more? If it was food everyone would be screaming. And to new entrants in the market property is a basic human need that hasn't been secured and just keeps rising.

Peoples weath does not increase when their house price goes up - they still have the same assets. The value of money is going down instead. The only reason why this is profitable is because debt's value erodes with inflation, not the house is accumulating value. Money's value is only measured against the assets it backs. But wages haven't been rising to compensate for housing. So in other words if this rate of growth keeps up my children will never own a home - they may be paid the same amount of money but their money will be worth nothing.

The only difference between you Beej and some others is you secured a property earlier when money was worth more and your wage in terms of housing was worth more - and you are hedged against this erosion in value.

Like the first post on this thread says Australia will become a nation of have and have-nots in housing and this effect will grow to include hard working people over time. You think this is a good thing? Now I totally understand where you are coming from.


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## satanoperca (17 May 2009)

Kincella,

You seemed to have missed the first part of that Age report.

"FIRST home buyers are continuing to pile into the housing market in the race to take advantage of the Federal Government's first home owners grant boost, despite clouds of gloom hanging over the economy and rising prices in Melbourne's most affordable suburbs."

Sounds like even the reporter is shocked, keep building the bubble, bring forward that demand, we are different to US, we can build a bigger bubble.

and

"Figures from the Bureau of Statistics show that first home buyers made up 27.3 per cent of home loans for owner occupiers in March ”” a record proportion"

Nothing to be concerned about, rising unemployment, an inept government placing all Australians in debt and record low IR's.

and 

"The figures, from Residex, show that 57 per cent of suburbs with average house values below $350,000 experienced a price increase of more than $7000." 

Government sponsored assistance to an asset class that only ever goes up in price. Taxpayers dollars well spent when facing a increasing world wide economic contraction.

aleckara, precisely. High RE prices does not provide for a productive or happy society.

If Oz is so different to the rest of the developed nationa, why is our government going into so much debt, I believed all those who said it is different here but is seems that it is not.


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## kincella (17 May 2009)

satan...no I did not miss any part of the report....and finance for owner occupiers...is wait for it....63% for non first home buyers...27% for fhb's...
I think astute fhb's are really smart....lowest interest rates in almost 50 years...
so the fhb's who did not rush in  from 04 to 08, when the prices and rates were higher, but waited until it all cooled down....

how many of you out there were fhb's once....did you think you were really silly, stupid at the time...
and if I rightly recall...some of you who pounce on any good news, are actually in the market to buy a second home yourselves....


----------



## robots (17 May 2009)

satanoperca said:


> Kincella,
> 
> You seemed to have missed the first part of that Age report.
> 
> ...




hello,

yeap we sure are different Satan, 

we dont sell 9mm, grenade launcher's, ak's, taser at bunnings

we dont have crack on the street man, its just up up and up for the greatest country on the planet

and with the changes coming up in superannuation the greatest tax free haven (and just for putting a roof over your head) is going to continue to roll on, wow, i cant believe it

thankyou
associate professor robots


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## MACCA350 (17 May 2009)

aleckara said:


> The only difference between you Beej and some others is you secured a property earlier when money was worth more and your wage in terms of housing was worth more - and you are hedged against this erosion in value



Just comparing what my father baught 17 years ago to my auntie who baught in 2007:

Father: $115k for a new 4bdr house and land package on a decent sized block, his teaching wage at the time was $30k........just under 4x wage

Auntie: $470 for a new 4bdr house and land package on a decent sized block, her teaching wage was $60k........that's just under 8x wage

Extrapolate that out based on wage and affordability ratio and my kids(in 15 years or so) will be paying $1.9M with a wage of $120k..........just under 16x wage That just does not seem sustainable, something has to give.

cheers


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## robots (17 May 2009)

hello,

your auntie should of picked up one similar to the examples Kincella through up the other day, even less $ in 2007

and would of been most likely 3x income (not sure why this income ratio is such an issue)

oh well auntie has made a decision to load up so can wear it if something happens 

thankyou
robots


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## Knobby22 (17 May 2009)

MACCA350 said:


> Just comparing what my father baught 17 years ago to my auntie who baught in 2007:
> 
> Father: $115k for a new 4bdr house and land package on a decent sized block, his teaching wage at the time was $30k........just under 4x wage
> 
> ...




It may be that they will have to live in an apartment, like what happens in many countries and houses will be reserved for the very wealthy.


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## MACCA350 (17 May 2009)

robots said:


> hello,
> 
> your auntie should of picked up one similar to the examples Kincella through up the other day, even less $ in 2007
> 
> ...



You make me laugh sometimes, how isn't income ratio an issue......I mean how do we pay for a house......with our income

Both houses were "average houses" for the times..........not sure if you've looked at those 200k packages but they are not what I'd call the "average house by today's standards. 

I haven't checked what the median price was back in 1992 but in 2007 it peaked at just over $470k, which put's my aunties house smack bang on the median.

cheers


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## satanoperca (17 May 2009)

Green shoots everywhere Robots, pity we are running out of water to nourish them - credit without government intervention anywhere in the world is becoming scarce.

Don't worry, the government is not, debt is to the solution to all problems. Paying for the debt is someone elses problem - Liberals will have a plan to get us out of a huge deficit Labor hopes.

Robots, where do I buy one of those Associate Professor titles. Seems once you have one, you to can waffle on about any subject without evidence to support arguments. Everyone in the Labor party must have bought one, growth will return to above historic levels by 2011. Of course it will if we fuel growth with every growing debt.

Cheers


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## aleckara (17 May 2009)

satanoperca said:


> Green shoots everywhere Robots, pity we are running out of water to nourish them - credit without government intervention anywhere in the world is becoming scarce.
> 
> Don't worry, the government is not, debt is to the solution to all problems. Paying for the debt is someone elses problem - Liberals will have a plan to get us out of a huge deficit Labor hopes.
> 
> ...




That's the thing - debt can rise forever theoritically (has no upper bound) because debt does have a way of diluting itself until it is called in because well debt is money and so is inflationary. Inflation diminishes the real value of nominal debt. Debt is only non-inflationary when the extra money is used to improve productivity or for business investment so that the increased credit is matched by increased supply. Debt is assumed to be paid back as well so the inflation is temporary. Kind of like a company that issues a lot of bonds - the value of each bond diminishes as it becomes riskier.

When debt is used appropriately it should increase the standard of living as the cost is less than the benefit received and a net gain. Machine investment, farming, all are examples. When used inappropriately (speculation) you just have more money, same assets = inflation.

My concern is really intergenerational equality - I'm seeing you need to earn so much more than the average wage to be able to afford a house. Low interest rates only temporarily fix the problem because P (price of house) is a function of the interest rate as well kind of like bonds (with a lag). Interest rates should be taken solely out of the affordability calculations of everyone IMO as price adjusts for I% (assuming housing shortage where price is determined by how much people can max borrow which with FHOB's is normally the case).

The ironic thing lately is everyone is saying it is the best time to buy based on interest rates. Well hate to say it but just on what I think above it is the worst time to buy. It is better to buy at 20%, where everyone is suffering and can't pay off their house, when price falls to the point where neww entrants can borrow at 20% and still afford it. That way you will make money as interest rates fall and the amount that people can pay rises.

So really given price is a function of interest rates, get rid of it because one variable will compensate for the other where affordability ends up the same. Instead look at what people earn to what the Price is - what people earn I assume is less impacting of price as people are forced to save and so the bidding process will find a lower price.

The real solution of course is not to throw more money at the problem - it is to build more houses. In some ways this is the saving grace of keeping the boom alive - if targeted correctly can cause more construction than otherwise.

At least at high interest rates savers can bettter save for a house and do it with disclipine. Right now the average person finds it hard to save at a rate that keeps up with inflation and so is falling further and further behind.


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## kincella (17 May 2009)

macca...there is something fundamentally wrong with the argument...your dad could afford the house, your aunt could not, and I cannot see how a bank would allow a loan on such a low income....must be another partner or someone there...your aunt could only afford a 240k house on her income....
where did all the other money come from to get into such an expensive house ????
anyone looking at a nearly half million dollar house on a wage of only 60,000 is trying to live  way beyond their means.....
it takes at least 2 wages of 60k each x 4 times = 480k house...
its not changing to 4 times, then 8 times then 16 etc....


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## kincella (17 May 2009)

this is such a small community on this forum, discussing the property market

....the rest of the world is out there enjoying themselves, I just wasted 3/4 trying to get parking in St Kilda, then Chapel st.....I cannot see any difference with the shoppers or the eateries....just all the same as the pre GFC...its choc a block, stuck in traffic going nowhere....
we went to the Million Paws Walk, literally thousands of people with the dogs, kids and families....all out happy and enjoying themselves with their pets, and donating for a good cause...
oh and lots of demolitions and building going on....
Melbourne must be different from the rest of the world.....or
 is it Australia is such a popular place, and everyone likes it here....
Met a greek lady, they have a big group that has been meeting at Albert Park for the last 55 years...alll happy Australians...
Thousands of them running around the TAN, whatever, its busy everywhere you go....I used to go shopping on sunday as it was quiter, parking easier...not any more...
I see absolutley no evidence of any doom and gloom that some of you on here are predicting...or hoping for...


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## satanoperca (17 May 2009)

Yes, the bank will lend that sort of money on that income, which is not low but the average. The banks were offering loans that were x6-7 our joint incomes which is ridiculous.

So you are saying that a mortgage should be no more than x4 household income and that you require two incomes to support the median house price on the average salaries. 

Yes, Kincella times have changed, 30 years ago the ratio was approx x4 salary based on a single income, today it is based on the requirement of two incomes. In the future if things continue as they have in the past you will need three incomes and then four and so on, so Macca arguement is somewhat correct.

This multiplying effect is interesting as it works both ways. 

30 years ago, 100 households, 100 employed, unemployment rises to %10, 10 unemployed, potential 10 household unable to meet mortgages.
today, 100 households, 200 employed, unemployment rises to %10, 20 unemployed, potential 20 households unable to meet mortgages.

I do not know to many young families were they can support a mortgage, rearing children and a mortgage. The fact that you require two incomes to pay a mortgage does no good for the well being of the children, they do benefit from having a parent home in the early years of their development.


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## kincella (17 May 2009)

its called nesting...when they are ready to have children they usually want a place to call their own.....the do not have to buy 500k house and place themselves in a high debt environment...
I told the story in the past here somewhere...young lady at a clients, with 30-40 friends, all renting and living in inner Melb...she was ready to start a family...she had a good job and likely to continue, spouse was in and out of work...asked for my advice....wanted to stay close to her friends....I suggested they all move out together, all in similar situations, I said it was  false sense of living, living beyond their means in affluent suburbs, spending all their money on rent and lattes
I said buy what you can afford out in the suburbs...do not count on spouse contributing...
so they did, about 200k near Ringwood, and over the past 4 years most of her friends have joined them...had her first baby, and her husband is the house husband, taking care of the little one, she is about to have her 2nd child.....gee he has it easy, fluttering around with all the mothers at playgroup , shopping etc, playing with the children...
I believe he can get a job, and help with the financials, she works all day, so he could work nights or weekends....
anyway, they are otherwise a sensible lot, and her house has almost doubled in value since they bought it...that does not mean too much to her, since that is their home and nest, but she is quite happy and confident she did the right thing at the time...
now they party at each others houses, instead of eating out and time at the bars etc...she pays more off the loan...I said there is no point,...it will look after itself, by the time she is ready to move to the next home and upgrade, she will be fine....
there are plenty of people out there, who are sensible people ,who do the right thing and not stupid about their financials.... she will always find a way of being employed and keeping it together...not so the spouse


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## kincella (17 May 2009)

I may seem to be out on a limb here with some on this forum....I love debt, and at these oh so low rates, I cannot wait to get my hands on some more, buy a house = good debt, a car = bad debt (and claim back 30% the first year as a tax deduction...used for business) in fact I will buy a couple of props, if only  I can  find those low priced ones again...grrrrrr for not taking the opportunity.....

Debt is a terrific tool if leveraged correctly for business or investment ...increases ones equity and income over time....and yes , negative gearing is still available, whether its for property or shares or a business......
a hiccup here for non commercial losses if earning over 250k...talking about hobby farms and the like....more information required on this topic...plus legislation

Dont think  what I am saying , and get it mixed up with all the rubbish thats been going on with the listed prop trusts, and corporate shennanigans.....look at GPT, with  prized shopping centres everywhere, then the scoundrels came in and hocked it to the hilt.
I have gearing at below 40%, it was not always that way.....


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## robots (17 May 2009)

hello,

great posts Kincella

went down to sth melbourne Kincella and the joint is busy as like everywhere man

i done a quick thesis when I was there on high property prices and the results indicate the community spirit is alive and well, oh well

satan, you get the associate professorship from 7-eleven, next to the 2-pak No-Doz at the counter, $4.99 now

thankyou
robots


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## MACCA350 (17 May 2009)

kincella said:


> macca...there is something fundamentally wrong with the argument...your dad could afford the house, your aunt could not, and I cannot see how a bank would allow a loan on such a low income....must be another partner or someone there...your aunt could only afford a 240k house on her income....
> where did all the other money come from to get into such an expensive house ????
> anyone looking at a nearly half million dollar house on a wage of only 60,000 is trying to live  way beyond their means.....
> it takes at least 2 wages of 60k each x 4 times = 480k house...
> its not changing to 4 times, then 8 times then 16 etc....



Honestly I've never asked her how she baught the house, but at the time she was divorced so she may have had some cash behind her.

My point is that my father had an average income and baught an average house at the time..........15 years later my auntie had an average income and baught an average house........yet the proportion of average income to average house has exploded..........what will happen in another 15 years, how can things be sustained if they continue at that rate

Your last paragraph has made my point. 15 years ago my parents could afford the average house on a single average income, yet you mention that is not possible with today's prices. If things continue, there will be no First Home Buyers in future generations and the only way to own property would be to inherit(or win the lottery)

Personally it makes me sick that the government could encourage house prices to continue to such unaffordable levels. 
The whole point of housing is to house people, what does it say about our society when the average person cannot own their own home(you remember "The Australian Dream"). 

Housing is turning into nothing more than an investment portfolio for the rich and bugger the average Aussie!

cheers


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## kincella (17 May 2009)

Macca...see the lists attached median FHP 1992 was 117200, but the established house price was 170k,
the graph only goes to 2006 where the FHP is 350k and established is 425k
your aunt had a choice, and was into her 2nd home, and bought at the top of the market....it was her choice
at the same time there were far cheaper  homes available to her, there always is....not all houses are the same or equal value....anyone can pick and choose....
sorry, but I keep hearing posters saying how overpriced property is..... its horses for courses....absolutely plenty of cheaper houses out there....just because there is a median value ...does not mean you have to spend that amount...and you know how the median figure is triggered....all those multi million dollar props were popular at the time......

I picked 3 examples last Sat about 30 mins drive to Melb city, 2 were around 200k the other 300k.....if your father were buying today...he would be happy with 200k house
http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf
 heres another chart showing our market peaked in 03/04 went flat 05/06 and hit the highs again 07/08....
http://www.globalpropertyguide.com/real-estate-house-prices/A


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## Go Nuke (18 May 2009)

Beej said:


> Firstly - if you take this argument to it's extreme, who is to set what the "lowest cost" for "basic shelter" should be? Remember there is a point at which the shelter will become more and basic the lower the cost. Conversely the higher the cost the better the shelter could be. If you take this to the extreme, we could be like an old eastern block communist state where all property is state owned and we get "allocated" our concrete box to live in for free, then all our spare money can go into "more productive" things! However, we all now where this path leads us, so therefore we also know it's far better to let the market work this stuff out for itself through land values, house prices and rents. This is the most efficient way available to find the right balance, based on what people actually want, between price and quality of "shelter".
> 
> Regardless, I don't see housing per se as a "basic function" or just "shelter". It's an argument that I see bandied about a lot. I think in a very narrow sense, housing/shelter is a basic function yes - but only in that as a society it is in our interests that we ensure everyone has shelter/housing of some sort (ie doesn't have to sleep on the streets) - even if that needs to be provided via the government through welfare/public housing etc.
> 
> ...





Your right Beej,
I choose NOT to buy a cheap house in a bad area of Brisbane where it has high crime and drug problems. Therefore I choose to keep chasing the dream by saving so that hopefully I can afford to buy in an area that is more to my liking for raising a family in.

I will also choose not to live more than 25kms from the CBD and sit in traffic hour after hour, day after day before and after work as public transport is too inadaquate to get me to my workplace by 6am.

IMO housing is overinflated or at least getting out of hand relative to the average income.
Wouldn't it be great if we could all speak with one voice and just say NO...I wont pay ???K for that property

I think prices are "high" relative to each persons personal income. For example 500K would be very expensive....relative to my income. so in theory as the ratio of income/housing debt becomes higher...wouldn't that mean affordablity would generally become lower?

:aus:


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## Go Nuke (18 May 2009)

MACCA350 said:


> Honestly I've never asked her how she baught the house, but at the time she was divorced so she may have had some cash behind her.
> 
> My point is that my father had an average income and baught an average house at the time..........15 years later my auntie had an average income and baught an average house........yet the proportion of average income to average house has exploded..........what will happen in another 15 years, how can things be sustained if they continue at that rate
> 
> ...




+1 to that MACCA350
You get my vote!


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## Go Nuke (18 May 2009)

kincella said:


> macca...there is something fundamentally wrong with the argument...your dad could afford the house, your aunt could not, and I cannot see how a bank would allow a loan on such a low income....must be another partner or someone there...your aunt could only afford a 240k house on her income....
> where did all the other money come from to get into such an expensive house ????
> anyone looking at a nearly half million dollar house on a wage of only 60,000 is trying to live  way beyond their means.....
> it takes at least 2 wages of 60k each x 4 times = 480k house...
> its not changing to 4 times, then 8 times then 16 etc....




FAIL!

60K is about the so called national average income.
Its also WAY above the medium income which I think is a more realistic figure.

Hmm whats happens if you want kids? Paid materity is at least the minimum income.


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## kincella (18 May 2009)

entry level public service jobs pay from 38,000 for those under 21 to 49500 for over 21's...then level 3 go to starting  at 59500....
believe the private sector pays more....the above are just basic admin jobs
lady I know is an office manager, small office mainly admin...earns 75000
labourers earn 45-50k min...and spouse working low paid jobs about 40k....
surely

Go nuke...you obviously did not check the link I gave yesterday...
full time adult earnings in 2006 were 56700 per person...and disposable income per household was 73200.....
dont know where you get your figures from...but these are the govt numbers...dont you believe them ????


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## kincella (18 May 2009)

just some notes for the sceptics...foreign ownership has been eased...so you have a bit more competition than you realised, and cashed up buyers paying multi millions for the houses...they are not on a low wage, but may give the fhb some competition as well.....
couple of points to note those auctions at the w/e at 80% clearance...you will find they are selling a higher number by private treaty rather than auctions..
and its now easier for foreigners to buy,and thats what they are doing....if you want to know whats really going on check out this site...loads more million dollar homes changing hands...these are buyers advocates...looking for the best lowest prices for the dream home buyers

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

Bayside: Invasion of the property snatchers.
Last December, while the rest of us were breaking up for Christmas, our Assistant Treasurer quietly announced proposed changes to the Foreign Investment Review Board regulations governing the purchase of residential property by foreign nationals. The changes were implemented in March and have greatly relaxed the restrictions and reporting requirements on non-Australian citizens buying a home or land.

For the observant, evidence of these changes has become apparent over the past three months; with a marked increase in the numbers of overseas buyers attending open houses and auctions.

Agents seem to have been caught flat-footed and are largely unaware of the amendments - but are obviously grateful for the increased traffic. No doubt some are even taking credit for attracting this new class of buyers claiming it is the result of their fabulous marketing or incredible web presence. Or charisma.

Whatever.

In reality, it’s the buyers who are a step ahead and are taking advantage of the changes to buy into the weakened top end of the Bayside market; Brighton in particular.

Last week we reported the sale of 49 South Road, Brighton for $4.25 million to a Chinese buyer. It seems this is only the beginning.

This week 15 Kent Avenue, Brighton has finally been sold after languishing on the market for almost 12 months. Originally being touted at over $5.25 million, agent number three has found a buyer at last. It sold before last Saturday’s scheduled auction for the sobering price of $4.225 million to another overseas buyer.

The same vendor has also offloaded a vacant allotment at 4 Miller Street, Brighton for $3.85 million. Originally marketed as the site of two luxury new homes with sweeping bay views, development plans were shelved recently due to lack of interest. This buyer is a local, having just sold a landmark residence at 32 Middle Crescent (see our report of the 30th March), for a price now believed to be much closer to $10 million, and intends to build a new family residence on the site.

Over in East Brighton, the agent has done the almost impossible by finally selling 13 Lysander Street. The newish house was not blessed with universally appealing looks, but was spotted on the internet by another overseas buyer and it was love at first sight. The keys changed hands for $1.85 million.

Last week we reported a passed-in result at 328 St Kilda Street, Brighton with a post auction price of $2 million+. The property has now been sold to another overseas buyer for $2.3 million. It’s 1500sq m and a potential development site, we will keep a keen eye out for a planning application sign to appear on the front fence.

Over the road in The Golden Mile, 4 St Ninians Court has been sold for $3.025 million. It’s 690 sq m (7425 sq ft), a level and vacant site carved from a neighbouring property.

The standout sale for the week is the relatively efficient sale of 19 North Road, Brighton. Designed by Charles Webb, the 1886 property sits on 2440 sq m (26,300 sq ft) and has not been touched in many many years. A local admirer has paid a price believed to be in the vicinity of $6.75 million against a private sale offering price of $7.3 million.

Bayside auctions (with the exception of Bentleigh) took a back seat to the number and scope of private sales negotiated throughout the week.

Following the disgraceful performance at 3 Butler Street, Brighton last Sunday, auctioneers and agents were largely on their best behaviour with most properties selling within an acceptable margin of the quote.


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## satanoperca (18 May 2009)

Kincella,

I think you should have posted that article in the other property thread. Brighton property - blue chip, got smashed last year. I have been informed by friends in the banking industry that there is a glut of high end properties available in Brighton for sales due to foreclosures but the banks are releasing them slowly as not to flood the market. Most of the foreclosures we due to margin loans going into default. I know of two people who got caught out last year who owned in Brighton and had to sell.

I was down in Brighton on the weekend, yes people in all the cafÃ©s, real estate office full of expensive properties for rent, no to many sold stickers on property for sale.

Overseas people have been buying property is Australia for a long time, it is not something new. Two Chinese business partners have asked me a look for properties in Melbourne, their children have relocated here. Both have several million in cash to spend.

My Malaysian business partner has a portfolio of commercial and residential real estate here and will continue to grow it but only ever pays cash. 

If you investigate who has been buying all the apartments in South Melbourne on City Rd you will find the majority are from East Asia - I believe the developers have been granted special permission to sell to overseas people but when they sale they must sell back to Australians.


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## kincella (18 May 2009)

I know foreigners have been here a long time...but they were restricted on what they could buy..restrictions have been eased since Feb 09...dont have time to check now...out for meeting...
the article mentioned the increased buying from overseas...
are you looking or kicking tyres ?


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## satanoperca (18 May 2009)

kincella said:


> are you looking or kicking tyres ?




A bit of both. Brighton was one of the areas I was concentrating on for them as prices had already been knocked about and there is some good buys in the 750K-1.1 range. We be far more active in the later part of this year, early next year.

This cycle still has a long way to go.

I see that the NSW Gov has published some stats for RE.

http://www.housing.nsw.gov.au/About+Us/Reports+Plans+and+Papers/Rent+and+Sales+Reports/Latest+Issue/

No lolipops up there, could it be Melbournes turn next with the vast majority of suburbs in Sydney showing negative growth for YoY, what did you say, negative growth cannot be we are different here.

Just proves that assets all have a maximum inflation rate, before a leak occurs and they slow deflate until reaching equilibrium again.


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## Go Nuke (18 May 2009)

kincella said:


> entry level public service jobs pay from 38,000 for those under 21 to 49500 for over 21's...then level 3 go to starting  at 59500....
> believe the private sector pays more....the above are just basic admin jobs
> lady I know is an office manager, small office mainly admin...earns 75000
> labourers earn 45-50k min...and spouse working low paid jobs about 40k....
> ...




Thank you for your reply kincella.



> entry level public service jobs pay from 38,000 for those under 21 to 49500 for over 21's...then level 3 go to starting  at 59500....
> believe the private sector pays more....the above are just basic admin jobs



Basic admin paying up to 59500?
I don't believe that would be the norm. My partner working in the private industry as a senior admin person and doesn't crack the 50K barrier.Nor any of the other admin people except one.



> labourers earn 45-50k min



Im sorry but where did you come up with that crap?
As a boilermaker my wage is approx $54K and thats for being a qualified tradesperson.
Now when I recieved my super generous pay increase of -1% this year I was told that Im earning more than my supervisor AND that I'm lucky I'm not paying my company money back! lol...a slap in the face I know, but what do you do when there are few other jobs available.

 Therefore I know alot of other tradies and those working in the manufacturing industry who Im sure would also love to dispute the figures you have put forth.



> dont know where you get your figures from...but these are the govt numbers...dont you believe them ??



Quiet simply no I don't believe them. Thats why I said that I prefer the MEDIUM income gives a more accurate picture of the the general population is earning.

I get my figures from every person I know...friends, family etc and I have to say, not that many of them earn over the 56700K you have mentioned.

Now in all fairness though, someone once told me that everyone they know earns more than that.
There are two sides to every story.
I just get fustrated and upset when people don't realise how many people out there dont earn the so called average income.

This is in no way a personal attack on you Kincella, just an attempt to broaden your mind


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## Go Nuke (18 May 2009)

satanoperca said:


> Kincella,
> 
> I think you should have posted that article in the other property thread. Brighton property - blue chip, got smashed last year. I have been informed by friends in the banking industry that there is a glut of high end properties available in Brighton for sales due to foreclosures but the banks are releasing them slowly as not to flood the market. Most of the foreclosures we due to margin loans going into default. I know of two people who got caught out last year who owned in Brighton and had to sell.
> 
> ...




HAHA how funny does that sound....







> I believe the developers have been granted special permission to sell to overseas people but when they sale they must sell back to Australians




No wonder everyone is moving to QLD, they want to live in Australia...not another Asia.
Typical of the government...Housing affordablity is out of reach for some Australians...lets sell it off to foreigners who have loads of cash.


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## satanoperca (18 May 2009)

Go Nuke said:


> Typical of the government...Housing affordablility is out of reach for some Australians...lets sell it off to foreigners who have loads of cash.




Just keeping the bubble growing, that all that matters, how are we to reach 4.5% growth without a housing lead recover?

Affordability - whats that? Something to do with a hippy commune?

Welfare for the developers maybe.


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## robots (18 May 2009)

hello,

keep the posts coming Kincella, you legend man

great informative reading each day 

Go Nuke has OFFICiALLY wiped the credibility of the ABS(Government) so any data from this department cannot be used now, oh well 

any other sites we can get housing data from?

thankyou
associate professor robots


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## kincella (18 May 2009)

I have access to some actual wages information... my clients...maybe they are in a higher income bracket than most.... although the majority are business people....and I see the wages they pay their employees.....

if you really want to test whats available just go to some of the job placement sites to see whats on offer regarding the wages....
yes they show what the wages on offer are....

have no idea about you...but maybe you and friends are under 21, or all working in similar industries that do pay a low wage....

there are some mongrel employers out there....

think  the worst class are the women who do all the sewing at home...they are the lowest paid...
I have family that on average earn $20 ph or thereabouts,,,800 pw or 50,000pa...they think its an OK wage ...and with both working its 100k pa


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## robots (18 May 2009)

robots said:


> hello,
> 
> good evening and hope everyone having a fine day
> 
> ...




hello,

i knew some guy had posted a couple of housing data sites a couple of weeks ago, i have found them for everybody

good informative sites with lots of data by the looks of them

will now have second thoughts about data the government presents

thankyou
associate professor robots


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## Wysiwyg (18 May 2009)

Go Nuke said:


> As a boilermaker my wage is approx $54K and thats for being a qualified tradesperson.
> Now when I recieved my super generous pay increase of -1% this year I was told that Im earning more than my supervisor AND that I'm lucky I'm not paying my company money back! lol...a slap in the face I know, but what do you do when there are few other jobs available.




You could crack the tonne easy if you worked the heavy industry/mining/shutdown/construction jobs. 10 to 12 hour days and 6 or 7 days per week. It aint in Brizzy though.


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## Beej (19 May 2009)

We don't hear much of the news out of the UK here anymore - so for what it's worth, here's a snippet from an article on business spectator today: (http://www.businessspectator.com.au...surge-pd20090519-S6TTJ?OpenDocument&src=sph):



> Finally, in the UK, house prices rose by 2.4 per cent in May, following a 1.7 per cent increase in April to show the biggest monthly increase since 2003. It’s no wonder that a Reuters poll has found that more than half of euro zone money market dealers think that the worst of the liquidity crisis is past.




Surprise surprise! House prices actually rising in the UK now? In the middle of a deep recession? After the worse credit crunch/liquidity/banking crisis seen in the UK since the 30s?

What does this tell us? As stated before I don't think the AU and UK/US housing markets are really directly linked in any significant way. However I think the emerging recovery trend in the UK does tell us that even in such a bad situation as they had over there, which was much worse than here in terms of the banks situation and their freeze on new lending and inability to pass on interest rate cuts etc to consumers, the housing market will only fall so far before picking up again.

According to RP-data, APM, auction clearance rates and anecdotal evidence, (almost all sources except for ABS)  prices in AU (led by Sydney/Melbourne and lagged by Brisbane/Perth) have started recovering after mild falls last year. I really find it hard to see what will trigger any further significant falls in AU (Sydney and Melbourne in particular). Remember unemployment etc is rising in the UK faster than here and is higher than here! Real lending rates are still higher there as well, and they had a systemic banking crisis, and yet prices there are now rising again? That picture doesn't really fit well at all with most of the bearish arguments made here and elsewhere re the likely direction of the market here in AU over the next 12 months.


Cheers,

Beej


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## kincella (19 May 2009)

Beej, and this from the US....and nuke take note of the average pay over there...
US builders are growing increasingly confident about the new-home market, a sentiment index showed.

The National Association of Home Builders' latest Housing Market Index rose to 16 in May, from 14 in April and nine in March. 

With the second straight increase in the index and other positive indicators issued recently, builders hold hope the worst might be near in the crisis. 

"There are a number of signs that indicate we could be turning a corner," said Jerry Howard, president of the builders' group. 

But builders and analysts agreed pitfalls litter the road to recovery. 

"Lower home prices, lower interest rates, and tax incentives have helped move some buyers off the sidelines to the closing tables," said Mike Larson, an analyst at Weiss Research. 

"But the recovery process will likely take some time, given the still-large inventory overhang, mostly in the 'used' home business." 

A separate, quarterly NAHB report -- the Housing Opportunity Index, or HOI -- showed nationwide housing affordability jumped January-March to its highest on record. 

The HOI showed 72.5 per cent of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $US64,000 ($83,510), up from 62.4 per cent during the previous quarter. *The 72.5 per cent marked the highest level since records began 18 years ago, the NAHB said. *
*and further rate cuts likely*
Reserve Bank governor Glenn Stevens also left the door open for further cuts in interest rates, saying changes in monetary policy still played a role in confidence. 

http://www.theaustralian.news.com.au/business/story/0,28124,25505483-5018001,00.html

http://www.theaustralian.news.com.au/business/story/0,28124,25505000-25658,00.html


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## kincella (19 May 2009)

ok...about wages, plumber here now, urgent job, waited 8 days...3.5 years of apprentice completed...earns 45 k....will go out on his own when 4 years up...about 6 months...will earn about 80k

hes not 21, said the supervisor earns about 80k


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## satanoperca (19 May 2009)

> Surprise surprise! House prices actually rising in the UK now? In the middle of a deep recession? After the worse credit crunch/liquidity/banking crisis seen in the UK since the 30s?




Hi Beej, do you know the reference to these figures purported by the Business Spec and it is interesting that they say May prices have increased when the month has not even finished.

Quick bit of research and I find this, April UK house prices down -0.4% but they did show a rise in March, but given the current economic environment it was a short lived rally of one month. YoY -15%. They thought they were different as well.

Ever seen a dead cat bounce?

http://www.nationwide.co.uk/hpi/historical/Apr_2009.pdf

Cheers


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## Soft Dough (19 May 2009)

kincella said:


> ok...about wages, plumber here now, urgent job, waited 8 days...3.5 years of apprentice completed...earns 45 k....will go out on his own when 4 years up...about 6 months...will earn about 80k
> 
> hes not 21, said the supervisor earns about 80k




Not very bright then is he.

Why own a business with risk, when you can be a supervisor and earn the same money.

I think you have been given a bogus amount what he can earn, I have a suspicion that a subcontractor would earn well in excess of $80k per year thanks to Kevin Rudd.


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## Go Nuke (19 May 2009)

Hi all.

Thank you Kincella for doing all that research and posting some useful information.

I was honestly amazed at this bit 







> The HOI showed 72.5 per cent of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $US64,000 ($83,510), up from 62.4 per cent during the previous quarter



 Though I'm assuming that the combined income as it says "families".

Wysiwyg....







> You could crack the tonne easy if you worked the heavy industry/mining/shutdown/construction jobs. 10 to 12 hour days and 6 or 7 days per week. It aint in Brizzy though.



Correct! 

Kincella....







> have no idea about you...but maybe you and friends are under 21, or all working in similar industries that do pay a low wage....



Actually Im 31 this year as are my friends and my partner is 35 this yr. Their occupations range from trades,admin,government jobs etc. I guess I have 1 or 2 mates are are in the IT industry and are on good money 70K+ I think.

As I say, there are also alot of people out there that don't earn the "average" wage.

Robots...







> credibility of the ABS(Government)



 lmao. 
Thats a joke in itself:bananasmi


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## kincella (19 May 2009)

attitude says it all...why be supervisor at 80k when you can be your own boss for the same amount....well I choose being my own boss, and a bit smarter than the supervisor, and the opportunity to earn a whole lot more than 80k...easy
this kid is only 19....to him 80k sounds like heaps of money...and like he said you get to pick and choose the good jobs...lots of benefits of being self employed....and thats the way he intends to go....
a good worker,,, and the magic...he cleaned up after himself....
he wants to buy a house once he is out there for a couple of years on his own...
I bet he goes places in a big way


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## Go Nuke (19 May 2009)

> I have family that on average earn $20 ph or thereabouts,,,800 pw or 50,000pa...they think its an OK wage ...and with both working its 100k pa




Your maths is a little out Im sorry to say.

$20 x 40hrs/week x 52 weeks a year is only $41.6K.
Thats a big difference to $50K/yr.

That example in itself highlights that not everyone earns the "average" income.

Anyway..back to housing, we'll just keep saving
Hard work will get us there


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## michael_t_f (19 May 2009)

I agree soft dough I'm a sparky and would rather supervise than run my own business for 80k. For it to be worth considering you would have to earn at least 150k and would need regular contracts to keep you going in slow periods.


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## robots (19 May 2009)

Go Nuke said:


> Your maths is a little out Im sorry to say.
> 
> $20 x 40hrs/week x 52 weeks a year is only $41.6K.
> Thats a big difference to $50K/yr.
> ...




hello,

thats the way to go man, put the direct debits or weekly savings in place and presto the $ are piling up large

as 1yr, 2yrs, 5yrs disappear quick as you will be laughing and be able to get yourself a place

have a family, play driveway cricket, do a few bomb's in the swimming pool

and take whatever comes along brother

thankyou
associate professor robots


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## robots (19 May 2009)

hello,

great article here:

http://onthehouse.yahoo.com.au/index.htm?Action=news_article&ArticleId=15

they all apply for the buyer as well

thankyou
associate professor robots


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## MACCA350 (19 May 2009)

Go Nuke said:


> Your maths is a little out Im sorry to say.
> 
> $20 x 40hrs/week x 52 weeks a year is only $41.6K.
> Thats a big difference to $50K/yr.
> ...



And for the normal 38 hour week:
$20 x 38hrs/week x 52 weeks a year is only $39.5K.
That's an even bigger difference to $50K/yr.

cheers


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## satanoperca (19 May 2009)

A good article Robots but I did like


> “If prices remain the same for eight years, after inflation and economic growth you would see that the real decline in price is 40 per cent,” says Rismark International economist Dr Matthew Hardman.




40% decline, I have heard that somewhere before. Japan maybe, no someone called S.Keen a professor much like yourself Robots. 

Cheers


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## robots (19 May 2009)

hello,

just putting up articles for discussion, 

personally i dont believe in inflation and it is the last hope for many, like  fantasy island

"real" "real terms" "real decline"

inflation is a non event, its a given like the sun coming up in the morning

"if"

thankyou
associate professor robots


----------



## Beej (20 May 2009)

Well, interesting analysis from the RBA pretty much blows many of the income multiple house price arguments bandied around out of the water:

From: http://www.smh.com.au/national/home...better-than-five-years-ago-20090519-bear.html



> A TYPICAL home is worth a little over four times the average household's annual after-tax income, down from almost six times five years ago, Reserve Bank figures show.
> 
> Strong growth in incomes and a period of more sluggish median house price growth are working in the interests of would-be home buyers. "This is a dramatically better picture on Australia's housing affordability," the chief economist at UBS, Scott Haslem, said.




By using household income as the measure (rather than a single average full time wage as many with bearish views attempt to do), you get a much more accurate picture of house prices and affordability, and that's without accounting for prevailing interest rates, which of course vary.

The article also goes on to state that in the 80s the household income to house price ratio was about 3x, however, I would expect that to be the case because a) the 80s (up until the 88 boom) were a period of little house price growth, and b) was a period of very high interest rates and inflation; a very different economic situation than we see today. It also points out that *some* countries still have a lower ratio using this measure than AU, but again I say that's expected due to our higher levels of urbanisation, different taxation regimes, supply constraints in urban area's and the fact we haven;t suffered a systemic banking crisis as some of those countries just have.

Anyway, the views and data presented by the RBA there pretty much sum up my views on how the housing market in AU operates, and how periods of very high price growth are "deflated" slowly in real terms rather than precipitously  via inflation based and real wages growth, increased building/supply of affordable housing plus inevitable government subsidy (which is nothing new here and been going on since the 60s at least). I think the early 2000s "bubble" has pretty much deflated by now already, as shown by these figures, and with monetary policy settings at the current levels the market is setting itself up slowly for the next boom, which will really get going 2-3 years out the back of the current economic downturn. There will be no great crash in prices from here. 

I'm not investing any more in property just yet though, as I think for an IP there is still time to wait, with there likely to be more cash-flow positive opportunities arising as rents continue to slowly rise in some area's over the next 2 years. IMO Currently equities are looking to be more attractive over-all for the next 1-2 years for potential growth. If I was looking to buy a PPOR though it would be a different story, as there is the need to account for all the rent payed in the meantime as well, plus the lifestyle/life-stage/security trade-offs etc, and what becomes available in the desired/target area in question. Interesting times! 

Cheers,

Beej


----------



## kincella (20 May 2009)

another little gem from  today....
extract................
 Treasury's growth forecasts drew support yesterday from Reserve Bank governor Glenn Stevens. He told a business breakfast in Sydney that Treasury's forecasts were almost identical to the bank's for the next two years, while beyond that, there had always been a period of above-average growth following previous recessions. 
"I don't think it is crazily optimistic to expect that will occur at some stage," he said, adding that it was hard to be precise about the timing. 

The Reserve Bank is increasingly confident that China's economy is recovering, with the March quarter displaying the strongest growth for nine months, although Mr Stevens said it was too early to tell how durable its recovery would be. 

Mr Stevens said there was a chance Australia would stage a much speedier recovery than anyone was expecting
http://www.theaustralian.news.com.au/story/0,25197,25509893-601,00.html

ps...I am a bit embarrassed about the wrong figures yesterday, I usually proof read my posts...but not that one...thanks to all who pounced on it

obviously a bit stressed yesterday...waiting for an electician and a plumber to fix things in the kitchen....and trying to finalise a job to meet a deadline..
the error stood out like a 'sore thumb'.... I was trying to point out, just how easy it is to earn $50,000 pa on a low hourly rate....and in most jobs there is opportunity for overtime etc.....and one does not need to be a professor to earn what is described as the median wage...or an average wage
it should have read 25 ph x 40 = 1000 pw or 50,000 pa


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## dhukka (20 May 2009)

kincella said:


> another little gem from  today....
> extract................
> Treasury's growth forecasts drew support yesterday from Reserve Bank governor Glenn Stevens. He told a business breakfast in Sydney that Treasury's forecasts were almost identical to the bank's for the next two years, while beyond that, there had always been a period of above-average growth following previous recessions.
> "I don't think it is crazily optimistic to expect that will occur at some stage," he said, adding that it was hard to be precise about the timing.
> ...




Why do you guys consistently cite the RBA as a source of authority on economic matters when their track record clearly demonstrates they have no credibility? This is the same institution that was raising interest rates and bleating on about inflation whilst the world was in the grips of a deflationary debt crisis. Their forecasts have been consistently too rosy, they have only just joined the recession call in the last couple of months. The only agency with a worse track record of economic forecasts is the Treasury and now the RBA is agreeing with them. Seriously, you can't make this stuff up.


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## kincella (20 May 2009)

dhukka....you are right...what the hell was I thinking....another alzheimers moment
oh well, it was my thoughts as well...I still believe the economy will recover before most wake up...
since it has not been a bed of roses the past two years...but woeful....it must come to an end soon.


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## MACCA350 (20 May 2009)

The RBA must be smoking weed if they honestly think we are currently at 4x ...........and remember they stated AFTER TAX 

Just to balance things up, here's the 5th Annual Demographia International Housing Affordability Survey: 2009 Ratings for Metropolitan Markets where the Sunshine Coast took out *number 1 spot* for the most *Severely Unaffordable* at *9.6x*



> Affordability Improves: There are 87 “affordable” markets, all in the United States (77) and Canada (10). As in 2007, the “affordable markets” include the three markets above 5,000,000 population with the greatest demand, Atlanta, Dallas-Fort Worth and Houston. A number of additional major markets (markets with more than 1,000,000 residents) in the United States are “affordable,” while Winnipeg is Canada’s largest “affordable” market (Table ES-2).
> 
> *“Severely Unaffordable” Markets Remain: The least affordable markets are generally in Australia*, Canada’s province of British Columbia, New Zealand, the United Kingdom and California (Table ES-3). However, many of these severely unaffordable markets have experienced steep price declines in the last year. *Among the major markets, Vancouver is the least affordable, with a Median Multiple of 8.3, followed by Sydney (8.3), San Francisco (8.0), San Jose (7.2), Adelaide (7.1), Melbourne (7.1) New York (7.0) and London (6.9).*



Sydney, Melbourne and Adelaide more unaffordable than New York!

cheers


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## Beej (20 May 2009)

MACCA350 said:


> The RBA must be smoking weed if they honestly think we are currently at 4x ...........and remember they stated AFTER TAX
> 
> Just to balance things up, here's the 5th Annual Demographia International Housing Affordability Survey: 2009 Ratings for Metropolitan Markets where the Sunshine Coast took out *number 1 spot* for the most *Severely Unaffordable* at *9.6x*
> 
> ...




If you are going to criticise RBA stats and analysis, then trying to use a complete load of rubbish like the Demographia report is even longer stretch of the bow!

Think about it - why is the Sunshine Coats so unaffordable by their measure? Is it REALLY that expensive up there? More expensive than Sydney, New York, London etc etc??? I don't think so, not in a million years. So why does that report rate it that way?

The reason is it used the LOCAL average wage as the measure.... that is just dumb. Area's like the Sunshine coast, Byron Bay etc etc have LOADS OF WEALTHY FORMER CITY DWELLING RETIREE'S! Duh! Ie and many of them earn very low incomes (self funded pensions etc), but they have loads of assets..... hence house prices are high because rich retiree's push the prices up, but that doesn't make it unaffordable (for the people buying anyway!). 

So no, all the dole bludgers and minimum wage earning unskilled losers who may have been born and bred in area's like that in the past  (and keep the average earnings stats low as well!) can't afford a "average" house for the area there anymore - no way, but nor should they expect to! The area has had it's natural benefits improved on by investment of large amounts of $$$ by businesses and developers etc - ie by others in order to make the lifestyle there attractive to tourists and wealthy retiree's - so area's change, and people have to deal with it. What's more stats like that certainly don't imply any likelihood of a reversal of those social-demographic changes anytime soon either.....

See here for a comprehensive debunking by Chris Joye of the massively flawed Demographia report: 
http://www.businessspectator.com.au...se-price-gloom-$pd20090129-NR2AR?opendocument


Oh and PS: I lived in the US for a while, and did some time in New York - anyone seriously trying to argue that housing is more affordable on New York than in ANY Australian city has boulders in their head. Most New Yorkers who are not Wall St bankers struggle to even pay the rent on a studio apartment, let alone even contemplate being able to buy when the entry price for a 2 bedroom apartment is not that far below the US$1M mark anywhere on Manhattan island. Same goes for London, Paris, San Francisco etc etc - they are all REALLY expensive places if you want to buy property, or even rent - in fact ESPECIALLY if  renting, compared to anywhere in Australia.

Cheers,

Beej


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## GumbyLearner (20 May 2009)

Beej said:


> So no, all the dole bludgers and *minimum wage earning unskilled losers* who may have been born and bred in area's like that in the past  (and keep the average earnings stats low as well!) can't afford a "average" house for the area there anymore - no way, but nor should they expect to!




Wow. I'm one of them and I'll take that as a compliment.

My only advice to you is not to rent out a property. After all it's a people business.


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## Beej (20 May 2009)

GumbyLearner said:


> Wow. I'm one of them and I'll take that as a compliment.
> 
> My only advice to you is not to rent out a property. After all it's a people business.




You have no skills at all? Really? You intend to earn minimum wage for the rest of your working life?? No ambition to improve your relative standing in society, level of education etc at all? If the answer to those questions are all yes, then you do fit into the broad generalisation I have made, and really you cannot expect to ever be able to own property. But I suspect that you would NOT answer yes to those questions, otherwise I don't think you would be hanging around a forum like ASF learning lot's of interesting stuff.....

And PS: Re renting out IPs - that why I employ R/E agents for that 

EDIT: On minimum wage etc - I too earned minimum wage once long ago when I was in high school and uni in various part time jobs I took on, so nothing wrong with that under such circumstances. However, once uni was finished I started work at about the national average full time wage at 22 - so already benefiting from a good education. I set 3 goals for myself at that time. 1) was to do some significant world travel before I was 30, 2) was to be earning 3 x what was then the average wage within 5 years, and 3) was to buy a house and have it paid off before I was 30. Earnings only went up from there, and I achieved all 3 goals comfortably. I think there's something in that for everyone! 

Cheers,

Beej


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## kincella (20 May 2009)

Its just like hard work...trying to extract the truth from the fiction on this topic.....loads of theories here...without the substance
try asking people who are out there hunting for a house....or looking to rent...to get the real picture

somewhere on this site today, joyous about property prices falling less than 1%...see this link where the ASX fell 31% yoy and LPT's lost 58%....
so to compare 1% to 31%....what the .....(insert your choice of word here)

http://www.rpdata.com/news/rp/20090430_media.html


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## Go Nuke (20 May 2009)

> So no, all the dole bludgers and minimum wage earning unskilled losers who may have been born and bred in area's like that in the past (and keep the average earnings stats low as well!) can't afford a "average" house




What an ignorant statement.



> However, once uni was finished I started work at about the national average full time wage at 22 - so already benefiting from a good education. I set 3 goals for myself at that time. 1) was to do some significant world travel before I was 30, 2) was to be earning 3 x what was then the average wage within 5 years, and 3) was to buy a house and have it paid off before I was 30.




Not everyone is like you Beej.
Its people like you who are ignorant and insensitive to those who are'nt as well off as yourself.
Sure I admit if someone wants to bludge on the dole, then I have no sympathy for them either if they cant afford a house. But I know plenty of people who work their butts off in blue collar jobs and will never acheive what you have...and its not because they are lazy!

I now remember why I avoided this thread for so long, because it was so full of some well off nobs with their heads in the clouds as to how a large proportion of hard working Australians live.

Some of you have no idea about average wages...honestly.


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## Beej (20 May 2009)

Go Nuke said:


> What an ignorant statement.
> 
> 
> 
> ...




Come on - people who work hard in blue collar jobs can earn a LOT more than the MINIMUM wage, which is what we are discussing, not the AVERAGE wage.... I am not deriding blue collar workers at all, far from it! (Many blue collar jobs require significant skills/training as well). All I am saying is if all you expect from life is a minimum wage for your whole life, well, you are consigning yourself to the bottom rungs of society, and property ownership is not common on those rungs.....it's a privilege not a right.

I would hope that my own experiences would potentially be a source of inspiration for others, rather than a source of jealousy or resentment. Ultimately it is a competitive game we are all in here called life.....

Cheers,

Beej


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## satanoperca (20 May 2009)

robots said:


> hello,
> 
> good evening and hope everyone having a fine day
> 
> ...




Here is a link for the 1st qtr 09 from Robots mates @ APM.

Houses national +0.1%
Units national +0.5% 

YoY figures all negative.

http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_MarchQ09.pdf

And why shouldn't RE go up for the quarter :

Lowest IR's in 40 years
Low unemployment levels

I cannot understand why it did not show greater growth unless the market was already overcooked, but the bulls keep presenting facts that showed it wasn't inflated. 

Cheers


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## MACCA350 (20 May 2009)

So how does the RBA get it's 4x figure?
If we use the Melbourne REIV Median of $410k, then the RBA believes the average AFTER TAX household income is over $100k.............dunno about you, but that's a load of BS.

BTW I did notice in the link Beej provided there was a graph that also showed Australia as unaffordable by comparison, so while there may be a dispute about the methods they still both showed Australia as being one of the most unaffordable countries.

cheers


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## kincella (20 May 2009)

sounds like a violin required


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## GumbyLearner (20 May 2009)

Beej said:


> Come on - people who work hard in blue collar jobs can earn a LOT more than the MINIMUM wage, which is what we are discussing, not the AVERAGE wage.... I am not deriding blue collar workers at all, far from it! (Many blue collar jobs require significant skills/training as well). All I am saying is if all you expect from life is a minimum wage for your whole life, well, you are consigning yourself to the bottom rungs of society, and property ownership is not common on those rungs.....it's a privilege not a right.
> 
> I would hope that my own experiences would potentially be a source of inspiration for others, rather than a source of jealousy or resentment. Ultimately it is a competitive game we are all in here called life.....
> 
> ...




The point I made was with regard to renting property.

You can have all the education in the world and also be successful in life endeavours without holding an attitude that minimum wage earners are LOSERS.

I don't think this attitude would endear any potential leasee to honour a lease agreement. After all, you would want them to pay on time and not break a lease right?  Leases are mutually beneficial to both parties. 

Just thought I'd share a little wisdom and reality to the attitude you presented on the thread.

Also, since you use an Agent I would also ensure that they are a down-to-earth and amicable kind of character. You certainly wouldn't want someone conducting your affairs with a similar kind of attitude. Real Estate is a people business.


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## singlefished (20 May 2009)

The violins have been playing in the background of this thread for over a year now....


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## Soft Dough (20 May 2009)

singlefished said:


> The violins have been playing in the background of this thread for over a year now....




and house prices have dropped, and in another year will have no doubt dropped even more.


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## kincella (21 May 2009)

I have predicted this for over 2 years since the GFC....that people would move into bricks and mortar, and use their SMSF to buy commercial property, not only for a better annual return of up to 8% or more...but also for the capital gains in the future....and most others would watch with envy, compared to the 3% the banks are paying...and no capital gains  for 'cash is king' sitting in the bank...
oh and I predicated the same back in 2000......
if you have been around long enough, with eyes and ears open and watching closely, you get to see exactly what is going on....no need to listen to the media or any other spruikers.....

*Small firms purchase in CBD*
a couple of extracts
Gavin Lloyd, a sales director for CB Richard Ellis in Sydney, said the trend for owner-occupier sales seemed to be a Melbourne phenomenon. But the Sydney strata market, which is more than twice the size of Melbourne's, has picked up since last year.

Wealthy individual Melbourne investors have also been showing interest in Sydney strata properties, including a surgeon who recently bought the fourth level of 99 Bathurst Street for $3.6 million.

Mr Lloyd said the surgeon nabbed a good deal, with the new tenant signing a seven-year lease that would bring a net return of 9.5 per cent.

"That's a much better return than if you leave your money in the bank, where the cash rate is about 3 per cent," he said  

He said small-business owners and professionals were buying office space through self-managed superannuation funds, which had been battered by the sharemarket slump.

"These buyers are looking at traditional bricks and mortar investment opportunities and seeing strata investments as a viable alternative to renting office accommodation."
Gavin Lloyd, a sales director for CB Richard Ellis in Sydney, said the trend for owner-occupier sales seemed to be a Melbourne phenomenon. But the Sydney strata market, which is more than twice the size of Melbourne's, has picked up since last year.

Wealthy individual Melbourne investors have also been showing interest in Sydney strata properties, including a surgeon who recently bought the fourth level of 99 Bathurst Street for $3.6 million.

Mr Lloyd said the surgeon nabbed a good deal, with the new tenant signing a seven-year lease that would bring a net return of 9.5 per cent.

"That's a much better return than if you leave your money in the bank, where the cash rate is about 3 per cent," he said  
http://smallbusiness.theage.com.au/growing/finance/small-firms-purchase-in-cbd-617506944.html


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## kincella (21 May 2009)

Nappy Valley about to give way to Lycra men DEMOGRAPHER: Bernard Salt | May 21, 2009 
Article from:  The Australian 

love the heading...nappy valley...hehehehehe
Bernard seems to be doing his in depth research  very well

only selected extracts here, its not the full article........

Now that those pesky Generation Y kids have finally left home, perhaps it's time to convert one of the bedrooms into a study or into a hobby room. And while you're at it, you might as well knock off the back of the house and put on an alfresco deck where you can entertain all your baby-boomer friends for brunch. And don't forget the six-burner barbie with wok burner. 

One of the greatest business opportunities stemming from the transitional ageing of communities (where 50-somethings morph over 20 years into 70-somethings) is not the development of new residential product, it is in helping home owners adapt an existing dwelling to the prevailing lifestyle. 

Queensland's former Shire of Maroochy (now part of Moreton Regional Council) has the dubious distinction of outgunning all other Australian municipalities in attracting most new residents over the age of 74. In the 10 years to 2019, the number of people living in Maroochy aged 75-plus is expected to rise 7000 to 19,000. 


But this analysis can tell us so much more about business opportunity than what will be hot in property and where. 

If you are a player in the first or even second-home market, then you need land in places like Ipswich, Wanneroo, Wyndham and Blacktown. 

Developers of retirement homes, on the other hand, should be active in places like Maroochy, Caboolture and the Gold Coast between Hope Island and Robina. 


And it sort of makes sense. All of these outer-suburban municipalities were initially settled as a collective Nappy Valley from the 1980s onwards. Just over two decades later and these places are increasingly being jammed with empty-nesters. 

This is an issue for local councils that have developed service models based on the nappy narrative. All of a sudden demographic transition causes the mind, the mood and -- most important -- the attitude of the local community to switch from timid youth to tub-thumping middle age. 

Out with demands for infant welfare facilities; in with impassioned pleas for bike paths for an army of 50-something men clad in Lycra who have taken up cycling because of dodgy knees. 


For some this will mean relocation and a new property; for most it will mean ageing in place and demanding different things from their house, from the community and from the local council. 

Bernard Salt is completing a study of baby boomers for the City of Monash; bsalt@kpmg.com.au; www.twitter/bernardsalt


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## kincella (21 May 2009)

good article about the govt infrastructure and how it will boost suburbs OZ wide....for those that are looking for opportunities.....

I have not included the news about Vic fast tracking and removal of red tape, opening up more land, and looks like they have scrapped their silly 2030 plans....but thats for another day....could be information overload for some here today......:sheep:

extracts............
It's the infrastructure spending that will send benefits rippling through the real estate market.

Poorly informed people have simply assumed that the grant has inspired first-time buyers because the boost coincided with the uplift in activity. It also coincided with the dramatic improvement in affordability, thanks to price declines and multiple interest rate cuts, not forgetting (as most people have) the impact of state government incentives. 

One of the fundamentals of Hotspotting is infrastructure because of the multiple impacts it delivers. A new road or rail link not only revolutionises a location's appeal by making it more accessible, it creates jobs and therefore demand for real estate of various kinds -- and it sends economic rewards through a local economy. 

Many locations around the country can expect a lift in their property markets because of funding commitments in the budget. 

http://www.theaustralian.news.com.au/business/story/0,28124,25512972-25658,00.html


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## gfresh (21 May 2009)

kincella said:


> Poorly informed people have simply assumed that the grant has inspired first-time buyers because the boost coincided with the uplift in activity. It also coincided with the dramatic improvement in affordability, thanks to price declines and multiple interest rate cuts, not forgetting (as most people have) the impact of state government incentives.




Of course.. that is why the Government extended it at budget time.. because it's totally useless, and was not required  Then again, the Government would fit in well with the "poorly informed" brigade quite well


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## Soft Dough (21 May 2009)

kincella said:


> I have predicted this for over 2 years since the GFC....that people would move into bricks and mortar, and use their SMSF to buy commercial property, not only for a better annual return of up to 8% or more...but also for the capital gains in the future....and most others would watch with envy, compared to the 3% the banks are paying...and no capital gains  for 'cash is king' sitting in the bank...




So I guess in your wisdom you also predicted the mammoth falls in value of commercial property as well.

Perhaps you should actually look at commercial property values before making such irrational statements.


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## kincella (21 May 2009)

hehehehe...mamoth falls....yes as if I am interested in a 10-100 million property,
otherwise the props I am interested in are still a bit high...and fully tenanted...


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## Soft Dough (21 May 2009)

kincella said:


> hehehehe...mamoth falls....yes as if I am interested in a 10-100 million property,




What, you don't have a few $100million properties in your portfolio?  amateur


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## singlefished (22 May 2009)

Abhorrent as it may sound to the "Queens of the ASF", people are voluntarily dropping their asking prices!!!



> *Property asking prices falling fast*
> 
> http://www.news.com.au/business/money/story/0,28323,25517239-5013951,00.html
> 
> ...




Non homeowners better get in quick so they too can be the proud owner of a falling asset... 

Funny there was no mention of the further discounting which is going on during the negotiation stage... 10% rings a bell from an article I read previously.


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## Soft Dough (22 May 2009)

singlefished said:


> Abhorrent as it may sound to the "Queens of the ASF", people are voluntarily dropping their asking prices!!!
> 
> 
> 
> ...




*but those ones are different *and not an indication of things to come. 

I mean the chinese will start buying our houses now as they will have more money now that iron ore will be 40% cheaper for them, and rents will go up because when people become unemployed, they have to rent $420 per week homes, and the government has billions of dollars in reserve to wisely stimulate the economy when it is really needed as they are very conservative and proficient.

I won't be playing a violin, perhaps a double-bass?


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## satanoperca (22 May 2009)

kincella said:


> Poorly informed people have simply assumed that the grant has inspired first-time buyers because the boost coincided with the uplift in activity. It also coincided with the dramatic improvement in affordability, thanks to price declines and multiple interest rate cuts, not forgetting (as most people have) the impact of state government incentives.
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,25512972-25658,00.html





Today



> But there is evidence the grants are pushing up house prices in the outer suburbs,






> ANZ chief economist Saul Eslake said the grants for existing houses had worsened affordability in the lower end of the market






> President of the Real Estate Institute of Victoria, Adrian Jones, conceded there was anecdotal evidence that grants for existing houses were forcing up prices.




http://business.theage.com.au/business/property-market-riding-on-first-home-buyers-backs-20090521-bh75.html

Cheers


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## singlefished (22 May 2009)

> *First time buyers, investors split on property outlook*
> 
> A survey has found first home buyers are optimistic that prices will rise, but investors have a gloomy outlook for the property market.
> 
> ...




I guess FHB's have been hearing "prices always rise" amidst the numerous spruiker arguments and have been conditioned into thinking that prices can't drop.... I guess their opinion will change somewhat once the boost is finally dropped.


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## Ben L (22 May 2009)

Very interesting read..

Ive been sitting on the fence waiting and deciding wether or not to enter the property market, and with the new increased boost from $26k to $32k from July it makes it very tempting. Im only purchasing a unit for myself to live and the repayments compared to renting seem to be about the same.


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## MACCA350 (22 May 2009)

re the ACA story about the investor with multiple houses falling on hard times. 

How can he let it get that bad, I mean if they're all rented out and since interest rates have dropped significantly in the last 6-12months wouldn't he be much better off now?

cheers


----------



## Go Nuke (22 May 2009)

> only selected extracts here, its not the full article........
> 
> Now that those pesky Generation Y kids have finally left home




I thought they were moving back home?..or was that Gen X?



> Developers of retirement homes, on the other hand, should be active in places like Maroochy, Caboolture and the Gold Coast between Hope Island and Robina.
> 
> 
> And it sort of makes sense. All of these outer-suburban municipalities were initially settled as a collective Nappy Valley from the 1980s onwards. Just over two decades later and these places are increasingly being jammed with empty-nesters.
> ...



Hmm not sure I can agree with that part.
Having moved to Caboolture when i was 10 and leaving when I was about 22 (with parents still living there for the time being) I KNOW that there are HEAPS of younger people living there. One of the reasons is the affordability factor.
The big joke has always been all the teenage kids pushing prams at Morayfield shopping centre

SO many people also live in Caboolture and travel either by car or train to work each day in Brisbane.

Still the whole population is aging with heaps of people coming up for retirement, so no matter where you build retirement villages I'm sure business will be good.


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## AMC (22 May 2009)

Thanks to the FHOG and 30,000 new first home buyers we have created a false price property economy...20%-30% increases in the last 6 months is not uncommon in some areas. The fear is when this will all stop and unemployment takes over...We will have loans at 105% of security values...Lenders have accordingly changed policies to cover themselves....


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## kincella (23 May 2009)

Some good news for the Sydneysiders.....
its not fhb's spending over $700k....so who are these hundreds of buyers ???

*I love the way there are just so few of us dissidents...and the rest of the mob are all following each other, with the same stories.....waiting for houses to crash so they can buy in cheaper....its the fhb's being blamed now....etc etc etc
I am always wary, when everyone is doing the same thing....bells ring...little warning tolls....:sheep:
now back to the article....

quote.......
He calculates there were more than 620 reported transactions in the $700,000 to $2 million bracket, and more than 145 transactions for more than $2million in three areas -- Sydney's eastern suburbs, lower north shore and inner west -- in 58 days from mid-March. 

More than 220 were in the eastern suburbs and the city, and included investment properties, some which sold on gross yields of 4 per cent to 5 per cent. 

On the lower north shore, more than 200 sales were reported in the same price bracket. 

http://www.theaustralian.news.com.au/business/story/0,28124,25522088-25658,00.html


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## Soft Dough (23 May 2009)

kincella said:


> Some good news for the Sydneysiders.....
> its not fhb's spending over $700k....so who are these hundreds of buyers ???
> 
> *I love the way there are just so few of us dissidents...and the rest of the mob are all following each other, with the same stories.....waiting for houses to crash so they can buy in cheaper....its the fhb's being blamed now....etc etc etc
> I am always wary, when everyone is doing the same thing....bells ring...little warning tolls....:sheep:




Oh really?  you think that the majority of australians think that the market is going to have a large correction?   Doesn't come off that way when I ask around, in fact I don't think people realise that median prices dropped so much in the last 12 months, denial? :hide:

Perhaps you think ASF is representative of the population at large.



kincella said:


> quote.......
> He calculates there were more than 620 reported transactions in the $700,000 to $2 million bracket, and more than 145 transactions for more than $2million in three areas -- Sydney's eastern suburbs, lower north shore and inner west -- in 58 days from mid-March.
> 
> More than 220 were in the eastern suburbs and the city, and included investment properties, some which sold on gross yields of 4 per cent to 5 per cent.
> ...




Depends what spin you are trying to put on it.

sales can be forced, there is always a buyer for a property if the price is right.  I do notice that the author of the article provided no statistics on the price differential from 12 months ago, ie it is quite plausable to make 600 transactions if the prices have fallen substantially, due to forced sales, and now represent fair value.


----------



## kincella (23 May 2009)

dont bother to use the median price in your arguments....when you have the majority of houses  selling around the 600k mark....and the middle number  happens to be 450k  voila there's your median price....it has nothing to do with a drop in value ...in fact a lot of the lower priced homes have gone up higher...all the current median is showing is the lack of sales of the higher priced homes in an ordinary market....

no ASF is not representative of the population....the rest of them are out there buying homes and a  lifestyle...., or they  are staying  put, more than half do not have any mortgage to worry about, and the others are obviously upgrading...
its just the attitude from some on here as expected
oh and while interest rates keep going down, prices will go upwards....its only when rates go higher , that prices will come down....
anyway...some of us have a 30 year span for an IP to go wherever it goes...
I have been checking for bargains again....just a bit too busy with work atm...
but may make enquiries...since I dont want to miss another bargain...
there are going to be some lovely bargains of land from those mismanaged agri businesses that have just gone under.....winners are grinners....and I bet there are some great winners if looking for land...

do you know why 90% of the worlds wealth is held by less than 10% of the population ???...its because those 10% do not follow the trend and follow everyone else  .....unlike sheep, who follow each over the cliff


----------



## kincella (23 May 2009)

just a note to my mates on this site....ie the positive people in property....
its all just getting a little too busy for me with work.....need quite a bit of catching up to do....so if I appear a bit quiet...or spend less time here...
its because I am just too busy on work or other things...
also have to attend to some property financing.....and looking to buy another property in a lovely spot about 1.5 hours from Melbourne....for a family member.....I will have to watch out....population of less than 3000 so could be a problem with the banks LVR....
otherwise  I am looking forward to some leisure time after June 30 deadlines are met...
cheers all....oh and I will be around
I think it was discussion about Townsville being the epicentre that spooked me ....there is too much valuable time, wasted on topics like that for me.....on the thread    'recession etc'


----------



## robots (23 May 2009)

hello,

no worries Kincella, you a legend man and plenty enjoy the superb posts

positive people in *property* and *life* man and thats why the RE threads at the top at ASF

even with so many trying to bring us down we walking tall on this planet

thankyou
associate professor robots


----------



## satanoperca (23 May 2009)

You can be positive about property as a long term investment and be bearish about property at the moment, that is not negative, just don't believe the current negative trend in RE prices is nearing it's cycle end.

Cheers


----------



## robots (23 May 2009)

h  e  l  l  o,

c  h  e  c  k,   c  h  e  c  k:

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

c  l  e  a  r  a  n  c  e     r  a  t  e     o  f  8 1 %  t  o  d  a  y, 

h  a  v  e   a   g  o  o  d   e  v  e  n  i  n  g, d  o  n  t   g  e  t   t  o  o    e  x  c  i  t  e  d    p  e  o  p  l  e,

t  h  a  n  k  y  o  u ,

p  r  o  f  e  s  s  o  r   r  o  b  o  t  s


----------



## Trevor_S (23 May 2009)

http://www.news.com.au/heraldsun/story/0,21985,25523446-664,00.html



> Which brings us to the Federal Government's decision in the Budget to extend the boost to the First Home Buyers' Grant, reported in the media as a win for first home buyers.
> 
> The real winner was the Housing Industry Association which managed to get billions of our tax dollars redirected to the pockets of its builder members under the guise of helping young people into their own homes.
> 
> ...


----------



## robots (24 May 2009)

hello,

oh yes, great editorial/opinion from the Barefoot Investor

they dont allow my cutting edge editorial's (reply's) at HeraldSun, too positive maybe?

imagine getting financial advice from this guy, would it go somewhere along the lines of sell all your IP's/properties and put it into managed funds

guess what man, plenty of places to rent around

sorry sorry i forgot, he has  a blog so everything he says must be correct

and interest rates are going to be 500%, unemployment of the scale, soup kitchens everywhere, tents at the sporting ovals

thankyou
professor robots


----------



## satanoperca (24 May 2009)

robots said:


> and interest rates are going to be 500%, unemployment of the scale, soup kitchens everywhere, tents at the sporting ovals
> 
> thankyou
> professor robots




Thats a little to bearish, even for me.



> The real winner was the Housing Industry Association which managed to get billions of our tax dollars redirected to the pockets of its builder members under the guise of helping young people into their own homes.




That seems somewhat correct.


----------



## Soft Dough (24 May 2009)

robots said:


> and interest rates are going to be 500%, unemployment of the scales




Unemployment is going up.

Interest rates are going to go up more as credit ratings around the world are being pressured and the flow on effects of The US reserve money printing results in pressure on their dollar ( which is starting to happen )

Gearing is at ridiculous levels.

Ore prices are going to be wound down.

Oh but then again keep believing that house prices can continue to rise much faster than trend, and buck the trend over the past 12 months ( 6-7% fall ) when there is real pressure.


----------



## robots (24 May 2009)

hello,

yeah, its a good time to clear out some dead wood with the best reason going around

no big deal though, you dont put in you dont have a job

thankyou
professor robots


----------



## singlefished (24 May 2009)

This is the sort of quality post we're going to miss out on with queencella unable to post over the next few weeks...



kincella said:


> ....when you have the majority of houses  selling around the 600k mark....and the middle number  happens to be 450k  voila there's your median price....




... need I say anymore?


----------



## kincella (24 May 2009)

Robots, 
the interview by Alan Kohler on Inside Business today...with John Edwards senior economist with HSBC aus...

he was talking about the govts budget predictions....he said they are too pessimistic....and he mentioned about the aus housing  market etc....he predicts our house market will turn into an upswing, by the end of this year, and asked for a prediction, only one...he said interest rates will start to turn up by mid 2010

you can listen to it here and draw your own conclusions
http://www.abc.net.au/insidebusiness/
then scroll down to 'pessimistic forecasts'

ps....a short explanation for my positive vibes about life, and this subject
.....I am a LEO, the lion....that explains it all......not that I take much notice of astrology....although chinese astrology is slightly more interesting

and in Numerology...life path a no. 4

The Number Four:

  The Builder, Foundation, Stability, Patriarchy, Power,
  Progress, Earth, Justice, Ability, Manual Dexterity,
  Practical, Law, The Conscious Mind, Civilization,
  Traditional, Profit, Wisdom, Commerce, Health, Conviction


----------



## satanoperca (24 May 2009)

Kincella,

I hope you did not give that interview any credence, it overlooks the basic fundamentals of global economics and the impact they have on Australia, we are not different here, globalization has determined this.

It was a beat up, bordering on a joke.

Housing lead recovery in two years, our biggest trading partners are in recession, government debt is increasing exponentially around the world and yes we are going to have a housing lead recovery if and only if we can keep the ponzi scheme going, must consume, must feed consumption with more debt, it has worked in the past, it must be restarted at all costs.

John Edwards would not be aligned to the Labor party would he?

I don't know, he was an advisor to P Keating and author of several Keating books.

Where is his facts to support his dribble?


----------



## satanoperca (24 May 2009)

If you want a better picture of what faces ahead of us in Australia then find an extract of the speech by Mr Don Argus AO, Chairman, BHP Billiton recently.

I think you will find his comments on the current global economic environment fair and realistic. Yes the feature is how we are going to deal with the huge mountains of private and public debt. 



> *Government actions seem primarily to be based on the recognition that Ponzi or pyramid games are only bad if they end*




The Age 23-05-09

This quote sums up the situation we are currently facing.


----------



## robots (24 May 2009)

kincella said:


> Robots,
> the interview by Alan Kohler on Inside Business today...with John Edwards senior economist with HSBC aus...
> 
> he was talking about the govts budget predictions....he said they are too pessimistic....and he mentioned about the aus housing  market etc....he predicts our house market will turn into an upswing, by the end of this year, and asked for a prediction, only one...he said interest rates will start to turn up by mid 2010
> ...




hello,

hi kincella, i watched the interview, great thoughts from john and mr kohler done his best to put the usual negativity on it

you a legend man and another great day on chapel st today, people everywhere enjoying life

went down to Jam Factory and played some video games for a few hours at Intensity, business as usual everywhere on the strip man

anyone know when Keen and Rory's bet is completed or will Keen just move the goal posts?

thankyou

associate professor robots


----------



## robots (24 May 2009)

hello,

check check:

http://www.tradingroom.com.au/apps/view_article.ac?articleId=309613

we getting closer to 2010! here we go, here we go

zero interest rates, the dire consequences of making predictions

thankyou
robots


----------



## cutz (24 May 2009)

Hi Robots,

Stumbled onto this thread again but if you don't mind me asking are you a property investor owning a portfolio of real estate investments or do you just own your own home.

Reason i ask is, what's with the anxiety regarding the downward spiral in real estate asset valuations ?

When dust settles from the above event everyone will be a winner.


----------



## robots (24 May 2009)

hello,

i live in 1 unit and rent out another unit as explained previously

and while we at it lets hear what everybody else has if you believe some sort of pre-qualification is required to post

a previous mod gave me a secret mission to keep things going so just undertaking that task

thankyou
professor robots


----------



## explod (24 May 2009)

robots said:


> hello,
> 
> i live in 1 unit and rent out another unit as explained previously
> 
> ...




The previous mod must have been a property investor so has a vested interest.  If he is a previous mod then he can have no influence now.  So you are off the hook robots.

Herald Sun yesterday Port Fairy real estate down 36% for the last 12 months.  Wonderfull holiday resort and near to where I grew up.  When I collect on my gold may buy a holiday home when it does hit the bottom, about two hears time I reckon.


----------



## robots (24 May 2009)

hello,

yes some of the "holiday" towns have been smashed explod

i know down in Inverloch there is a sale board on about every fifth house

oh well

thankyou
professor robots


----------



## explod (24 May 2009)

robots said:


> hello,
> 
> yes some of the "holiday" towns have been smashed explod
> 
> ...




Friends at the weekend looking at a rental in Baumauris making $500 a week (interest from tgerm deposits)from money they have ready to buy a house told by agent not to buy yet as property round there going to fall a great deal soon.  FROM AN AGENT mind.

But who knows we see what pans out but getting closer to central there Robots


----------



## Soft Dough (24 May 2009)

robots said:


> and while we at it lets hear what everybody else has if you believe some sort of pre-qualification is required to post




$0 in property

might change in 12-30 months, just waiting to see the fallout.

PS Steve Keen has until 2013.  I would be surprised if it drops that far, but it definately has much further to fall, or will plateau for a long time to make at least 20-30% correction ( of which we have already seen 6% real and 2-3% inflationary )


----------



## Santoro (24 May 2009)

robots said:


> hello,
> 
> i live in 1 unit and rent out another unit as explained previously
> 
> ...




oh dear units!!!....how are you champ?...posted to you 6 months ago saying I would post again after six months....that's now....still hanging in there I see....I'll get back to you in another 6 months (if you're still here)  when unemployment is closer to peaking that will be when the real estate market will really be feeling it....nice to have made 70%+ in the last couple of months in shares.....a little better than real estate I guess....take care robots....


----------



## robots (25 May 2009)

Santoro said:


> oh dear units!!!....how are you champ?...posted to you 6 months ago saying I would post again after six months....that's now....still hanging in there I see....I'll get back to you in another 6 months (if you're still here)  when unemployment is closer to peaking that will be when the real estate market will really be feeling it....nice to have made 70%+ in the last couple of months in shares.....a little better than real estate I guess....take care robots....




hello,

yeap I am still here unlike all the fellow members of your crew, remember these members:

WayneL, Kimosabi, Pepperoni, XAO, haven't seen Numbercruncher for a while, Chops a Must, Realist (who owned every stock in the world), Knocker

i think a few of them got cleaned out with dodgy email addresses

hows that Soft Dough is including inflation and Keen has moved the goal posts has he to 2013 now?

well done Santoro you wont get me or others knocking you on the performance or what you do in life, amazing

thankyou
professor robots


----------



## Soft Dough (25 May 2009)

robots said:


> hows that Soft Dough is including inflation and Keen has moved the goal posts has he to 2013 now?
> 
> thankyou
> professor robots




Well perhaps if you read the link that you posted

"Dr Keen expects Australian house prices to plunge by 40 per cent within five years, double the drop in the troubled US market."

and I always include inflation in MY calculations as that gives a real indication of purchasing power.


----------



## robots (25 May 2009)

hello,

and the first paragraph of that article:

"An academic who *expects zero interest rates within two years *and a 40 per cent drop in house prices has promised to walk from Canberra to the top of Australia's highest mountain if he's wrong."

whats with inflation? get a pay rise

thankyou
associate professor robots


----------



## nunthewiser (25 May 2009)

Job security fears impact housing market

24th May 2009, 11:30 WST  
Increasing concerns about job security are impacting on the property market, with people opting to spend less and delay buying, a survey shows. 

The realestate.com.au Consumer Insights Buy report, which measures the perceptions of property buyers, showed 55 per cent of Australians have a high degree of concern about their job security.

Of the 2,665 people surveyed, 38 per cent said they would spend less on buying property, while 32 per cent said they would delay their purchase.

Realestate.com.au residential general manager Peter Wright said the online survey found one in two Australians were now looking to buy within the $200,000-$400,000 price bracket.

There had also been a four per cent decrease in the number of people looking to buy above $750,000.

"With increasing unemployment rates, job security is having a direct impact on many Australian families and their decision to buy," Mr Wright said in a statement.



just keeping it real man

thankyou


----------



## nunthewiser (25 May 2009)

Staff cuts expected at big companies: survey

25th May 2009, 12:30 WST 



Nearly a quarter of Australia’s big companies expect to shed permanent staff over the next 12 months, while salaries in WA and Queensland are expected to be the hardest hit as the resources boom unwinds.

A national survey of 549 companies ”” with an annual turnover of more than $10 million ”” found the number anticipating staff cuts had trebled in the past year.

The finding led the Australian Institute of Management, which conducted the survey, to describe the times as “an increasingly uncertain and challenging economic environment”.

The institute’s salary survey found 23.5 per cent of companies that responded were planning to shed permanent staff levels during the next year, up significantly from 8.4 per cent in its 2008 survey.


just keeping it even more real man


thankyou


----------



## Soft Dough (25 May 2009)

robots said:


> hello,
> 
> and the first paragraph of that article:
> 
> "An academic who *expects zero interest rates within two years *and a 40 per cent drop in house prices has promised to walk from Canberra to the top of Australia's highest mountain if he's wrong."




Nope, you misquoted it. The bet is to do with house price decline, not interest rates.

move on you are wrong.




robots said:


> whats with inflation? get a pay rise
> 
> thankyou
> associate professor robots




Sure a pay rise helps with income, but inflation will destroy the purchasing power of your assets.

You also assume that in an environment of increasing inflation and increasing unemployment, there will be wages growth at least equal to inflation.....


----------



## robots (25 May 2009)

robots said:


> hello,
> 
> and the first paragraph of that article:
> 
> ...




hello,

pretty clear, not looking too good, zero interest rates by 2010

oh well, i hope Keen keeps entertaining us with Debtwatch and predictions

thankyou
associate professor robots


----------



## robots (25 May 2009)

hello,

great reporting Nun

remember its all sunshine and lollipops

thankyou
robots


----------



## explod (25 May 2009)

robots said:


> hello,
> 
> pretty clear, not looking too good, zero interest rates by 2010
> 
> ...




Zero interest rates, what a load of absolute rubbish.  Spose the next move will be minus 2% interest and perhaps after that the banks will even pay some of the repayments.

Would you also care to fill us in Robots on your letters, the academic experience and appointment details that entitle you to use the title Associate Professor.


----------



## Soft Dough (25 May 2009)

robots said:


> hello,
> 
> pretty clear, not looking too good, zero interest rates by 2010
> 
> ...




http://wotnews.com.au/like/rory_robertson_vs_steve_keen/2766469/

no you are wrong... stop making yourself look like a fool.

"To make it interesting, I offered Dr Keen a challenge... On the maybe 1% chance that he is right, and capital-city home prices do indeed fall by 40% within the next five years - starting from Q2 2008, and as measured by the ABS - I will walk from Canberra to the top of Mt Kosciusko (that's maybe 200km followed by a 2228-metre incline). If Dr Keen turns out to be less than half right, as I expect, and home prices drop by (much) less than 20%, he will take that long walk"

"Sorry to interrupt. For the record, Steve Keen is keen to clarify that our bet is "peak to trough", as agreed, with no five-year limit . Obviously, I expect this distinction will not make a difference, with the ABS house price index likely to surpass its Q2 2008 level well within 5 years."


----------



## robots (25 May 2009)

hello,

apologies for the delay in getting new information out to people here at ASF:

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

weekly update, great seeing new australians participate in the fabulous life on offer in this country

another 20 mil could fit in here easy

special word out to Kincella and Beej who have been on the money for a long time now

thankyou
associate professor robots


----------



## robots (25 May 2009)

hello,

oh well, Keen's prediction of zero interest rates by 2010 not looking too good i think we at 4.25% cash rate

explod, a fellow student gave it to me for my efforts in plant molecular biology at  LaTrobe University in 1996, i think quite a few people got them

all government data has been banned from use at ASF

oh well, how we looking still 7-8x average income to median price, i thought 3x average income to median price is a birth right?

thankyou
associate professor robots


----------



## Dowdy (25 May 2009)

explod said:


> Would you also care to fill us in Robots on your letters, the academic experience and appointment details that entitle you to use the title Associate Professor.




He's just a tool with an ego.




OZ property is already peaked. If your smart you'll get out now. 

There are so many cracks in the fundamentals on property right now. 
Government is inflating the bubble
Unemployment is increasing
Stamp duty keeps rising every year (I bet alot of speculators forget to add that to their price - that along with council rates, power, water, electricity, maintenance which also keep increasing etc)

There's not a shortage of houses - there's just an oversupply of speculators


----------



## Soft Dough (25 May 2009)

robots said:


> oh well, Keen's prediction of zero interest rates by 2010 not looking too good i think we at 4.25% cash rate




Yeah he looks to have got that one well and truly wrong, and I think his other once is set to fail too.

Thank goodness our reserve bank has looked at the problem in America and looks set to keep interest rates as high as possible to prevent overgearing at these lower levels.... pity our government isn't as savvy.


----------



## MACCA350 (26 May 2009)

robots said:


> hello,
> 
> oh well, Keen's prediction of zero interest rates by 2010 not looking too good i think we at 4.25% cash rate



RBA cash rate is currently at 3%

cheers


----------



## kincella (26 May 2009)

hehahahaha......what a scoundrel

It seems that both Fortescue and the Forrest family have been indulging in a bit of property development to supplement that disappointing iron ore income, which still has a long way to go before it meets original forecasts

The lots were sold by Landcorp to Forrest's private company, Minderoo Pty Ltd, for between $165,000 and $240,000. He then tried to sell 10 of the lots on the open market as house-and-land packages at up to $1.25 million each.

http://business.theage.com.au/business/gfc-prunes-twiggy-of-8bn-20090525-bkuo.html


----------



## kincella (26 May 2009)

another gem....sounds like me into the future....

IN RECENT years, Jean Beaufranqui and his wife have spent most of their time in Menton, enjoying the sunshine and gentle Mediterranean breezes that have made this little town into a retirement haven.

And now, even as the world reels from its most painful economic crisis since the 1930s, Beaufranqui's thoughts have turned not to budget cuts but to buying an apartment here and settling in full time. As a retiree ”” he stopped working almost 19 years ago, at the standard age of 60 ”” the former metallurgist has sailed smoothly through the economic storm as the French Government regularly deposited his monthly pension payments

http://business.theage.com.au/busin...-in-a-french-welfare-haven-20090525-bkug.html


----------



## kincella (26 May 2009)

http://www.bankwest.com.au/fightingfund/

business loans at 4.99% for a year....whoo hoo...I will have to get myself some of that action...
this is a wow factor....should shake up the other monsters


----------



## satanoperca (26 May 2009)

robots said:


> another 20 mil could fit in here easy




Try reading Robots before you make stupid statements like this. I recommend the following book, Future Eaters by Tim Flannery to get an idea of the ecological impact a greater population has on this country. 

As for Government data being used, I assume you have admitted defeat on our little wager but denouncing it invalid at ASF.

Cheers


----------



## Beej (26 May 2009)

Dowdy said:


> He's just a tool with an ego.
> 
> OZ property is already peaked. If your smart you'll get out now.
> 
> ...




Complete unsubstantiated rubbish! In fact, if you back through this thread, and the old one "Houses to stagnate for years", you will find many similar predictions and advice to "get out now while you can" going back 1, 2 even 3 years! Boy, good advice NOT!

Of course I know that all property investors are complete idiots to you, and they don't know the first thing about the cost of owning property (unlike you of course who is an expert even though you have probably never owned any property in your life). But I guess it's like all the perma-renters that don't account for the rent they would other wise pay into the future (which increases at least with inflation and often faster), when deciding not to buy a PPOR..... Or the costs of moving every 1-2 years + the impact of your kids having to change schools all the time etc etc.

PS: Please explain how stamp duty can keep going up if you think prices are going to fall? On stamp duty I feel it's day's are numbered anyway, and in the not to distant future it will be radically reduced or even removed via some sort of state/commonwealth deal as was intended when the GST originally came in. But when this happens prices will quickly increase by the amount that used to be paid in stamp duty anyway, so only the very nimble purchaser will actually benefit from this when it happens.

PPS: For a more quantitative analysis of the likely impact of rising unemployment on house prices, see the following business spectator article (Chris Joye): ( http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail ). Note that in the early 90s prices rose even as unemployment kept rising and hot 11% in 1993 or so.

PPPS: Good luck debunking the housing shortage story! It's pretty established as a fact. The only credible criticism there involves a long term trend reversal in the number of people per household (which has been steadily decreasing for 20 years), which would of course mean a big reduction in living standards.



satanoperca said:


> As for Government data being used, I assume you have admitted defeat on our little wager but denouncing it invalid at ASF.




A bets a bet and it was based on ABS figures so I think that should stand - I am sure Robots would agree!  However, I am expecting an upward revision to the Q1 numbers when Q2 comes out to bring them more in line with all the other data.

Cheers,

Beej


----------



## kincella (26 May 2009)

geez, whats all these personal attacks against my mate Robots ? its not nice at all....
lets keep the thread nice....
discuss the subject and not the poster...please

ps Robots, thanks for the Morrell and Koren..top end trends link....
psst...shoosh....had to have a little chuckle....

and back there in the country...a contact tells me...her mate a RE agent is still selling 20 houses a month....its a bit harder these days...but thats her average monthly sale....just the same as its been for the past 10 years....
apparently prices have come off a bit...about 5%
hmmmm...what to make of that....
my contact is like self...holds multiple props...wants to buy more....
going out to buy a new car before June 09....and trade in the Lexus
her hubby was going to retire this year, the boss wants him to stay, she thinks he will be too bored.....there goes another boomer, staying in the job a bit longer than he should....those pesky boomers

thought you would like this news Robots, Beej and other mates...
I have been catching up on the work a bit faster than expected...hence the time here today
cheers


----------



## Dowdy (26 May 2009)

Beej said:


> PS: Please explain how stamp duty can keep going up if you think prices are going to fall?




I got confused with Stamp Duty and Land Tax, but that's another cost that goes into buying a house. Stamp duty won't be eliminated. The VIC government just put itself into massive debt so you're going to see stamp duty on for a very long time. What has increased and keeps increasing is Land Tax which in some cases have increased *300% in one year*. 
You have power bills going up, insurance going up. Do speculators add that into their overall profit? 

All these 'little' thing that all you speculators never mention, except you just post the clearance rate week-to-week.


----------



## kincella (26 May 2009)

land tax on the principal resi has exemptions...land value only applied...not the house value...varies.. 352k in Nsw, 225k Vic, 600 K Qld, 110k SA etc etc etc
we look at the big picture....a small price to pay for all the other benefits

have a look state by state land tax rates
http://www.hotspotting.com.au/index.php?act=viewArticle&productId=159
another link to keep handy
http://www.hotspotting.com.au/index.php?act=viewArticle&productId=1253


----------



## kincella (26 May 2009)

Why did I think this was funny....?

“I’ve bought a number of properties on Terry Ryder’s recommendation and made good capital gains as well as high returns. But the best advice he’s given me is the properties I didn’t buy. Last year he carried out research which helped me realise that investments I planned to make were unwise.”

- Neil Jenman, consumer advocate and author, Sydney

http://www.hotspotting.com.au/index.php?act=viewArticle&productId=6


----------



## gfresh (26 May 2009)

Dowdy said:


> You have power bills going up, insurance going up. Do speculators add that into their overall profit?
> 
> All these 'little' thing that all you speculators never mention, except you just post the clearance rate week-to-week.




Dowdy.. to be fair, power bills are payable by the renters, and so is contents insurance. Any further higher costs such as building insurance can, and probably are passed onto the renter eventually. Same with rates. 

If stamp duty costs were to rise excessively, costs would also be passed on in rental costs, and because net yields could become so pissant, nobody would bother investing. If you have less and less occupiers who are buying to live in due to high buy-in cost (e.g. stamp duty), then you've also got higher demand for rentals at higher prices. 

Unfortunately the only situation I can see with costs going up and up, is the renter gets screwed as those costs are passed on until something gives. If we're going to be stuck in a massive inflation spiral soonish, and everybody scrabbling to pass on costs, I don't see how the renter is going to be that much better off than an owner-occupier. Unfortunate as that may be. 

p.s. Victorians get royally screwed on stamp duty.. I remember 7 years ago when I was still living there the gumbyment promising to reduce this, but hasn't happened yet and I wouldn't be holding my breath. I don't know how long these generous exemptions are going to last in the other states as well - we get it pretty easy up here. The big pits in the State Deficit's are looking wider and wider every month at the moment.


----------



## satanoperca (26 May 2009)

kincella said:


> Why did I think this was funny....?




I have no idea, except Jenman runs an ethics site! 

Funny was the fact that his testimonials page also had the title "About the Team". So the people who work for him also vouch that his advice is correct or have I missed something.

Kincella, have you purchased Terry's reports before and found them to be accurate?

Cheers


----------



## Largesse (26 May 2009)

robots said:


> hello,
> 
> apologies for the delay in getting new information out to people here at ASF:
> 
> ...





hello robots,

i usually love your posts but "another 20m could fit in here easy" is by far the silliest thing i've read you say

thankyou
soon-to-be graduate largesse


----------



## kincella (26 May 2009)

satan....never heard of him before today....but see the report cards on the left...where he predicted various hot spots etc...and the results were they performed very well in 2008....I dont have time to see how they fared in the YTD
reports do not mean much to me...as I am only interested in 2 suburbs...no where else


----------



## robots (26 May 2009)

hello,

hello and good afternoon,

just on the bet, Satanoperca has thrown in the ABS data requirement, it didnt come with that originally i think and also wants a +/or- 0.5% leeway now as well

oh yeah Kincella , great reading at Morrell & Koren, honest on the ground reporting of the market and for us it gives a great snapshot of inner Melbourne

gee Sol is in the news, similar great minds

thankyou
associate professor robots


----------



## kincella (26 May 2009)

hi, you will like the hotspotting site I posted earlier today....
sol from telstra I assume...not solomon lew ?
hehehe they all own houses though


----------



## satanoperca (26 May 2009)

robots said:


> hello,
> 
> hello and good afternoon,
> 
> ...




The variation was an offer, not a requirement. With all the discussion on stats it seemed only reasonable that a tolerance range would be applied.

I don't won't to win any wager on -0.1%, to be that figure is inconclusive whether there was a fall or rise.

Gone out and bought that book yet, you will find it a fascinating read.

Cheers


----------



## kincella (26 May 2009)

I am a global warming sceptic at this stage....
he does not need to read the book...heres wikipedia...to sum him up

however I agree with Robots.....easy to fit another 20 mill here...they just need to sort out the water problems....and all the other problems we have experienced in the last 10 years of growth....
they were increasing the immigration figure this time last year to about 300k pa...so at that rate over 10 years is another 3 million....more people to tax
http://en.wikipedia.org/wiki/Tim_Flannery


----------



## satanoperca (26 May 2009)

kincella said:


> I am a global warming sceptic at this stage....
> http://en.wikipedia.org/wiki/Tim_Flannery




The book is not about global warming, it is about how Australia & NZ and it's inhabitants evolved. The use of land and population growth.

It is a naive person who believes that we can support a doubling of the population and keep our standard of living the same and our environment clean. Just need to go to some of our neighbours to see this.

As you have just pointed out we are currently faced with some huge problems, that being water, let alone how we would feed so many people and the impact it would have on Australia.

If you have ever looked on a map, Australia is mostly desert, hence the majority of Australia's population is on the coast.

Or you advocating the Japanese approach to population where by the country starts to starve if you close of its ports to food importation. They are not self sufficient and we are slowly becoming the same way.

And were do you stop if you want more people to tax, 20M, 30M, 40M, why not aim for one billion, plenty of sandy desert to grow that food in.

Green shoots seem to be abound everywhere.


----------



## robots (26 May 2009)

hello,

just like to say a special welcome back to Kincella and thank him for the informative posts, hold your head high man

check this brother:

http://business.theage.com.au/business/australia-bestplaced-to-beat-recession-20090526-blrg.html

no surprise there though, and plenty more space across the country for others to join us on this fabulous ride

thankyou
associate professor robots


----------



## kotim (26 May 2009)

Some of you would no doubt have heard recently about Australias new subprime mortgages in the last 2 years. In the last 2 years the first home buyer average loan has grown by 52000 dollars.

Ultimatley this means that such growth in such short term means that many of those first home buyers maxed out their lending capacity at 5% loans.

So now lets see what happens if interest rates go up again, because if the stimulus package even half works? interest rates would pretty quickly climb to 7% minimum without too much trouble.  Now imagine all those people paying an extra 40% in repayments over a 5% loan.

Its sad but we are being set up for a big property implosion, not necessarily in terms of price so much I believe, although we will see further substantial price falls, but more so in relation tohow long our markets stays down.

Funny isn't it, if the stimulus package works, inflation will take off along with interest rates, and if it doesn't it means another bad alternative anyway.

This is a lose lose situation for the country.

Personally I believe gov't should legislate maximum percentage of loan anyone can get according to their slaries.  It is just plain wrong that so much money should go to just simply supplying a roof over peoples heads.


----------



## satanoperca (26 May 2009)

robots said:


> hello,
> check this brother:
> 
> http://business.theage.com.au/business/australia-bestplaced-to-beat-recession-20090526-blrg.html
> ...




Yawn.

Report :
Servcorp, a provider of virtual and serviced offices globally surveyed
7500 international business people from 24 countries to determine something based on a whozemeewhat scale.

Great PR stunt for Servcorp, smart move.

And government data is not good enough for you.


----------



## Largesse (26 May 2009)

kotim said:


> Some of you would no doubt have heard recently about Australias new subprime mortgages in the last 2 years. In the last 2 years the first home buyer average loan has grown by 52000 dollars.
> 
> Ultimatley this means that such growth in such short term means that many of those first home buyers maxed out their lending capacity at 5% loans.
> 
> ...






Kotim, 
If interest rates are to get back to 7% the economy will have to improve pretty substantially. You would expect house prices will recover in line with the greater economy barring any unexpected altering of the Supply/Demand equation. 
So while repayments will increase, homeowners should have increased equity in their homes aswell. It then just becomes a judgement call as to whether these will offset each other.

However, if people have overpaid now, they may not see the same increases in the equity in their homes. But that becomes a case by case issue.

Well thats my view on it anyway.


----------



## Soft Dough (26 May 2009)

Largesse said:


> Kotim,
> If interest rates are to get back to 7% the economy will have to improve pretty substantially.




Depends what the cause of inflation is.

Imo it is more likely our next round of inflation will be in a low growth, high unemployment environment.


----------



## Mc Gusto (27 May 2009)

Thank you all for your posts and opinions. Amid the bickering i find both these posts (the falling one as well!) more than useful. I am in the market for a home and admit the uncertainty of where the market is going certainly plays on my mind. Having these posts may not quash that uncertainty but it certainly opens the door to many informed opinions and strategies

Thanks

Gusto


----------



## kincella (27 May 2009)

good on you...if you look past the short term frame and think long term ...there are no worries...some suburbs do better than others....inner city are always better than the outer burbs....I gave an example of my first home cost $12,000 in a regional centre....now worth about 250k...compared to a friend who paid the same cost, same time in a nice suburb inner Melb....just a workers cottage in her case....the land  alone now worth 1 million....4 times better..return....
so tell us where you are looking ?


----------



## netfleet (27 May 2009)

Largesse said:


> Kotim,
> If interest rates are to get back to 7% the economy will have to improve pretty substantially. You would expect house prices will recover in line with the greater economy barring any unexpected altering of the Supply/Demand equation.
> So while repayments will increase, homeowners should have increased equity in their homes aswell. It then just becomes a judgement call as to whether these will offset each other.
> 
> ...




That's a good point that if interest rates rise, it means the economy is in better shape which means house prices will recover.  That makes sense.

However the real issue as I see it will be all those FHBs who scrape into servicing a loan when they have 2 jobs and 5% interest rate.  If they lose a job or interest rates are up to 7%, then we might see distressed sales.  They may well pull equity out but a number of forced sales will reduce prices.

Plus really tough for the poor owners...


----------



## Beej (27 May 2009)

netfleet said:


> That's a good point that if interest rates rise, it means the economy is in better shape which means house prices will recover.  That makes sense.
> 
> However the real issue as I see it will be all those FHBs who scrape into servicing a loan when they have 2 jobs and 5% interest rate.  If they lose a job or interest rates are up to 7%, then we might see distressed sales.  They may well pull equity out but a number of forced sales will reduce prices.
> 
> Plus really tough for the poor owners...




But you have to ask yourself who are all these "FHB scrapers" and how many are there? The average FHB mortgage is $280k. At 5% interest that's $1150/month (or $14k/year) to cover the interest bill. Not that much really for a couple/family and probably the same or even less than they might have been paying in rent anyway. Even on a single average wage of ~$60k, that's about 28% of take home pay, without accounting for middle class welfare benefits that such a family would be receiving (Family Tax Benefit A/B, dependent rebates etc etc).

If interest rates hit 7.5% (which as pointed out would likely mean the economy was in much better shape), the interest bill goes up to $1750/month ($21k/year), assuming no principle has been paid off at all (which is unlikely). So that's now about 40% of after tax single income. Getting tighter, but probably still doable for most. Many would earn above the average anyway or actually have 2 incomes making it a breeze still.

So only the "complete unemployment scenario" would be likely to produce a distressed sale. And for that to happen both partners would have to become long term unemployed. As discussed previously on the thread and in articles posted etc such as this one (http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail) the likely and historical impact of this factor on the housing market is far less than expected by many. The reason it is misunderstood is most don't really understand how rising unemployment plays out socio-demographically speaking - we haven't really seen it here since the early 90s and most posters on internet forums weren't in the work-force at that time (I was).

Cheers,

Beej


----------



## kincella (27 May 2009)

netfleet
I am playing the violin for you now......a woeful, mourning, sorrowful tune

listen if one cannot afford to pay an average of 6.5-7% interest in normal times.....then forget about buying a house...
the ones who are buying at 5% are very lucky....
now the bleeding heart brigade were not around when rates went from 12-18% with in about 5 months..when I bought a house....so stop whinging at 5% or 7%
I was advised about a commercial loan last week...the lender uses an 8% rate to determine if you can service the loan....
oh and a huge amount of discretionary income left to play with....so forget about the $100 games, and huge mobile phone bills....nights out on the booze etc, and the credit cards
buying a house requires discipline...a little maturity etc...


----------



## netfleet (27 May 2009)

Beej said:


> But you have to ask yourself who are all these "FHB scrapers" and how many are there? The average FHB mortgage is $280k. At 5% interest that's $1150/month (or $14k/year) to cover the interest bill. Not that much really for a couple/family and probably the same or even less than they might have been paying in rent anyway. Even on a single average wage of ~$60k, that's about 28% of take home pay, without accounting for middle class welfare benefits that such a family would be receiving (Family Tax Benefit A/B, dependent rebates etc etc).
> 
> If interest rates hit 7.5% (which as pointed out would likely mean the economy was in much better shape), the interest bill goes up to $1750/month ($21k/year), assuming no principle has been paid off at all (which is unlikely). So that's now about 40% of after tax single income. Getting tighter, but probably still doable for most. Many would earn above the average anyway or actually have 2 incomes making it a breeze still.
> 
> ...




Nice analysis.  And yes when you put it like that it doesn't seem like too much of a big deal.

Few points to make though


The average FHB would probably be on a lot less than the average wage so as a % of income, it might well be well over 30% to start with (at 5% int rates)
Mortgage repayments (interest only) are always almost more expensive than renting (even with 5% int rates).  Plus there's the other costs of home ownership sapping their income
I don't think it would take a massive proportion of 'distressed sales' to have a big impact on the market.  If just 5% of these FHB end up here, say, wouldn't it have a massive impact on the market.
Extra houses on the market from these sales is only part of the problem.  The fact that these sellers are 'motivated' or forced to sell means they will sell for less - dragging down
prices.

I don't think distressed sales will bring down house prices as much as:

1) a lot of the FHB having been brought forward thanks to the boost
2) the end of the boost reducing the amount remaining FHB can borrow
3) increasing interest rates (or thereat thereof) causing people to be cautious when buying
4) threat of job losses making people more conservative with house buying
5) continued financial disparity between renting & owning your home
6) realisation that property in Aus is v expensive compared to many parts of the world

Saying all that I'm in the market myself even though on the basis of sheer logic & finance I realise I probably shouldn't


----------



## explod (27 May 2009)

netfleet said:


> That's a good point that if interest rates rise, it means the economy is in better shape which means house prices will recover.  That makes sense.
> 
> However the real issue as I see it will be all those FHBs who scrape into servicing a loan when they have 2 jobs and 5% interest rate.  If they lose a job or interest rates are up to 7%, then we might see distressed sales.  They may well pull equity out but a number of forced sales will reduce prices.
> 
> Plus really tough for the poor owners...





Rising interest rates do not mean the economy is in good shape.  This is a misnomer created by the lowering of interest rates to stimulate activity.  And it is not working so where to from here.   Money is losing value each day (the lists of why are endless) and it is becoming almost impossible for business people to borrow now for projects.  This tells me that the only way out of this will be a rise in interest rates to entice the banks to lend for worthy activity.


----------



## netfleet (27 May 2009)

kincella said:


> netfleet
> I am playing the violin for you now......a woeful, mourning, sorrowful tune
> 
> listen if one cannot afford to pay an average of 6.5-7% interest in normal times.....then forget about buying a house...
> ...




I don't disagree with you but nevertheless I'm sure it's happened.  Plenty of people have just rushed in because the combination of low int rates & FHB grants have made it possible



explod said:


> Rising interest rates do not mean the economy is in good shape.  This is a misnomer created by the lowering of interest rates to stimulate activity.  And it is not working so where to from here.   Money is losing value each day (the lists of why are endless) and it is becoming almost impossible for business people to borrow now for projects.  This tells me that the only way out of this will be a rise in interest rates to entice the banks to lend for worthy activity.




That makes sense.


----------



## robots (27 May 2009)

hello,

congratulations to *Harry Triguboff*, 3rd on the BRW List for 2009

top effort man, well done

thankyou

associate professor robots


----------



## Mc Gusto (28 May 2009)

kincella said:


> good on you...if you look past the short term frame and think long term ...there are no worries...some suburbs do better than others....inner city are always better than the outer burbs....I gave an example of my first home cost $12,000 in a regional centre....now worth about 250k...compared to a friend who paid the same cost, same time in a nice suburb inner Melb....just a workers cottage in her case....the land  alone now worth 1 million....4 times better..return....
> so tell us where you are looking ?




Hi Kincella

I am looking for a house 2 / 3 bedroom, inner south of melbourne. the search is taking me far and wide and the limited amount of stock means there is not a great deal for me to look at (in my range of 600 - 750k) but i am hoping a bit more stock comes on the market and then we will know the true picture of where this market is.

Thanks

Gutso


----------



## kotim (28 May 2009)

The average first home buyer loan has gone up 52000.00 in 2 years, no real increase in house prices genreally speaking over the last 2 years, so it means that FHB are borrowing a LOT more money becasue they can with 5-6% interest rate.  Tell you what what do you think all those introductory type loans are for.  HSBC don't offer 3. something % introductory and then make usre you can pay it back at 7-8%, they simply want your business. They know a certain number will fail adn they are takign a calculated risk. 

Do you know that 2 of the big 4 banks are now righting 85% of all new home loans etc.  They believe there is not really bad stuff to come, whereas the other 2 big anks reckon the proeprty market is going to hurt the lenders so they are really making sure they only lend to the least riskiest.


Time will tell, but there is an enormous number of fhb's who have clearly maxed their borrowings to the hilt, otherwise we would not have seen a 52 grand increase in loan size.

And the figures show that they are not taking our fixed rates, which means they are very vulnerable to interest rate rises. We know how fast interest rates went back up to 9 plus %

Anyway its all entertaining stuff,


----------



## aleckara (28 May 2009)

Rule of thumb - most people buy the best they can get away with when it comes to anything. While some people will be factoring higher interest rates in the future I'm sure the buyers that:

1) Feel that they don't get in now they will never afford a home (i.e speculating price rises)
2) People eager to get out of the "rent trap"
3) Young people who expect more than a fibro shack in a crime riddled area
4) People who with the FHB are confident that the govt will save their investment every time
5) Want to be in the best area with the best house they can
6) Want to live in the area which they grew up, have their social networks and their established lives

and many others will be borrowing as much as the bank gives them in the hope of profits or not being stuck in a FHB home forever. Besides in this supposed "housing shortage" if they don't borrow as much as they can they won't get the house at all. The highest bidder gets the home, because there isn't enough homes to fill for the lowest bidders.

Most people can admit here that the lower end of the market is a bit overheated due to the FHBG. If this is so this is direct evidence that indeed people are borrowing irresponsibly as if they want a home when their is a frenzy (FHB boom) they will have to.


----------



## kincella (28 May 2009)

this is all with 'tongue in cheek', a bit of a stir to liven the place up...

you know that dream home some of you were looking for...the million dollar ones that have dropped 40% and now only $600k...or thats what you were hoping for...based on the silly associate professor's wishing well....

....cannot find it...wonder why ?....well it just does not exist...in fact it will probably be on the market for 1.2 million now or more....

the natives are not restless....they have been renovating the old house, staying put and upgrading it....33 billion dollars last year....now that is keeping a load of people in work and businesses running along....its helping the economy...

see this quote......

Dr Dale said renovations would continue to underpin the housing industry, accounting for 47 cents in every dollar spent in the market. "Renovation activity hit a record worth of nearly $31 billion in 2007/08 and our forecast is for the value to be well on the way to $33 billion in 2010/11," Dr Dale said. 

On Wednesday, the Australian Bureau of Statistics (ABS) announced that the value of construction work for the first three months of the calender year posted its biggest fall in almost nine years. 

and don't bother with the argument, this information is coming from the insiders...would you rather the 'feral goat industry' who specialise in feral goats...spent the time analyising the housing market ? :sheep:

http://www.news.com.au/heraldsun/story/0,21985,25551465-664,00.html


----------



## gfresh (28 May 2009)

RBA hints they won't hesitate to raise interest rates if inflation is once again seen as a threat. In some ways the fact that inflation has come back into their precious "target band" revalidates their opinion they can control inflation via interest rates.. 

http://www.businessspectator.com.au...l-monetary-poli-pd20090528-SG2N8?OpenDocument



> While noting that central banks could make incorrect policy judgements, Mr Battellino said the high level of awareness about the risks of higher inflation should prevent this from happening.
> 
> "This [incorrect policy judgments] is always a possibility," he said.
> 
> ...




What may happen is that investors could pile right back into commodities (even now this is starting to happen, oil back over $60USbbl), in the *expectation* of inflation hitting.. when in fact this will actually help cause inflation to rise (raw prices being passed onto finished goods) further, building into a large feedback loop. You could argue this is what happened at the tail end of the boom. 

Then central banks are going to be rushing madly to raise rates to reign in this rampant inflation and fight these forces. It could be quite messy. 

If you think about it, rates rising rapidly is probably now not so much of a problem for those in the US/UK/elsewhere who have had house prices come down significantly. In these countries, even if the CB's hike rates significantly, the prices paid for houses for borrowers who enter now are 30-40% off peak... hence mortgage stress is less of a problem. Here in Australia however, the fact that our market has not crashed and is only a few digits off peak we do not have that luxury, even though higher rates may be pushed upon us due to outside CB forces. Interesting times.


----------



## kincella (28 May 2009)

UH OH....looks like we have a hiccup here....
all attempts to look at the big picture....goal posts being moved...makes it difficult to see, how the opponents can win their arguments....
and just when you thought you had seen it all....into cruzing gear....
out comes another obstacle......

PLANNED apartments worth more than $2 billion have been shelved or abandoned in inner Melbourne because of the financial crisis.

Projects affected since September include the $700 million Jam Factory redevelopment in Chapel Street, South Yarra, and failed venture WeLive's 320 apartments at Southbank.

At least 3155 apartments or units planned for the CBD, Fitzroy, St Kilda, South Yarra, Docklands, North Melbourne and Collingwood have also been shelved or abandoned, according to figures collated by Colliers International for The Age.
The drop-off could put hundreds of building jobs at risk and worsen the inner-city rental squeeze.

The figures are based on the status of development applications kept by Building and Construction Interchange Australia, a leading provider of building information.

They are likely to spur on supporters of the Commonwealth's proposed $4 billion Australian Business Investment Partnership - or "RuddBank" - that would fund commercial property players struggling for finance. The Senate is yet to vote on the proposal.

Freehills law firm partner David Sinn, who advises developers in gaining finance, said difficulty in securing loans and their high cost was making some projects unviable, despite strong demand. "Basically, the banks are in a position at the moment where they feel they are overexposed to the property market and are very reluctant to provide any further funding," he said.

http://www.theage.com.au/national/2bn-in-innercity-flats-put-off-20090527-bnnv.html


----------



## kincella (29 May 2009)

wow....QLD knows how to make money and rip off home buyers........
and the grass hoppers reckon its greedy property investors making all the money.....
The state Government made about 40 per cent of its revenue from the construction industry and delays and charges were hitting developers hard through land holding costs, sources said. This was typically $1000 per lot per month, which was more than $1million annually for a 100-lot residential project. 

http://www.theaustralian.news.com.au/story/0,25197,25554204-2702,00.html


----------



## gfresh (29 May 2009)

bah.. blaming the government is just passing the buck as the **** has fallen out of demand. I am sure the government would like nothing more than apartments to be flying off the plan so they can collect the stamp duty.. lack of which is now half the reason the QLD budget is now down the hole. 

The tourist spots up here were always boom territory.. relying on baby boomers getting richer and richer and in the hope more and more of them would retire to SEQ. Now the steam has been taken out of that, no surprise demand for approvals has collapsed, as developers (or the financiers) aren't willing to construct more as right now there aren't the buyers, especially as most of these are "premium" apartments. If they were actually sub $400k FHB territory, they might have had a chance to sell.. so they can only blame themselves for targeting the mid to upper market, and nearly totally ignoring the lower end. 

Some of the fancier 2br apartments were selling for around $500k+ , when "down on the ground" you could buy older 2br places in the exact same suburb, even across the road for $200k less than that. The difference always seemed a little crazy to me.

On the radio here they are giving away "rent free" for a year an apartment as a competition in a newly finished development.. First they tried sales = fail.. Then they tried pushing rental = fail, now they are even giving it away to get people in there!


----------



## Beej (29 May 2009)

Gfresh- interesting insights into the SEQ apartment situation! I agree that it seems the developers put all their eggs in the one basket (now with a hole in the bottom!). I've always thought that somehow more incentive is needed to promote the construction of housing at the more affordable end- that would ultimately address the affordability issue over the long term and bring median prices down.

Meanwhile, an interesting article by Alan Hohler today! Seems Alan might have turned more bullish on property after at first buying into all the bearish predictions made up to 2 years ago! See this article (http://www.businessspectator.com.au/bs.nsf/Article/House-rules-pd20090529-SGSL7?OpenDocument&src=sph). April RP Data figures will be out later today as well. Some AK quotes:



> Later this morning the RP Data-Rismark house price index for April will come out, along with a revised number for the March quarter. It is expected to show that prices, amazingly, increased more strongly than previously thought in the quarter, and actually accelerated in the month of April. Recession? What recession?
> 
> These figures are based on the largest database of home sales (60,000 in the first quarter) and the index is hedonic, which means it is more sophisticated than the median price data used by the ABS because it adjusts for the differences in houses.
> 
> ...




The Australian residential housing market is a very resilient beast!

Cheers,

Beej


----------



## Beej (29 May 2009)

Also - to help understand how median house price figures are being "skewed" downwards without necessarily reflecting corresponding real house price value declines, check the attached chart comparing the range of buynig activity Mar 08 qtr vs Mar 09.
(It's from RP Data).

PS: That's not say there have not been some real value/price declines last year, there certainly have (the area's where I sold one house and bought another one in Nov/Dec last year was definitely down 5-10% from the mini-peak of late 2007/early 2008, although it seems to have stabalised and maybe even gone up a little since the start of this year). But in many cases they are over-stated/skewed by the median stats as discussed here quite a bit, and this chart demonstrates that quite well I think.

Cheers,

Beej


----------



## kincella (29 May 2009)

Beej, great chart, and the proof for the grasshoppers and others.

now for some other exceptional news
......hints....there are some other strong indicators for confidence.....like the sharemarket lately....

Although first-time buyers helped support the market, "people forget that 70-75 per cent of home buyers aren't first timers''.

No significant falls


Homes in every capital, except Perth, rose in value. Median home prices in the WA capital fell by 0.8 per cent to $466,385 after "spectacular" growth during the commodities boom.

"Our analysis demonstrates that home values are rising in around 80 per cent of all suburbs with only the top 20 per cent of suburbs ranked by price suffering material falls," said Christopher Joye, managing director of Rismark International, which releases the report jointly with RP Data.

Darwin homes experienced the highest median-price growth, rising 5.3 per cent to $443,179 in the first four months of the year, while Melbourne median values grew 4.5 per cent to $436,548. Sydney home values climbed 3.9 per cent to $522,797.

RP Data national research director Tim Lawless said the figures cast doubt on the notion that a `bubble,' driven by low interest rates and the boost to the first time home owners' grant by the government, would develop in the first-home buyers' market.

"Home values in Australia's mortgage belts, which are the prime first-home buyer markets, were flat or falling between 2004-07 while the inner city and affluent markets enjoyed consistent growth,'' Mr Lawless said.

"In 2008-09 we have seen a reversal of these fortunes.''

http://business.theage.com.au/business/house-prices-bounce-back-20090529-bpm7.html


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## Beej (29 May 2009)

Further to Kincella's post, here's the RP-Data/Rismark Hedonic Index data for April (see attached chart). Some selected commentary from (http://www.businessspectator.com.au...rising-pd20090529-SGVEY?OpenDocument&src=is):




> Based on Australia’s largest sales database, which includes over 60,000 transactions in 2009, *the monthly RP Data-Rismark Hedonic Capital City Home Value Index rose by a stunning 2.8 per cent over the four months to end April 2009*. (And there is evidence to suggest that the performance of the non-capital city regions has been even healthier.)
> 
> ..........
> 
> ...




Cheers,

Beej


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## kincella (29 May 2009)

Beej,
I wonder if you would be so kind as to post the link to those charts you put up re the 'median' prices...
I am trying to get some interest going over on the APF site...and copied your post..but the charts link did not copy...so I abandoned it.
or you could just post it over there and help that site out...
psst its getting quiet on here again....
'all those crystal balls' of impending disaster have been squashed....
not saying 'I told you so' to anyone....but geez..the arguments I have had over the past 2 years with this fiasco....
and before that the arguments I had from 2000 to 2007 along the same lines...
cheers


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## Beej (29 May 2009)

Kincella - here is the link: http://www.businessspectator.com.au...odyhtml/0.3D6!OpenElement&FieldElemFormat=jpg

Cheers,

Beej


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## aleckara (29 May 2009)

kincella said:


> Beej,
> I wonder if you would be so kind as to post the link to those charts you put up re the 'median' prices...
> I am trying to get some interest going over on the APF site...and copied your post..but the charts link did not copy...so I abandoned it.
> or you could just post it over there and help that site out...
> ...




Their arguments were valid ones if the government did not step in. I had the same bearish thoughts (i.e deleveraging, etc) until the government announced the FHB extension. The only people left who had scope to leverage as obviously they had no debt - and a lot of them felt that saving for a $350,000 house in their area of choice (probably more) was a pipe dream when their job was at stake.

The thing that has made you right so far is nothing to do with shortages, interest rates or whatever. Even with low interest rates a lot of these people wouldn't have bought due ot the economic uncertainity. The FHB with its deadline, with its "buy before you miss out", with Kevin Rudd claiming all good things must end and extending it afterwards. It forced them to ignore their concerns and go on their fears - if they don't get in now it might get even more overvalued and be much harder to get in later. This isn't really possible with any other bubble asset since for most people shelter is a basic need and even if its overvalued people need it. I personally think that the actions by the Labor government were cruel - and while the gamble for them might pay off they enticed the FHB to take a big risk with no equity in a bad time to save everyone else. 

The sad thing about this is that they will be the taxpayers of the future, left to pay off the debt of the FHBG that made their houses cost more. More debt, more taxes, less growth in the future.

By allowing the FHB to come in when the investors were pulling out meant that the argument that the bears used (mainly the deleveraging) argument never occured. In fact I would say that wealth has been instead been transferred from future generations to pay for the housing bubble and that there is a good chance that the incumbents with housing already will walk free and proud and praise their investment decisions. I guess they are right - the government will always save them until it can't possibly do it (i.e almost bankrupt).

The only fundamental is credit. And housing credit hasn't been declining all too strongly unlike say the business credit (which is or will IMO definitely have an impact on unemployment). Credit for FHB houses has been boosted substantially hence those homes rise.

Bad to bet on homes falling in Aus. By the time they do the government will be in so much debt or printing money to try to save them (as I believe they would do anything for the housing industry) - so much so that it won't be the same good place anymore to buy a home.


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## kincella (29 May 2009)

aleckara...less than 25% of all the recent sales were to FHB's...the balance of 75% were not fhb's........
and I posted yesterday...renovations are contributing 47% to the economy,
today the QLD govt receives 40% of its revenue from developers and house/land taxes....
we are talking about a lot of money from housing goes into our govt coffers...and the rest into the economy...
its a win win for everyone....
stop housing....and contribute a big loss to the economy...everyone suffers
its your choice to come along for the ride...or stay away


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## kincella (29 May 2009)

decided I am pretty happy with property atm....more so with the nice low rates on offer...and BankWest offering 4.99% variable for business loans..
and the resi loans at 5.2%....
what some on here are not aware of ....when rates go down prices go up...ie more buying power...and when rates go up, as they did last year..the prices go down..
now I dont want anyone else...not a single sole...to buy a house under duress or because everyone else appears to be buying...thats the wrong thing to do....
I just blog to advise what my thoughts, are and what I am doing with property.....in order to give a balanced view, rather than the incorrect messages from the media
I am hoping to buy another prop..while the rates are low...I have missed out on 2 exceptional buys....but with patience I am sure I will find another to suit my needs...

cheers


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## aleckara (29 May 2009)

kincella said:


> aleckara...less than 25% of all the recent sales were to FHB's...the balance of 75% were not fhb's........
> and I posted yesterday...renovations are contributing 47% to the economy,
> today the QLD govt receives 40% of its revenue from developers and house/land taxes....
> we are talking about a lot of money from housing goes into our govt coffers...and the rest into the economy...
> ...




Renovations do not affect housing prices - so take that out. If no one else is willing to pay the price for the renovated property then renovations won't raise the price. I repeat again - it is credit only that drives prices. Nothing else (well not in Australia anyway).

I don't mind if it stimulates housing construction. It means more houses. But for the last few years most debt has been bidding up existing properties. The country has more debt, yet the same amount of houses. Sorry don't see the more money argument of yours. In fact I see that overall we have a debt program that isn't diminishing but houses that are depreciating. The money for housing mainly bids up the LAND VALUE of the housing - not the house itself.

A lot of money from housing does go into the governments coffers as you say. But the effect of Australia as a whole is a different story. We get require new debt constantly to keep house prices where they are - to stimulate the market. And the more debt is used the more debt is required as the interest component of the debt rises - or we need ever increasing lower rates of interest over time to keep the interest burden constant.

Australia as a whole is losing money as a result of this boom. The money in the government's coffers is the borrowed money of the public and is definitely less than what we are borrowing. It has to be, because we don't save anything yet spend like bad thinking we have wealth in guess what... houses.

If the world called in its loans there would be no money for housing. Simple. The government through housing is making money because while the government has been paying off debt (in the liberal time) that money has come at the expense of the household's becoming more and more indebted. Of course when they can't or won't take on more debt the government falters - the debt money source that was once property is dried up for now.

Is it a good thing for Governments to borrow endlessly and forever? why is it a good thing then for them to do it to homeowners? the compensation is that while the music is playing prices go up (if other people are willing to take your place pulling the debt money into Australia). Once the music stops there will be debt, but housing will drop. The government has brought in FHB to keep the money flowing - when there is no debt source left you will see it for what it is. Maybe in 10 years time? Maybe 2? Maybe 20? Who knows? After all people are still lending money to the US and they didn't have a resource boom like us.

Everyone wins.... will not really. Everyone that is 'incumbent' in property wins or is in the industry wins. At the expense of future generations and everyone else. That is the nature of debt. Gravy now, pain when the gravy stops flowing.


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## Beej (29 May 2009)

A lot of issues raised in your post aleckara, but I'll try and address a couple that sparked my interest:



aleckara said:


> Renovations do not affect housing prices - so take that out. If no one else is willing to pay the price for the renovated property then renovations won't raise the price. I repeat again - it is credit only that drives prices. Nothing else (well not in Australia anyway).




I do not believe this is correct. One the the benefits of the "boom" in Sydney has been that it made economic sense for existing owners to transform/improve much of the existing housing stock, or renew it. If prices had remained stagnant and only fell in real terms, the housing stock would have slowly deteriorated (= depreciate) without the financial incentive for renewal. This would result in lower living standards for most. Instead we have the opposite where on average houses have got better, bigger etc over the years and thus have improved living standards, and this has been to a large extent due to rising prices providing the financial incentives for grass roots housing stock renewal/improvement.

I think this view is backed up by the figures Kincella posted showing that $31B was spent in 07/08 on house renovation. That's about 3% of that years total economy/GDP, with the economic benefit feeding directly into improved living standards.

Think of it another way - if renovation did not effect prices, then why do renovated houses sell for more than un-renovated ones all other factors being equal? Add to this what happens when an old suburb undergoes gentrification (think Glebe or Surry Hills). There is a tipping point where as a certain percentage of old houses have been renovated, the values of all properties in the area's lift, which provides incentive for the remaining ones to be renovated as well, and within a decade or so nearly the whole suburb has been renewed. Without the price rises (usually well above city-wide trend as well in these cases) this improvement of the housing stock in those type of areas would probably not have occurred.



> I don't mind if it stimulates housing construction. It means more houses. But for the last few years most debt has been bidding up existing properties. The country has more debt, yet the same amount of houses.




There are more houses, which are better than what used to be built, plus there are many renovated/improved existing houses as well - so that debt has bought something real, not nothing as you are suggesting. 

Anyway you could make the same argument here about any commodity (le gold etc) being bid up just because of increased demand for a scarce resource (ie land). It happens, can't be stopped. At least with land/houses the utility of the commodity is improved along the way.....



> Australia as a whole is losing money as a result of this boom.




The money is not lost - I really think that's the wrong way to look at it. All of it goes into circulation through the economy, with the vast bulk likely to stay in country and not get spent on imported goods (although some inevitably will). A large amount of the money goes back directly into the construction/development/building industries, and is used to renovate existing stock and build new stock.



> Everyone wins.... will not really. Everyone that is 'incumbent' in property wins or is in the industry wins. At the expense of future generations and everyone else. That is the nature of debt. Gravy now, pain when the gravy stops flowing.




Playing the violins for future generations is a bit melodramatic; for a start everyone dies sometime and when they do their assets including all their "inflated" property assets will be passed on to the next generation (ie our kids!). Also you make out like an entire current generation is locked out of the property ownership market; that's also not true - as pointed out many times there is plenty of affordable housing around, it's all just a matter of matching price and location/quality expectations.

Debt is not forever - it's a tool used by smart long term thinking people wisely for long term accumulation of hard assets. It can also be used by the foolish to fritter away income on depreciating consumer goods of course, but that's an individual choice - the 2 things are not the same. When you take on debt to purchase land/housing, at some point in the future you own the asset with no debt - surely you can the benefit at that point? Almost regardless of actual asset price movements?

Cheers,

Beej


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## aleckara (29 May 2009)

When people die - a lot is given to inheritances yes.

But believe it or not the fact that we have a current account deficit shows that the money is spent elsewhere. 

Hosuing isn't the only thing the economy needs. I can buy houses, I can buy TV's, etc. Your argument is that I need an increasing price constantly to improve my own stuff is wrong. The only difference then between a house and anything else then is the timeframe of depreciation.

My point is that house prices should be worth something yes, but they should be worth in terms of purchasing power to other assets. I.e you look at gold and other commodities - their purchasing power relative to each other most in the long term is usually constant. However housing has generally outclassed all forms of commodity investment, unlike incomes which commodities normally follow the CPI and income tends to grow with this figure. I don't see how the price of anything rising that is essential can be a good thing. TV's at least are getting cheaper over time.

Inheritances get squandered as well or are taxed - but that's besides the point. America has no shortage of houses - does anyone think their inheritance is worth the same as what it was despite the debt used to build it up? Not everyone is lucky to get an inheritance either. Two generations ago (60's) work 6 years in a labours low skilled job (didn't even have to speak English) to have a paid off house after expenses. Now days it is more or the same with longer working hours and more skills required. That's what I mean by generational theft - new labour is worth less per hour in real terms than the labour of the past. Like all ponzi schemes (and housing is where most of our household wealth is so any price rises have to come from some other source than in country - if we are a deficit nation guess where it comes from?). We are still net spenders despite some of us saving more in this downturn. The maths are not hard to figure out. The money, even your savings must come from somewhere and in a country with ever increasing debt the answer is of course it comes from someone else's debt/pain. The problem really is if the music stops everyone realises we really have no money to begin with, just housing, imported goods and because the debt kept our dollar higher no way to produce for ourselves. That's another point - debt brings up the value of the dollar today but risks a much bigger decline in the future. Another theft into the future - you incorporate value of the dollar in the future to today's dollar.

Your argument is like a person going wild on their credit card to buy the store out. Everyone is happy (right now that is). If that person can't pay eventually though what happens? They have a bunch of stuff that they need to sell, and that the seller doesn't want to take back even if it is a need. In an economy its worse - the pain of a lot of bankrupt people can't be wiped off. Its shared through the banks. Our housing is what we use to channel the funds to buy everything that we don't provide for ourselves - imports and of course money (hence net interest burden overseas).

My point is that housing may be great, but can we afford it at the price? I think everything is great - housing, food, entertainment, etc. The fact that we are racking up debt that isn't constant but growing over time signals to me that we can't. Debt for houses - not bad. But ever growing debt greater than income growth on houses - bad. Debt is forever Beej if the country's net mortgage is only growing and never being paid off.


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## pj2105 (29 May 2009)

Another note that you have overlooked.  Australia is a great country, what I mean is where else can you buy property on the beach for about 200K?  Alright, it might be far from a city centre, but still, compared with overseas in Japan you have to get a 99 year loan to buy a house which means your grandkids will be in debt for it to be paid off.

Sooner or later, people will flock to Australia in the hundreds of thousands.


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## kincella (29 May 2009)

aleckara...your statements are almost  unbelievable.....fancy saying its only credit that drives house prices....etc...
most of us like to live in a nice house in good condition, with all the modern conveniences including air conditioner, beautiful garden and outdoor living....

do you honestly believe that the old unrenovated place next door is going to fetch the same price...lets say it has an old wood stove, and a wood fire for warmth in the winter, no airconditioning or any other modern convenience....there is no garden (its been rented out for years)...the garden alone may cost me 5000-10,000

these old props are the ones I like, I buy them cheaper, then renovate...it may cost me 50-100k's to bring it up to the standard of next door....
but I paid 100k's less...compare apples to apples
now I can sell mine for  about the same price as next door.... add or subtract for the number of bedrooms, bathrooms, garage etc....
some people pay cash for their house...so credit has nothing to do with it in their circumstances....the others may borrow 50% only
grrrrrrrrrrrrrrrrr
the economics of the world revolves around trade...goods and services..and labour...australia sells its resources...then buys back all the other things we consume...cars, whitegoods, tv's etc....all the people involved can earn a living, then provide a house for their family....
you must be another of those 'theorist people'...very different to the real world


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## gfresh (29 May 2009)

pj2105 said:


> Sooner or later, people will flock to Australia in the hundreds of thousands.




They already do? but the question is how much more can we take? Already I would argue we are struggling to balance our budgets, and house everybody and well keep things ticking over without cracks appearing in the system. We can take millions of more people into the country, but the question should we, do we want to, and if so, do we have the proper systems in place to make sure it doesn't destroy our way of life. Bigger picture thinking needs to undertaken, and longer term sustainability issues needs to be looked at a decade out, not in half-baked fashion either as I think is the case presently. 

Even though we may deride China's way of life, they look forward much further into the future and make the hard decisions, even if it may make some uncomfortable in the short term. We can't even plan more than the next election in many cases.


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## robots (29 May 2009)

hello,

to steal one from the great Shane Crawford:

*"thats what i'm talking about"*

fantastic result from RP today, this just amazing during the biggest event since the great depression and even some calling it a greater event than the great depression 

this is great

special thanks for todays posts must go out to Kincella, Aleckara and Beej, superb job keeping the community informed

just like to say a special word out to all in the UK, anyone know if the internet back on over there yet?

walking tall brothers

thankyou
robots


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## robots (29 May 2009)

hello,

whats going on brothers, anyone around?

thankyou
robots


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## robots (29 May 2009)

hello,

oh, gee does anybody remember that guys name, what is it, u know from Western Sydney Uni, it will come to me, hang on hang on, i think he is an economist or something, media w***e a while ago, oh god

it will come to me, the one that made all those predictions

thankyou
associate  professor robots


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## joeyr46 (30 May 2009)

Keen to help robots but memory sadly lacking this early in the day


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## aleckara (30 May 2009)

kincella said:


> aleckara...your statements are almost  unbelievable.....fancy saying its only credit that drives house prices....etc...
> most of us like to live in a nice house in good condition, with all the modern conveniences including air conditioner, beautiful garden and outdoor living....
> 
> do you honestly believe that the old unrenovated place next door is going to fetch the same price...lets say it has an old wood stove, and a wood fire for warmth in the winter, no airconditioning or any other modern convenience....there is no garden (its been rented out for years)...the garden alone may cost me 5000-10,000
> ...




I'm glad you are being rewarded for your renovation work. You are doing people a service.

Credit drives houses yes, but certain people can only tap a certain amount of credit. So houses are split into price bands. Pretty obvious to me. People only have a certain amount of credit capacity that they can take and they tend to get the best they can with it. I don't think that's theory - I think everyone wants the best for themselves that they can. You renovate, you attract a different buyer who has a higher credit capacity. But obviously the buyer pool shrinks as the price rises - doesn't mean you won't get your price. But you price people out on the lower ladder.

I don't think its theory kincella. I just think that everyone wants a great lifestyle (myself included) but think that Australia is living beyond its means and our biggest purchase on that Australia credit card is housing (and I think I heard somewhere before that something like 50% of our foreign debt bill is on housing loans - don't remember the exact figure). I'm worried about the future of this country - the debt, and what can happen if house prices keep rising and wages don't rise as fast.

Like I said the shopkeeper may have a job in the first place because of the customer spending in the credit card, but can we really afford his job in the long term? Same possibly with the building workers. I don't like to seee anyone out of work but at the same time debt isn't making the same amount of GDP (a bad measure of work but its what I've got) that it used to. Most of the resources boom was spent anyway because we Australians don't save anything - I'm worried about our short term focus as Australians and the lack of long term planning to deliver houses, food, goods, and a quality of life without prices rising of these things so it isn't just housing. Maybe I shouldn't - just worry about myself and my profit.


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## kincella (30 May 2009)

now it seems I am guilty of contributing to gentrification myself....when I was a FHB I could only afford a place out in whoop whoop....but later on in life after I had my career on track I upgraded into the heart of the city...again I could not afford the renovated house...but I could afford the unrenovated one....then took about 5 years to make it comfortable...I am not finished...it still needs a new roof, and outdoor entertaining area.
I actually thrive on buying and renovating period homes...I retain all the old world character and appearances including the garden in period style. I update the kitchen and bathroom into modern living with airconditioner , and create an outdoor entertainment area.
now read this article....you can buy an unrenovated period house in Castlemaine in Vic for 200-250k's, with new road and rail fast tracked to Melbourne....
"There are unrenovated period homes here still in that range of $200,000 to $250,000 and some of those go right back to the 1860s, gold rush time," he says. "For local people, who've grown up here, it feels like things have got really unaffordable, but for Melbourne people, it's cheap."

With a new freeway to Melbourne opened last month and the recent federal budget promising a faster train service, the city commute is not much longer than that of some outer suburbs

http://www.theage.com.au/national/ca...0529-bqbm.html
on TT last night they told where you could buy affordable houses close to the city in each state...I missed most of it..but noted Braybook 11 klm from Melb cbd for about 250k's
__________________
Ever met a wealthy person who complains and moans about everything ? 

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.


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## kincella (30 May 2009)

here is a list of suburbs for affordable housing in each city...I missed most of the show but caught Braybrook 11k's from Melb at 250k's
here is the list...............

So where do you start looking?

Peter Koulizos has selected the top five first homebuyer gem suburbs in every capital city.

Sydney's suburbs are:
Arncliffe
Darlington 
Enmore 
Newtown 
Woolloomooloo - where units are much more affordable.

Melbourne's suburbs are:
Coburg - units are the best option.
Braybrook
Flemington, Frankston
Seaford

And in Brisbane:
Redcliffe
Brighton
Clontarf
Margate
Woody Point

In Hobart look for a house in North Hobart, while in Darwin houses may now be too pricey, so go for units in Rapid Creek.

Further informationPeterÃ¢•s book, "Top Australian Suburbs" is available at all good bookstores.
http://au.todaytonight.yahoo.com/article/5615551/money/home-bargains


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## kincella (30 May 2009)

in this article Marcus Padley is comparing risk in the sharemarket to risk in marriage....if you insert 'property' into the article.....the same applies...
I agree with his statements......but use it in all facets of your life.............

this post is targeted to the non home owners, who are waiting to enter the market....I am not saying to enter now...just in the future when you are ready...and to the potential Property Investors...
..............................................................................................
The fear of the future is no reason to delay it. You need the courage to take steps and let the future unfold. Simply put, it is what we do, not what we avoid, that allows progress.

The way to manage risk is not to spend your life avoiding it, but to plan for it. Expect disaster, expect mistakes and, in the sharemarket, expect losses. You can't avoid them, you just need to develop the skills to manage them when they happen. All the researching in the world will not save you, but preparation will. The skill is knowing what you are going to do when disaster strikes.

Do all this and you can boldly step out into the night and not be afraid because you have certainty of action whatever the outcome. You don't need to be courageous or reckless. You don't need to step out of your comfort zone. You just need to contain the damage when it happens and move on. Preparation rather than indecision. Indecision is the bus stop of life.


http://business.theage.com.au/busin...-planning-not-fearing-risk-20090529-bqc8.html


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## Soft Dough (30 May 2009)

robots said:


> oh, gee does anybody remember that guys name, what is it, u know from Western Sydney Uni




He who laughs last laughs loudest.

Remember the string of wonderful deadcat bounces the stockmarket had WITHOUT government stimulus.

when the floor falls out of this one, I will be at the bottom level with small amounts of cash to offer the people who have to accept it.


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## Beej (30 May 2009)

aleckara said:


> Credit drives houses yes, but certain people can only tap a certain amount of credit. ......You renovate, you attract a different buyer who has a higher credit capacity.




Or more simply a buyer who has more money. Where/how they got it is their business. You assume that 100% of the time the bulk of their money has come from credit - the further up the property ladder you go the less likely this is the case. I know of many people who have bought houses (quite expensive ones) fro cash with money they made from a business, or from a lucrative stint o/s etc.



> I don't think its theory kincella. I just think that everyone wants a great lifestyle (myself included) but think that Australia is living beyond its means and our biggest purchase on that Australia credit card is housing (and I think I heard somewhere before that something like 50% of our foreign debt bill is on housing loans - don't remember the exact figure). I'm worried about the future of this country - the debt, and what can happen if house prices keep rising and wages don't rise as fast.




That's a very Austrian school view of how things work! I don't know off hand what the foreign debt proportion directly related to house mortgages is, but whatever it is, housing debt overall is just not that big an issue (on average) for people with mortgages. The average existing mortgage (for those 2/3 of properties that are mortgaged) is around $200k. Half of those mortgages (probably the bigger ones for tax reasons) are over IPs where our lovely friends the renters pay most of the interest. The other half are funded by OOs who therefore on average currently have to find about $850/month to pay that interest bill - not that hard to do really if you think about it. So really I'm not sure what all the fuss is about.....



> I'm worried about our short term focus as Australians and the lack of long term planning to deliver houses, food, goods, and a quality of life without prices rising of these things so it isn't just housing. Maybe I shouldn't - just worry about myself and my profit.




Some pretty legitimate concerns there - it would definitely have been wiser for the long term to have seen more of the resources boom saved rather than having it all squandered away into permanent tax cuts etc. But as you say - your actions as an individual and/or your views on the housing market are not on their own going to change the economic culture of the entire country! So instead it's better to just understand what's going on and why, and then make the most of the situation given your own means and constraints.

Cheers,

Beej


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## kincella (30 May 2009)

the front page of the fin review today says it all....why the property market is ready to turn....and several articles inside...
I have said for a while now...people will be so dissatisfied with their super they will come back to property as an investment...
and the reduction in how much they can top up their super means it will be more attractive to have an IP than to pay more tax...
oh and the articles state....AUS housing always lifts the economy out of recessions....namely the start is the lower interest rates...that gets them back into housing...housing recovers...then the economy recovers...
and this time is no different.....
I am not suggesting anyone rush out and buy a prop...the market will just have modest growth for another year...and I dont need anymore competition in the market, when I am looking for the bargains...
cheers


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## robots (30 May 2009)

hello,

and who was that bloke who SOLD his apartment in Sydney a while ago, gee the mind has had a bad couple of days, whats his name, gee i should be getting these, it will pop up some time soon, remember he predicted 40% falls, escapes me

oh well, just going with the flow like Kincella man setting up the next 20, 30, 40, 50 yrs of our lives walking this planet 

utopia

thankyou
the real associate professor


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## kincella (30 May 2009)

Hi there Robots....we need a house for a long long time, so regardless if it is a depression or a recession, or boom times....or planning for our retirement,
the price goes higher in line with everything else...and has as much to do with the devalue of the dollar....
history charts to show us where it has gone in the past...so we can predict with reasonable accuracy where its going in the future......
I just need to keep healthy..not that I want to live till 90...but I need to plan in case I do....
on another note...
....a dear old client is on her deathbed this week...she is 92...her husband was a banker, he bought the beautiful unit in Toorak 70 years ago or around about the time of the great depression...1939...it might have cost 1500-3000-5000...today its worth about 800-1 million...
her husband passed away 20 years ago....he left her with top 50 shares..bhp and bank shares, and a few clues on how to look after the investments...she never sold any investments....did not spend all the income...saved and reinvested some each year...played tennis until she was 80, then it was bridge...
so a home for 70 odd years...and a nice bequeath for the 2 children....
what more could one need


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## overlap (30 May 2009)

Safe as Houses (Ascent of Money - part 5)

http://video.google.com.au/videopla...PT3YymDg&q="the+ascent+of+money+part+5"&hl=en

or search for "the ascent of money part 5" on video.google.com.au


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## Soft Dough (30 May 2009)

robots said:


> hello,
> 
> and who was that bloke who SOLD his apartment in Sydney a while ago, gee the mind has had a bad couple of days, whats his name, gee i should be getting these, it will pop up some time soon, remember he predicted 40% falls, escapes me




Oh I guess that if he had it still over the past year he would be down 4% rather than up 4% if he had it in cash.... how stupid of him.


----------



## robots (30 May 2009)

hello,

check check:

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

another fantastic day out there, a huge 82% brothers

this is just amazing i cant believe it, still at 7-8x average income, looks like it

paradise for holders, jealousy for those who dont

gee some groupies around the place these days, oh well

thankyou

associate professor robots


----------



## awg (30 May 2009)

if only Associate Professor Keen lived on the Gold coast

http://business.smh.com.au/business/king-tide-hits-gold-coast-20090529-bqca.html?page=-1


----------



## Beej (30 May 2009)

Soft Dough said:


> Oh I guess that if he had it still over the past year he would be down 4% rather than up 4% if he had it in cash.... how stupid of him.




Ummmm no; Surry Hills unit median price UP 14% ($410k ->  $466k) over the past 6 months according to APM data, (check for yourself here: http://www.homepriceguide.com.au/snapshot/price/index.cfm?action=view&source=apm). And now it seems prices rising even more and across the board nearly in Sydney - so it looks like a really dumb decision so far.

In other news, another cracker auction weekend in Sydney; 75% clearance rate. (Check out results here: http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf )

In those results is a place in an area that I was looking at last year that sold today for $2.1M+ - from what I saw at the end of last year a couple of similar places started out asking $2M+, one didn't sell and was withdrawn from sale and the other needed to sell, so ended up going for $1.75M after a couple of months on the market- if you had the cash that seemed at the time like an excellent buy. This all starts to tell me that the high mid range/top end of Sydney is starting to bounce back now - I think late last year may well turn out to have been the best time for top end bargains in the current slump.

Cheers,

Beej


----------



## robots (31 May 2009)

hello,

just amazing Beej the results for Surrey Hills units, up 14% over the past 6mths

as a suburbs changes and the riff raff move out, things pick up typically, fantastic

great research from Beej who has been out on the ground putting in

looking forward to the topend report from Morrell & Koren as well

thankyou

associate professor robots


----------



## kincella (31 May 2009)

Morning all....news now  saying its back to the boom days of 2007..with clearance rates at 80% and the big numbers of sales at auction...anyone note the private sales were about 30% higher...ie 911 PS and 647 auctions...and Melb prices up over 4%...
my research of only the 2 suburbs that I am interested in...showed the bargains were gone in Oct 08...3 months earlier than the rest...
its an amazing recovery....specifically when so many were expecting huge drops in value...
people selling their family homes, gone renting, and waiting for the huge falls before entering the market again...heard another couple bragging of this yesterday on another site.....they may lose far more than the house
and that attitude is  very risky imo....I know of people who sold out in 2000, they thought that was the peak....and so far behind now they will never re-enter the market ..... 
http://www.theage.com.au/national/property-sales-hit-boom-level-20090530-br3w.html


----------



## michael_t_f (31 May 2009)

I would say the property market has flat lined for a year due to the fhog and low rates. You are kidding if you think this is a boom.


----------



## kincella (31 May 2009)

well, in fact I dont think its a boom....I clearly stated the 'news' was calling it a boom...
and as we are all well aware...the news has been wrong most of the time since 2000....regarding the property market
so again they are out to scare the 'scaredy cats'...to attempt to frighten them out of their skins....
and again no one with half a brain is listening to the media...
there are numerous reasons why people are heading back into the property market......and interest rates are in the top 10 reasons....

the posters on this and other forums who are positive  about property, are generally very experienced in holding property as an investment....
and like me, just trying to impart some knowledge out there for the inexperienced...
otherwise it would be a very boring thread...with all the scaremongering about what might happen,  could happen...including references to comparing today to the great depression :sheep::sheep:


----------



## robots (31 May 2009)

hello,

yeah top effort Kincella,

in todays Investor lift out from the Age the editorial deals with the changes in Super and the positive impact this is going to have on property, and in particular the continual haven of the "home"

thankyou
associate professor robots


----------



## legs (31 May 2009)

Its great to see a really healthy argument about something that is so important to discuss. This can have a major effect on the value of alot of retiress nestegg in the next 10yr's.

Keep it up.


----------



## nunthewiser (1 June 2009)

> Thousands need helping hand
> 
> 31st May 2009, 10:45 WST
> 
> ...




http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=145061


not sunshine and lollipops for some 


just keeping it real brothers

thankyou


----------



## nunthewiser (1 June 2009)

> Industrial land prices plummet, supply falls
> 
> 28th May 2009, 6:30 WST
> 
> ...




http://www.thewest.com.au/default.aspx?MenuID=359&ContentID=144280


not keeping it too real am i ?


----------



## kincella (1 June 2009)

nunthewiser...you are living up to your nick....
since when did industrial land have anything to do with  this thread....
we are discussing housing....
industrial land has nothing to do with housing...and in fact industrial land is at the bottom of the list for most investors...it has its own unique set of problems at any time...and is always the first to tumble....in a recession...

you seem to be clutching at straws now


----------



## MACCA350 (1 June 2009)

kincella said:


> nunthewiser...you are living up to your nick....
> since when did industrial land have anything to do with  this thread....
> we are discussing housing....
> industrial land has nothing to do with housing...and in fact industrial land is at the bottom of the list for most investors...it has its own unique set of problems at any time...*and is always the first to tumble*....in a recession...
> ...



If it's the first, what's next?
Are you saying we're at the beginning of the overall housing market tumble?

cheers


----------



## nunthewiser (1 June 2009)

kincella said:


> nunthewiser...you are living up to your nick....
> since when did industrial land have anything to do with  this thread....
> we are discussing housing....
> industrial land has nothing to do with housing...and in fact industrial land is at the bottom of the list for most investors...it has its own unique set of problems at any time...and is always the first to tumble....in a recession...
> ...





i see you have chosen to ignore my other post darl .......no need for personal insults , it only proves your ignorance 

have a nice day


----------



## kincella (1 June 2009)

hahahahaha...thats so funny...bollocks to the personal insult...its your nic...you chose it....


----------



## robots (1 June 2009)

hello,

hello and good evening brothers

got the violin out for the usual stories from the likes of the Army, CityMission, Sacred Heart Mission etc

perhaps they should offload some of the assets they hoarding to give to the needy instead of bludging of the average man/woman in the street

check out this:

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

great commentary from a crew out there doing the deals and putting in the yards on the pavement

thankyou
associate professor robots


----------



## nunthewiser (1 June 2009)

kincella said:


> hahahahaha...thats so funny...bollocks to the personal insult...its your nic...you chose it....




oh thats so immature kincella ......


----------



## grace (1 June 2009)

nunthewiser said:


> oh thats so immature kincella ......




Hey kincella, if you have a look around this sight, you'd find that nunthewiser is completely the opposite to his nic.


----------



## kincella (2 June 2009)

so its not just housing thats showing you the signs and a few clues for the future...."if you are not so blind that you cannot see"...(think that was a proverb years ago)

I stopped spending in June 07...and buttoned down the hatches since then....so here we are two years later.....now the lights shining at the end of the tunnel....well at least one can see the light..

and I note CBA is doing its bit to rein in the kids...max LVR now 90% as per presentation yesterday

oh and the last time I saw a bargain priced house was Oct 08....but I sense some here only became aware of the mess since that time.....all just a bit too late
extract.........................
MANUFACTURERS worldwide preparing for an economic rebound are rebuilding inventories of everything from benzene to plywood, sparking a record-breaking commodities rally that has lit a fire under the Australian dollar.

The Journal of Commerce index that tracks prices of 18 industrial materials gained 9.5 per cent last month -- the most in one month since the measure began in 1985. 

Aurubis, the top manufacturer of copper wire rods for cars, said last week that demand improved since April. Huntsman, the biggest maker of epoxy adhesives, said early in May that second-quarter results would benefit from improved sales to customers who had depleted stockpiles. And Dow Chemical, the largest US chemical maker, said its plants operated at 70 per cent of capacity in April, up from 45 per cent in December. 

"The distribution chain will generate this giant sucking sound of demand," Alcoa chief executive Klaus Kleinfeld said on Friday. The largest US aluminium producer said metal distributors had "seen some green shoots" in orders and were concerned they would not be able to satisfy clients as the economy recovers because inventories were near zero. 

While the US contracted 6.3 per cent in the fourth quarter and probably will shrink 2.8 per cent this year, commodity prices show that investors and corporate purchasing agents anticipate that a rebound will begin later this year. 

http://www.theaustralian.news.com.au/business/story/0,28124,25571304-643,00.html


----------



## Mc Gusto (2 June 2009)

hello hello

I have made up my mind that the current rises are not sustainable in the current economic climate. Unemplyment to increase. Wages to stall. Mc Gusto waits until the year end

Thanks

Gusto

http://business.theage.com.au/business/house-prices-tipped-to-slide-20090602-btmd.html


----------



## robots (2 June 2009)

hello,

good evening fellow members and distinguished guests,

what another great day, everything going okay by the looks of it

just for people who might of missed the link yesterday:

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

great reading

gee, not looking good for ZERO interest rates as per which economist?

thankyou
associate professor robots


----------



## kincella (3 June 2009)

bad news for the doomsdayers.....
is anyone surprised by these figures ???
Robots and I have been confirming the shopping in Chapel St has been going hot....
hehehehehe and the economists got it wrong again...no surprises there.....
oh and the housing stats have been going up ....yes again
hehehehe

AUSTRALIA has avoided a technical recession as the economy grew 0.4 per cent in the March quarter.

"Here we are with an acutal expansion in the economy, a great result for the economy," said CommSec economist Savanth Sebastian, who says Australia may be through the worst.

"You'd expect going forward, it's a lot brighter scenario," he said.

Economist predictions swung from -0.4 per cent to growth of 1 per cent ahead of today's data.

GDP is a measure of all the goods and services bought and sold, and is the key data economists use to take a health check on the Australian economy.

Many economists swapped their forecasts 

http://www.news.com.au/business/story/0,27753,25580772-462,00.html


----------



## singlefished (3 June 2009)

kincella said:


> bad news for the doomsdayers.....




Deary, deary me, you poor short sighted individual... missing the big picture and oblivious to reality again.

Don't you realize that with middle/high end house prices still going down in an expanding economy it means the air is gradually being let out the bubble?

You don't even have the contracting economy as an excuse for price declines any more....

I suppose *Today Tonight* will have a house prices to boom story within the next few days that you will no doubt bore us with - I can hardly wait!


----------



## Beej (3 June 2009)

singlefished said:


> Don't you realize that with middle/high end house prices still going down in an expanding economy it means the air is gradually being let out the bubble?




I think you will find things have stablised and are starting to rise in some area's now as well (certainly in Sydney) in the mid/high-end. My neighbors house went on the market last month, sold in 9 days after multiple offers, and for $100k more than they, or their agent, (or myself!) expected based on what I got my place for Nov last year. This was mid $1Ms price territory and in a suburb with a ~$1.3M-$1.4M median house price. 

There's also been some cracker auctions over the past few weekends in some of the Sydney beach-side eastern suburbs, and a few of the $3M+ Mosman mansions etc are starting to shift as well.

It's all there to see every week if you read through the auction results and follow the market in area's of interest closely! 

Cheers,

Beej


----------



## kincella (3 June 2009)

oh dear...so its back to a personal attack again......ie; poor short sighted individual.....
hohoho...contrary to what ever you like to believe.....I am long sighted...
my property acquisitions are held for  a 20 year term or longer.....or unless someone offers me triple the cost within 2-3 years....as has happened in the past...
but then I took that profit and bought more props.....
I have regularly stated on here, I have 30-40 years of self funded retirement to look forward to....most of it will be in property....
this window of opportunity....low interest rates.....may not be seen again for another 50 years.....
oh and you dont need to be bored with my posts....simply ignore them....
:sheep:


----------



## robots (3 June 2009)

hello,

yes spot on Beej and Kincella, 

this is all hilarious, amazing 

we have truck drivers, delicatesen owners, rag trade merchants, the card-board man, property developers but dont see any economists on the BRW Rich List, 

what another great day here in Australia the grandest place in the world

thankyou
associate professor robots


----------



## kincella (3 June 2009)

Robots, exactly...points noted about the economists.....not on the rich list...we all know why....well because they are duds.....they get it wrong most of the time....
but back home here in reality land....just slow and steady, little by little...bit by bit...plant a little seed and a mighty  big tree will take its place....
or a lovely home...
sorry...but sometimes its such a simple attitude, coupled with a proven history....nothing flamboyant, no star spanagled banner, no drum roll, or mind boggling media story, nor guru status required.....or fancy derivatives to spoil the party...
just an old fashioned proven method is all that is required
old money attitudes win everytime......
cheers


----------



## satanoperca (3 June 2009)

kincella said:


> but back home here in reality land....just slow and steady, little by little...bit by bit...plant a little seed and a mighty  big tree will take its place....
> or a lovely home...
> cheers




So true.


----------



## singlefished (4 June 2009)

kincella said:


> oh dear...so its back to a personal attack again......ie; poor short sighted individual.....
> hohoho...contrary to what ever you like to believe.....I am long sighted...
> my property acquisitions are held for  a 20 year term or longer.....or unless someone offers me triple the cost within 2-3 years....as has happened in the past...
> but then I took that profit and bought more props.....
> ...






Quite amazing that anyone with an opposing viewpoint pointing out the flaws in your moribund analysis is construed to be personally attacking you. If you cannot accept criticism of the statements you post then a public forum is obviously not the place for you to be spending time.

Anyway, comprehension is obviously also an issue so to clarify, your longsighted outlook on property bears no consideration to the immediate problems currently wreaking havoc on both our local and global economies.

*You* are obviously not concerned with this but that doesn't mean the GFC is an irrelevent issue which will not affect the property market in the short term.

Once the artificial stimuli have run their course, once unemployment peaks and starts declining, once credit tightening measures start to abate, once the global and Australian economies start growing at a sustainable rate, yes - you can then start spruiking the next property boom.

Property as an investment in the short term will likely further fall before flatlining for several years regardless how much activity is going on in the market place. Activity in the market is not a harbinger of price growth.

Look at todays GDP figures as reported by Alan Kohler this evening, dwelling investment down 5.7% for the quarter - ouch! Wasn't the market supposed to be bustling with activity????

You are welcome to discuss and debate the above assertions.... please don't give us the regular today tonight/mel-kochie/kerri-anne analysis with the "bollocks to everybody attitude" to those of differening opinions.


----------



## kincella (4 June 2009)

I think the RBA is too focused on housing, instead of the business community...
I believe business rates are 10% plus....and grossly unfair for small business...which are this countries biggest employers.....
they should be cutting the rates now...not waiting for disastrous figures to arrive in Sep when it will be too late to save the jobs.....
here are extracts from todays article..........

Still scope for interest rate cuts: RBAMr Stevens said it was likely economic activity remained subdued in the June quarter, with the rapid decline in business investment "almost certainly continuing". 

But figures which have shown a pick-up in borrowing for housing over the past six months was "what would be expected if an upturn in residential investment spending is to begin later in the year". 

"It would be counterproductive, though, if further reductions in interest rates induced a large number of marginal borrowers into debts they could service only at unusually low interest rates

http://www.news.com.au/business/story/0,27753,25585914-462,00.html


----------



## ROE (4 June 2009)

kincella said:


> I think the RBA is too focused on housing, instead of the business community...
> I believe business rates are 10% plus....and grossly unfair for small business...which are this countries biggest employers.....
> they should be cutting the rates now...not waiting for disastrous figures to arrive in Sep when it will be too late to save the jobs.....
> here are extracts from todays article..........
> ...




huh? what the? 

business rate got nothing to do with the RBA
it's set by the commercial banks...

Business lending are high risk lending so it's high to compensate for the risk the banker willing to take.

No one going to lend you for a business loan at 5% simple as that

RBA can set what ever rate they want, banks has the job to whether to
pass on the rate cut or not all got to do with risk, profit and margin

banks dont need to pass didli squat rate cut to you if they feel they dont maintain
a decent profit margin.

when you borrow you are at the mercy of the banks


----------



## kincella (4 June 2009)

Roe....hello...I guess ....ever heard of the ....no forget it...its easy... you dont know much about business finance ...


----------



## ROE (4 June 2009)

kincella said:


> Roe....hello...I guess ....ever heard of the ....no forget it...its easy... you dont know much about business finance ...




No enlighten me what is business finance and see if you can get cheap rate for Business 

Maybe Wesfarmers can get their interest at 5% rather than 11% they paid 2 years ago 
you obviously now something about cheap business lending that the CEO of Wesfarmers and those guys who sell them bonds doesn't and maybe advise Tabcorp why they paying a margin of 4.25% on top of 3 months bank bill rate

Most small business I consider them in the class of Junk bonds
see if you can get cheap rate on junk bonds


----------



## satanoperca (4 June 2009)

Firstly I am not expert in commercial/business loans.

The RBA can drop rates as much as it wonts but that does not mean the banking sector will pass on any cuts to business loans. The last lot of rate cuts were not reflected in business loans. 

Source RBA
Small Business Loans
                 Yr 08      Yr 09   Difference
Cash Rate    7%          3%       -4%
Overdraft    11.5         9          -2
Variable Rate 10          8          -2

Residential Mortgagee - variable
                  9.5%       5.5%     -4%
Cash Rate     7%          3%       -4%

The banks seemed very reluctant to pass on the latest IR cuts, but pressure was born on them by the Government due to residential mortgage rates being such a politically sensitive issue.

Cheers


----------



## kincella (4 June 2009)

satan...forget about the cash rate...the banks charge a margin above that...and talking to brokers...some of the rates listed in the following link, no longer exist...my experience with bank west last week....and they want 3 years tax returns ..not 2 years....a lot more hoops to go thru....
this canex/canstar list looks good...but the reality is quite different...and even though a rate is posted on this list or the banks web site...
individuals ln business looking for a loan...will be offered a higher margin loan for their trouble...
bank west had infor about business loans etc...when questioned they said those loans wer no longer available from Sep 08...I said why is it shown on your web site...no answer
this list if for residential back business loans...if you do not have a resi property to secure the loan...expect to pay another 2%..if you can even get a loan...
http://www.canstar.com.au/interest-rate-comparison/compare-residential-secured-overdraft-rates.html

and this today...seems unfair...our govt tipped billions into the banks to provide liquidity....but no liquidity handed out...

A survey of Australia's top 500 businesses by turnover has found 40 per cent wanted their bankers to relax lending security requirements and debt covenants.

The findings, in a bi-annual report by East & Partners, were similar to a twin survey of Asia's top 1,000 companies by revenue across 10 countries.

That survey showed 43.8 per cent of Asia's biggest institutions want their bankers to relax lending criteria which was tightened significantly in 2008 when liquidity all but dried up.

http://news.theage.com.au/breaking-...ant-banks-to-relax-lending-20090604-bwuv.html


----------



## robots (4 June 2009)

hello,

great article for off the planners:

http://www.domain.com.au/Public/Art...eadline=Slump takes shine off best-laid plans

thankyou
associate professor robots


----------



## satanoperca (5 June 2009)

kincella said:


> and this today...seems unfair...our govt tipped billions into the banks to provide liquidity....but no liquidity handed out...




This seems to be the problem, the banks. I would like to see no more handouts to these business. Let them fail if it is to be.

Cheers


----------



## kincella (5 June 2009)

and how many billions of income do they rip off us in just fees alone...not the interest each year...was it 3 billion or 8 billion mentioned last week ??
seems they take no responsibility at all....they are more in control of our economy than any govt....its just a giant cartel...


----------



## ROE (5 June 2009)

kincella said:


> and how many billions of income do they rip off us in just fees alone...not the interest each year...was it 3 billion or 8 billion mentioned last week ??
> seems they take no responsibility at all....they are more in control of our economy than any govt....its just a giant cartel...




That is right nothing works without bankers,
they are one of the most powerful organisation in the world
it's not just 21st thing, it's been like that since man invent money..the bond dealers and the bankers are the most powerful and the most richest man on the planet through the ages.

and you better off have a profitable banks than a collapse banks, a collapse banks bring the economy to its knees, you house price will crumble, your stock market free fall.

so interest rate are set by banks, nothing you can do about it, when you borrow you are at the mercy of the banks.....RBA can set at 1% banks can charge you at 10%...not a damn thing you can do about it ....so have you found  cheap rate for business 

You cant beat them you join them I laugh all the way to the banks when people borrow money  ..keep borrow son keep making more money for banks and when **** fall over they seize your asset and kick you out of the street...


----------



## Trevor_S (5 June 2009)

kincella said:


> seems they take no responsibility at all....they are more in control of our economy than any govt....its just a giant cartel...




If you think it's a money making bonanza for the banks, then buy shares in them, they have large payout ratios    You do realise they have a duty to shareholders first ?  I would suggest some due diligence first though, before buying.

If you are suggesting they become less diligent with their lending practices, I disagree, I suggest they need to tighten even further, and expect them to do so, especially with resi. mortgages.  I am all for profitable banks, the alternate is worse.

As to the spread between the cash rate and the loan rate (+ margin), it's always been expensive for small to medium business compared to resi.    I saw you spruiking Bank West Business Lending weeks ago, and wondered what the result would be


----------



## kincella (5 June 2009)

Hi Trevour....so this is called spruiking is it.......


kincella said:


> decided I am pretty happy with property atm....more so with the nice low rates on offer...*and BankWest offering 4.99% variable for business loans..*and the resi loans at 5.2%....
> 
> it is the lowest business rate I have ever seen in over 20 years........I thought it deserved some mention.....but to call it spruiking seems rather over the top to me....just a one liner in amongst the other chatter....
> **** note it is highlighted and underlined here...but not in the original post....


----------



## Trevor_S (5 June 2009)

kincella said:


> Hi Trevour....so this is called spruiking is it........




It was more a light hearted jibe   At the time I wondered if you mentioning it meant you were going to approach them about lending as it was mixed in mixed in with your normal rhetoric about how good things are... I had seen their ad prior to you mentioning it and thought "bulls_hit" at the time... why would they (owned by CBA) offer 5% when other banks where at 10% (by the time you add in the margin)  ?  Let us know how you go and what margin on top of the advertised rate you end up paying, if you do proceed, I am genuinely interested.



kincella said:


> and this today...seems unfair...our govt tipped billions into the banks to provide liquidity....but no liquidity handed out...




Surly you're not that naive to think the banking industry is fair ?  Perhaps your frame of reference is the last few years where they have thrown money at people with very little due diligence on their part and you expected this to continue ? rather then perhaps a revision to the status quo of decades past where you needed substantial deposits and a savings record etc...


----------



## Beej (5 June 2009)

Interesting article: http://business.smh.com.au/business/house-prices-not-tipped-to-slide-20090603-bv6p.html



> *House prices NOT tipped to slide*
> MICHAEL PASCOE (SMH)
> June 3, 2009
> 
> ...




There's a lot basically ripping in to recent JP Morgan house price D&G prediction (which wasn't all that gloomy anyway) and Ass Prof Keen etc.

A good quote:



> Yes, rising unemployment is not good for maintaining house prices, but sharply lower interest rates are. Of those who do lose their jobs, relatively few will actually face foreclosure. Most Australian workers actually don't have a mortgage and of the rest, most have built up a healthy equity buffer to see them through a period of unemployment - which is why our big banks are prepared to capitalise repayments for a year.
> 
> On the other hand, as Rory Robertson has repeatedly stressed, monetary policy does work: lift interest rates as the RBA did during the boom and it creates pent-up demand; cut interest rates as the RBA did as the economy slowed and that pent-up demand is unleashed.




Cheers,

Beej


----------



## kincella (5 June 2009)

not naive at all....but why were govts world wide throwing billions at the banks...to save the economy rubbish..when the banks have not passed it on...I posted an article yesterday how big business worldwide is complaining about the lack of funds

and yes I have been looking to refinance my suncorp loan at 7.75...down to a lower rate....compared to my resi loans at 5.2%...why not...a sensible person would...
the rubbish about a commercial loan is tax deductible hence the margin...well thats the excuse the banks give you....at the same time my resi loans on the properties are tax deductible...without a margin    

I know of another rate at 6%...to suit my prime commercial property....but I have another hiccup which is holding things up...which should have been resolved last year....incompetent people responsible....but I am stuck with it...oh and none of them will get any business from me in the future


----------



## kincella (5 June 2009)

hmmm...now just 3.1 points and it will be at the 50 point level heading towards expansion....
and how long has this thread been running now ?? 
its time for that other thread to be closed down.....
and am I looking forward to xmas this year.....and party party party......

The construction industry continued to decline in May, but at its slowest rate in 14 months, a survey has found.

The Australian Industry Group (AI Group)/Housing Industry Association (HIA) performance of construction index rose in May by 10.4 points to 46.9.

While the index rose, it remained below the 50-point level that separates expansion from contraction.

"Despite the continued subdued state of the construction industry, the latest data provides evidence that the industry is starting to recover some ground following the significant deterioration during 2008 and the first quarter of 2009," said Tony Pensabene, associate director of economics and research at the Australian Industry Group (AI Group).

"This was particularly noticeable in the house building sector 

http://news.theage.com.au/breaking-...ion-falling-at-slower-pace-20090605-bxwz.html


----------



## kincella (6 June 2009)

Chinese wealth is boosting our property market.....well in Melbourne anyway..
surely they would be interested in the rest of Australia.....too
oh...btw they are not FHB or buying into the FHB market....

A GROWING number of Chinese people are taking advantage of a relaxation in Australia's foreign investment laws to buy property in Melbourne.

Real estate agents in the eastern suburbs report that up to half the buyers this year have been part-time residents from China, Hong Kong or Taiwan, or Asian companies buying accommodation for their staff.

Auctioneer Robert Ding, of Jellis Craig in Balwyn, started holding auctions in both Mandarin and English in March. A fortnight ago a multilingual auction resulted in the sale of a $1.838 million house in Balwyn.

Agents from Marshall White in Armadale and Hawthorn, are flying to Shanghai this month with plans to establish an office there to draw more Chinese buyers.

"The massive wealth that they've got is quite daunting in some instances," director John Bongiorno said. "What's attracting them is that there's so much space here ”” it's such a safe haven for them to park their money in terms of good real estate. It's a safe lifestyle, great schooling for their children, no pollution and cheap property by their standards."

http://www.theage.com.au/national/chinese-wealth-boosting-property-market-20090605-bylh.html


----------



## kincella (6 June 2009)

now the evidence of some of my predictions regarding the housing market here in Australia.....it comes from being in the market for a couple of decades, and being out there, with a big interest in the market....and not reliant on the media to advise what is happening with this housing market
............................................
Careful home buyers move up to next rung
 Majella Corrigan | June 06, 2009 
Article from:  The Australian 
THERE is more evidence that the middle sector of Sydney's residential market is seeing activity, with those confident enough of their job security taking the opportunity to trade up. But with an unpredictable future, such buyers are exercising caution over the size of their mortgages.

Last week the auction clearance rates were back at 2007 levels, according to Australian Property Monitors. 

One Sydney buyers' advocate, Curtis Associates, has tracked 620 sales in the $700,000 to $2million bracket in Sydney's eastern suburbs, lower north shore and inner west in the two months from mid-March. 

More recently, valuer HTW says in its June market review that in some Sydney suburbs the middle market has been "humming along quite nicely", courtesy of low rates, cheaper prices and lots of choice. 

This combination is allowing people to trade up more cheaply than nine months ago. HTW defines the middle market as $600,000 to $900,000 in most Sydney suburbs and up to $1.2million in areas close to the central business district. 

It says the typical purchaser already lives in the area and needs more space or wants a better quality of living, such as renovated internal fittings or external improvements with entertaining areas and parking. 

Such buyers want to stay in their area, close to schools, transport corridors and other services. 

Many in the mid to outer suburbs want the complete package, but in inner-city suburbs they are looking at unrenovated property, hoping for eventual capital gain. 

HTW says a prime motivation is the potential for a bargain. 

http://www.theaustralian.news.com.au/business/story/0,28124,25591688-25658,00.html


----------



## Gordon Gekko (6 June 2009)

Hi All,

I am trying to find some info on defense housing. I have been looking through the DHA website and it seems straight forward.
Has anyone here had any experience with DHA housing?
Or any sites where I could get some more info?

Thanks,

G


----------



## kincella (6 June 2009)

and now this....oh and in case some dont know....recessions dont last forever....this ones being going for almost 2 years.....its almost over...

British home prices up most in six years

Grainne Gilmore | June 06, 2009 
Article from:  The Times 
BRITISH house prices rose at their fastest pace in over six years last month, but economists were quick to dampen speculation that the market had hit the bottom.

Figures from Halifax showed that property values increased by 2.6 per cent in May, pushing the price of the average UK home up by more than pound stg. 4000 ($8000) to pound stg. 158,565. The jump helped to ease the annual rate of decline in prices to 13.6 per cent from 17.8 per cent in April. 

This is only the third time that prices have gone up in the past 21 months, and the finding comes hot on the heels of separate figures from Nationwide showing a rise of 1.2 per cent during the month
http://www.theaustralian.news.com.au/business/story/0,28124,25593547-25658,00.html


----------



## robots (6 June 2009)

hello,

great posts AGAIN from Kincella, bloody legend man, second to none in the community

check check:

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

another massive 83% clearance rate, just amazing 

but we are living in the finest place on the planet

thankyou
associate professor robots


----------



## MACCA350 (6 June 2009)

Not surprising with only 166 properties.

cheers


----------



## MrBurns (6 June 2009)

MACCA350 said:


> Not surprising with only 166 properties.
> 
> cheers




Slam dunk


----------



## Soft Dough (7 June 2009)

Can you please put in the median price difference compared to last year as well, perhaps that will give a better indication of the health of the market.


----------



## kincella (7 June 2009)

Hi Robots...I see a bit of scoffing at the numbers sold...but the kids dont realise this is a long weekend, half the population takes a holiday....skiing etc and partying....
hey I thought houses over a million bucks were not selling....but there you go..it must be all the Chinese with the big bucks....and then look how cheap the bargains houses are....afraid Broady is just a bit too feral for me....but they have to start somewhere
cheers

TOP 5 HOUSES
1. 117 Alfred Crescent, Fitzroy North $1,410,000
2. 89 Esplanade , Altona $1,265,000
3. 27 Faussett Street, Albert Park $1,230,000
4. 21 Male Street, Brighton $1,203,000
5. 28 Fuller Avenue, Glen Iris $1,182,000

TOP 5 BARGAIN HOUSES
1. 5 Garner Parade, Broadmeadows $190,000
2. 16 Norma Street, Melton $226,000
3. 269 Gap Road, Sunbury $252,000
4. 20 Fairbairn Road, Sunshine West $261,000
5. 6 Livingston Street, Deer Park $272,000


----------



## kincella (7 June 2009)

This is what some of us  have been advising....this magnificent window of opportunity, but the protractors have been going on about the FHB propping up the market, but they only represent 25% of the activity...the upgraders at 75% have been taking advantage of the Lowest interest rates in 50 years...and thats ......well thats the secret

Have to pop down to Chapel St today...see a man about a dog....I get the dog washed at Prahran Market...buy the dog a little treat at KFC...then back home to catch up on work...boring but necessary
cheers
ps only extract here...read the full article

*Recession should not be wasted*
 Jan McCallum June 7, 2009 Page 1 of 2 Single page view

Canny operators are sowing the seeds of wealth and security, reports Jan McCallum.

INVESTORS are buying property and businesses increasing their advertising. Sound wrong? Not for investors and business owners who are determined not to waste the recession.

Many are setting themselves up for future prosperity by looking to buy under-priced assets or, in the case of business, identifying and moving into areas where competitors are weak.

It takes nerve to expand when the country teeters on the edge of recession and business and consumer sentiment is plummeting, but the pay-off from a successful strategy will be evident in a few years when the economy has recovered.

National Australia Bank's general manager of private wealth, Angela Mentis, has no doubt this crisis will forge a new generation of wealthy people who will feature on rich lists in 20 years' time.

Ms Mentis said high-net-worth individuals, usually people with over $10 million to invest, were starting to look at high-end residential property which had been heavily discounted as well as commercial property and opportunities to invest in private businesses.

http://business.theage.com.au/business/recession-should-not-be-wasted-20090606-bz6o.html


----------



## overlap (7 June 2009)

Never believe a banker telling you their primary motivation is building your future wealth.

http://www.news.com.au/heraldsun/story/0,21985,25594181-664,00.html

Now, this doesn't deny there are opportunities for those in a position to take advantage of the times and survive the tide going out - as it must do sometime (but how far?)

It does spell trouble for those getting on the wave of banker largess in bark canoe.


----------



## Beej (7 June 2009)

kincella said:


> TOP 5 HOUSES
> 1. 117 Alfred Crescent, Fitzroy North $1,410,000
> 2. 89 Esplanade , Altona $1,265,000
> 3. 27 Faussett Street, Albert Park $1,230,000
> ...




Hah! Kincella that aint nothin!!  From the North Shore Times (local Cumberland rag for Sydney upper/mid north shore) - top 10 sales in the past week (includes PT and Auction):

1. 19 Coolawin Rd, Northbridge, 5 bed house, $5M
2. 51 Warrangi St, Turrumurra, 5 bed house, $2.65M
3. 18 Tindale Rd, Artarmon, 4 bed house, $2.125M
4. 68 Nicholson St, Chatswood, 5 bed house, $2.1M
5. 667 Pacific Hwy, Killara, land, $2.05M (probably bought for development?)
6. 2A Bruce Ave, Killara, land, $2.05M (Same as above I think)
7. 17 Flamont Ave, Riverview,  4 bed house, $2.045M
8. 28 Brisbane Ave, East Lindfield, 5 bed house, $2.0M
9. 50a Arabella St, Longueville, 3 bed house, $1.975M
10. 17 Burgoyne St, Gordon, 5 bed house, $1.79M

So no matter what many might think here, those who actually have the money seem to be back buying top end property on the north shore now - that's one of the better weekly top 10 sales lists for a while.

Yesterdays auction clearance rate was 72% in Sydney, but as noted it was a long weekend so volume was only in the mid-100s and not too many in the top end (you don't sell top end property on a long weekend!).

Cheers,

Beej


----------



## kincella (7 June 2009)

Beej, thank you for that info....hahahaha to you too....well done...
gee for a moment I felt we were like the poor cousins.....but I am sure there was a reason for that, probably no million dollar houses listed for auction....they are being sold privately...have to wait for Morrell and Koren's next reports....
I guess Sydney keeps its spot as the leader in the direction of where housing is going.....
we did have one here sold about 2 weeks ago at auction for $5 million...Ma*****a Rd Toorak.....a basket case...huge refurbishment or redevopelment required there, so guess they will need to spend another few million on it....
Anyway, I believe Sydney and Melbourne are the top 2 cities...the others just follow, then some go way off course....

Anyway..news coming out is just confirming exactly what a small group of us property people have been saying for ages.....
I assume the Asians and foreigners are spending big in all Capital Cities now...
and Sydney may get more than a fair share of interest from those buyers....

so we have had a few 'I told you so' moments in the last couple of months
cheers


----------



## ROE (7 June 2009)

Gear it up borrow a bit more, buy a few more properties.
I'm sure banks wont mind lending you when you are LVR at 80% 

You are the customers bank want, always pay your mortgage on time 
and when you down to that 70% gear up again to 80% and get some more properties.
and make sure you borrow from the big 4 just to make your life easier ..

Safe as house they said even banks know it


----------



## Beej (7 June 2009)

ROE said:


> Gear it up borrow a bit more, buy a few more properties.
> I'm sure banks wont mind lending you when you are LVR at 80%
> 
> You are the customers bank want, always pay your mortgage on time
> ...




ROE do you think the buyers of those top ten north shore sales I listed are borrowing at 80% LVRs???? It's far more likely many of them are paying cash! And the rest on very low LVRs. Many probably cashing in on the recent global equity markets rallies, and moving some money out of the markets and into upgraded PPORs....

Beej


----------



## Soft Dough (7 June 2009)

It is really interesting, the corner that we are all painting ourselves into, and the glee that some people have, and the spin that they can put on their figures.


Still no figures on the 12 month returns in these markets?

It still amazes me that people think interest rates drive house prices, employment rates, and hence income drives house prices.


----------



## Beej (7 June 2009)

Soft Dough said:


> It still amazes me that people think interest rates drive house prices, employment rates, and hence income drives house prices.




Soft Dough - what evidence/data can you show to prove this assertion? All the data I look at suggests the opposite? Ie interest rates plus disposable household income are the key factors. Unemployment/employment rate doesn't show any correlation one way or the other - at least not at the levels we have seen at any time in the past 60 or 70 years.....

Cheers,

Beej


----------



## kincella (7 June 2009)

I am just a small fry in the game... income from property $115,000 less interest expense $35,000= 80,000....and piddling amounts for the rates and insurance...
the interest expense bill has dropped 20,000 from the highs of the past 18 months
geared to under 40% over all props

unemployment is 5% and employment is 95%....
you might be reading to many media stories...its quite different out in the real world
cheers


----------



## Soft Dough (7 June 2009)

Beej said:


> Soft Dough - what evidence/data can you show to prove this assertion? All the data I look at suggests the opposite? Ie interest rates plus disposable household income are the key factors. Unemployment/employment rate doesn't show any correlation one way or the other - at least not at the levels we have seen at any time in the past 60 or 70 years.....
> 
> Cheers,
> 
> Beej




It all has to do with gearing.  You need income to gear, and it is the increase in incomes that have driven overgearing during the mining boom.  As unemployment rises, people will not be able to gear and hence house prices fall.

It doesn't matter what interest rates are if people are experiencing real income growth.


----------



## kincella (7 June 2009)

geez Soft Dough...
huh....... very scattered pieces in your last post
...most of you are yet to buy a first home, now your talking about gearing....higher earnings....and you say forget the interest rates.....
what  folly...
I would suggest its all probably more theory on your part at this stage


----------



## Beej (7 June 2009)

Soft Dough said:


> As unemployment rises, people will not be able to gear and hence house prices fall.




So if unemployment rises from 5.4% to 9%, the incomes of only 3.6% of the work-force are significantly changed right? Assuming of course they become LONG term unemployed and don't find a find a new job in a few months! So how does this effect the ability of the remaining 96.4% to gear exactly as the might have otherwise? (Not they necessarily want to or need to! And dependent primarily on prevailing interest rates of course....). I just don't see how your argument here pans out?

You should read this article by Chris Joye on the topic of unemployment rate and house price growth correlation: http://www.businessspectator.com.au...ousing-pd20090520-S7VRU?OpenDocument&src=srch

Also see the attached graph which shows all the major house price indexes through the late 89 -> early 90s when unemployment rose to 11%. Note that the dips in prices correlate to interest rates hitting 17%, and the rises correlate to the lowering of interest rates, all the while with rising unemployment.

Cheers,

Beej


----------



## ROE (7 June 2009)

Beej said:


> ROE do you think the buyers of those top ten north shore sales I listed are borrowing at 80% LVRs???? It's far more likely many of them are paying cash! And the rest on very low LVRs. Many probably cashing in on the recent global equity markets rallies, and moving some money out of the markets and into upgraded PPORs....
> 
> Beej




oh ok I got it.. share rally 20% - 30% let cash out and buy some multi-million dollars home.. and assume they got in  spot on and buy at the very bottom.

Have you meet many millionaire like that?  .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill 

Most millionaire I know don't do things like that .. In fact most live in an average mum and dad suburbs and live well below their mean but has income producing assets like business and large stock holding...without debt by the way


----------



## Soft Dough (7 June 2009)

kincella said:


> geez Soft Dough...
> huh....... very scattered pieces in your last post
> ...most of you are yet to buy a first home, now your talking about gearing....higher earnings....and you say forget the interest rates.....
> what  folly...
> I would suggest its all probably more theory on your part at this stage




1. A huge percentage of first homebuyers gear, and gear heavily. Perhaps you fail to see that borrowing to buy as an owner occupier is gearing?
2. Banks set gearing ratios due to risk of defaulting, which is affected by the unemployment rate - we are seeing that happen.
3. Rising unemployment is accompanied by lower wage growth.
4. Unemployment from 5.5% to 9% has a more significant effect than 3.5% of the "market" as the decrease in money spreads through the economy affecting profits etc, so it also causes problems for people like you and me.
5. Increasing unemployment causes people to unload houses that they have, and or they cannot afford to pay high rents.


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## Bill M (8 June 2009)

ROE said:


> Have you meet many millionaire like that?  .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill



You assume too much, you don't need to be a millionaire or very rich to be retired.


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## Bill M (8 June 2009)

The market here on the Northern Beaches is still doing very well. Units are sold very quickly and supply is still not enough. Prices seem to be going upwards.

-----

AN investor fought off five other buyers to purchase a Manly semi last weekend, and according to the agent more investors will be out and about with the new superannuation rules. 

“It is early days yet but I think the superannuation restrictions may prompt people to buy property, especially with interest rates so low,” he said.

FULL STORY HERE


----------



## kincella (8 June 2009)

I know of a few people who will put the extra into property, with the new restrictions on superfunds....they are the ones that are now ploughing / fast tracking surplus funds into super for retirement....the mortgage on the family home is minimal....


----------



## kincella (8 June 2009)

to expand a bit on Bill's post on Manly property.....

its the changes coming from left of field that can have unintended consequences....or become another of those 'windows of opportunity' for the astute.....
back in the 90's the compulsory super was in its early days....and the boomers were not so interested in retirement.....we were still partying then...
however, today its a whole different ball game..... if anyone thinks the changes to super will not have an impact on the property market....do so at your risk...

“This is different from the previous flat market in the 1990s, then, we had interest rates of around 16 per cent, whereas now they are very low,” he said. 
we , well some of us have been banging on about the low rates....
love this guys name......

James Economides, of Elders Manly, said the new superannuation restrictions announced in this month’s Federal Budget - halving the limit on super contributions that come from before rather than after-tax income - would mean that some people will look again at property. 

“It is early days yet but I think the superannuation restrictions may prompt people to buy property, especially with interest rates so low,” he said. 

People aged 50 or less will only be able to salary-sacrifice up to $25,000 per year and those over 50 only $50,000 per year. 

This means there may be more money around to invest. 

“This is different from the previous flat market in the 1990s, then, we had interest rates of around 16 per cent, whereas now they are very low,” he said. 

http://manly-daily.whereilive.com.au/real-estate/story/investing-in-quality-property/


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## Beej (8 June 2009)

ROE said:


> oh ok I got it.. share rally 20% - 30% let cash out and buy some multi-million dollars home.. and assume they got in  spot on and buy at the very bottom.
> 
> Have you meet many millionaire like that?  .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill
> 
> Most millionaire I know don't do things like that .. In fact most live in an average mum and dad suburbs and live well below their mean but has income producing assets like business and large stock holding...without debt by the way




Yes as Bill M says you do assume a lot ROE! For a start I know personally at least one person that did time the current market quite well - exiting in early 08 at around XAO 6000 level (all capital into 12 month fixed term cash @ 8%), and re-entering in March this year at the ~3200 level - and this was with a SIGNIFICANT amount of capital - they have done very well, I'm sure they are not alone. (PS: I wish I had taken that persons advice at that time!).

On your second point, what do you REALLY know of any other posters financial position here? Including my own?? What do you know of who I know? And how wealthy (or not) they might be? I won't turn this into a pissing contest by revealing anything further on these fronts, however I will say that you make some very broad assumptions above that are pure generalisations, (ie they might apply in some cases but absolutely not all), and as such are irrelevant to the original points I made, which still stand. I mean really, do you think someone buying a $5M house is borrowing $4M or more of that???? Seriously? 

Cheers,

Beej


----------



## kincella (8 June 2009)

Wealthy Asians buying up in Australia....due to a relaxation of the FIRB

Apart from the fact the Australia is seen as a very attractive place to live.... we have a very large immigration program, 300,000 annual intake this year, and 430,000 foreign students some of whom may stay here.....add to that a very large number of immigrants who have taken up residence here over the last 60 or so years....and then they bring their extended families over....

since everything is so bright and rosy compared to the rest of the world....including property prices not falling over....it does not take much to wonder
just how many more will see Australia as even more attractive place to live....and want to purchase a home here

now back to the FIRB..............
the main changes are the removal of the 300,000 limit on student visa holders for established dwellings, temporary residents will not have to notify the FIRB for purchases..
and the 50% limit on new dwellings to foreign persons is removed........
plus applications to be streamlined and processed faster...

Foreign Ownership Laws are:
New dwellings
 The existing requirement allows
only 50% of new dwellings to be
sold to foreign persons in an ‘off-the-plan’ situation. This was lifted, provided developers market locally
as well as overseas
 Previously, a ‘new dwelling’ was defined as never previously occupied or sold. This now includes dwellings that were not sold by the developer but were rented out for no more than 12 months
Second-hand dwellings
 Student visa holders residing in Australia are no longer subject to a $300,000 limit on the value of an established dwelling purchased as their principal place of residence
 Temporary residents won't be required to notify the FIRB of proposed acquisitions of an established dwelling for their
own residence, any new dwellings and single blocks of vacant residential land
 Foreign-owned companies can now purchase established dwellings for the use of their Australian-based staff provided that they sell or rent them if they're expected to remain vacant for more than six months
Vacant residential land
 Foreign-owned companies, trust estates and non-resident foreign persons who purchase single blocks of vacant residential land must
build a dwelling within a period
of 24 months (previously, within
12 months)
 The conditions previously relating to acquisitions by temporary residents of single blocks of vacant residential land no longer apply

Why were the changes made?
The government’s viewpoint is that it doesn't expect the changes to have any upward effect on house prices.
But they may assist somewhat
in the sale of new unit developments by reducing the compliance burden
on developers to get pre-approval
and lifting restrictions on the sale
of new units to non-residents –
such as the 50% quota and
considering units rented for 12
months as ‘new’ and therefore
available for sale to foreigners.
What effect might this have on Australia’s property market?
The recent changes to Australia’s Foreign Ownership Laws may well allow for an increase in the number of foreigners buying property in Australia.
In the current world economic climate, however, this may not be an automatic outcome and it's difficult to forecast whether the changes will, in fact, lead to an increase in the number of foreign purchasers.
The intention is to simplify the process and in doing so, streamline it, while reducing costs for foreign residents and foreign businesses

http://www.newzealandmortgages.co.uk/wp-content/uploads/Foreign Ownership Aust Apr 09.pdf


----------



## kincella (8 June 2009)

regarding the question of millionaires....I know quite a few....and its no big deal today....I think we achieved a million millionaires in  OZ last year....its rather ordinary unless you start going over the 10 million mark..

of the ones that I know, they all own property, not one is not a property owner..... they all have multiple properties.....and most have at least some debt....

they did not become millionaires by sitting around doing nothing....most are quite a bit smarter than the average person.....
and because they are smarter,  they understand debt, there is good debt and bad debt, most are geared up...conservately....

geez the idea that debt is bad is just crazy....there is no way known I could have made the sort of money I have without the debt....

its the stupid greedy ones, bad management etc that fall over.....
hey look at all the companies world wide...with their hands out at the moment....
they took on too much debt, thought the good times would go on forever....


if you have ever had experience in farming....it teaches you to put money aside for the bad times...because, as sure as day turns to night...the bad times will come....probably every 3 years...so for the years you make good money...there will be years when you have to outlay money...but there will be little or none coming in......but also the knowledge that the good times will come again.....so to keep the farm viable and running for the future....
you put the money aside....for those rainy days, or droughts...
most prudent businesses do the same....they do not rely on huge amounts of debt, and they make allowances for disruptions..or what if scenarios

with farming it was mainly due to the weather...too much rain...or not enough....or bushfires to wipe it all out


----------



## robots (9 June 2009)

hello,

top post Kincella, always a great contributor at ASF

no surprise here:

http://www.theage.com.au/travel/tra...s-third-most-liveable-city-20090609-c10w.html

and a total of four in top 20, man this is the place, all welcome in Australia

plenty of room for others from across the globe, especially the sub-continent

only have to take a food tour of Dandenong to experience the great benefits to society

thankyou
associate professor robots


----------



## robots (9 June 2009)

hello,

sorry brothers nothing to report:

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

thankyou
associate professor robots


----------



## kincella (9 June 2009)

Robots,
love your humour...
and you are a valued contributor to the ASF forum yourself.....same as, same as,  the rest of the clan
plus you and the rest of our clan.....are some of the 10% of the population that owns 90% of the wealth
congratulations brothers......
seriously though....there is a mongrel that is about to know ...experience some Karma.....he crossed me......
and like an elephant I never forget......
oh and the lawyer that was too weak...karma coming to him as well
.....
just need to call on or a  really ugly angry mate of mine to fix things up...... to bring Karma and return it  to those that gave me pain...

dont worry its all under control....Karma will prevail
proverb = where there is a will...... there is a way
cheers
PS I really like Karma
or do unto others as they would do unto you...
the unto others will commence shortly


----------



## nunthewiser (9 June 2009)

can we get a drug testing unit to this thread asap 

thankyou


----------



## IFocus (9 June 2009)

nunthewiser said:


> can we get a drug testing unit to this thread asap
> 
> thankyou




LOL Nun that's funny crack me up

Well housing has held help well beyond my own predictions but then the Oz economy has held up beyond my wildest dreams also talk about the lucky country.

More power to the bulls


----------



## MrBurns (9 June 2009)

nunthewiser said:


> can we get a drug testing unit to this thread asap
> 
> thankyou




This thread is keeping several drug lords in Columbia in business.


----------



## singlefished (9 June 2009)

MrBurns said:


> This thread is keeping several drug lords in Columbia in business.




I guess that puts the Colombian drug lords amongst the top 10% of population that own 90% of the world wealth... saying that though, you only need a piddly odd $60K or so to qualify - well done brothers and sisters!!! 




			
				World Institute for Development Economics Research said:
			
		

> *$2,200 per adult to be in top half of world wealth ranking
> $61,000 to be in richest 10% of adults
> more than $500,000 to be in richest 1% of adults (group with 37 million members worldwide)*
> 
> http://www.wider.unu.edu/publications/working-papers/discussion-papers/2008/en_GB/dp2008-03/


----------



## singlefished (9 June 2009)

kincella said:


> ....there is a mongrel that is about to know ...experience some Karma.....he crossed me......
> and like an elephant I never forget......
> oh and the lawyer that was too weak...karma coming to him as well
> .....
> ...




Isn't it wonderful when the flaws in one's character come shining through...

Your real name's not *Earl J Hickey* is it???


----------



## Trevor_S (10 June 2009)

IFocus said:


> the Oz economy has held up beyond my wildest dreams also talk about the lucky country.




http://www.theaustralian.news.com.au/business/story/0,28124,25593640-5018061,00.html



> It is much too early to declare success and say we are going to avoid recession," says Shann. "We have only just had the large hit from the terms-of-trade fall. That is clearly going to hit business profits and cashflow hard. You have to assume businesses are going to set about slashing their costs and running down inventories, and soon they are going to cut employment."




http://www.businessspectator.com.au...withers-pd20090610-SUSKJ?OpenDocument&src=sph



> In fact the iron ore unloaded in China this year is being stockpiled, mostly at or near the ports. Those facilities are now full.




If this sort of analysis is correct, we haven't even started the real decline yet...


----------



## Beej (10 June 2009)

Trevor_S said:


> http://www.theaustralian.news.com.au/business/story/0,28124,25593640-5018061,00.html
> 
> http://www.businessspectator.com.au...withers-pd20090610-SUSKJ?OpenDocument&src=sph
> 
> If this sort of analysis is correct, we haven't even started the real decline yet...




I don't think anybody is claiming the recession is over - far from it, but you have to admit that compared to other western countries we have been very lucky here and the economy has proven very resilient in the face of serious o/s problems/issues and a large decline in global trade, frozen credit markets last year etc etc. Our economy has only been treading water (zero growth) for nearly a year now - but things have certainly been much worse in the US and UK, even NZ etc.

So while of course things are far from rosy, we may yet escape without unemployment going up to much more than 8% I reckon. Plus many businesses have already cut back on their inventories, investment in plant etc and pulled their heads in (ie recession mode). Business confidence is now starting to improve.....and the housing market is still burbling along with no signs of a major crash, and residential construction approvals and activity are now on the increase as well, which feeds directly into GDP.

Cheers,

Beej


----------



## Trevor_S (10 June 2009)

Beej said:


> I don't think anybody is claiming the recession is over




That was my point, obviously poorly made... if you read the analysis in those articles, it has barely STARTED here in Aus. ie not that the Aus economy has held up at all, but that we are only just now starting to see it enter recession.


----------



## Beej (10 June 2009)

Trevor_S said:


> That was my point, obviously poorly made... if you read the analysis in those articles, it has barely STARTED here in Aus. ie not that the Aus economy has held up at all, but that we are only just now starting to see it enter recession.




I'm not so sure - I don't see why our "recession" would be delayed compared to other countries that we trade with; I think we have been seeing the impacts of all that clearly since mid last year, it's just that our local economy has remained fairly resilient in the face of that adversity. If the US, UK etc have bottomed and are heading towards recovery later this year (as appears might be the case), then Australia's economy should not really dip too much deeper than it already has. Maybe we will get another mild quarterly contraction or 2 before we start on a steady growth trend again - but this would be seen as a very good outcome under the global circumstances.

To back this up: June consumer confidence figures released today: http://business.smh.com.au/business/consumer-confidence-surges-on-gdp-news-20090610-c2wk.html



> *Consumer confidence surges on GDP news*
> June 10, 2009 - 12:01PM (SMH)
> 
> Consumer confidence jumped the most in 22 years as Australians took heart from the release of better than expected economic growth figures for the first quarter of 2009.
> ...




In addition April housing finance stats out as well: 



> *House finance extends gains*
> June 10, 2009 - 12:17PM (SMH)
> 
> Australian home-loan approvals rose in April for a seventh month as the lowest borrowing costs in half a century and government cash handouts bolstered demand among first-time buyers.
> ...




With consumer confidence at those levels (100+ means optimists outnumber pessimists) and the continuing growth in residential housing finance (which clearly bottomed around Sep/Oct last year), and housing construction on the rise, it's really hard to see how we are only at the very beginning of a recession with much worse yet to come! It looks like quite the opposite to that in fact....

Finally - for some fun, an interesting article here by Ross Gittins that talks about some research that suggests "optimists" usually do better in life than "pessimists" 
http://business.smh.com.au/business...n-makes-the-world-go-round-20090607-bzs2.html

Cheers,

Beej


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## lasty (10 June 2009)

The problem is that the media has thrown Australia in with what is happening in the US and UK and teleported it here.
With the doom and gloom comes employer paranoia and the chain reaction.How many businesses have over-reacted?How many consumers have suddenly become frugal from the media scare?
Many "advisors" have told their clients to remain in cash whilst seeing our sharemarket rally close to 30pct.

Moving on, today consumser confidence suddenly jumps 12.7pct best ever since 1986. Housing finance up. Investment finance up.
Positive signs coming from certain sectors.

There are those who are disappointed the property market hasnt fallen and the sharemarket has rallied.
A frustrated investor is a dangerous one and living in hope.

They have a major problem on their hands.Thats when to pull the trigger for the entry back in.


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## nunthewiser (10 June 2009)

everyone forgets about the artificial props of late tho , stimulise this , boost that ........what happens when them numbers are no longer being produced ? ......... anyways .........happy everybody happy 

i do hope kincella gets better soon tho


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## Beej (10 June 2009)

nunthewiser said:


> everyone forgets about the artificial props of late tho , stimulise this , boost that ........what happens when them numbers are no longer being produced ? ......... anyways .........happy everybody happy
> 
> i do hope kincella gets better soon tho




It's Ok nun - we know it's really all "storm clouds and vinegar sticks!"


----------



## MACCA350 (10 June 2009)

lasty said:


> Moving on, today consumser confidence suddenly jumps 12.7pct best ever since 1986. Housing finance up. Investment finance up.
> Positive signs coming from certain sectors.



Consumer confidence can change very quickly, what happens if GDP goes negative:


Trade balance dives into the red


> *The outlook for the Australian economy has been dealt a reality check after the nation's trade balance unexpectedly fell into deficit in April.*
> 
> ...nation posted a $91 million trade shortfall as exports of coal, iron ore and wheat fell.
> 
> ...




Trade slump undermines GDP optimism


> *Economists say the first trade deficit in nine months underscores the risk that the economy could still contract.*
> 
> Today's official figures show a sharp slump in exports has dragged the $2.3 billion trade surplus in March to a deficit of $91 million in April.
> 
> ...



Is Rudd planning on going into more debt to keep the official figures rosy.......seems we were able to stave off the natural decline, but are we now going to see an accelerated slump into recession?

cheers


----------



## Beej (10 June 2009)

MACCA350 said:


> Is Rudd planning on going into more debt to keep the official figures rosy.......seems we were able to stave off the natural decline, but are we now going to see an accelerated slump into recession?
> cheers




I don't see why this would produce an "accelerated slump into recession"? So trade is now (finally) dropping off, but in GDP terms this can easily be offset, at least partially, by increased activity in the housing construction sector and through consumption/spending by the newly confident Aussie consumer (60% of our GDP is from the services sector). So those figures, while not great, IMO don't paint a doomsday picture - they just confirm an outlook that includes a few more quarters yet of flat or mildly negative growth. Trade will bounce back strongly once the US/UK/China etc get going again properly.

The thing with government fiscal response (ie stimulus) to economic contraction is it acts like a shock absorber does on your car. You hit a pot hole, but the shockie stops the wheel (and therefore the car) from dropping all the way into the hole. By the time the wheel does start to fall (because the fall has been "delayed"), your car has travelled over most of the pot hole so your tyre hits ground again on the other (rising) edge of the pothole. At that point the shock absorbers work is done and it is not needed until the next pot-hole in the road....

PS: The current government stimulus still has a lot of wind left in it's sails - only about 1/3 of the $67B allocated to the 3 phases (cash, shovel ready capital works, long term infrastructure), has been unleashed so far. Most here under-estimated the impact of the first 1/3 of that stimulus, don't make the mistake of underestimating the impact of the remaining 2/3 that have yet to be spent!

Cheers,

Beej


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## lasty (10 June 2009)

"Consumer confidence can change very quickly, what happens if GDP goes negative"

Wasnt that meant to be in the last figures?
The problem is that the recession that was meant to be didnt eventuate and wasnt the media disappointed.
It was like, crikey the US had one and the UK had one, where is Australia's?
The same can be said about Swine Flu.
Once again as other countries dismiss it as a common cold, Australia was squealing for those little piggies to hit our shores.

We have seen a couple of pessimists with plenty of air time trying to alarm the masses.One in particular is calling for doom and gloom despite stimulus packages and economic indicators starting to turn the economy around.

With these types there is wait until this happens or wait until that.Unfortunately when they dont eventuate they have quietly slipped away with their tails between their legs hibernating for the next downturn.


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## MACCA350 (10 June 2009)

Considering exports saved us from a technical recession last quarter, you don't think that the dramatic turnaround of those export and import figures will have a major effect on the economy? 

If exports were flat we'd be in negative GDP and a technical recession. And I'd say consumer sentiment would be not very rosy at all.

I don't think China will rescue our exports, someone already mentioned they've been stockpiling and are now at capacity. If anything that would suggest that they've been part of the reason our exports did so well during the first quarter. As that demand drops off our exports will fall(as they have in April).

The effects of the Housing incentives will(and already has from what I've seen while looking for a house) start to taper off. Small Business are not seeing much in the way of support, even the tax incentives are of no hep to those who are running out of cash.

What does Rudd have up his sleeve that would counter these effects? 

cheers


----------



## aleckara (10 June 2009)

lasty said:


> "Consumer confidence can change very quickly, what happens if GDP goes negative"
> 
> Wasnt that meant to be in the last figures?
> The problem is that the recession that was meant to be didnt eventuate and wasnt the media disappointed.
> ...




That depends of where you stand lasty. For people without a home, still studying for a job, our children, people looking to settle into Australia etc. the prospect of another housing boom is very bad news. If your the entrenched and have a house (or multiple ones) a housing boom is great.

A lot of people claim jealously in this forum if people want them to go down - I don't think when talking about basic occuped housing that is an appropriate term. I would like to see the price of everything fall including housing but for good reasons (i.e enough supply of housing, food, oil, etc). Not for bad reasons like people are suffering.


----------



## The_Bman (10 June 2009)

Certainly is a crazy time to buy. I'm just going through the process of finalising our first purchase & contract. 

The price we settled on in March was at the time on the high side of similar properties in the market for this area. At the time we thought it would drop further however given a 5-15 year occupancy, any short term loss would be more than recovered.

On the weekend a house 1 street away in the same condition, same size, same age sold for $350K more.


----------



## lasty (10 June 2009)

aleckara said:


> That depends of where you stand lasty. For people without a home, still studying for a job, our children, people looking to settle into Australia etc. the prospect of another housing boom is very bad news. If your the entrenched and have a house (or multiple ones) a housing boom is great.
> 
> A lot of people claim jealously in this forum if people want them to go down - I don't think when talking about basic occuped housing that is an appropriate term. I would like to see the price of everything fall including housing but for good reasons (i.e enough supply of housing, food, oil, etc). Not for bad reasons like people are suffering.




How far do you want these prices to fall?
whereabouts?
You can get a 2 bedroom apartment in outer sydney suburbs for 200K, the problem is no one wants to live out there and now it becomes the greed factor.


----------



## Uncle Festivus (10 June 2009)

Beej said:


> With consumer confidence at those levels (100+ means optimists outnumber pessimists)




100 means the optimists = pessimists. That is, of the 2000 people surveyed, 1001 were optimistic? It's a survey of peoples opinion, hardly the solid foundation for an sustained economic recovery against hard data that says otherwise? And the usual stuff....


----------



## Beej (10 June 2009)

Uncle Festivus said:


> 100 means the optimists = pessimists. That is, of the 2000 people surveyed, 1001 were optimistic?




That's why I wrote *100+*!



> It's a survey of peoples opinion, hardly the solid foundation for an sustained economic recovery against hard data that says otherwise? And the usual stuff....




Well actually the consumer confidence index is an important leading indicator that historically has a strong correlation with economic outcomes (GDP growth etc). The clear upward trend in this indicator and the fact that it has gone past 100 for the first time in a long time is significant IMO - but stay in denial all you like! 

Cheers,

Beej


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## Soft Dough (10 June 2009)

MACCA350 said:


> Considering exports saved us from a technical recession last quarter, you don't think that the dramatic turnaround of those export and import figures will have a major effect on the economy?
> 
> If exports were flat we'd be in negative GDP and a technical recession. And I'd say consumer sentiment would be not very rosy at all.




What saved the day was not exports rising

but imports plummeting.

iirc exports fell, but imports fell more ( but i could be wrong on this )


----------



## MACCA350 (10 June 2009)

Soft Dough said:


> What saved the day was not exports rising
> 
> but imports plummeting.
> 
> iirc exports fell, but imports fell more ( but i could be wrong on this )



The growth was driven by exports, which contributed 2.2 per cent to the broader result

cheers


----------



## Soft Dough (10 June 2009)

MACCA350 said:


> The growth was driven by exports, which contributed 2.2 per cent to the broader result
> 
> cheers




Perhaps some more realistic commentary ( retail spending was up 2.2% )

http://www.news.com.au/heraldsun/story/0,21985,25583765-36281,00.html

"Exporting more of what we make is obviously positive for our GDP - Gross Domestic Production. As the graph shows, increased exports contributed 0.6 percentage points to the 0.4 per cent March quarter growth rate"

"So a big cut in our imports in the March quarter actually boosted the quarter's overall GDP growth rate by a thumping, extraordinary 1.6 percentage points"


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## Quincy (11 June 2009)

"Housing fears as loans hit new high" - by Jacob Saulwick.

See Here



> Asked if the the market had been inflated by grants, the Treasurer, Wayne Swan, said yesterday's figures showed the benefits of the Government's economic stimulus packages.
> 
> "It has played a very important role in supporting employment in the Australian housing and construction industry."




Does Wayne Swan EVER answer the question asked ?


----------



## Uncle Festivus (11 June 2009)

Beej said:


> That's why I wrote *100+*!
> 
> 
> 
> ...




A survey of 2000 peoples _opinions_ is economicaly irrelevant - it obviously didn't include 2000 people who have just lost their jobs and/or houses.

Permabulls and/or blinkered Polyanna optimists playing the 'Glad Game' being in denial of economic fundamentals are the ones who caused all this mess in the first place.

Now you would have to agree on at least one thing, and that is the importance of interest rates on property buyers? Yes or no? Now you would also have to agree that long US treasuries yields are going up? Yes or no? If Rudd is in the debt market to pay for his deficit then he will be competing with the other indebted economies in the world for funds, of which the US sets the bench mark.

Central banks are now zero bound on 'official' interest rates - the market is now calling the shots on the risk yield of debt! And guess what, public (government) debt is going up, not down! 

10 year US treasuries yields are rising - surely you can't deny that? Simple, hard facts not subject to human _opinion._



> Prices on longer-term U.S. bonds dropped Wednesday, pushing 10-year note yields to the highest since October, after *the government had to pay more* to sell $19 billion in debt at its second of three big auctions this week.


----------



## dhukka (11 June 2009)

Beej said:


> That's why I wrote *100+*!
> 
> 
> 
> ...




Beej,

I wonder if you could provide evidence that consumer confidence is highly correlated with economic outcomes like GDP growth. I thought the following was the highlight of yesterday's consumer confidence report:



> “Overall the "Current Conditions" Index was up by only 2.2% compared with 20.7% for the Expectations Index. That emphasis on expectations is similar to the recent result we saw for the US Index when Expectations were up by 10.0% and current conditions fell by 0.9%.
> 
> “We are of the view that the "Current Conditions" is a more reliable indicator of the likely outlook for consumer spending. In that regard it is significant that the one component of the Index which fell was the one most closely correlated with overall consumer spending – "Time to buy major household items". That is a major qualification of the reliability of this movement in the Index for predicting consumer spending.


----------



## aleckara (11 June 2009)

lasty said:


> How far do you want these prices to fall?
> whereabouts?
> You can get a 2 bedroom apartment in outer sydney suburbs for 200K, the problem is no one wants to live out there and now it becomes the greed factor.




I've been out there and trust me the apartments that you can get for 200K are 200K for a reason. Not for greed, but because of crime and the culture of these areas. Not a place to raise a starting family at all.

How far do I want things to fall? I would like my shopping to be $1, instead of $200 if I could get away with it. I want myself and everyone else to live in the land of abundance. That's the real goal of economic management - even if it is impossible and unattainable. It is to give the most goods and services at the lowest price. Housing is the only good that doesn't really have this competition and I think it is really due to too many vested interests.


----------



## lasty (11 June 2009)

Uncle Festivus said:


> A survey of 2000 peoples _opinions_ is economicaly irrelevant - it obviously didn't include 2000 people who have just lost their jobs and/or houses.
> 
> 
> Ok so lets change the reporting rules then.
> ...


----------



## lasty (11 June 2009)

aleckara said:


> I've been out there and trust me the apartments that you can get for 200K are 200K for a reason. Not for greed, but because of crime and the culture of these areas. Not a place to raise a starting family at all.
> 
> How far do I want things to fall? I would like my shopping to be $1, instead of $200 if I could get away with it. I want myself and everyone else to live in the land of abundance. That's the real goal of economic management - even if it is impossible and unattainable. It is to give the most goods and services at the lowest price. Housing is the only good that doesn't really have this competition and I think it is really due to too many vested interests.




Well thats the cost you pay isnt it, safety and lifestyle, which is a form of greed as all countries have a similar problem.


----------



## MrBurns (11 June 2009)

Quincy said:


> "Housing fears as loans hit new high" - by Jacob Saulwick.
> See Here
> Does Wayne Swan EVER answer the question asked ?




NEVER - they spend all day being coached how to use every question to parrot their BS and avoid the real issues.


----------



## Uncle Festivus (11 June 2009)

lasty said:


> Ok so lets change the reporting rules then.



As the 'Glad Gamers' usually do when the going get's tough ie the mark to market rules 


lasty said:


> As for the US Treasuries well we all know their shot. Australia is now looking toward Asia for their money.




And the rest of the world isn't? He who pays the best yield will get the money....


----------



## kincella (11 June 2009)

Aleckara wrote....Housing is the only good that doesn't really have this competition and I think it is really due to too many vested interests.

It is not so much a vested interest, its the competition, to get into the nicest suburb you can afford....and to avoid the cheaper places, because of the crime and atmosphere that comes with those suburbs...
Vested interests infers conspiracy....when in fact its a very competitive market...

You think there is no competition....try over 120 people with 6 bidders at houses valued over 2 million as per last weeks Morrel and Koren reports.

as an aside.......
I have heard reports of  whole suburbs becoming homes to predominately Pakistani's...or asians etc....
and the current race crisis in Sydney..reported on the news last night....as the Indians moving in, in large numbers to a predominately Lebanese  suburb.

Oh and I like the way we whites are not allowed to say the word race...or we are racist....but they are allowed to call us whites.... racist.....
anyone surprised its mainly the lebanese attacking the indians....so its more of a race war between those two groups....


----------



## lasty (11 June 2009)

Uncle Festivus said:


> As the 'Glad Gamers' usually do when the going get's tough ie the mark to market rules
> 
> 
> And the rest of the world isn't? He who pays the best yield will get the money....




Ask Zimbabwe about yields and see how much they are getting


----------



## aleckara (11 June 2009)

kincella said:


> Aleckara wrote....Housing is the only good that doesn't really have this competition and I think it is really due to too many vested interests.
> 
> It is not so much a vested interest, its the competition, to get into the nicest suburb you can afford....and to avoid the cheaper places, because of the crime and atmosphere that comes with those suburbs...
> Vested interests infers conspiracy....when in fact its a very competitive market...
> ...




Competition doesn't come from buyers, it comes from people providing the goods (the builders and the sellers). When sellers feel the freedom to hold on, or developers have economic profits consistently it isn't that competitive of a market. Its no conspiracy, just a lot of government incentives that encourage inefficiencies in this market and cause people to act that way. I don't blame people buying heaps of properties - I never said I have. I see it as one of the only ways to the average person to preserve money in a constant inflation environment. If you didn't your cash would be worth nothing today. But that's the other side of the coin of the same problem - money in terms of houses is worth less and less because of these incentives. The government has mismanaged money, infrastructure, services, housing, immigration (I do believe part of the problem is that some capital cities can't handle the people in them) particularly in NSW severely.

And to be honest I'm not really interested in the upper end of the housing market. Despite its values it is so small that it doesn't really affect the overall living standard of the country too much. I'm interested in the affordable housing and what happens to that.

When the party started it was better. Young couples moving into new neighbourhoods (even in Sydney) 20 years ago with new houses starting families. They did very well and in comparison to what a lot of average new home buyers need to settle for today they lived the dream.

Compare apples to apples please. Don't compare apartments with crime issues (not racist - just stating a fact that there are gangs of these people in a lot of these areas or people I wouldn't want my kids anywhere near - not a good environment for them) with peachy new neighbourhoods with better quality homes than today's new ones where kids could play in the street. I do think housing may rise - I just don't think it is good for the country.


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## kincella (11 June 2009)

well it says more about the people that make those affordable suburbs, unattractive to others, than anything else....
one of my daughters tried living in the West in Sydney ...she did not last long...
her majority of Timorese and Fijian neighbours threw the dirty disposable nappies out the window, onto the lawn and onto the street.....she said the stench 24/7 was unbearable....and that was about the least of the awful things they did....apart from the almost monthly break ins....she barely lasted 3 months...she did not fit in with that culture


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## Trevor_S (11 June 2009)

lasty said:


> Australia is now looking toward Asia for their money.




We're already selling 20% of our Government Bonds to the Chinese.  

http://www.news.com.au/business/money/story/0,28323,25247817-462,00.html

Aussies would rather redecorate their house, getting a loan from overseas interests, to purchase goods from overseas,  then invest in genuine wealth building   and then whinge about immigrants "taking our jobs !!"


----------



## aleckara (11 June 2009)

kincella said:


> well it says more about the people that make those affordable suburbs, unattractive to others, than anything else....
> one of my daughters tried living in the West in Sydney ...she did not last long...
> her majority of Timorese and Fijian neighbours threw the dirty disposable nappies out the window, onto the lawn and onto the street.....she said the stench 24/7 was unbearable....and that was about the least of the awful things they did....apart from the almost monthly break ins....she barely lasted 3 months...she did not fit in with that culture




That's exactly right. People don't buy land really - they buy location and all the things that go with that to get a lifestyle (i.e services, anemities, parks, environment, jobs, etc). For the same living standard relative to income it is getting harder and harder for people to make a start and I don't think lowering our interest rates to zero so that people who are diligent and save suffer makes the situation any better to make it affordable which it doesn't anyway as prices tend to adjust to interest rates. It doesn't lean to a good society. BTW a lot of people in these areas don't really care about these properties - probably are in them for free or renting.

Retirees lose out because their savings are eroded, the people buying lose out due to higher prices. The people it helps are those in the building industry - the only industry other than mining that can never be outsourced to other countries (i.e natural protection against competition hence it's one of the only industries Australia has left due to its short sightness and its inability to think for the future thinking everything will be right).


----------



## Uncle Festivus (11 June 2009)

lasty said:


> Ask Zimbabwe about yields and see how much they are getting




Actually, you won't have to go that far - ask the Commonwealth bank how easy it is to get money - 



> COMMONWEALTH Bank has refused to rule out the prospect of a *mortgage rate rise ahead* of next month's Reserve Bank board meeting.
> Banking analysts are suggesting the country's largest home lender is poised to increase its standard variable rate home loan by as much as 10 basis points this month *because its funding costs are continuing to rise*.
> Such a move would be controversial because CBA and the other major banks have not passed on the full benefit of recent official rate cuts by the Reserve Bank.




Now our very own RBA is 'zero bound' at 3% ie lost control of the debt lever. I wonder what will happen when the home sellers grant finishes in September??

http://www.news.com.au/business/money/story/0,28323,25619257-5013951,00.html

More reality for the Glad Gamers - 



> MORE Queensland families than ever are losing their homes and businesses to the banks, after a record number of repossession claims in April.
> As the global economic crisis forces up the jobless rate, new figures from the Justice Department show lenders lodged 176 claims to repossess homes or businesses in the state's courts during April.
> A Justice spokesman has confirmed it is *the highest monthly total since records began*, about 1992, _The Courier-Mail_ reports.




Anomaly corrected - 



> MORE than 35,300 Australians lost their jobs in May with Australia’s unemployment rate jumping back up to 5.7 per cent, after it took an unexpected slide in April.


----------



## kincella (11 June 2009)

thats funny...which article do you believe.....is it the seasonally adjusted figures that are out....and look at the different full time and part time figures...one is the opposite to the other....
updated......
so here are the actual figures from the ABS site...
EMPLOYMENT 

decreased by 1,700 to 10,793,100. Full-time employment decreased by 26,200 to 7,643,100 and part-time employment increased by 24,500 to 3,150,000. 


UNEMPLOYMENT

increased by 27,200 to 651,200. The number of persons looking for full-time work increased by 30,000 to 482,600 and the number of persons looking for part-time work decreased by 2,800 to 168,600.
...................................................................
hmmm.....so full time employment decreased by 26,200 but PT increased by 24500 = difference of 1700
but then how do they come up with unemployment increased by 27200...if employment decreased overall by 1700 ???.....I think the answer lies in those PT people that increased by 24500...were actually looking for full time work....
how else do you explain...on one hand there is only a 1700 decrease in employment....but on the other hand there is an increase in unemployment......
ps I cannot be bothered wasting time on this useless figures 

then the article in the age............

Total employment fell by *1,700 *to 10.793 million, in May, seasonally adjusted, compared to market expectations for a decline of 30,000 in the month, Australian Bureau of Statistics (ABS) data released on Thursday showed.

The data also showed that full-time employment decreased by 26,200 to 7.643 million in the month while part-time employment was up 24,500 to 3.150 million.
The unemployment rate was a seasonally adjusted 5.7 per cent in May, compared with an upwardly revised 5.5 per cent in April, while the participation rate was 65.5 per cent, compared with 65.4 per cent in April.

http://news.theage.com.au/breaking-...ws-positive-say-economists-20090611-c4d7.html

and then this from the news

Mixed bag for full and part-time employment

Full-time employment increased by 49,100 and part-time employment decreased by 21,800 according to the Australian Bureau of Statistics data released today. 
Part-time employment decreased by 21,800 in April. Economists had forecast April unemployment to edge closer to 6 per cent but instead the turnaround figures surprised many.

In March, the rate was 5.7 per cent leaving 650,900 people out of work.

http://www.news.com.au/business/story/0,27753,25619639-462,00.html


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## Uncle Festivus (11 June 2009)

> In March, the rate was 5.7 per cent leaving 650,900 people out of work.
> .....upward revision to 5.5% for March




That's the only bit that matters?


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## kincella (11 June 2009)

people employed total....wait for it....10,793,100 or roughly 95% of the population in the age groups available for work.....
but you concentrate of the bad news of 5.7%
for me ...its a celebration that we have so many in work...
my glass is half full.....


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## lasty (11 June 2009)

This is right Kincella however the doom and gloomers wouldnt be too happy.

They need some bad news to keep their "Emo"s" fan club rocking.

So far there hasnt been much bad news of late, even Tracey and Gordon, had a happy ending 

Mind you Steve Keen the property bear and the Professor of gloom must be elated that the area in which he sold his property has risen by 14pct in the past year.


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## dhukka (11 June 2009)

kincella said:


> thats funny...which article do you believe.....is it the seasonally adjusted figures that are out....and look at the different full time and part time figures...one is the opposite to the other....
> updated......
> so here are the actual figures from the ABS site...
> EMPLOYMENT
> ...




Jesus kincella , how many times do you want to demonstrate your ineptitude with numbers?  A net 1,700 people lost jobs but unemployment rose by 27,200, why do you think that was? 

The change in employment is the change in the number of people with jobs. The change in unemployment is the change in the number of people that aren't considered employed plus new entrants into the labour force. If the labour force grows and employment stays flat the unemployment rate will rise. That's why you need to average around *15-20k* new jobs per month in Australia just to keep the unemployment rate steady.


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## kincella (11 June 2009)

dhukka...my numbers and comprehension are just fine...
now since we have been there and done this everytime the unemployment numbers come out....and the reality is....its not taken from centrelink with actual numbers of people registered for unemployment.....

but taken from a survey by ABS...a telephone call to 20 odd households...and the respondents say oh yes...dave still has a job, but the kids looking for work, and sara works pt...but bill down the road is looking for work I think...or is he on the dole....and me mate in timbuktoo just got a ft job...but his mate went pt...and the wife is working pt but looking for ft work...
so there you have it.....a whole lot of rubbish....and then the abs seasonally adjusts the figures....then the treasurer says make them figures look good..

I will leave it to you people who are good with numbers to fight over it
hehehehehehe:sheep:


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## dhukka (11 June 2009)

kincella said:


> dhukka...my numbers and comprehension are just fine...
> now since we have been there and done this everytime the unemployment numbers come out....and the reality is....its not taken from centrelink with actual numbers of people registered for unemployment.....
> 
> but taken from a survey by ABS...a telephone call to 20 odd households...and the respondents say oh yes...dave still has a job, but the kids looking for work, and sara works pt...but bill down the road is looking for work I think...or is he on the dole....and me mate in timbuktoo just got a ft job...but his mate went pt...and the wife is working pt but looking for ft work...
> ...




I'll explain it 

1,700 fewer people had jobs in May than did in April.

However 27,200 more people were unemployed in May as opposed to April. 

Your mistake is in thinking that these two numbers should cancel out. 

They don't for the simple fact that more people entered the workforce, that is, more people were looking for work in May than in April. 

So they are not added to the employment number because they don't have jobs but they are added to unemployment because they don't have a job and are actively looking. 


The opposite case can also happen (although it is more unlikely), that is the number of employed can go down and the unemployment rate can also go down if there is a decline in the number of people looking for work. Simple stuff really.


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## Beej (11 June 2009)

dhukka said:


> Beej,
> 
> I wonder if you could provide evidence that consumer confidence is highly correlated with economic outcomes like GDP growth. I thought the following was the highlight of yesterday's consumer confidence report:




The view that Consumer Confidence correlates with economic outcomes is by no means a new or even controversial idea! So I'll let you research that one for yourself if you think otherwise. I know someone who has based entire medium/long term equity trading strategies around the CC indicator and being very successful doing that over the past 20 years, including using it to signal exit and re-entry for the current bear market at what have turned out to be very opportune times. 

Of course it pays to understand the data thoroughly and read all the information as you did.



Uncle Festivus said:


> A survey of 2000 peoples _opinions_ is economicaly irrelevant - it obviously didn't include 2000 people who have just lost their jobs and/or houses.




Again, you can dismiss it all you like, but a sample of 2000 people is statistically significant if done using a correct methodology, and the consumer confidence index based on that survey is a widely followed and well respected indicator.

PS: I've added a CC graph below - if you plot the CC index against GDP growth there is a clear correlation, with CC usually dipping as the economy contracts, and rising as the economy expands. Note that graph is from last year so does not show the recent improvement in confidence to 101.



> Now you would have to agree on at least one thing, and that is the importance of interest rates on property buyers? Yes or no? Now you would also have to agree that long US treasuries yields are going up? Yes or no? If Rudd is in the debt market to pay for his deficit then he will be competing with the other indebted economies in the world for funds, of which the US sets the bench mark.
> 
> Central banks are now zero bound on 'official' interest rates - the market is now calling the shots on the risk yield of debt! And guess what, public (government) debt is going up, not down!
> 
> 10 year US treasuries yields are rising - surely you can't deny that? Simple, hard facts not subject to human _opinion._




Yes interest rates are important, possibly the most important factor effecting house price trends. I would absolutely agree that a switch from long term low interest rates to long term high interest rates (aka 90s/00s vs 70s/80s Australia) would be one of the only factors likely to really force a significant downward shift in property prices.

Now as for US T-Bonds, well their yields are being driven up in part because the USD is devaluing relative to other currencies, and they are relying on o/s purchasers to fund those bond sales. This makes perfect sense - and might be a problem for the US. Of course the Fed can simply continue to use or expand it's quantitative easing program in an attempt to keep the yield under control, but that would probably backfire ultimately as it should lead to further downward pressure on the US $. So maybe the US is headed into a period of higher interest rates over the long term - how much higher? Time will tell.

In Australia on the other hand we have several factors working in our favour that may mean we avoid the same fate. 

* For a start, we don't need to raise anywhere near as much government debt, either as a proportion of GDP or in absolute terms. In fact our cash needs are tiny compared to those of the US (only a few hundred billion over 4 years). 

* So far there is significant appetite for a large proportion of our bonds locally - the last auction sold $8B worth right and $7B of those were bought by our own local banks.

* There are over $1Trillion in local super funds in Aussie $$. It is conceivable that if yields were being pushed to high due to excessive reliance of o/s funding, they government could regulate to ensure that some of the bonds had to be acquired by Aussie super funds - where there is clearly more than enough liquidity to fund the whole lot if we wanted to do that.

* The Aussie dollar is likely to be one of the many currencies that will appreciate against the US dollar in the current scenario. We don't have QE going on here, official and bank lending interest rates, while low, are not as out of whack as in the US/UK etc. Couple this with the majority of government bonds being bought with local funds, plus maybe the Chinese, who have a very practical use for our Aussie $$ yield flows (ie buying our resources, and therefore given the US dollar outlook wuold likely buy our bonds even at lower yields than the US ones), and I think it looks like we should not see the same upwards yield pressures here on bonds as in the US. 

Cheers,

Beej


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## dhukka (11 June 2009)

Beej said:


> The view that Consumer Confidence correlates with economic outcomes is by no means a new or even controversial idea! So I'll let you research that one for yourself if you think otherwise. I know someone who has based entire medium/long term equity trading strategies around the CC indicator and being very successful doing that over the past 20 years, including using it to signal exit and re-entry for the current bear market at what have turned out to be very opportune times.
> 
> Of course it pays to understand the data thoroughly and read all the information as you did.




Actually your contention that: 

_consumer confidence index is an important leading indicator that historically has a strong correlation with economic outcomes (GDP growth etc)_

is controversial. i don't need to research it because I've read the research, you are the one who needs to read it. I remember reading a paper years ago published by your mates at the RBA called "WHAT DO SENTIMENT SURVEYS MEASURE?" 

Here is the abstract:



> Indices of business and consumer sentiment receive widespread media coverage and are closely watched by market economists despite their limited success as leading indicators. In this paper we ask what explains ‘sentiment’ and find that lagged economic indicators (such as changes in GDP, job vacancies and the cash rate) can explain a substantial proportion of the variation in a number of backward and forward-looking sentiment indices. This does not rule out the possibility that they may be useful for forecasting. We find, however, that when currently available economic information is appropriately ‘filtered’ from the sentiment indices, in most cases they fail even rudimentary Granger-causality tests of predictive ability. On a more positive note, we find that the Roy Morgan consumer confidence rating, NAB actual business conditions, NAB expected employment outlook over the next three months and the second question in the Roy Morgan and Westpac/MI consumer surveys all provide some, albeit small, contribution to forecasting employment growth. The second question of both consumer confidence surveys (which asks about anticipated personal financial conditions over the coming year) also appears to have some ability to predict recessions. Outside of these results there is little evidence that the surveys tell us anything we didn’t already know. Thus, there is reason to suspect that surveyed respondents’ forecasts offer little more information about the future path of the economy than a weighted average of lagged economic variables.


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## Beej (11 June 2009)

dhukka said:


> Actually your contention that:
> 
> _consumer confidence index is an important leading indicator that historically has a strong correlation with economic outcomes (GDP growth etc)_
> 
> ...




All fair enough and that was an interesting read - thanks for the link! I would note though that my assertion was about correlation rather than causality. The paper and exert you referenced acknowledges the correlation, with some caveats. Additionally, the consumer confidence numbers for a given time are released well before other data like National Accounts etc, and therefore when I say it is a leading indicator, perhaps what I should instead have said was early/first available indicator. Ie you can often get a good idea what other economic data might be going to look like for a given period by looking at the consumer confidence (and related) data for the same period, which is available first.

Cheers,

Beej


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## Beej (11 June 2009)

By the way - back on topic for a while; I don't think anyone has remarked on the big jump in INVESTOR participation evident from the latest ABS housing finance stats? Investor buying up nearly 8.9% over the previous month - interesting isn't it?

Beej


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## kincella (12 June 2009)

interesting article about the age of investors...usually older
Not surprisingly, investor households differ
from non-investor households in a number of
aspects. The survey revealed that investor
households tended to be somewhat older than
the rest of the population (Graph 1). The
median age of the reference person in investor
households was around four years older than
for non-investors, largely reflecting a greater
concentration of households in the 35 to
64 age groups, especially those aged between
45 and 54. The bunching of investors in the
working-age segment of the population
would be consistent with tax considerations
being one of the motivations for owning
investment property.
Investor households across all age groups
tended to have higher incomes than their noninvestor
counterparts (Graph 2). In line with
this, 71 per cent of investors were in the top
two household income quintiles and the
propensity to own an investment property
increased at higher incomes, with households
in the highest quintile being almost three times
more likely to own an investment property
than households in the middle quintile
(Graph 3). Associated with their higher
income, investor households were much more
likely to be working than their non-investor
counterparts, and especially to be
self-employed.
Not surprisingly, investor households were
also wealthier than non-investor households,
partly because higher wealth reflects property
ownership (Graph 2). More than half of all
investor households were in the quintile with
the highest net wealth, while only 2 per cent
were in the least wealthy quintile (Graph 3).
A conventional view of property ownership
is that households tend to purchase their own
home before buying an investment property.
The HILDA Survey provides some support
for this view, with 85 per cent of investor
households also owning their own home,
considerably more than the 68 per cent of
home owners in the general population. Still,
at 15 per cent, a surprisingly large share of
investors were households who rented, but
owned a residential property which they did
not normally reside in. The latter group tended
to be younger than those investors who also
owned their own home: the median age of
renter investors was 39 years, verNot surprisingly, investor households differ
from non-investor households in a number of
aspects. The survey revealed that investor
households tended to be somewhat older than
the rest of the population (Graph 1). The
median age of the reference person in investor
households was around four years older than
for non-investors, largely reflecting a greater
concentration of households in the 35 to
64 age groups, especially those aged between
45 and 54. The bunching of investors in the
working-age segment of the population
would be consistent with tax considerations
being one of the motivations for owning
investment property.
Investor households across all age groups
tended to have higher incomes than their noninvestor
counterparts (Graph 2). In line with
this, 71 per cent of investors were in the top
two household income quintiles and the
propensity to own an investment property
increased at higher incomes, with households
in the highest quintile being almost three times
more likely to own an investment property
than households in the middle quintile
(Graph 3). Associated with their higher
income, investor households were much more
likely to be working than their non-investor
counterparts, and especially to be
self-employed.
Not surprisingly, investor households were
also wealthier than non-investor households,
partly because higher wealth reflects property
ownership (Graph 2). More than half of all
investor households were in the quintile with
the highest net wealth, while only 2 per cent
were in the least wealthy quintile (Graph 3).
A conventional view of property ownership
is that households tend to purchase their own
home before buying an investment property.
The HILDA Survey provides some support
for this view, with 85 per cent of investor
households also owning their own home,
considerably more than the 68 per cent of
home owners in the general population. Still,
at 15 per cent, a surprisingly large share of
investors were households who rented, but
owned a residential property which they did
not normally reside in. The latter group tended
to be younger than those investors who also
owned their own home: the median age of
renter investors was 39 years, versus  49 years
for owner-occupier investors.
Graph 1

and this with the negative views by the younger ones.........
2). Young investor
households were much more likely to gear
their investment properties than older
investors: more than two-thirds of property
investors in the 25–44 year age group used
gearing. In addition, among those investors
with debt outstanding on investment
properties, the typical gearing ratio was higher
for younger investors. Young investors were
also more likely than older investors to report
receiving a negative net income on their
property investment: indeed nearly
50 per cent of investors in the 25–44 year age
group reported negative or zero net income
from letting their property. Interestingly,
26 per cent of residential property investors
in this age group were renters. 
http://www.rba.gov.au/publicationsandresearch/bulletin/bu_may04/bu_0504_2.pdf


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## kincella (12 June 2009)

another article on household debt....for the young'uns

In an address to the institute's Public Economics Forum in Canberra today, he will review income data which shows wealthier households, those with the most capacity to get themselves out of financial strife, hold the bulk of the nation's private debt.

The median household had debts that amounted to just 8 per cent of assets, meaning that in the event of a sudden drop in income the repayment obligations, could, in the worst case scenario, be avoided by selling at least part of the household wealth."

http://www.news.com.au/business/money/story/0,28323,25614711-5017313,00.html


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## Trevor_S (12 June 2009)

kincella said:


> meaning that in the event of a sudden drop in income the repayment obligations, could, in the worst case scenario, be avoided by selling at least part of the household wealth."




In a "worst case scenario", I would anticipate a general flight to "cash" and/or Au .... so, sell ...  To whom ? and if you do sell, will getting 10c on the dollar be enough to to alleviate the "repayment obligations"  ?


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## kincella (12 June 2009)

well well well...what have we here....those NRAS houses are being onsold to investors...receive back $8000 pa from the govt for the next 10 years...but you need to rent them out 20% cheaper than the market...
Property ID: 2007739780
MASSIVE CASH FLOW

Want government guaranteed positive cash flow? 

Introducing National Rental Affordability Scheme, or NRAS as seen on TV and all major print media NRAS is a Federal & State Government Incentive providing investors an exclusive opportunity to invest in limited properties which qualify for tax exempt Government grants. The scheme provides a minimum of $8,000 in tax exempt incentives every year for 10 years, that's an incredible $80,000 + in tax exempt incentives Plus rent Plus depreciation and negative gearing. 
In addition to normal capital growth, these selected dwellings are CASH FLOW POSITIVE around $500 pcm After Tax* . The property is kept continuously compliant by experienced property professionals for a single low fee. This is what makes NRAS properties winners and give piece of mind in a changing market. & nbsp;

Full details are available on application.
eg 290,000 in Perth

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007739780


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## Uncle Festivus (12 June 2009)

CBA raises rates 0.1 to 5.74% - the 4 pillars of monopoly?


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## Quincy (12 June 2009)

Uncle Festivus said:


> CBA raises rates 0.1 to 5.74% - the 4 pillars of monopoly?






> CBA's group executive of retail banking, Ross McEwan, blamed higher funding costs for the decision, which will add around $220 a year to a $300,000 variable rate mortgage.
> 
> "We fully understand that any increase in interest rates impacts on our customers and for that reason, have continued to absorb as much of the additional funding costs as long as we could," Mr McEwan said. "Unfortunately, we have seen the bank's wholesale funding costs remain high and continue to increase as previous long term funding matures and is replaced with new funding at significantly higher cost."





Based on the above statement by the CBA, it is hard to imagine that interest rates for home loans (say for the next 12 to 18 months) will head in any other direction than up from here on in.


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## Soft Dough (12 June 2009)

Uncle Festivus said:


> CBA raises rates 0.1 to 5.74% - the 4 pillars of monopoly?




No doubt reflecting what is happening in the real world of funding and NOT rudd and swan's simplistic popularist viewpoint on how banks should be run.


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## gfresh (12 June 2009)

great if you're a shareholder  the banks are going to come out of this so damn rich..



Quincy said:


> Based on the above statement by the CBA, it is hard to imagine that interest rates for home loans (say for the next 12 to 18 months) will head in any other direction than up from here on in.




yes.. looks like 6.5% interest rates at the end of next year.. and wouldn't be surprised with a 0.25 rise before the end of the year to act preemptively on inflation.


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## MACCA350 (12 June 2009)

Uncle Festivus said:


> CBA raises rates 0.1 to 5.74% - the 4 pillars of monopoly?



US 30 year fixed mortgage rate up 0.51 from 4.78%(2/4) to 5.29%.

...........so the rate rises begin

cheers


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## kincella (12 June 2009)

One in 10 workers self employed: ABSJune 12, 2009 - 2:29PM 
One in 10 Australian workers are their own boss, official figures show, but that proportion is expected to drop as the economy slows.

Experts expect the ranks of the self employed to dwindle as the global financial turmoil makes consumers less likely to spend money on their homes.

Australian Bureau of Statistics figures, released on Friday, show the self employed were more likely to be males working in the construction sector.

Of Australia's 10.75 million workers, 10 per cent of them were independent contractors in either their main or second job in November 2008.

ref..from theage today...
and gilliard is expecting 1 million unemployed...the banks putting the rates up...very conflicting ideas....
approx 10 million workers, 1 in 10 self employed, 1 in 10 out of work
looking like a W shaped recession now


----------



## Quincy (13 June 2009)

> It may be easy for Australians to look at the subprime crisis in the US and say it can't happen here. But we did have a small-scale version of it in western Sydney, when the first-owner intake of 2001 became the negative equity club two years later when the property bubble popped. To appreciate the dumb luck involved, imagine if a global financial crisis had hit in 2004, not 2008. Our banks would have been sprung with a customer base over their collective heads. It is important to note that Sydney never did recover after the Howard grant warped the market. On the latest count, house prices in the nation's largest city are 7.3 per cent lower now compared with the end of 2003.
> 
> In every other capital, prices are at least 20 per cent higher, notwithstanding more recent drops. Melbourne is 31.4 per cent more expensive than it was five years ago, Brisbane 35.5 per cent and Perth 77.6 per cent. That's why the entry price for first-timers is an average loan approaching $300,000. When interest rates rise again, as they inevitably will, watch the newest arrivals to the market squeal. Their complaints will test the government's character.
> 
> In Australia, property ownership is seen as the principal marker of personal wealth. But self-reliance built on subsidy is surely an oxymoron.




http://www.theaustralian.news.com.au/business/story/0,28124,25627834-25658,00.html


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## kincella (13 June 2009)

I still says its all a hullaballoo....25% are FHB's...75% are not....
years ago when I was a FHB....no incentives or freebies were available...its been hard at times....its not easy peasy as some would make you believe....but its worth it....
and it makes you stronger....
I tell the babes...its like a forced saving plan....
and since you all need a plan at some time to get back onto a sensible path in life...you may as well start as early as you can...

you should read my post yesterday with the article...about how the older ones are the investors rather than the young....
so its probably more about gaining experience and information rather than the pros and cons thats tossed around on this site.....
between the older wealthy investors and the younger non wealthy non investors...
cheers :sheep:


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## gfresh (13 June 2009)

> It is important to note that Sydney never did recover after the Howard grant warped the market. On the latest count, house prices in the nation's largest city are 7.3 per cent lower now compared with the end of 2003.




I can see a bit of that happening in SEQ for the next few years.. especially with the high influx of growth (mining) into the state slowing down for a while. Government will also be cutting back due to a shattered budget, and a large proportion of workers here are public service, forget the exact percentage, but I think it's as high as 20%. Plus the fact that wages here in general are still not as high as Sydney or Melbourne, so it's going to be a while before that catches up as well. Then throw in massive inflation coming.. and it's a tough mix.


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## Trevor_S (13 June 2009)

kincella said:


> no incentives or freebies were available..




I doubt that is true.  I know I received a whack of stamp duty reduction on mine.

That aside, here's a link to a SMH newspaper from the 1980's about real estate in Sydney 

http://news.google.com/newspapers?id=JsMRAAAAIBAJ&sjid=DecDAAAAIBAJ&pg=3658,4454312

In particular read the last part of Section 1 about the federal government grant for first home buyers


----------



## kincella (13 June 2009)

Trevour...dont call me a liar....fhb grants, schemes and incentives came in later....but not when I bought my first house....
they have not been around forever


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## Trevor_S (13 June 2009)

kincella said:


> Trevour...dont call me a liar




I didn't, I did doubt your memory however. You were emphatic that you never received ANY HELP, at all, in terms of grants, freebies etc.... I call bullsh_it..  I never received a FHB grant either but I did receive a fair whack of Stamp Duty rebate back in the '90's.  The article I linked to was from 1980 and showed there was a FHB grant way back then (obviously it was taken away at some stage and then reinstated)  !!!



kincella said:


> they have not been around forever




Indeed, but there was one back in the 1980 ! (nearly 30 years ago) for example, so it is something that comes and goes and as long as I can remember there has been stamp duty reductions for FHB's in QLD (as another example).  I am not sure how long the federal scheme had been in place in that instance,  nor how long it continued.  I was pointing it out as an EXAMPLE that a FHB grant is not a new thing and has been around for quite some time (off 'n on) as a housing incentive.


----------



## kincella (13 June 2009)

my memory is fine about my first home,  it was earlier.... before 1980


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## robots (13 June 2009)

hello,

good evening brothers, i hope the day has brought happiness to you and the family

hey hey hey:

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

thanks to Enzo for the speedy way in which REIV get the results out there to the public, top effort man, true professional 

MASSIVE 84%, yes MASSIVE 84%

oh well, gee still doesnt look as though the internet is working in the UK yet

just another day helping out the community

thankyou
associate professor robots


----------



## kincella (14 June 2009)

Morning Robots,
I will be happier come July after I have met all the June workload, and hoping to take a break to attend to some other committments that need attention.

In the meantime...Chapel St was the worst for traffic yesterday, it was so cold,  obviously they came in their cars instead of walking.....
now look at this article...it sounds radical to begin with...and then a sensible solution......but we do not have this problem here in Australia....
the other thing that springs to mind....some of  the bigget companies in the US went bust....they became to big to manage.....then I get a litte twitch... and wonder if Woollies and the Banks here going overboard, in the big is better stakes....with their grab for petrol and liquor ?
Safeway in Toorak is a joke with its delve into newspapers....they only sell the age and herald sun....not the Fin Review ...luckily for the Newsagent I go there to get my reading material....and been spending more time at Coles to buy my fav foods...Safeway no longer stock them
back to housing.......an extract only

US cities bulldoze their way to survivalTom Leonard, Michigan
June 14, 2009 
DOZENS of US cities may have neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama Administration to tackle economic decline.

The Government is looking to expand a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, the treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the presidential election campaign, Mr Kildee has now been approached by the US Government and a group of charities that want him to apply what he has learnt to the rest of the US. 
http://business.theage.com.au/business/us-cities-bulldoze-their-way-to-survival-20090613-c6r9.html


----------



## robots (14 June 2009)

hello,

good morning Kincella,

yes all about location location location, hope you snuck in a treat for your dog at KFC

but we will be bull dozing as dont we follow the US in everything?

thankyou
associate professor robots


----------



## robots (14 June 2009)

hello,

and 400 properties up for auction, 84% clearance rate

are those numbers okay?

thankyou
associate professor robots


----------



## kincella (14 June 2009)

Hi Robots, 
no treat for the dog...parking was too hard to find... I had spent more than half an hour extra sitting in traffic yesterday...in Chapel St...Toorak car parks's not much better either...
might go and get her a kangaroo tail from the pet shop today...
now back to the auctions...
couple of weeks ago they were selling as many at private sales as they were at  auction...I wonder if that is still the case.....Morrells will have a report out Monday..so we may have the numbers then.....
cheers


----------



## kincella (14 June 2009)

amazing...what are these people thinking....paying 100k more than the reserve...or was the reserve too low to begin with ???
its all rather interesting
I imagine Sydney is doing the same....

In Surrey Hills, an $80,000 bid failed to knock out the competition for the three-bedroom Federation house at 19 Sunbury Crescent. Fletchers said the rise was from $630,000 to $710,000 ”” trumping the market price by $20,000 ”” but the price increased another $15,000 to make a sale at $725,000.

The single-fronted weatherboard at 62 Adam Street in Burnley sold for $704,500, with at least five bidders pushing the price $104,500 above the reserve. Biggin & Scott had advertised the two-bedroom house at $530,000 to $580,000.

Six bidders took the three-bedroom townhouse at 49 Clifford Place, Clifton Hill, from an opening at $680,000 to a sale under the hammer at $786,000. Collins Simms said the reserve was $755,000.

Barry Plant Real Estate sold the three-bedroom family house at 69 Sevenoaks Road in Burwood East for $540,000 ”” nearly 26 per cent above its reserve ”” thanks to six bidders. Chief executive Barry Plant said money from the state trustee's auction (minus costs) would be donated to the Peter MacCallum Cancer Centre.


----------



## robots (14 June 2009)

hello,

Burnsie, any commentary on the results this week with 400 auctions?

thankyou
professor robots


----------



## MrBurns (14 June 2009)

robots said:


> hello,
> 
> Burnsie, any commentary on the results this week with 400 auctions?
> 
> ...




G'day robots, I expect clearance rates in the FHB range to remain high til after the end of Sept, then well.....wait and see.

The Asian participation in the market at all levels seems particularly high, don't know why.

There wil be a severe correction but eventually prices will recover and continue up as they always have done in the past.

Boom and bust as usual here in Australia.


----------



## robots (14 June 2009)

hello,

thanks burnsie, i think the people you mentioned are just buying a place for the family

thankyou
associate professor robots


----------



## MrBurns (14 June 2009)

robots said:


> hello,
> 
> thanks burnsie, i think the people you mentioned are just buying a place for the family
> 
> ...




I think you're right, interest rates are down they need a place to live so there you go, easy.


----------



## kincella (15 June 2009)

or the asians could be buying the properties due to the relaxation of the FIRB changes....and for students the $300k limit has been removed...

I just read the article about the NAB and muslim friendly loans to be made available for everyone....then for just a moment I thought....wow this could be good for all of us....but the profit sharing bit would need to be scrutinised..

otherwise without the profit sharing ...you lock in a rate for the life of the loan....for eg; the bank buys the property, adds on a profit....and you repay the amount by instalments...but over a 30 year loan...what would the bank assess interest rates at...hmmm...10% plus profit sharing......
no better off the way we are ...
and the funny thing about this....a muslim style loan is not allowed to charge interest....but they allow other interest type charges to be added up front...
no difference...its interest by another name.....or similar to a massive break fee....
hehehehe.....does not sound too smart at all:sheep:


----------



## MrBurns (15 June 2009)

BIS says house prices could rise 20% in the next few years because of low interest rates and the FHB effect.
Very low interest rates is what caused to price explosion in the first place, if they're right it would be the first time a housing bubble ended in another housing bubble.


----------



## Beej (15 June 2009)

MrBurns said:


> BIS says house prices could rise 20% in the next few years because of low interest rates and the FHB effect.
> Very low interest rates is what caused to price explosion in the first place, if they're right it would be the first time a housing bubble ended in another housing bubble.




I think the problem here is the argument that housing in AU is still (over-all) in a bubble. If it was in a bubble, it inflated during the period from about 1998 through 2004. Since then, particularly in Sydney, prices in real (inflation adjusted) terms have actually fallen quite a bit already; 20% in Sydney in real terms - this is how housing bubbles deflate in a normal situation (like we have here - unlike the abnormal situation in say the US with massive defaults, sub-prime, credit rationing etc). In the meantime rents have continued to rise strongly in both absolute and real terms (as you would expect as a so called housing bubble deflates), and interest rates went through a full rising/falling cycle, with commensurate effects on the housing market. The rising interest rates take the wind out of price rises, and the rising rents put a floor under any price falls.

The market is currently actually relatively cheap, and I don't think it is in a bubble now at all - it is in a consolidation phase (certainly Sydney/Melbourne are), which is why there is the possibility of further strong price rises in a few years time, as the cycle starts over again.

Of course the exact position in the cycle can and does vary from city-city/regions-region. Sydney/Melbourne markets lead the rest of the country. So it may be that Perth/SEQ for example are still in the prices falling in real terms rather than a consolidation phase - but those markets will move soon into the same consolidation phase Sydney/Melbourne are in now.

Cheers,

Beej


----------



## robots (15 June 2009)

hello,

good evening, my name is Robots and its been another great day,

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

fine commentary from the Buyers Advocates, just amazing, cant believe Kincella

Melbourne what a place on the planet

i know who should be getting down to CentreLink,

anyway, any questions fire away

thankyou
associate professor robots


----------



## Trevor_S (15 June 2009)

Beej said:


> The view that Consumer Confidence correlates with economic outcomes is by no means a new or even controversial idea!




http://business.smh.com.au/business/confidence-takes-another-hit-20090615-c8am.html



> The outlook for consumer confidence has dropped to its lowest on record in the 17-year history of a survey.




*The MasterCard Worldwide Index of Consumer Confidence


----------



## kincella (16 June 2009)

Hi Robots,
sorry I missed your post last night...its exceptional reading...
so I have copied bits...just so the kids did not miss it....

Those not at the coalface could read in Saturday’s Age “Global Crisis Hits Toorak” and come away with a 180 degree view of what was really in store. The article should probably have been headed “Global Crisis Misses Toorak, Last Seen Heading for Perth” – because in these parts, over the weekend clearance rates approached the stratosphere.

If you look only at the residential market, you could conclude that Melbourne is leading the world out of the GFC. The graph is taking on a distinct U-shape, at the top end driven in large part by continuing stock shortages (in that, at least, we see no early respite).

So what’s up? Is it sustainable? Should those property analysts who were predicting 20-40% drops be seeking alternative employment?

Oh, the unpredictables. We can only tell you what we are seeing; and that’s a solid market right through the inner-city, the reappearance of investors and the added spice (following the FIRB’s relaxation of rules) of overseas interest.

At times over the weekend, it felt like we were back in 2007. Multiple bidders, reserves left in frenzied wakes, auctioneers with grins from chequebook to chequebook.

A peak in margin-call driven sales? In mortgagee auctions? There are always some, but today’s levels are nothing out of the ordinary. So there go a few more crises whizzing by.

The litmus test is always land. The result? Land is not going out of fashion.

and this bit at the end

The next two weekends are particularly busy as sellers attempt to fairwell their property prior to the mid-year school holidays. Later listings are are likely to be slim until Spring. Prospective buyers are advised to remain calm.


----------



## kincella (16 June 2009)

another incentive to keep the builders in jobs....and new home buyers
incentives 
NSW moves to kick start housing sectorJune 16, 2009 - 12:54PM 
The NSW government is hoping to kick start the state's housing sector by slashing the stamp duty on newly built properties for at least six months.

Under the government's NSW Housing Construction Acceleration Plan, buyers will receive a 50 per cent stamp duty cut on newly built houses capped at $600,000 from July 1 until the end of 2009, with plans to review the measure in 2010.

In his first budget, Treasurer Eric Roozendaal said the plan would provide a $64 million boost for the housing construction industry and put $11,245 back into the pockets of home buyers.

"This measure will benefit anyone buying a new dwelling including empty nesters, families who need more room, and mum and dad investors seeking the security of bricks and mortar," Mr Roozendaal said when delivering the budget in parliament on Tuesday.

The plan will not apply to first home buyers because they already pay no stamp duty on purchases up to $500,000.

The state government will extend its $3,000 first home buyers supplement for newly-constructed homes until June 2010.

http://news.theage.com.au/breaking-...-kick-start-housing-sector-20090616-ceux.html


----------



## MrBurns (16 June 2009)

From Crikey - note the link to 
http://sqmresearch.com.au/ 
this looks interersting.

also posted this on the house prices to fall thread as it's interesting for both - 



> BIS Shrapnel property assessment BS
> Adam Schwab writes:
> 
> 
> ...


----------



## MrBurns (16 June 2009)

kincella said:


> another incentive to keep the builders in jobs




I was wondering if this was designed to help the building industry why didnt the grant just apply to new homes ?


----------



## Quincy (16 June 2009)

> *NSW moves to kick start housing sector* June 16, 2009 - 12:54PM
> The NSW government is hoping to kick start the state's housing sector by slashing the stamp duty on newly built properties for at least six months.




The goal posts just keep moving.


----------



## Beej (16 June 2009)

MrBurns said:


> I was wondering if this was designed to help the building industry why didnt the grant just apply to new homes ?




Which grant? The $3k + the new stamp duty concession do apply to new homes only? 

The big change here is that now non-FHBs can get a stamp duty concession (a first for NSW, where FHBs have been stamp duty exempt at < $500k and discounted for < $600k for several years), but only for newly built places as stated. IMO this is a good move for both the economy (building industry), housing supply, and longer term house prices/affordability (due to the increased supply). Notice that this can and does all happen without the need for a "crash" in existing house prices, although clearly some existing demand would shift from the established house market to the newly built one due to incentives like this. I think there is plenty of demand to go around! 

Cheers,

Beej


----------



## Quincy (16 June 2009)

> *NSW budget slashes stamp duty on new build property*
> 
> Buyers will save up to $11,245 in stamp duty charges, under the new measure announced in the NSW budget today.
> 
> ...




http://money.ninemsn.com.au/article.aspx?id=826160


----------



## Soft Dough (16 June 2009)

Quincy said:


> http://money.ninemsn.com.au/article.aspx?id=826160




Well congratulations government, you have not only put house prices up $11000, making it more unaffordable for people, you have increased it by what that amount could effectively gear.

Stupid politicians, only in it for votes instead of interest in the economy.


----------



## robots (16 June 2009)

hello,

buying an established is very good for the economy, a house/unit may get modified 3 or 4x over its life

some more info:

http://www.residex.com.au/newsletter/source2009_06aMC.html

just like to thank the real king: Shadow, for the link

i am getting excited about picking up that slab of Ruskie's from Satan, might fast for a few days for the meal as well, going to be a great photo opportunity when i collect

this is just amazing, has the crash happened yet? we still at 7x average income?

internet back working in the UK yet?

thankyou
associate professor robots


----------



## MrBurns (16 June 2009)

Beej said:


> Which grant? The $3k + the new stamp duty concession do apply to new homes only?
> 
> The big change here is that now non-FHBs can get a stamp duty concession (a first for NSW, where FHBs have been stamp duty exempt at < $500k and discounted for < $600k for several years), but only for newly built places as stated. IMO this is a good move for both the economy (building industry), housing supply, and longer term house prices/affordability (due to the increased supply). Notice that this can and does all happen without the need for a "crash" in existing house prices, although clearly some existing demand would shift from the established house market to the newly built one due to incentives like this. I think there is plenty of demand to go around!
> 
> ...





Thanks Beej I dont recall getting a notification of your reply - 

I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.


----------



## robots (16 June 2009)

MrBurns said:


> Thanks Beej I dont recall getting a notification of your reply -
> 
> I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.




hello,

what about when the new owners get in? things soon change

thankyou
associate professor robots


----------



## Stan 101 (16 June 2009)

MrBurns said:


> Thanks Beej I dont recall getting a notification of your reply -
> 
> I meant any increase in the FHB grant that applies to existing homes does nothing for the building industry, only gathers votes.





For people to purchase new homes, one needs to sell their existing. But then again, what would BIS Sharapnel know?



Another golden Burns post.


----------



## MrBurns (16 June 2009)

Stan 101 said:


> For people to purchase new homes, one needs to sell their existing. But then again, what would BIS Sharapnel know?
> 
> Another golden Burns post.




The whole FHBG boost was justified on the basis of jobs for the building industry, the FHB who who buys an existing home does nothing for employment. and we all know BIS just BS with an I in the middle.


----------



## nunthewiser (16 June 2009)

Stan 101 said:


> For people to purchase new homes, one needs to sell their existing.
> 
> .




rubbish

i have purchased a few homes over the years , i still own the original ones i used as collateral


p.s dear robots 

amazing stuff re 7x income 

record number of defaults , record breaking risng banktruptcies, charity services having to knock back ppl

sunshine and lollipops brothers


----------



## Stan 101 (16 June 2009)

nunthewiser said:


> rubbish
> 
> i have purchased a few homes over the years , i still own the original ones i used as collateral




You, like me are a minority. 

The majority of families sell a home and buy another. Based on figures from reputable data collators/collectors many of these families offload an established home and quite a few purchase new homes regardless of what Burn's fantasy figures claim.

Funny how BIS Shrapnel's forward data has been *amazingly* accurate over the years when stacked up against major building industry trade figures.

But then they aren't involved in fluff and multiple negative unfounded posts on a forum.


Cheers,


----------



## MrBurns (16 June 2009)

Stan 101 said:


> regardless of what Burn's fantasy figures claim.
> Funny how BIS Shrapnel's forward data has been *amazingly* accurate over the years when stacked up against major building industry trade figures.
> But then they aren't involved in fluff and multiple negative unfounded posts on a forum.
> Cheers,




Didn't you see this ?

https://www.aussiestockforums.com/forums/showpost.php?p=448384&postcount=5450

I was a real estate agent for over 20 years, BS Shrappnel are industry hores but you believe what you like eh ?


----------



## Julia (16 June 2009)

Stan 101 said:


> For people to purchase new homes, one needs to sell their existing. But then again, what would BIS Sharapnel know?



Well, perhaps BIS Shrapnel might know more than you on this subject.

Nonsense to say people have to sell existing homes before buying anything else.
If that were true, it's hard to see where  much of the IP market would come from.


----------



## Stan 101 (16 June 2009)

Julia said:


> Well, perhaps BIS Shrapnel might know more than you on this subject. [\QUOTE]
> 
> Clearly BIS Shrapnel do, That's why I believe them and not Burns off the cuff comments.  I don't understand your attempted point. Please clarify.
> 
> ...


----------



## makingmoney (16 June 2009)

this question can be easily answered by a book "financial iq" <---a must read...explain a different theory..in a quick summary..is it really the houses or reroperty that rises in  prices or that it will take more worthless dollars in the future to buy the same house now..so inflation..some my say..i say since nixon took the us off the gold standard for a us currency u could say the change of guard..the dollar or all currencys seem 2 fall in price as times go on..all as in a sense of hyperinflation...as time goes on inflation will take a strangle hold of the dollar..please read the book it will help explain..it was written by robert t. kiyosaki


----------



## Trevor_S (16 June 2009)

makingmoney said:


> it was written by robert t. kiyosaki




geeze... I wouldn't even wipe my.... okay I would wipe my ar-se with a book by him but only if robots paid me first 

c'mon, anything by that guy might be a feelgood, group hugs all round kinda thing that they do on the somersoft forums but a treatise on economics ? I think not.


----------



## makingmoney (16 June 2009)

Trevor_S said:


> geeze... I wouldn't even wipe my.... okay I would wipe my ar-se with a book by him but only if robots paid me first
> 
> c'mon, anything by that guy might be a feelgood, group hugs all round kinda thing that they do on the somersoft forums but a treatise on economics ? I think not.



lol...wow jeez well being a no#1 author with rich dad poor dad..that is funny...maybe u should start publishing books


----------



## MrBurns (16 June 2009)

Let's' continue this discussion when the banks move in and reclaim their money.


----------



## Bafana (17 June 2009)

This property bubble is confusing me. Is there one or not?

Getting ready to buy a second house closer to my work in another town/provincial city and feeling nervous as all hell having seen Ireland go mental on house with bubble tea max in the late 90's early 00's when I was there working, and seeing what they are going through now.

With the stamp duty halved, fixed interest rates so low and having one house already debt free I feel like buying but am holding off cause it feels like Ireland again. The old adage of walks like a duck, sounds like a duck comes to mind but the extra commute is killing me. Anyone got any ideas?


----------



## kincella (17 June 2009)

for those of you who like to follow the US housing market

Housing starts jumped 17.2 per cent in May from April to a 532,000 annual rate, the Commerce Department said, more than twice the gain economists in a Dow Jones Newswires survey had expected. 

Building permits, a leading indicator, rose as well. And single-family starts -- which economists tend to focus on for a less-volatile reading on housing trends -- rose 7.5 per cent from April, their third-straight rise. 

"This adds to evidence that the housing market is no longer falling apart," said Mike Larson, an analyst at Weiss Research. 

But the problems of the housing sector are far from over. Inventories are still far too high relative to sales, while layoffs and tight credit are holding back home buying. Meanwhile, mortgage rates have started rising. 

"The inventory overhang means any recovery in building will be very muted for an extended period, but at least the very worst is over," said Ian Shepherdson, chief US economist at High Frequency Economics. 

http://www.theaustralian.news.com.au/business/story/0,,25648936-36418,00.html


----------



## gfresh (17 June 2009)

Bafana said:


> This property bubble is confusing me. Is there one or not?
> 
> With the stamp duty halved, fixed interest rates so low and having one house already debt free I feel like buying but am holding off cause it feels like Ireland again. The old adage of walks like a duck, sounds like a duck comes to mind but the extra commute is killing me. Anyone got any ideas?




You tell us  Interested in those who have had some overseas perspective.. Are conditions similar, or do you think they are different to what you have seen in Ireland? 

Have read of people moving from the UK and still keen on buying here, so they must think conditions aren't quite the same as the UK to justify a safe purchase. Are people stupid to walk into the same trap or do they see indicators that are different here?


----------



## Trevor_S (17 June 2009)

makingmoney said:


> lol...wow jeez well being a no#1 author with rich dad poor dad.




JK Rowling sold lot of books as well, I wouldn't be looking to her for economic advice either.  You point it out yourself, publishing books is his thing, not being an investor / economist etc.

That aside, if your argument is one of equating popularity with quality, it holds no water, one just has to look to Macdonalds for the fallacy of that argument.

Kiyosaki is a fraud, he's about selling books, selling a myth /fantasy etc.  As long as people realise that and treat the guy the same way they would any other inane "motivational speaker", then no problems... but you will find an argument when he is held up as a doyen of investment guidance.    Best of luck to him on his book publishing business.

When people say to me they've read Kiyosaki, I say right, give that to Lifeline for their bookfest and go read "The Intelligent Investor" and "Millionare Next Door" instead.


----------



## kincella (17 June 2009)

so this will house another 681600 people at the rate of 2.4 per house
I saw something in the past week about Melb's population at 4.63 million 
oh and the other posters insist the housing shortage is a myth......well tell that to the Vic State Govt...
think we are close to our 5 million population for Melb now...that was not supposed to happen until much later...

the govt has a 5 million plan....for the future and we are there now...

*Land released to house Melbourne population boom*
Article from: AAPFont size: Decrease Increase Email article: Email Print article: Print Submit comment: Submit comment AAP

June 17, 2009 02:39pm
THE State Government will release an extra 41,000 hectares of land for new housing to accommodate the population boom.

The extension of the urban growth boundary in Melbourne's north, west and south-east will accommodate an extra 284,000 new houses. 

The draft plan also includes the proposed alignment of the outer metropolitan ring road and the regional rail link, which will include up to six new train stations in Melbourne's western suburbs growth areas. 

Announcing the new boundaries today, Planning Minister Justin Madden said it was the most significant project undertaken to meet Melbourne's future housing and transport needs. 

http://www.news.com.au/heraldsun/story/0,21985,25649858-661,00.html


----------



## Bafana (18 June 2009)

gfresh said:


> You tell us  Interested in those who have had some overseas perspective.. Are conditions similar, or do you think they are different to what you have seen in Ireland?
> 
> Have read of people moving from the UK and still keen on buying here, so they must think conditions aren't quite the same as the UK to justify a safe purchase. Are people stupid to walk into the same trap or do they see indicators that are different here?




Sounds like a duck and walks like a duck.

With this one the government seems to be making it worse by encouraging it and pumping tax payers money in. What I feel is that if they have gone through the UK or Ireland bubble they will know that there are certain properties that are pretty immunish (keep their value relatively well).

The trick is working our which ones.

On my side I need a second house for work but don't know what to get as don't know what would be best suited to ride out the oncoming tsunami.

Any hints?


----------



## Soft Dough (18 June 2009)

Bafana said:


> Sounds like a duck and walks like a duck.
> 
> With this one the government seems to be making it worse by encouraging it and pumping tax payers money in. What I feel is that if they have gone through the UK or Ireland bubble they will know that there are certain properties that are pretty immunish (keep their value relatively well).
> 
> ...




You could always..... .drum roll please........ RENT..... ( cringes in the back corner as evil stares and gasps abound )....... "but rent money is dead money"

Well it shouldn't be as the market should have tanked by now, but the government keeps propping it up.... imho the saying should be rephrased " but income tax money truly is dead money"


----------



## Taltan (18 June 2009)

Bafana said:


> This property bubble is confusing me. Is there one or not?
> 
> Getting ready to buy a second house closer to my work in another town/provincial city and feeling nervous as all hell having seen Ireland go mental on house with bubble tea max in the late 90's early 00's when I was there working, and seeing what they are going through now.
> 
> With the stamp duty halved, fixed interest rates so low and having one house already debt free I feel like buying but am holding off cause it feels like Ireland again. The old adage of walks like a duck, sounds like a duck comes to mind but the extra commute is killing me. Anyone got any ideas?




Ok so this is not financial or any kind of advice because who knows what courts may construe in the future but in my opinion. 

Firstly rent where you want to live, and if possible rent out the place where you currently reside. Now take the house that is debt free and mortgage it with a bank at residential rates of approx 6%. Then take the money and go buy shares in our big 4 banks. NAB & ANZ etc. have a p/e of about 9 at the moment so with franking credits your dividends will more than cover the 6% mortgage interest.


----------



## Bafana (19 June 2009)

Soft Dough said:


> You could always..... .drum roll please........ RENT..... ( cringes in the back corner as evil stares and gasps abound )....... "but rent money is dead money"




Renting will be dearer than me traveling the extra distance, beside renting out my existing house not an option as my olds are sickly and need a place nearer to town (doctors and the likes). Was thinking take mortage on the existing house and fixed loan on new one, or get olds to cough up intrest free loan to cover loan shortfall on the new house. Nearly like satrting over again ;-)

Also need to keep money aside to work the market as it gets better.

Suppose the more I delay the less advantage I can get.


----------



## knocker (20 June 2009)

Maybe we should change the title to council rates to keep rising for years to justify their existence


----------



## knocker (20 June 2009)

Where's robots?


----------



## robots (20 June 2009)

hello,

i am here

where's the crash? and zero interest rates?

thankyou
associate professor robots


----------



## Trevor_S (20 June 2009)

http://www.news.com.au/heraldsun/story/0,21985,25660169-664,00.html



> He and I share the view that *Australia's property market is among the most overvalued in the world*, and - should the law of gravity hold true - at some stage we will likely suffer the same slide as every other nation has experienced.




Link to the show mentioned, for those interested

http://mpegmedia.abc.net.au/local/nightlife/nightife_w_m1753992.mp3


----------



## robots (20 June 2009)

hello,

scott pope and n.jenman, 

thanks for confirming the crash hasnt occurred yet

thankyou
associate professor robots


----------



## overlap (20 June 2009)

yet


----------



## kincella (20 June 2009)

Hi Robots,

this article sounded like a backdown to me....since he spent some time recently over in Calafornia checking out all the housing drama...and reporting as if the same thing will happen over here in OZ.. he appears to just have the same views as most young people and says whatever appears to be popular on the day.......
I would not normally take any notice of him....  it is just that some raised the issue..... 
the article is like  a double edged sword...because on one hand he says your own home is the best investment you can make...and on the other...telling readers our houses are so overpriced....he loses any credibility he was trying to make...
here is the extract......

Wealth starts at home
One of the first points I brought up on the show was why I believe buying a home is the best investment you can make. So long as you have a 20 per cent deposit, have factored in a 4per cent jump in interest rates, and have asked yourself the what-if questions: What if I get pregnant? What if I lose my job? What if I get sick? 

Here's why buying a home is so important: the bedrock to mastering your money is spending less than you earn, borrowing conservatively and investing in long-term growth assets. 

As a financial adviser I know of no other investment that inspires savings like meeting a monthly mortgage payment.


----------



## kincella (20 June 2009)

another very interesting article ...this time about Japan investing $90 billion in AUS  ...surging 16% for the year
extract...........
*Japanese target Australia for investment*
Last week, Sekisui House announced a $190 million investment in a joint venture with Payce Consolidated to build new housing, with a special focus on "green homes", in Sydney's Homebush Bay and Queensland's Ripley Valley. 

Trade Minister Simon Crean says this will support about 3500 jobs in NSW and 4500 in Queensland. "While the global financial crisis has caused global trade and investment flows to contract, Japan is one of the economies countering this trend," Crean says
Investments from Japan in recent few months have included: 

* A $376m investment in Tower by life insurer Dai Ichi. 

* A $1.1bn investment in Schweppes Australia by Asahi Beer. 

* $3.3bn from Kirin to complete its ownership of Lion Nathan (approved by the Foreign Investment Review Board yesterday), with another $910m paid for Dairy Farmers. 

* A $200m investment in the Kaz group by Fujitsu. 

* A $575m investment in Paper Australia, a unit of Paperlinx, by Nippon Paper. 

* Mitsubishi's leadership in the $3.5bn Oakajee port and rail project in Western Australia. 

* Marubeni and Osaka Gas paying $800m for 80 per cent of APA GasNet, and Marubeni paying another $250m for a rail leasing joint venture. 

* Suntory paying $1bn for the Australia and New Zealand operations of Danone's Frucor. 

The range of these investments is especially impressive. China is also now cashed up and eager to invest in Australia, but its interest remains overwhelmingly focused on a single sector of national strategic priority -- resources. 

http://www.theaustralian.news.com.au/story/0,25197,25662847-5017906,00.html he tune of $90 billion....


----------



## kincella (20 June 2009)

This article confirms what Beej has been telling everyone for months now...

*Now for the good news on house prices*
only an extract.....

Sydney buyer's agent PK Property reports that units and houses up to $650,000 are selling in a week, and for houses up to $4million on Sydney's lower north shore, eastern suburbs and mid north shore, there are low stock levels. "This market has stabilised now and will start to creep up because of supply and demand issues," it says. 

Houses over $4 million are still fairly soft in all the blue-ribbon areas, with stock levels and buyer numbers still low, but in the other price brackets mentioned there seems to be a build-up of buyers because there have been low stock levels for five months, according to PK. 

It says stock levels are low because lower rates have allowed people to hang on to their homes and investments and because owner occupiers are staying put, perhaps fearful of losing their jobs. But Sydney could be entering what it calls a locked market, "a vicious cycle where no one sells because they are too scared they won't find anything else". 
John McGrath, chief executive of McGrath Estate Agents, says in his winter market review that while most of the strength has centred on the lower end of the market, results in the $1 million plus range are exceeding expectations. The Sydney market is divided more by price bands than the traditional geographic segmentation. Sellers in the lower end have pocketed better than expected results and are reinvesting to upgrade their homes with confidence, he says. 

The market for property over $5 million is harder to gauge because of limited volume, but McGrath says there is a shortage of trophy properties and suspects the top end of the market is about 15 per cent off its highs. 

However, there have been properties sold for better than their 2007 prices and if there is no great increase in listings, he says, most of the price falls will be regained next year. But, similar to others, he qualifies this by saying that if unemployment were to hit 10 per cent, the sustainability of present demand and prices would have to be revised. 

http://www.theaustralian.news.com.au/business/story/0,28124,25660175-25658,00.html


----------



## kincella (20 June 2009)

all this positive news is becoming just a little boring....but here is another piece anyway
*Offshore buyers flock to Raptis Group's Hilton development *

Turi Condon, Property editor | June 20, 2009 
Article from:  The Australian 
APARTMENTS in the collapsed Raptis Group's $700 million Gold Coast Hilton project are being snapped up by overseas buyers as its new owners, the ANZ Bank and builder Brookfield Multiplex, resurrect the previously stalled beachfront towers.

Eight apartments, which are being marketed for more than $720,000 each, were sold in Singapore last weekend by the builder, whose residential division is marketing the units. 

Work restarted last month after halting last year as the property empire of Gold Coast developer Jim Raptis faltered. Raptis Group collapsed in February under more than $900m of debt, leaving the ANZ Bank reportedly $200m down. 

The two-tower Hilton Surfers Paradise hotel and residences and Mr Raptis's $700m Southport Central, being completed by receivers, were tipped as strong contenders to get funding from Rudd Bank, the commercial property bailout fund voted down in the Senate on Tuesday, and which was put up by the government as an industry job saver. 

Giant Canadian-owned builder Brookfield Multiplex and ANZ say the Hilton project will provide 900 construction jobs over the 2 1/2-year building period, as well as a further 1000 tourism and other jobs. 

ANZ Queensland state chairman Russell Shields said the Hilton project could have been a contender for Rudd Bank funding before the bank took control, acknowledging there might be more political will to introduce the bailout scheme if employment deteriorates. 

Mr Shields declined to put a figure on how much Raptis owed the bank, putting the collapse in the past. "It's not a five-minute fix, it's not a five-minute project," he said. 

Brookfield Multiplex expects to sell half the 410 apartments to offshore buyers, and is marketing the property heavily in Asia. 

Turi Condon was flown to the Gold Coast by Brookfield Multiplex.


----------



## overlap (20 June 2009)

> Turi Condon was flown to the Gold Coast by Brookfield Multiplex.



imp:


----------



## knocker (20 June 2009)

robots said:


> hello,
> 
> i am here
> 
> ...




No zero rates just a crash and high rates


----------



## Beej (20 June 2009)

knocker said:


> No zero rates just a crash and high rates




Interesting theory! Meanwhile auction clearance rate was 73% in Sydney on a cold rainy day today (127 sold), median price $573k. And last weekend was about the same with a $625k median. Heaps of $2M+ pads changing hands on both weekends as well.

Cheers,

Beej


----------



## robots (20 June 2009)

hello,

check check, Professor Robots is in the house:

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

WOW WEEEE

86% clearance rate, this unbelievable, well done brothers, keep holding onto the title slips fellow men

gee the internet must still be down in the UK as havent heard from WayneL for while, maybe out earning a quid

oh well, paradise still in the lucky country

kincella: re S.Pope, yeah definitely back pedalled with todays article and NO DOUBT was heavily influenced by his visit to United States of Crapola

debtwatch donations will be in for a hard time I think, not much credibility left at that joint 

thankyou
associate professor robots


----------



## kincella (20 June 2009)

yes friends...as I stated this morning...all this good news is become rather boring..
Beej did you note about Sydney having a locked market....interesting concept..
oh and those Raptis apartments sound like a good price at just 720 K
cheers all


----------



## MACCA350 (20 June 2009)

Just bought a block of land..........now to decide on the rest

Would have been nice if the market tanked more before we baught but since this will be our PPOR for the next 10-20(or more) years I'm not too fussed now we've decided. If things do tank we may pick up an IP

It's taken us nearly a year to find and decide. In the end we couldn't find the established "one that ticks all the boxes" so we're going to build it since we found a great sized block(biggest in the estate) in a great location(adjoining a huge 20+ha parkland reserve with a creek and views).

cheers


----------



## knocker (20 June 2009)

MACCA350 said:


> Just bought a block of land..........now to decide on the rest
> 
> Would have been nice if the market tanked more before we baught but since this will be our PPOR for the next 10-20(or more) years I'm not too fussed now we've decided. If things do tank we may pick up an IP
> 
> ...




Good stuff bro. I have my big block of land up North approx 50 acres, waiting for the right time to build my eco friendly amnsion.

In the meantime I am picking up bargain basement propertiues here in Uk ,Portugal and Spain.


----------



## Julia (20 June 2009)

knocker said:


> In the meantime I am picking up bargain basement propertiues here in Uk ,Portugal and Spain.



Knocker, what will you do with these?  Rent them?   Via an agent?  How does the tax work?


----------



## scanspeak (20 June 2009)

A reality check from http://www.news.com.au/couriermail/story/0,23739,25660536-3122,00.html

Worse to come for Australian economy, says Harry Dent

AUSTRALIA'S sharemarket will halve in value, house prices will slump as much as 40 per cent and unemployment will climb to 10 per cent.

That's the bold prediction from economic forecaster Harry Dent, who says a bigger crash is ahead for the global economy within the next two years.

And while Australia's strong financial system, links to China and young working population have cushioned the nation from the economic turmoil so far, Mr Dent says smart investors are cashing up in preparation for "the Mother of all depressions".

"When you have to deleverage a major bubble in stocks and housing and commodities . . . it doesn't just get over with in one year with a nice stimulus program," he says.

Mr Dent, who predicted Japan's 1990s recession and the present economic crisis, yesterday began an Australian speaking tour in Brisbane.

He says a "perfect storm" is brewing where a peak in spending by baby boomers will collide with the global commodity bubble to "leave behind the next great crash".

Although Australia's All Ordinaries Index may peak at between 4500 and 5000 points by the end of this year, he says a crash in about 2011 will see it slump to about 2000 points.

He says our house prices are "among the most overvalued in the world" and will backtrack by as much as 40 per cent while unemployment – now at 5.7 per cent – will hit double digits.

"I would say Australia is not paying close enough attention to the worldwide housing bubble and banking crisis," he says.

Mr Dent scoffs at a BIS Shrapnel report, issued this week, that said home values would rise by as much as 20 per cent over the next three years.

"Look at Japan to see what happens when a generational trend finally slows your economy and a housing bubble bursts. Housing peaked in 1991 in Japan and is still down over 60 per cent from the peak 18 years later."

He believes the next boom will begin to unfold in 2023, when India will take over from China as the world's growth powerhouse.

"If I was Australian businesses and government I'd say, 'OK, China's our best customer now but we need to be cultivating India'," Mr Dent says.

"India is the one large country – that isn't dependent on just commodity cycles for exports – that could grow dramatically and urbanise."

He says India's economic strength will be underpinned by its youthful population – something that will also help make Australia one of the most resilient developed economies throughout the next two decades.

Most of the affluent world is not having enough children to support their ageing population, he says.

Japan has the oldest population in the world, followed by Italy.

However, Australia's immigration policy has ensured the local economy has stayed refreshed by young, skilled workers from overseas, helping drive innovation to "take the economy to new heights".

"Your demographics do not turn down nearly as much as Europe and the United States and Japan's did and your banking system didn't go nuts," Mr Dent says. "You will fare better but you won't come out of this unscathed."


----------



## Trevor_S (20 June 2009)

http://www.news.com.au/couriermail/story/0,23739,25660536-3122,00.html

A few salient quotes, for the those unable/unwilling to read the entire article, addicted to twitter and suffering ADHD 



> AUSTRALIA'S sharemarket will halve in value, house prices will slump as much as 40 per cent and unemployment will climb to 10 per cent.






> Mr Dent, who predicted Japan's 1990s recession and the present economic crisis






> He says our house prices are "among the most overvalued in the world" and will backtrack by as much as 40 per cent




I wonder if he has been reading this thread  (see below !)



> "I would say Australia is not paying close enough attention to the worldwide housing bubble and banking crisis," he says.


----------



## knocker (20 June 2009)

Julia said:


> Knocker, what will you do with these?  Rent them?   Via an agent?  How does the tax work?




I have a big family, I let them stay there for a nominal fee ;-) Unemployement in Spain and Portugal is very high, a lot of ex-pat pohms are coming back home, I help them out here as well;-)


----------



## Bill M (20 June 2009)

scanspeak said:


> A reality check from http://www.news.com.au/couriermail/story/0,23739,25660536-3122,00.html
> 
> Worse to come for Australian economy, says Harry Dent
> 
> AUSTRALIA'S sharemarket will halve in value, house prices will slump as much as 40 per cent and unemployment will climb to 10 per cent.



Mate, word of warning, Harry Dent has been proven wrong before. I would take anything he says with a grain of salt. Here is what some of his readers have said:

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

_I am really amazed at the shameless spinning by Harry Dent in his latest book about his past predictions. He makes it sound like he foresaw the crash of 2000-2002. But in fact, his previous book, The Roaring 2000s, published in late 1990's, made all sorts of bullish predictions that were totally 100% wrong in retrospect._

_In June of 1999, Harry became a mutual fund advisor. It did okay for all of six months, then lost 70% of its value. It regained some ground in the last two years, but is still down substantially from its inception. Just a few weeks ago, the fund was quietly merged into another and the Dent name removed._

_So Mr. Dent has another book out, eh? The same guy who put a book out five years ago saying BUY NOW just as the Nasdaq was reaching 5000. Anybody who listened to this guy five years ago surely has a big DENT in his portfolio... or rather, a CRATER. If someone truly knew the secret to attaining market-beating returns, guess what? It would be A SECRET... and he certainly wouldn't be sharing it with you._

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

All of this can be verifyed off this freely available website here:
http://www.amazon.com/Next-Great-Bubble-Boom-2006-2010/product-reviews/B000W3U9CY/ref=dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1


----------



## Beej (20 June 2009)

Bill M said:


> Mate, word of warning, Harry Dent has been proven wrong before. I would take anything he says with a grain of salt. Here is what some of his readers have said:
> 
> ------------------
> 
> ...





Yep and here's some more stuff about this guy (from wikipedia - a referenced criticsim of the guy):



> Dent has also been criticized for being downright wrong on several of his predictions by many economists. In fact, www.maxfunds.com, a financial reporting site *awarded him the The "Ultimate Charlatan"[3] Award*. They write: "The worst investing advice usually arrives near the top and bottom of stock market cycles. Demographic trends guru Harry S. Dent is making the rounds again, and touting his latest book, The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History ... In his 2006 work, Dent predicted, “The Dow hitting 40,000 by the end of the decade, the NASDAQ advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009…The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.” ..


----------



## Trevor_S (21 June 2009)

Bill M said:


> Mate, word of warning, Harry Dent has been proven wrong before.




LOL    If you're an Economist by definition you will be mistaken, often.  I don't have any faith in any of them, I read the opinions of many, however he seems no more a whack job then say Chris Joye or Craig James.  

That aside, I guess I agree with him in the "Aus. has the most overpriced housing market in the World" mantra.


----------



## robots (21 June 2009)

knocker said:


> Good stuff bro. I have my big block of land up North approx 50 acres, waiting for the right time to build my eco friendly amnsion.
> 
> *In the meantime I am picking up bargain basement propertiues here in Uk ,Portugal and Spain.*




hello,

throwing good money down the drain there bro,

look at WayneL, havent heard from him for a long time, the biggest value investor the world has, the joints you mentioned are finished

there is only one on the planet, oh well

thankyou
professor robots


----------



## robots (21 June 2009)

MACCA350 said:


> Just bought a block of land..........now to decide on the rest
> 
> Would have been nice if the market tanked more before we baught but since this will be our PPOR for the next 10-20(or more) years I'm not too fussed now we've decided. If things do tank we may pick up an IP
> 
> ...




hello,

top effort Macca350, how many metres?

brother building house at the moment in Mornington, due down there this week to do some work 

you going owner-builder or get house built?

thankyou
professor robots


----------



## knocker (21 June 2009)

robots said:


> hello,
> 
> throwing good money down the drain there bro,
> 
> ...




Really professor crock. maybe you have a screw loose or two lol  My land in queensland is prime waterfront realestate  better than you p!ssy st kilda syringe infested beach.

My other properties are also in prime location in Portuguese and spainish algarve the villa sits on hill and our grapes are doing well.

as for my Uk properties, nothing but good new here with a very tight market demand is very strong. Few people selling lots of eager newcommers wanting to enter at the bottom end of the market. Lots of people unemployed.

I love recessions, only a matter of time before **** hits the fan in aus and then i return lol

So what have you been doing theses past months robots lol


----------



## MACCA350 (22 June 2009)

robots said:


> hello,
> 
> top effort Macca350, how many metres?
> 
> ...



Block is just over 800m2(20km N.W. of the CBD), not the biggest around but bigger than most in the area(we had considered moving further out for a rural acreage, but we like living within Melb). 

The big plus for us is the 20+ha reserve that butts up against our side fence, we have 3 kids(under 13yo) and 2 dogs so having the parkland right next door will be great. Shopping centre, schools, relatives are within walking distance.

Haven't decided which way we'll build, still considering all angles. Whichever way we go we plan to incorporate the aspect of the reserve on that side of the house into the design..........which pretty much discounts the usual designs from the big mass builders like Metricon etc. There are also many specific things we want in the design of the house, so it's looking like we may go with a custom builder or owner build(not sure I'm up for the stress though). 

We've already spoken to a recommended custom builder, but I'd like to open the net.........any suggestions on a good quality custom builder with reasonable pricing?

cheers


----------



## knocker (22 June 2009)

MACCA350 said:


> Block is just over 800m2(20km N.W. of the CBD), not the biggest around but bigger than most in the area(we had considered moving further out for a rural acreage, but we like living within Melb).
> 
> The big plus for us is the 20+ha reserve that butts up against our side fence, we have 3 kids(under 13yo) and 2 dogs so having the parkland right next door will be great. Shopping centre, schools, relatives are within walking distance.
> 
> ...




lol good for you macca. nice land ther. still sh!TTY weather in winter hey enjoy lol


----------



## MACCA350 (22 June 2009)

knocker said:


> lol good for you macca. nice land ther.



Thanks, looking forward to sitting on the balcony with an icy cold beer and enjoying ourselves



> still sh!TTY weather in winter hey enjoy lol



Yeah, been a classic Melb winter day today.

cheers


----------



## robots (22 June 2009)

knocker said:


> Really professor crock. maybe you have a screw loose or two lol  My land in queensland is prime waterfront realestate  better than you p!ssy st kilda syringe infested beach.
> 
> My other properties are also in prime location in Portuguese and spainish algarve the villa sits on hill and our grapes are doing well.
> 
> ...




hello,

ah, more cyrstal ball work

i think we coming up to 4yrs since the "house prices to crash" discussion started and things are just rolling along

what's the crash been doing the past 4 yrs? 

oh well, gee relax Knocker, take it easy at the internet cafe man 

thankyou
associate professor robots


----------



## MACCA350 (22 June 2009)

robots said:


> hello,
> what's the crash been doing the past 4 yrs?



It's done this so far
<put's on raincoat>






cheers


----------



## samuely1 (22 June 2009)

Hey, just wondering if someone can explain the first home buyers grant for a new house.  I was talking to an estate agent today regarding a new home and from what I understand it is currently $29,000 and as of July 1st it goes up to a figure in the $30,000's.  Can anyone tell me what that amount is as of July 1st?


----------



## robots (22 June 2009)

hello,

what about this:

http://www.rpdata.com/images/storie...a_rismark_home_value_indices_may_09_final.pdf

thankyou
professor robots


----------



## robots (22 June 2009)

samuely1 said:


> Hey, just wondering if someone can explain the first home buyers grant for a new house.  I was talking to an estate agent today regarding a new home and from what I understand it is currently $29,000 and as of July 1st it goes up to a figure in the $30,000's.  Can anyone tell me what that amount is as of July 1st?




hello,

samuely1, go to the your state based Government websites for the correct information

as you get variation if you also buy regional

some home builders are rolling "benefits" into the advertising spiel so read it carefully (the documents from a builder)

anymore questions just ask me as I am an associate professor

thankyou
associate professor robots


----------



## knocker (22 June 2009)

here's a photo of my pad in Vilamoura.


----------



## MrBurns (22 June 2009)

knocker said:


> here's a photo of my pad in Vilamoura.




Yep and here my California weekender -


----------



## knocker (22 June 2009)

Nice mr burns. is that an ambualnce I see in the car park or some tv van lol


----------



## Bafana (23 June 2009)

knocker said:


> Nice mr burns. is that an ambualnce I see in the car park or some tv van lol




Probably the EPA thought police coming to take him away cause of his gynormous Carbon Footprint to the extreme...

Keep it up guys, brightening the day.

Would settle for a up/down 5 bed right now w/o pool and a double garage/workshop.


----------



## MACCA350 (23 June 2009)

Bafana said:


> Probably the EPA thought police coming to take him away cause of his gynormous Carbon Footprint to the extreme...
> 
> Keep it up guys, brightening the day.
> 
> Would settle for a up/down 5 bed right now w/o pool and a double garage/workshop.



Something like this?




The misses saw it while browsing for ideas, would be great for pool parties
Though it's only 4br

cheers


----------



## Bafana (24 June 2009)

Indoor pool so OK. Don't like outdoor ones around here too cold in winter. Vry nice.


----------



## kincella (24 June 2009)

ashaege....
I saw something somewhere last week...Lindsay Park stud is moving to Euroa.....that will be a big boost for the area....I was looking at buying there for my brother....Its always been big on horses....we used to go there often with the childrens horses...
its a cute little town about 1.5 hours from Melbourne on the freeway....
it will give the town a lift....and cheap houses...well a lot cheaper than Melbourne
cheers


----------



## kincella (27 June 2009)

THE software entrepreneur Simon Clausen is Sydney's most active property investor, having bought $34 million worth since last October.

Mr Clausen, who made his debut on the recent BRW Rich List with a $180 million fortune, has snapped up nine properties since selling his business last year.

The 32-year-old recently added another Clareville beachfront to his portfolio, paying $2,789,000 for a property listed with $3.5 million hopes.

He has also bought a Balmain East property listed at $2.49 million for $1.73 million.

http://business.smh.com.au/business/tech-tycoon-bets-on-houses-20090626-cztn.html


----------



## kincella (27 June 2009)

I thought this article was full of interesting tit bits....short and concise...different from some of the long winded boring waffle we see......
the really interesting bits are highlighted......so the dollar has lost 95% of its value....meaning if that trend continues then one would need a whole lot more dollars to buy that house.....
and what impact will another 74 billion dollars issued by India have on interest rates world wide ???  

AS the Monty Python boys said, always look on the bright side of life.

Overnight we’ve had reports that manufacturers in the Euro-zone saw their April orders down 35.5 per cent year on year, that the Irish banks are facing collective losses of Euros 35 billion, that UBS is going to report another loss in the second quarter, that India desperately needs some cash and is issuing $US74bn in paper and so threatening to choke bond market appetite, while the New Zealand economy shrank another 1 per cent. And, this morning, Qantas announces it is not only deferring orders for the Boeing 787 but cancelling 15 jets that were to be delivered from 2014 - all rather suggesting that it’s not too optimistic even five years out. 

Are the markets worried. Nah! 

Wall Street’s up, gold’s up, hopes are up - and it’s joy unbounded on the London Metal Exchange. They took heart from the Federal Reserve saying no further monetary policy action is needed. Great, but just remember that the period 1800 to 1900 in the US was one of either non-inflation or actual deflation, yet that century saw the greatest economic development story the world has known - and the dollar largely kept its value. In the 96 years since the Fed was set up - with the primary aim of protecting the greenback’s value - that same greenback is now worth 5 per cent of its buying power in 1913. And do you think that all this money printing could just possibly accelerate that loss of value even further? 
So there is some sense in holding hard assets - like metals. 

http://www.theaustralian.news.com.au/business/story/0,28124,25693000-15023,00.html


----------



## MACCA350 (27 June 2009)

kincella said:


> So there is some sense in holding hard assets - like metals.
> 
> http://www.theaustralian.news.com.au/business/story/0,28124,25693000-15023,00.html



Why can't metals devalue?

Copper went from $8.5k down to $3k in the space of 6 months.

cheers


----------



## explod (27 June 2009)

MACCA350 said:


> Why can't metals devalue?
> 
> Copper went from $8.5k down to $3k in the space of 6 months.
> 
> cheers




Big difference in metal types, copper industrial, down;      gold for collectors investors, held its own and up 300% since 2002


----------



## knocker (27 June 2009)

kincella said:


> ashaege....
> I saw something somewhere last week...Lindsay Park stud is moving to Euroa.....that will be a big boost for the area....I was looking at buying there for my brother....Its always been big on horses....we used to go there often with the childrens horses...
> its a cute little town about 1.5 hours from Melbourne on the freeway....
> it will give the town a lift....and cheap houses...well a lot cheaper than Melbourne
> cheers




lol Euroa you have to be joking. get a life dude and buy os. Lots of bargains in Spain at the moment ;-)


----------



## kincella (27 June 2009)

no thanks, I will buy where its just easy travelling distance to visit and inspect....
and I am not into travel o/seas....I have no idea what their market is like...
and prefer to really know the market...location
but thanks anyway.....others on here may be interested in your idea


----------



## knocker (27 June 2009)

kincella said:


> no thanks, I will buy where its just easy travelling distance to visit and inspect....
> and I am not into travel o/seas....I have no idea what their market is like...
> and prefer to really know the market...location
> but thanks anyway.....others on here may be interested in your idea




Fair enough, I guess euroa is good for retirement nothing else there. But if you were to retire why not go further up towards mildura lots of cheap farms etc up there.


----------



## Gordon Gekko (27 June 2009)

kincella said:


> no thanks, I will buy where its just easy travelling distance to visit and inspect....
> and I am not into travel o/seas....I have no idea what their market is like...
> and prefer to really know the market...location
> but thanks anyway.....others on here may be interested in your idea




http://patrick.net/housing/crash2.html

Well here is some info on the housing market in the US. I cannot believe how over priced property is here in Aus I get a chuckle when I read most of your posts. Are you a realestate agent or something?
If you have made money in property thats great congratulations!
I've lived in Aus 10 years (originally from Canada) If housing prices hold these levels I will truly be shocked but I will never buy at these prices.

Lucky I don't have to pay rent so I guess its easy for me to sit tight and watch. Or maybe I pay to much attention to Steve Keen and Harry Dent

Best of Luck

G


----------



## kincella (27 June 2009)

I like closer to Melb....maybe Kyneton, somewhere with a fast train...or soon to be a fast train within an hour to Melb....not the western suburbs...
brother wants to go somewhere where its warm all year....doubt such a place exists in Australia....
oh and he is retired....
Brumby looks after himself
....we need a fast train to Albury and I might live there...under duress.....cannot stand the place....but I have props up there
plenty of cheaper places around....all they have to do is get some fast rail and people will stay there, or move to where they have fast commute times...
no new roads or infrastructure required ...its already there

the drought is a worry....but if it breaks, everything changes....


----------



## robots (27 June 2009)

hello,

good evening, has been a tough couple of days with Michael passing away

but as usual the auction report for the day:

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

THATS RIGHT BROTHERS, A GREAT 86%

fantastic effort again, oh well, anyone know if the internet working in the UK yet

the thing is Gordon Gekko, no guns and no crack here in AUs, just a supreme place on the planet

zero interest rates yet?

thankyou

professor robots


----------



## kincella (27 June 2009)

Gordon...thanks again, but no thanks...I am not interested in what the freeken americans, canadians, irish or japanese do....
not an agent....just had fun buying properties at a low price and selling at a high price....only have 5 props left...but on the lookout for a bargain again...
have 30-40 years of retirement to look forward to...so need some income to support me all those years...
and if its worked well for so long now...not expecting anything to change...
sure some hiccups and twists and bends along the way.... but its proved worthwhile so far
cheers


----------



## robots (27 June 2009)

hello, 

Kincella, we have a family house in Kyneton (maxwell st, near pool)

the place has gone really boutique over the past 12-18mths, Piper st is a mecca for foodies now

still some cheap places in the streets

thankyou
professor robots


----------



## Gordon Gekko (27 June 2009)

kincella said:


> Gordon...thanks again, but no thanks...I am not interested in what the freeken americans, canadians, irish or japanese do....
> not an agent....just had fun buying properties at a low price and selling at a high price....only have 5 props left...but on the lookout for a bargain again...
> have 30-40 years of retirement to look forward to...so need some income to support me all those years...
> and if its worked well for so long now...not expecting anything to change...
> ...




Kincella you should be worried about what happens globally but you are liquidating your portfolio so I can see why you are keen to talk up the property market. Have you been watching to much steve keen

Here is the 40 ways to lose your future.


   1. Deflation is inevitable due to Ponzi dynamics (see From the Top of the Great Pyramid)
   2. The collapse of credit will crash the money supply as credit is the vast majority of the effective money supply
   3. Cash will be king for a long time
   4. Printing one's way out of deflation is impossible as printing cannot keep pace with credit destruction (the net effect is contraction)
   5. Debt will become a millstone around people's necks and bankruptcy will no longer be possible at some point
   6. In the future the consequences of unpayable debt could include indentured servitude, debtor's prison or being drummed into the military
   7. Early withdrawls from pension plans will be prevented and almost all pension plans will eventually default
   8. We will see a systemic banking crisis that will result in bank runs and the loss of savings
   9. Prices will fall across the board as purchasing power collapses
  10. Real estate prices are likely to fall by at least 90% on average (with local variation)
  11. The essentials will see relative price support as a much larger percentage of a much smaller money supply chases them
  12. We are headed eventually for a bond market dislocation where nominal interest rates will shoot up into the double digits
  13. Real interest rates will be even higher (the nominal rate minus negative inflation)
  14. This will cause a tsunami of debt default which is highly deflationary
  15. Government spending (all levels) will be slashed, with loss of entitlements and inability to maintain infrastructure
  16. Finance rules will be changed at will and changes applied retroactively (eg short selling will be banned, loans will be called in at some point)
  17. Centralized services (water, electricity, gas, education, garbage pick-up, snow-removal etc) will become unreliable and of much lower quality, or may be eliminated entirely
  18. Suburbia is a trap due to its dependence on these services and cheap energy for transport
  19. People with essentially no purchasing power will be living in a pay-as-you-go world
  20. Modern healthcare will be largely unavailable and informal care will generally be very basic
  21. Universities will go out of business as no one will be able to afford to attend
  22. Cash hoarding will continue to reduce the velocity of money, amplifying the effect of deflation
  23. The US dollar will continue to rise for quite a while on a flight to safety and as dollar-denominated debt deflates
  24. Eventually the dollar will collapse, but that time is not now (and a falling dollar does not mean an expanding money supply, ie inflation)
  25. Deflation and depression are mutually reinforcing in a positive feedback spiral, so both are likely to be protracted
  26. There should be no lasting market bottom until at least the middle of the next decade, and even then the depression won't be over
  27. Much capital will be revealed as having been converted to waste during the cheap energy/cheap credit years
  28. Export markets will collapse with global trade and exporting countries will be hit very hard
  29. Herding behaviour is the foundation of markets
  30. The flip side of the manic optimism we saw in the bubble years will be persistent pessimism, risk aversion, anger, scapegoating, recrimination, violence and the election of dangerous populist extremists
  31. A sense of common humanity will be lost as foreigners and those who are different are demonized
  32. There will be war in the labour markets as unempoyment skyrockets and wages and benefits are slashed
  33. We are headed for resource wars, which will result in much resource and infrastructure destruction
  34. Energy prices are first affected by demand collapse, then supply collapse, so that prices first fall and then rise enormously
  35. Ordinary people are unlikely to be able to afford oil products AT ALL within 5 years
  36. Hard limits to capital and energy will greatly reduce socioeconomic complexity (see Tainter)
  37. Political structures exist to concentrate wealth at the centre at the expense of the periphery, and this happens at all scales simultaneously
  38. Taxation will rise substantially as the domestic population is squeezed in order for the elite to partially make up for the loss of the ability to pick the pockets of the whole world through globalization
  39. Repressive political structures will arise, with much greater use of police state methods and a drastic reduction of freedom
  40. The rule of law will replaced by the politics of the personal and an economy of favours (ie endemic corruption)

Best 
Professor Gordon


----------



## Beej (27 June 2009)

Gordon Gekko said:


> Kincella you should be worried about what happens globally but you are liquidating your portfolio so I can see why you are keen to talk up the property market. Have you been watching to much steve keen
> 
> Here is the 40 ways to lose your future.
> 
> ...




Ummm - might be best if you head back up into the hills to your cave and curl up with your stockpiled shotgun ammo and baked bean tins!!! Really, this type of stuff is up there with the guy going on about aircraft contrails actually being "chemtrails".......

In the meantime back in the real world, Sydney auction clearance rate today was 76%.....

Beej


----------



## knocker (27 June 2009)

kincella said:


> I like closer to Melb....maybe Kyneton, somewhere with a fast train...or soon to be a fast train within an hour to Melb....not the western suburbs...
> brother wants to go somewhere where its warm all year....doubt such a place exists in Australia....
> oh and he is retired....
> Brumby looks after himself
> ...




Ok I have a property around maldon. very nice for a visit very now and then. bOUGHT AND PAID 10 YEARS AGO FOR 50K. Now rent.


----------



## knocker (27 June 2009)

Beej said:


> Ummm - might be best if you head back up into the hills to your cave and curl up with your stockpiled shotgun ammo and baked bean tins!!! Really, this type of stuff is up there with the guy going on about aircraft contrails actually being "chemtrails".......
> 
> In the meantime back in the real world, Sydney auction clearance rate today was 76%.....
> 
> Beej




well mortagagees must be doing well


----------



## Gordon Gekko (27 June 2009)

Beej said:


> Ummm - might be best if you head back up into the hills to your cave and curl up with your stockpiled shotgun ammo and baked bean tins!!! Really, this type of stuff is up there with the guy going on about aircraft contrails actually being "chemtrails".......
> 
> In the meantime back in the real world, Sydney auction clearance rate today was 76%.....
> 
> Beej




Actually beej I live on a small island 80km north of Townsville where I have a 7 course degustation menu prepared daily by a chef that opened the fat duck restaurant in the UK.. My only bill is for red wine which I pay at cost. Yesterday I went for a scuba dive and today I had fresh red emperor fish for dinner. My wife and I save 90% of our wages.
I may choose to buy a house in cash when interest rates go up which they will start to do very soon. That is when it will be time to buy, now it is time to sell.
The smart money is selling now only to buy it back when rates go up and over leveraged dreamers are forced to sell and then blame everyone else for why there life is so unfair.
For every winner there is a loser and I hope young people don't get burned by the falicy that prices never go down.

Best

G


----------



## robots (27 June 2009)

Gordon Gekko said:


> Actually beej I live on a small island 80km north of Townsville where I have a 7 course degustation menu prepared daily by a chef that opened the fat duck restaurant in the UK.. My only bill is for red wine which I pay at cost. Yesterday I went for a scuba dive and today I had fresh red emperor fish for dinner. My wife and I save 90% of our wages.
> I may choose to buy a house in cash when interest rates go up which they will start to do very soon. That is when it will be time to buy, now it is time to sell.
> The smart money is selling now only to buy it back when rates go up and over leveraged dreamers are forced to sell and then blame everyone else for why there life is so unfair.
> For every winner there is a loser and I hope young people don't get burned by the falicy that prices never go down.
> ...




hello,

sounds like the sermons many gave 4 yrs ago when the great thread started, oh well

i thought we were going like Japan with 0% interest rates? oops sorry people have changed there mind this week

what a new blog somewhere on www?

thankyou
professor robots


----------



## knocker (27 June 2009)

Gordon Gekko said:


> Actually beej I live on a small island 80km north of Townsville where I have a 7 course degustation menu prepared daily by a chef that opened the fat duck restaurant in the UK.. My only bill is for red wine which I pay at cost. Yesterday I went for a scuba dive and today I had fresh red emperor fish for dinner. My wife and I save 90% of our wages.
> I may choose to buy a house in cash when interest rates go up which they will start to do very soon. That is when it will be time to buy, now it is time to sell.
> The smart money is selling now only to buy it back when rates go up and over leveraged dreamers are forced to sell and then blame everyone else for why there life is so unfair.
> For every winner there is a loser and I hope young people don't get burned by the falicy that prices never go down.
> ...




nanygai.. mmm nice

barra and muddies mmm nice


----------



## knocker (27 June 2009)

Port douglas nice
cairns nice


----------



## MrBurns (27 June 2009)

knocker said:


> Port douglas nice
> cairns nice




I was going to buy in Port Douglas prices must be down by now, but it's a long way to go for a weekend, better in Sorrento or Portsea but they're still expensive.

Maldons nice easy now the new freeways through.


----------



## kincella (27 June 2009)

Robots, 
memory fading now...but pretty certain I lived in Piper St Kyneton, opposite the showgrounds for a short period of about 12 months when I was  only 12.... I had a Kelpie dog, that I exhibited in the working dog classes and won 3rd prize...I was aged twelve  at the time..... aged 12....**** stunning result when I think about it now...but at the time I was dissapointed...I expected to win....can any of you imagine a 12 year old pitting their skills against the best in Vic...and coming 3rd....at age 12 ????

fond memories of Kyneton High School and although boring for a 12 year old....family had big ties with the area for several generations...hence my interest...then and now....


----------



## knocker (27 June 2009)

MrBurns said:


> I was going to buy in Port Douglas prices must be down by now, but it's a long way to go for a weekend, better in Sorrento or Portsea but they're still expensive.
> 
> Maldons nice easy now the new freeways through.




Don't really like victorian beaches. never have. I guess squeaky bay at wilsons prom is ok, the rest are overated.


----------



## kincella (28 June 2009)

I used to spend most weekends at Sorrento...a friends place...not mine...

now I have been saying for ages....that some people will take whats left and move into property...never to return to the stock market.....

its showing up so soon...

*Share abandon, but at what cost?*
Richard Webb
June 28, 2009 Page 1 of 2 Single page view

AUSTRALIANS have quit the sharemarket like rats from a sinking ship.

A study by the Australian Stock Exchange shows that 1.3 million investors decided to sell out of shares completely in the past four years, taking to 2.5 million the number who have owned shares and have shed them.

That's equivalent to more than half the population of Melbourne abandoning arguably the best-performing investment class in the long term. It's 12 per cent of the Australian population. A big number in anyone's book.

http://business.theage.com.au/business/share-abandon-but-at-what-cost-20090627-d0j5.html


----------



## kincella (28 June 2009)

looks like these people might be investors, they are not FHB...
but its getting too hot too early....IMO
most investors are waiting for the Sept change in fhb grants before entering the market again.....and with another 1 or 2 rate cuts...that sounds like a good plan....

*Record auction rate sparks growing concern*Chris Vedelago
June 28, 2009 

MELBOURNE'S auction clearance rate has held its ground at the second-highest level on record, with this latest performance fuelling speculation the market could be heating up too much, too fast.

The Real Estate Institute of Victoria reports this week's clearance rate was 86 per cent for 425 auctions. The results of another 31 scheduled auctions were unreported.

This is the seventh consecutive week when the clearance rate has been above 80 per cent, while private sale transactions have continued to surge ahead of even 2007 levels.

"There's no doubt that consumers are showing strong confidence in Melbourne's property market, judging by the results we're seeing for both auctions and private sales," said REIV chief executive Enzo Raimondo.

The overall sales performance, and increasingly common reports of prices being achieved well above reserve, is sparking plenty of confusion and some concern.

"It's not just supply and demand any more. You look at some sales and people are paying these prices with seemingly no logic behind the price they pay … they're buying properties just because they can afford to," said buyer's advocate Michael Ramsay.

In Brunswick, a crowd of about 400 watched, stunned, as the sale price of 10 Charles Street soared 61 per cent ”” or nearly $1 million ”” above its reserve.
Intense competition between four bidders saw the 1525-square-metre block sell for $2.58 million against a reserve of $1.6 million. Barry Plant real estate quoted the property at $1.5 million to $1.6 million.

http://business.theage.com.au/busine...0627-d0k5.html


----------



## robots (28 June 2009)

hello,

thanks to Kincella for the links, legend man

with immigration still ticking over the race will always be on for people to buy a residence, 

with yourself in total control of the "property" typically, no managers, no boards, no advisors and the changes which appear likely with super

the tax free environment of the home is looking extremely good

fantastic

thankyou
professor robots


----------



## knocker (28 June 2009)

Yes thats right robi but not in australia. Just picked myself up another bargain this week in uk. 100k end o terrace three bedder. Previous owns went belly up, a little bit of work and I will rent out each room individually for 90 to 100 pound a week. very nice, close to m4 ascot etc. interest rates nice, Mr Halifax gave me a nice loan. thank you very much


----------



## kincella (28 June 2009)

you got a 3 bdr terrace for 100k.....thats pretty hard to believe....is it in a rundown place.....rundown condition.........
sounds awfully cheap.....in Melb the kids pay around 150pw plus in the city to share


----------



## knocker (28 June 2009)

100k pound yes it needs some work inside, previous owners took doors light fittings etc. Probably spend about 15 k Average rent here for a double room is 100 pound per week, i rent for 95, a single room gets about 80. You do the math


----------



## Beej (29 June 2009)

knocker said:


> 100k pound yes it needs some work inside, previous owners took doors light fittings etc. Probably spend about 15 k Average rent here for a double room is 100 pound per week, i rent for 95, a single room gets about 80. You do the math




So you think the property market has bottomed in the UK for now? PS that sounds like a great investment!

Beej


----------



## Mc Gusto (29 June 2009)

kincella said:


> looks like these people might be investors, they are not FHB...
> but its getting too hot too early....IMO




honestly 'too hot too early' when did it get cold??! It is a massive worry for the average buyer mortgaged to the hilt thinking they can afford property with the FHBG and interest rates at 5% going in with F-all deposit.
If it does get cold, and if fundamentals like unemployment etc spike up then it will get cold, these people are going to find themselves in a whole world of pain. The market has recovered from a small dip no doubt in my mind but whether that dip was the decline that was expected due to this recession i highly doubt it.

We had a quarter of downturn and a quarter of flat to positive. We are yet to feel the real effects of the global downturn and what is the greatest financial crash in modern times. If the next quarter is down things are going to get very skinny and that includes property.

Just my opinion but I will not buy at current levels it is madness.

Thanks

Gusto


----------



## Buckeroo (29 June 2009)

kincella said:


> The overall sales performance, and increasingly common reports of prices being achieved well above reserve, is sparking plenty of confusion and some concern.
> 
> "It's not just supply and demand any more. You look at some sales and people are paying these prices with seemingly no logic behind the price they pay … they're buying properties just because they can afford to," said buyer's advocate Michael Ramsay.
> 
> http://business.theage.com.au/busine...0627-d0k5.html




It all very simple. 

The Government gives the first home buyers a boost and encourages the banks to lend out enormous sub prime loans. Then the first home buyers get ripped off as developers & agents raise prices - sadly, the handout provides a negative advantage to these inexperienced buyers.

Then there is a large market for higher value properties from the people who sold to the first home buyers. This inflates the prices as demand skyrockets.

So, all we have to do is wait until the Government runs out of money - that is when the collapse will happen...and it will happen!

Cheers


----------



## Boggo (29 June 2009)

MrBurns said:


> I was going to buy in Port Douglas prices must be down by now, but it's a long way to go for a weekend, better in Sorrento or Portsea but they're still expensive.
> 
> Maldons nice easy now the new freeways through.




Cheap block of flats for sale here MrBurns...
http://www.dailymail.co.uk/news/wor...tures-13-storey-block-flats-toppled-over.html


----------



## MrBurns (29 June 2009)

Boggo said:


> Cheap block of flats for sale here MrBurns...
> http://www.dailymail.co.uk/news/wor...tures-13-storey-block-flats-toppled-over.html




Yes I'm due to settle on that in a week or so, the final inspection will be interesting.


----------



## robots (30 June 2009)

hello,

good evening, gee some selective reading going on by the members out there

anyhow, check this:

http://www.smartcompany.com.au/adve...ces-surge-4-in-first-five-months-of-2009.html

bang that in your pipe brothers, that chicken parma and slab of ruskies is looking real good Satanoperca, dont disappear man

and on it rolls, what a day

sorry sorry, hang on hang on, no one is going to have a job in 2 years, interest rates are going to 5000%, we going the way of Japan, got to be true i read it on a blog

thankyou
associate professor robots


----------



## robots (30 June 2009)

hello,

hello hello hello, anybody out there?

fantastic results out today regarding the property, crash anyone?

so much for bubble land, just reality

thankyou
robots


----------



## kincella (30 June 2009)

Hi Robots....
I have been busy working man....tax deadlines today....biggest stressful day of the year for me....and paid all the bills for the tax deductions for 2009

....just checked in to see if I won some money in the big lottery...but no....

taking a break for the next week...sort of. ...still have too much work to do....

I have been too busy to follow whats going on with property.....but am sure its all OK.....another interesting 6 months coming up....

I really have to get my house in order...so to speak....been neglecting things this past 2 months because of work....
so looking forward to a spring clean...in winter....and then addressing all those other things I need to do......
keep up the good posts....
cheers


----------



## robots (30 June 2009)

hello,

no worries Kincella, take your time man

and some more great reading on the property market from our friends at Morrell & Koren:

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

thankyou
professor robots


----------



## robots (30 June 2009)

hello,

just in case anyone missed the post before, this is the direct link:

*http://www.rpdata.com/*

i know our friends in the UK keep a KEEN eye on the data coming out of Australia so hope you find it informative (since they back online, credit flows must be working)

thankyou
associate professor robots


----------



## robots (30 June 2009)

robots said:


> hello,
> 
> just in case anyone missed the post before, this is the direct link:
> 
> ...




hi, 

ah yeah top post professor thanks for the link

sunshine and lollipops

cheers
pepperoni


----------



## nunthewiser (30 June 2009)

> HIA senior economist Ben Phillips said the May figures showed it would take more than first home buyers to support a recovery in home building activity.
> 
> "The vast majority of the housing recovery has been at the first home buyer end of the market,” Mr Phillips said in a statement.
> 
> ...




http://www.thewest.com.au/default.aspx?MenuID=159&ContentID=151830


sunshine and lollipops brothers 

pure nirvana 

walking tall

senior professor nun


----------



## trainspotter (30 June 2009)

When the state revenue dept sends you a refund cheque for land tax and downgrades your property portfolio by an average of 20k per construction you gotta be asking yourself "hello, what property boom, man?"

Currently holding 5 houses that have dipped between 30k to 50k on average. Some rented, some not. Real estate agent figures by the way.

Nevermind that they incresed in value on average of 100k in 2 years ... (nervous cough) Could be the market correcting itself?

RP data ... my main source of info. Useful as a weapon of mass destruction.


----------



## Bafana (1 July 2009)

Just a quick footnote. Some of the larger private developers in Canberra are continuing to purchase property and have sites set up to get done over the next 5 years already. These guys sat back for a while recently but are now out and about so my feel is there may not be such a large bubble in commercial property, the same may not be said for residential. (Source: Office Workload projections, we are insultanting engineers lah)

What I have found is that regional prices in residential property in and around provincial city's doesn't looking to be spiking too much, especially old homes. They appear to be spiking in retirement and hobby areas only, and it would appear that real farm land is very hard to move right now (my aged Aunt's property $750K has been on the market for over a year now).


----------



## robots (1 July 2009)

hello,

hey hey hey hey:

http://business.theage.com.au/business/melbourne-in-housing-recovery-20090630-d3uk.html

this is just amazing, the residential property train just keeps plodding along

fantastic and for most its just for putting the key in the door and saying Hi to the wife, awesome 

surely that western sydney uni must have an empty office by now

well done to those putting in keep up the effort man

thankyou
professor robots


----------



## kincella (1 July 2009)

Hi Robots,
I copied this post from a mate on another forum........he is a smart cookie...
....................

I bought a place 4 weeks ago for $180k ....100% lend 

spent 8k and 2 weeks doing it up and now back on the market for $269,000

So has cost me $204,000 inc all fees/sduty/agents and reno costs. 

First open was Saturday.....got an offer of $255k and another one coming in today.

here is the house below....shown refurbished.


http://www.realestate.com.au/cgi-bi...er=&cc=&c=61011103&s=sa&snf=rbs&tm=1246406012

So Peter.....stick to the books and I will live reality.


----------



## Taltan (1 July 2009)

Kincella
Aren't quick and easy profits a sign of a bubble in a market? Such stories remind me of the M&A activity that took place on the ASX in 2006 & 2007.

At the moment both interest rates and unemployment are at near historical lows so I think there is still generally only one way for them to go


----------



## kincella (1 July 2009)

actually that poster turns over those projects on a regular basis.....he has an eye for it ......finds a bargain....knows how to fix them up....
obviously knows his market....note the prices are well below that 300k threshold for fhb's....
there has been a bubble forming since Jan 09....but it will deflate a bit I believe


----------



## kincella (1 July 2009)

I copied this extract from another property poster on another forum.....
its magic.......

The owner of McDonalds once asked Harvard students if anyone knew how he made his money.

They answered easy, making hamburgers. 
No he replied. I own the best real estate in every capital city in the world.


----------



## nunthewiser (1 July 2009)

yeah .blah blah blah to copied posts from other forums ..............

meanwhile in reality land ............



> Building approvals fall 12.5 per cent in May
> 
> 1st July 2009, 10:00 WST
> 
> ...




sunshine and lollipops ? 

better get over to the happiness thread and breath in some of that sweet smelling scent i left there


----------



## kincella (1 July 2009)

I live in reality land...right here in Melb......
you are laughing at reduced building approvals...which means less houses built
which puts more pressure on the  existing stock.......
grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr

and then this.....hehehehehe

*Melbourne's population surge*
Jason Dowling 
July 1, 2009 - 4:23PM 
Melbourne will add 70,000 residents each year for the next five years making it the highest urban growth area in Australia. 

The population rise means Melbourne will need 29,000 new homes a year for the next five years - especially alternative housing such as houses on smaller lots, townhouses, villas and apartments. 

The new population and housing figures, produced by Matusik Property Insights, were commissioned by the Residential Development Council. 

At the release of the new growth figures, Federal Minister for Housing Tanya Plibersek said Australia could have an under-supply of 200,000 homes by 2013. 

http://www.theage.com.au/national/melbournes-population-surge-20090701-d4vx.html


----------



## robots (1 July 2009)

kincella said:


> I live in reality land...right here in Melb......
> you are laughing at reduced building approvals...which means less houses built
> which puts more pressure on the  existing stock.......
> grrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
> ...




hello,

i thought immigration was halted in a recession? i read it on a blog from the UK, strange

yes it going to be massive Kincella, just holding on doing our bit for society and getting a bit on the way

fantastic, its just so easy i cant believe it

nirvana man, 

thankyou
professor robots


----------



## trainspotter (1 July 2009)

kincella said:


> Hi Robots,
> I copied this post from a mate on another forum........he is a smart cookie...
> ....................
> 
> ...




All glory to you kincella. You go, you good thing !! That is a fabulous reward for effort. Used to be like that where I am, back about 8 years ago. Trend moved to new blocks and new construction. Blocks are cheap and the builders needed the work. Great coin to be made.

Times have changed. Glut on the market of "new" homes. Prices droppped 40k on established. Not complaining. Just summarising.

Majority of $$$ to be made is in property. And safe. Safe as bricks and mortar. Banks also tend to be more agreeable on lending as well.

Like the idea of sticking the key in the door and saying HI to the Missus and making money !


----------



## Saucebottle (1 July 2009)

Stop_the_clock said:


> What a load of garbage...if people think house prices are going to keep rising for years then I have 2 words for you "INTEREST RATES"
> 
> The only sure thing that is going to be rising is interest rates, NOT the price of housing!
> 
> ...




What indication have the RBA given that they are going to raise rates, didnt they just bring them down???  What drugs are these people on??


----------



## MrBurns (1 July 2009)

kincella said:


> Hi Robots,
> I copied this post from a mate on another forum........he is a smart cookie...
> ....................
> 
> ...




What a hero, and it's not that hard, thats what I should be doing but it's a bit harder in Melbourne or am I just lazy ? by the time I get motivated the crash that's overdue will be here.


----------



## robots (1 July 2009)

hello,

you a bit like all the money box bankers here at ASF, Burns?  

the text book boys 

thankyou
professor robots


----------



## MrBurns (1 July 2009)

robots said:


> hello,
> 
> you a bit like all the money box bankers here at ASF, Burns?
> 
> ...




You mean money in the bank robots ? Yes.


----------



## trainspotter (1 July 2009)

What a neat way to get traffic directed to your website !! Attribute it too a mate. Or is that too close to the bone? Web page counter went through the roof !

Log onto RP data and do a search of ownership and check the sales history.

Just me being militant. If it works out then great! Make money anyway you can. If housing works your style then go with it. Remember ... everything is kinky the first time.


----------



## trainspotter (1 July 2009)

Don't mean to rain on anyones parade:.

Demand for new houses hits 22 year low:-

AUSTRALIAN building approvals fell 12.5 per cent to 9953 units in May, seasonally adjusted, from a downwardly revised 11,374 units in April, the Australian Bureau of Statistics (ABS) said. 
In the year to May, building approvals fell 22.4 per cent.

The market forecast was for building approvals to have recorded a rise of 3.3 per cent in May.

The lowest in 22 years apparently.


----------



## nunthewiser (1 July 2009)

trainspotter said:


> Don't mean to rain on anyones parade:.
> 
> Demand for new houses hits 22 year low:-
> 
> ...




scroll back 

i posted that earlier today but the sunshine and glee gang tried to turn it into a lollipop moment .

quite a few indicators turning pear shaped lately but hey never let facts get in the way of a good story


----------



## Julia (1 July 2009)

Saucebottle said:


> What indication have the RBA given that they are going to raise rates, didnt they just bring them down???  What drugs are these people on??



Did you look at the date of that post?
Stop the Clock hasn't been on this forum for at least a couple of years.


----------



## nunthewiser (1 July 2009)

Hi kincela this is a post i stole from another forum 



> " i just bought a place 6 months ago for 350k 100% lend, i lost my job 2 months ago and have just had to sell it in a depressed market for 280k
> 
> i now owe 70k there plus fees plus an extra 100k on cars , boats and credit cards
> 
> ...



thankyou 

senior proffessor nun


----------



## trainspotter (2 July 2009)

nunthewiser said:


> scroll back
> 
> i posted that earlier today but the sunshine and glee gang tried to turn it into a lollipop moment .
> 
> quite a few indicators turning pear shaped lately but hey never let facts get in the way of a good story




Ooooops. Sorry to you nunthewiser for stepping on your post. Must have been a senior/blonde/stupid phase I was going through at the time. Now there's an opening for someone to pounce on !

Anyways, parts of Australia are showing recovery in the housing sector and other sections are NOT. The ones that aren't, have already been through a  capital growth situation and have either hit peak or have dropped away slightly. (my portfolio at the moment)

Different parts of the property market traditionally do well in this almost stagflation environment. Kincella's "friend" is more than likely on the money. Find an old house in a good suburb and give it a lick of paint an replant the garden. Viola !! Instant 50k in some cases. Other cases not so much.

The double post refers to "NEW" construction. Current glut on the market as we wait for the established property to be taken out of the mix. Once purchasers cannot find what they are looking for there is no alternative but to build in the new subdivisions. OR buy on existing leafy/wealthy/inner suburb and completely gut and rebuild an existing property. Remember the three L's in property.


----------



## Mc Gusto (2 July 2009)

people clearly feel now is the time to buy. therefore demand is up with supply being moderate to low.
fear factor of jobloss etc has gone. the recession is over.  australia has skipped through it unscathed.

Meanwhile...canada getting thwacked. NZ in the poo. UK / Europe / USA pretty messy.

well i never..?@!?!

sunshine and lollipops. no recession here. onwards and upwards.


----------



## kincella (2 July 2009)

more reality
the indexes jumped as follows ,and peaked year, population
nz  200 03/04  4 mill
ire  200 07      4 
uk  150 03       61
us  150 05      303
ca  150 07      33
ice  100 06  *    only 300k's
aus  40 03 and again 08 21 mill
***note how far below aus index rose compared to all the others...a lowly 40 compared to 150-200....
apart from nz and the uk peaked about the same time as aus...all the others were laggards...us in 05, ice 06, ca and ire 07
population of nz and ire about the same as Melbourne only, and ice only 300,000 like one of our regionals...

http://www.globalpropertyguide.com/real-estate-house-prices/A


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## nunthewiser (2 July 2009)

nsw and qld next ?



> WA home repossessions soar
> 
> 2nd July 2009, 6:45 WST
> The number of home repossessions in WA has hit a record high as hundreds of families lose the battle to make mortgage repayments.
> ...





http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=152314

sunshine and lollipops ?

just keeping it real man


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## lasty (2 July 2009)

nunthewiser said:


> nsw and qld next ?
> 
> 
> 
> ...




Interesting, so those who are losing their homes are what income bracket?
In NSW the higher end are losing their homes but managing to fall back into the median market.
Then we see so many losing their homes as claimed by many but prices arent falling, so there maybe vultures waiting to claw their way in.
Lets not jump to panic mode just yet. Certain areas like holiday areas and the high end have been smacked but the middle to lower housing prices are firm.


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## matty2.0 (4 July 2009)

All I see on this thread is complaining and whining about the "imminent crash" that will "inevitably" happen ... however no data or proper reasoning to back up the argument.

Fact of the matter is there is a shortage of supply and housing stock (since the govt has not made land available) and population growth (and thus household formation) is growing at record pace. 
There won't be any crash if the demand/supply imbalance continues the way it is. You can check RP data or APM or any other data broker; rental yields are at record lows still, even after all this stimulus, this suggests that demand is strong and supply is not enough to offset the demand. If it was, then along with govt. grants, we would be seeing yields come off a bit but we haven't. 

The only cloud looming over our housing market is unemployment, which is quite low at about 5-6% compared to international levels .


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## Taltan (4 July 2009)

Matty 
I think your right and I expect property prices to stay at current levels over the next twelve months. The reason is that although there are supply issues as you say yields are at record so I would think there is only one way for them to go - up. For that either rents (wages) rise or prices fall. Rents rising seems unlikely hence the current equilibrium between supply shortage and insufficient yields should continue in the short-term.


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## knocker (5 July 2009)

Big trouble coming in the next 3 months. stay tuned  property suckers.


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## matty2.0 (5 July 2009)

knocker said:


> Big trouble coming in the next 3 months. stay tuned  property suckers.




What are you suggesting? and what do you base it on?

note: I am in no way involved in the property markets right now.


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## Bafana (5 July 2009)

knocker said:


> Big trouble coming in the next 3 months. stay tuned  property suckers.



Can you elaborate please? Am looking to make some purchases over the same period and it doesn't hurt to ehar all the scuttle butt.


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## MACCA350 (5 July 2009)

knocker said:


> Big trouble coming in the next 3 months. stay tuned  property suckers.



You're just nasty...........saying that and just scuttling off:

cheers


----------



## michael_t_f (5 July 2009)

I went to an auction North Brissie last thursday and was the only one bidding for a 3 bed renovator, I thought there would of been some competition from first home buyers. There are a few people interested but the owner strictly wanted 10% upfront which the agent informs me no one else had! 
Also I have noticed the amount of properties for sale on the Gold Coast has risen in the last couple of months. My saved search on RE.com usually brings up around 10 props per day, I'm now seeing 20 plus per day new props for sale.


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## kincella (5 July 2009)

What happened to the housing slump?
Chris Vedelago
July 5, 2009 

The surge in property prices has even the experts perplexed, writes Chris Vedelago.

IT WAS supposed to be the worst property slump in a generation. After a succession of interest rate rises, a sharemarket slump, corporate collapses and the psychological effects of the global financial crisis, 2008 had all the ingredients for a prolonged downturn. Some analysts warned that Australian house prices would fall by as much as half.
Property analysts RP Data-Rismark reported last week that Melbourne has posted the highest house price growth of any capital city in the five months to May, up 5.86 per cent to $469,357. It has now passed the previous peak median price of $465,216 set in February last year.

Residex reports that during the downturn, house values rose in suburbs where the median value was below $360,000, such as Laverton (18.9 per cent), Braybrook and Albion (19.6 per cent) and Broadmeadows (20.8 per cent).
note only extracts here..not the full story
http://business.theage.com.au/business/what-happened-to-the-housing-slump-20090704-d8i2.html

my thoughts on Qld and WA....they rose higher and longer than the other states...so they will see softening...while NSW and VIC are showing growth
I expect all resource dependent states to soften...unbelievable they would be higher than biggest cities of Syd and Melb...


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## MACCA350 (5 July 2009)

michael_t_f said:


> I went to an auction North Brissie last thursday and was the only one bidding for a 3 bed renovator, I thought there would of been some competition from first home buyers. There are a few people interested but the owner strictly wanted 10% upfront which the agent informs me no one else had!
> Also I have noticed the amount of properties for sale on the Gold Coast has risen in the last couple of months. My saved search on RE.com usually brings up around 10 props per day, I'm now seeing 20 plus per day new props for sale.



I think it's a bit silly to go to an auction without a deposit and expect to buy the house 
Granted I haven't been in the game long but when we sold our house it was standard practice to have a 10% deposit from the buyer on the auction day. Even buying our block of land we had to supply a 10% deposit when we signed the contract...........I wouldn't expect any different.

If you're serious and are planning to bid on a property at auction you'd better have your check book with you...........that's my opinion anyway

cheers


----------



## kincella (5 July 2009)

A very interesting article showing the differences between Melb and Sydney, and will explain to the mexicans who live anywhere other than Melb...what keeps melb buzzing along...selected extracts  only......
*Melbourne comes out on top*

AT ALMOST every level, Melbourne business is thrashing its Sydney counterpart ”” and it has been doing so almost from the moment the prawn bike made its grand entrance as part of the Sydney Olympics closing ceremony in October 2000.

More businesses are starting up in Melbourne, growth in economic activity is considerably higher in Melbourne and Victoria generally ”” up to double that of Sydney and NSW ”” infrastructure spending is higher, and while Sydney still captures more tourist dollars, Melbourne is rapidly catching up.

Wages are higher in Sydney but so is the unemployment rate (6.4 per cent versus 5.9 per cent), and while Sydneysiders go home to their average $530,000 houses, Melbourne house prices have been more solid in recent times ”” albeit at $425,000.

The differing economic performance has been reflected in population growth. Melbourne's population is growing at more than double the rate of Sydney's and, if this continues, Melbourne will overtake Sydney as Australia's largest city within the next 20 years.

At the big end of business, the cities are equally split. Sydney is home to nine of the top 20 companies listed on the Australian Stock Exchange, while Melbourne boasts eight, although in BHP, Rio, NAB, ANZ and Telstra they are also some of the biggest
"Senior banking people tell me that Melbourne is going gangbusters and if the rest of the country was like Melbourne, we wouldn't be in recession ”” but Sydney is completely cactus."
Mr Phillips (a Melburnian) describes Sydney as the consummate deal-making town and believes there is still a seamless connection between Sydney unions, the ALP and major businesses there.

"People in business think this situation is normal in NSW but it has ossified decision-making in the state ”” the decisions are politically driven and not market driven and NSW is now the dead lead in the Australian economy."

http://business.theage.com.au/business/melbourne-comes-out-on-top-20090704-d8g5.html


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## michael_t_f (5 July 2009)

Macca I don't think you read my post properly. My point is that no first home buyers actually have a 10% deposit. This is why I was the only one bidding because I was the only one with the cash. It appears that the majority of fhb are fully dependent on the grant.


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## kincella (5 July 2009)

Michael. the banks have demanded the FHB have at least 5% of genuine savings, to use with the grant....so maybe they were just lookers....tyre kickers


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## trainspotter (5 July 2009)

_This in the Australian in January - _WESTERN Australia's property bubble has been pricked and prices could drop as far as 20 per cent as home buyers flee the market. Turnover in the market has dropped by 16.1 per cent since its peak in June, based on the number of new home loans being approved, with a 4.1 per cent fall in November. 

_This in the West Australian in July -_ *HOUSE prices on rise again: Industry chief* (front page headline) Perth's property market is on track to record its second consecutive quarter of price growth that would confirm the embattled sector has turned the corner. Median house prices to rise by2.3%

Talk about conflicting signals.


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## MACCA350 (5 July 2009)

michael_t_f said:


> Macca I don't think you read my post properly. My point is that no first home buyers actually have a 10% deposit. This is why I was the only one bidding because I was the only one with the cash. It appears that the majority of fhb are fully dependent on the grant.



Yep, I was referring to those who don't yet expect to buy at auction..........Kincella may be right, not about what He's been banging on about this whole thread:, but about them being tyre kickers

cheers


----------



## MACCA350 (5 July 2009)

trainspotter said:


> _This in the Australian in January - _WESTERN Australia's property bubble has been pricked and prices could drop as far as 20 per cent as home buyers flee the market. Turnover in the market has dropped by 16.1 per cent since its peak in June, based on the number of new home loans being approved, with a 4.1 per cent fall in November.
> 
> _This in the West Australian in July -_ *HOUSE prices on rise again: Industry chief* (front page headline) Perth's property market is on track to record its second consecutive quarter of price growth that would confirm the embattled sector has turned the corner. Median house prices to rise by2.3%
> 
> Talk about conflicting signals.



So basically their crystal ball is broken, and they have no idea about the future of the Aussie housing market.........just like us

Up........down...........up..........down.........place your chips

cheers


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## kincella (5 July 2009)

TS the difference being the first article was in Jan...and predicted to drop
the 2nd article was in June 09 and records a rise.....
you should know by now all the people predicting huge losses....were just so wrong.....and they continue to predict figures on anything and everything that proves them wrong....hello...problem with their methodology


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## MACCA350 (5 July 2009)

kincella said:


> TS the difference being the first article was in Jan...and predicted to drop
> the 2nd article was in June 09 and records a rise.....
> you should know by now all the people predicting huge losses....were just so wrong.....and they continue to predict figures on anything and everything that proves them wrong....hello...problem with their methodology



No prediction..........






I love posting that: ..............Yeah I know, blah blah blah

cheers


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## trainspotter (5 July 2009)

When the State Revenue Dept sends you a REFUND cheque for land tax on property and devalues the block by 15% (just a lazy 20k down the gurgler)you start to wonder. Like everything there is an element of risk. Property has been recognised to be the most stable and should make up part of a good portfolio. Following the SIP rule we should be in for a looong wait before property will be the shining example it used to be.


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## kincella (5 July 2009)

Macca...remember the GFC started June 07.....almost no houses were selling...then the increased FHB grant kicked in and houses started off again about Oct 08...but predominately at the bottom of the range....
so if only low priced houses are selling...and no middle or high end houses sold...the median value must come down....traps for players ,...unless you are a buyer in the bottom bracket...
the truth was the lower priced homes increased in value...if you were out there looking, like quite a few buyers are....they are not finding a bargain...and looking to pay higher prices....why is that....
they were fooled by the median price dropping...but not actual house prices falling....


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## MACCA350 (5 July 2009)

kincella said:


> Macca...remember the GFC started June 07.....almost no houses were selling...then the increased FHB grant kicked in and houses started off again about Oct 08...but predominately at the bottom of the range....
> so if only low priced houses are selling...and no middle or high end houses sold...the median value must come down....traps for players ,...unless you are a buyer in the bottom bracket...
> the truth was the lower priced homes increased in value...if you were out there looking, like quite a few buyers are....they are not finding a bargain...and looking to pay higher prices....why is that....
> they were fooled by the median price dropping...but not actual house prices falling....



"..............Yeah I know, blah blah blah"

cheers:


----------



## kincella (5 July 2009)

whats your location trainspotter ??? it can make a big difference....
there will be pockets of unemployment....higher than usual....so there will be some softening in some suburbs,,,,generally not the inner city areas....but in the outer suburbs....
I am expecting a very slowed economy...its not going to bounce back quicky as some think....interest rates will need to come down....when they start to hike tax rates to cover the deficit....Swan predicted a growth in our economy to offset the big handouts....that was a mistake.
oh and when I talk property as a good investment...I dont mean a 5 minute investment job....I mean 10-20 years and its a passive investment...
glued to the pc watching trades is not passive....


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## trainspotter (5 July 2009)

Location, Location,Location, is the key. North of Perth to give you some indication without giving my poition away. WA country on the coast.

I have been in the property industry for 21 years. Fom finance (mortgage origination) to holding a Real Estate Reps licence. I have bought and sold approx 35 blocks and houses in this time. For me, not for clients. I still own a property development company that specialises in purchasing potential blocks for unit develpment (current requirement where I am located).

Yes, there is property that you hold for a longer period of time due to rental income, capital growth etc etc. Property is a great investment, so are shares and so is a portion of money in the bank. What I am driving at is that depending on the economic times depends which way you should shift your portfolio to take advantage of the markets.

Think of it like a tree in the wind. It will bend whichever way the wind blows it. Smart tree. If it does not, then it will come down, cradle an all !


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## kincella (5 July 2009)

well the old maxim was...put a third of your money into each asset category...hold all 3 types...when one is up the other will be down, or flat...rare for all 3 to be up at the same time or down....
past 8 years showed property and shares were up, but cash was in the middle, since then stocks have lost 50%, property has grown in some areas , cash had a rise than a fall...
I have friends LT investors, they have not sold anything, but have used cash to top up on shares, and they intend to buy more property by the end of this year
I know some here think its a lazy way to invest, and that they could have made a stack more money selling near the top of the market and buying back in at the bottom....
but these friends run businesses...and they consider the investments are super or for retirement...and it can sit around cooking for a long time....no hurry


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## nunthewiser (5 July 2009)

trainspotter said:


> Location, Location,Location, is the key. North of Perth to give you some indication without giving my poition away. WA country on the coast.
> 
> !





all the beutiful people live in geraldton , the rest wish they did

a.nun


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## MACCA350 (5 July 2009)

nunthewiser said:


> all the beutiful people live in geraldton , the rest wish they did
> 
> a.nun



My mum use to live in Geraldton, nice little town

cheers


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## nunthewiser (5 July 2009)

MACCA350 said:


> My mum use to live in Geraldton, nice little town
> 
> cheers





son?? is that you ?


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## MACCA350 (5 July 2009)

nunthewiser said:


> son?? is that you ?







..........nah.........she wasn't living there that long ago

cheers


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## kincella (5 July 2009)

auction results clearance rates....melb 83.8,sydney 75.4, brisb 42, ade 40, perth 33, tas 33......
I know why I like Melb the best.....

http://www.realestate.com.au/cgi-bin/rsearch?a=ars


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## robots (5 July 2009)

kincella said:


> *What happened to the housing slump?*
> Chris Vedelago
> July 5, 2009
> 
> ...




hello,

just in case anyone missed one of the best from Kincella,

surely there must be an empty desk at Western Uni

Beej or Kincella should be sitting a that desk

thankyou
professor robots


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## So_Cynical (5 July 2009)

kincella said:


> auction results clearance rates....melb 83.8,sydney 75.4, brisb 42, ade 40, perth 33, tas 33......
> I know why I like Melb the best.....
> 
> http://www.realestate.com.au/cgi-bin/rsearch?a=ars




Just having a quick look at the results...

http://www.realestate.com.au/105728306

4 bedroom, newish brick home in the outer northern Perth suburbs $225,000 
no wonder my mum cant even get anyone to look at her house.


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## kincella (5 July 2009)

Cynical....houses are always cheaper, new ones in the outer suburbs.....looks good to me
Robots....thanks...but not interested in western uni...its Melb I like..
btw
I bank with wbc....but my property loans have been with others, the bank called me last Friday...suss me out, they want to lend me some housing money, wondered why I had not borrowed from them before...said better deals elsewhere.... they said they can match any deal and better it....I said I had just refinanced with rams....she wants me to change to wbc....joking all those new fees again...no thanks...will I be buying more property....you bet I will...
just found a house in regionals...massive upgrade...but they must have run out of money....listed at a very low price....4 beds, 2 baths....maybe the agents playing...will find out...appears to be most of the big work is done...going by the photos.....and my fav type of house....period, with beautiful japanese maple in front.....
it will make a beautiful family home for a bigger family one day....its too big for my needs..but it will be worth finding out the nitty gritty of the deal
cheers


----------



## So_Cynical (5 July 2009)

kincella said:


> Cynical....houses are always cheaper, new ones in the outer suburbs.....looks good to me





kincella

Perth and Adelaide are a disaster, i fail to see how anyone could see it any other 
way....The Melb results certainly read very well...perhaps it was the 2 decades of 
low growth, and the state is now just playing catch up.


----------



## MACCA350 (5 July 2009)

kincella said:


> auction results clearance rates....melb 83.8,sydney 75.4, brisb *42*, ade *40*, perth 33, tas 33......
> I know why I like Melb the best.....
> 
> http://www.realestate.com.au/cgi-bin/rsearch?a=ars





Was there a public holiday in Brisbane, Adelaide, Perth and Tasmania or something............or have they been that low for a while?

cheers


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## kincella (5 July 2009)

Macca I dont follow the other states...only know that they went higher for longer than Melb
Cynical....the above  covers  my thoughts on the other smaller cities


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## MACCA350 (5 July 2009)

kincella said:


> Macca I dont follow the other states...only know that they went higher for longer than Melb



Me neither..........but I nearly chocked when I saw those numbers

cheers


----------



## kincella (5 July 2009)

Cynical...2 decades of low growth  ??? ...not in Melbourne......well yes in Melton maybe, not inner suburbs where I live...


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## So_Cynical (5 July 2009)

kincella said:


> Cynical...2 decades of low growth  ??? ...not in Melbourne.....




HUH 

So u weren't in Melb when the state bank of Victoria and Pyramid building society 
collapsed...the state was left pretty much bankrupt as subsequently suffered 
decades of low (economic) growth that was also reflected in real estate prices.

http://74.125.155.132/search?q=cach...+victoria+state+bank&cd=3&hl=en&ct=clnk&gl=au


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## kincella (5 July 2009)

arrived in Melb in 1989...but this report shows a continous growth from 1986 - 2006...its Aus wide....but I dont recall Melbourne being substantially below or behind any other state except Syd..which is always the most expensive

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


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## gfresh (5 July 2009)

QLD auction rate is always pretty low.. and auctions are not popular here (thank god).. possibly because once you are successful bidder at auction, contract automatically goes unconditional that day. Scares off FHB.


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## gfresh (5 July 2009)

Queensland’s population growth compared to the Australian average






_Queensland’s economic growth rate of 3.8 per cent is 35 per cent higher than the Australian average, 40 per cent higher than the Victorian (Melbourne) average, and 71 per cent higher than the New South Wales (Sydney) average_ -- although that was probably pre-GFC


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## MACCA350 (5 July 2009)

kincella said:


> arrived in Melb in 1989...but this report shows a continous growth from 1986 - 2006...its Aus wide....but I dont recall Melbourne being substantially below or behind any other state except Syd..which is always the most expensive
> 
> http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf



There are some interesting figures in there Kincella, would be interesting to see them stretch from 06 to 08.

This stood out to me:


> June 86 - June 06
> 
> Established house prices (which include land) have increased significantly over the last couple of decades. However, project house prices (which exclude land) and the cost of materials used in house building, have experienced increases more in line with the general rate of inflation (Table 2). The implication is that an important component of the increase in established house prices is the higher cost of land.
> 
> ...




A few things can be seen here 

1) The cost to build a house has increased far more than CPI and the cost of materials which would mean the labour charges have increased disproportionately(and explains all the new generation of wealthy developers and tradies). 

2) Land has increased ridiculously, which lends credibility to the dismay I have at the governments excessively slow release of land which seems intentionally inflating the price of land...........though I would lay blame on the major developers here also........all of this I have already mentioned.

3) Building materials costs are actually *less* than the CPI increase, so overall, the land, labour greed of developers and lack of government intervention are where *all *the excessive increase in cost to current home buyers has gone in the past 20 years.

If the housing market is truly and solely influenced by supply and demand then the root of the excessive increase is squarely placed on the shoulders of the government and it's lack of timely release of land!!!

What a shame for our future generations of first home buyers trying to have that "*All* Australian Dream"............and shame on the government(all of them) for allowing this to occur under their watch

........it really upsets me this could be allowed to happen..........I have three children and I am embarrassed at the situation we were given and are expected to give them when we hand over the "keys to the city"  

cheers


----------



## matty2.0 (5 July 2009)

MACCA350 said:


> If the housing market is truly and solely influenced by supply and demand then the root of the excessive increase is squarely placed on the shoulders of the government and it's lack of timely release of land!!!
> 
> cheers




... what I said earlier ...
We ain't gonna have a crash like we've seen in the UK and US. Things are different down here.


----------



## knocker (5 July 2009)

matty2.0 said:


> ... what I said earlier ...
> We ain't gonna have a crash like we've seen in the UK and US. Things are different down here.




Really? lol see you in three months time.:


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## kincella (6 July 2009)

Amazing.....Robots you will love these figures.....almost 3 times as many homes were sold privately.....

There were 823 private sales last week, compared with 287 auctions. 

Mr Larocca said people were selling privately because of a loss of confidence in the economy and a cooling at the top end of the market. 

"The proportion of properties that have made up the marketplace this year have been skewed towards more affordable and middle-end homes, and they are generally more often than not sold at private sale," Mr Larocca said. 

"Seventy per cent of the Melbourne market has always been sold at private sale. 

"But while the market is resembling the boom times of 2007, when the auction market was very strong, we are seeing a higher number of private sales," Mr Larocca said.

Share this article 
http://www.news.com.au/heraldsun/story/0,21985,25737586-661,00.html


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## Beej (6 July 2009)

MACCA350 said:


> There are some interesting figures in there Kincella, would be interesting to see them stretch from 06 to 08.
> 
> This stood out to me:
> 
> ...




Macca - you are correct that the MAJOR issue (in the big cities at least) has been the slow rate of new land release, plus also the high levies placed on developers for establishment of all the services needed for new land release (you have not mentioned that factor in your post). That adds significant cost which get's passed straight onto prices (as long as there is demand at those price levels - which there seems to be).

Re tradie wages - over the last 10 years ALL wages have gone up at a rate faster than CPI. We have been in a high growth, skills and infrastructure lacking period, causing strong wages growth well beyond CPI. So given that most of the trades involved in building are considered to be skilled (by definition), of course their wages will have increased above inflation in the past 10 years. In fact, this is the outcome EXPECTED in a strong economic growth environment - if wages only tracked CPI why would we even bother with productivity improvement and economic growth? productivity growth will bring the cost of materials down, but wages up (in real terms).

Other factors to consider - how much bigger have houses got on average over the periods you are comparing? It may be that materials have actually got a lot cheaper, but more of them are used per house, plus the amount of labour to build has also increased - so all of that labour cost may not be just due to higher wages for tradies.....

Cheers,

Beej


----------



## kincella (6 July 2009)

spot on again Beej , as usual....houses are probably 1.5 times larger than the traditional size of 30 years ago...some probably twice the size....you know, like the mcmansions....
when I was looking out near Wantirna in the early 90's...all the display homes were close by...they were all 2 story, 4-5 bedrooms and 2 bathrooms, double garage etc...
when I was looking in the early 80's Jennings had homes in NE Vic beautiful big entertaining areas...but the rest of the house was with smaller bedrooms, they were about 120k's, same home today in Sydney for about 350-390, but other builders near Melb now 2009 about 240-280 k's
as you correctly point out, building materials are cheaper, but they are building bigger houses, and requires more labour....

btw I was looking for a graph to compare property to shares over past 20 or so years....
what I found was mainly companies who wanted lure investors into either shares or super...with a comparison of 10k invested over 20 years in shares produced a return of say 12%, with the property graph they showed 4k's invested over only 15 years returned half that.....are people really so stupid to believe that.....
in the real world they are likely to invest more in direct property than shares...recent figures suggested the average share investor put up 100k's into shares while sitting on property worth about 400k's
another graph had the same amount invested in each, but share graph was over 20 years, property graph over 10 years.....skewed periods to show shares outperformed property......
grrrrrrrrrrrrrrrrr


----------



## awg (6 July 2009)

So_Cynical said:


> kincella
> 
> Perth and Adelaide are a disaster, i fail to see how anyone could see it any other
> way....The Melb results certainly read very well...perhaps it was the 2 decades of
> low growth, and the state is now just playing catch up.





Most of the recent chat on this thread has been re Melbourne, which is undergoing strong population growth.

happy to stand corrected on this, but my impression is the entire east coast, and regionals, from Sth NSW to Nth Qld is very flat, except Sydney and Brisbane.


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## kincella (6 July 2009)

awg....I think you are right...I have been talking about Melb only, and Beej watches Sydney, I think Perth is having problems, and am not sure about Brisbane...thought it was overheated though


----------



## trainspotter (6 July 2009)

Lend Lease thusly spake:

http://www.news.com.au/business/story/0,27753,25735861-31037,00.html

More or less backs up what has been typed in here.


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## MACCA350 (6 July 2009)

Good point there, I didn't take into account the size of houses being built. 
This indicates that average house size has increased about 37% over the last 19 years to 03', they mention that the last 2 years of those figured showed reduction in size!.....This does not fully explain the disparity between material and build cost.........I'd like to see a graph covering up to 08' though as I think the following point will have had an impact on house size also.

This article indicates that land size over the previous 10 years to 03' has reduced by about 8%.........in Melb this reduction has been over 20%..........I'd say even more reduction has taken place since 03'. 

Talk about getting less for more

cheers


----------



## trainspotter (6 July 2009)

First house bought 1987. 863m2 block and 110m2 3 x 1 house. $20,000 for block and $50,000 for house. Industry standard

Last house bought 2006. 612m2 block and 218m2 4 x 2 house. $150,000 for block and $256,000 for house. Industry standard.

How the times have changed. Young adults buying property want the biggest and the best. NO 3 x 1 for them.


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## kincella (6 July 2009)

Macca...somewhere in my hundreds of posts on this subject over 2 sites I have covered the costs.....but did not add the research notes to my fav's folder...
you do the research....check out the amount of cement used per house today ...I think it is double the amount of the old homes, and double or triple the price,.....think BHP and steel, again there is a large amount used compared to the old days....and you know where steel prices have gone past 10 years.....any copper in the house ...of course there is
the fittings are not cheaper than 30 years ago....ie bathroom, kitchen etc
add airconditioning (not air in the old houses)
the main cost is the price of land.......with local govt and state govt charges increased a hundred fold ....its about 25-30,000 k's for the new blocks in the  outer suburbs


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## MACCA350 (6 July 2009)

kincella said:


> the main cost is the price of land.......with local govt and state govt charges increased a hundred fold ....its about 25-30,000 k's for the new blocks in the  outer suburbs



Don't know about that, Govt charges for our $220k 800m2 block in Melb outer suburb are just over 7k. I'd say the average smaller blocks in the area are cheaper still.

cheers


----------



## kincella (6 July 2009)

.....and a fast train there within 5 years....lucky buggers...
oh and these houses are probably about 200k's...not 500 k's
extracts only
Mr Zhang, who migrated from China in 2000, said while the grants helped, owning a property rather than renting was the couple's main incentive. "In China we couldn't buy a house with big land like Australia," he said.

"Impossible. Even an apartment would be hard. Here it's different, we've got a good house

The State Government's $4 billion regional rail link from Werribee to the city, due to be completed by about 2014, will include stops at the boom suburbs of Tarneit and Wyndham Vale.

http://business.theage.com.au/busin...o-take-tarneit-for-granted-20090705-d97b.html


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## kincella (6 July 2009)

macca...they are prices you dont see....its what the state govt charges the developer...and its passed onto you in the price of the land
in sydney it can be 100k's per block


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## Uncle Festivus (6 July 2009)

trainspotter said:


> Lend Lease thusly spake:
> 
> http://www.news.com.au/business/story/0,27753,25735861-31037,00.html
> 
> More or less backs up what has been typed in here.






> Mr McCann said the group's construction arm, Bovis Lend Lease, was getting more work from government contracts, and the proportion or earnings in Australia coming from government work was now around 50 per cent.




One of the governments housing industry subsidies, the home sellers bonus, is to be scaled back this qtr.

China has just stopped stockpiling our resources. Chinas' gov subsidies amount to 6% of their 7% GDP. If KRudd is relying on the China myth to help pay for the property subsidies/stimulis by getting GDP back to 4% in 2 years time and aussie companies starting to fill the coffers with tax revenue then China better start buying again pretty soon.

Either that or KRudd & Swanny have to keep the junket going indefinatly? 

Give it the Dec qtr to settle in to show up about Jan qtr, & the property permabulls will be scratching their collecting heads at what went wrong, and maybe trying to work out the difference between genuine supply & demand and artificially derived price distortion due to government meddling?

Here's the logic for anyone living in the real world - 

http://www.aussiestockforums.com.au/forums/showpost.php?p=456385&postcount=193

snip...


> What happens next is a function of what government doesn't do, rather than what it does. Unfortunately, government is committed to creating a further credit expansion, and providing subsidies, and make-work schemes, all poor policy decisions. Thus, real estate I agree does not present as an attractive investment choice currently.


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## Mc Gusto (6 July 2009)

the bubble is about to burst in melbourne and people investing in recent times are going to get hurt. fancy paying 50-60% above reserve when all other property markets are stumbling if not crashing. bigger balls than me


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## gfresh (7 July 2009)

Is all a bit crazy right now.. went to 2 OFI's on the weekend south of Brisbus for places under $500k.. each had multiple contracts on the table that day, first week listed. Both low $400's and most seemed to be under 35 y/o.  Either somehow cashed up, or willing to take on a ****load of debt. This is going to keep running until the end of the year. 12-18 months many of them might be up for sale again...

Latest ABS population figures were out the other day.. Out of interest I extended these rates 20 years into the future.. Doesn't seem to stack up that "Victoria has the stronger population growth in the country". It seems QLD wins in terms of percentage AND actual numbers.


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## kincella (7 July 2009)

Aussie cities more affordable: surveyJuly 7, 2009 - 1:24PM 

some extracts....to drool over........
Sydney remains the most expensive Australian city for expatriates but has dropped from 15th place globally to 66th place.

The survey findings, released on Tuesday, also show Brisbane now sits in 116th place, having dropped down from 57th, and Adelaide remains the least expensive city in Australia in 130th place.

Across the Tasman, Auckland has moved down the ranks to 138th place from 78th.

The survey covered 143 cities across six continents and measured the comparative cost of more than 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

http://news.theage.com.au/breaking-...ies-more-affordable-survey-20090707-dbe6.html


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## kincella (7 July 2009)

I finally found 2 minutes to catch up on some reading....
and now looking at putting in solar panels and solar HWS on all the houses....and 2000lt water tanks for the gardens...
I am guessing it will cost around 11,000 plus per house...
7000 for 6 solar panels, 2200 water, and 1600 for hws...less any state rebates...
Origin electricity sent me a brochure...you pay half now and the rest interest free over 2 years....sounds like a good deal and one can save 50-80% of the costs of electricity pa....
depends which area...Brissy and Qld probably 80% as more sun, Syd 65%, Melb 50%
and the govt has a 10,000 interest free Green loan...
anybody here done any of the above ???
ps Origin deal is for 100klm radious Melb metro only...but am sure competitors will match or better it.
my tenants should love the deal


--------------------------------------------------------------------------------
.
The owner of McDonalds once asked Harvard students if anyone knew how he made his money.
They answered easy, making hamburgers. 
No he replied. I own the best real estate in every capital city in the world>***


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## explod (7 July 2009)

kincella said:


> I finally found 2 minutes to catch up on some reading....
> and now looking at putting in solar panels and solar HWS on all the houses....and 2000lt water tanks for the gardens...
> I am guessing it will cost around 11,000 plus per house...
> 7000 for 6 solar panels, 2200 water, and 1600 for hws...less any state rebates...
> ...


----------



## Glen48 (7 July 2009)

Mate in Burpengary Qld has spent 8 mths trying to sell his house for 420K and now has an offer for 360K the purchaser had his house valued 100k less then 1 yr ago. to rent out the new purchase he needs and extra 5k to cover loans and 4K for mortgage insurance and need to spend money to get the new house safe for a tenant. So much for the Aussie dream???/


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## kincella (8 July 2009)

explode...so you dont get it....spending money will improve the house and the price...oh and saving 60% on the electricity bill...and the water bill...is not a good incentive .....
and what of all the people that are now renovating their existing homes...at a low interest rate....future enhancements.....future profits, or higher standard of living...


----------



## kincella (8 July 2009)

steve keen flogging it again..... 
of the 100 or so blogs after that article probably 10% are realists and 90% who agree with him are still in fairy land.....here is one of the realists blogs............

I am a financial adviser and always bullish on property. We where told not to buy our first house in 1997 on the very same basis. Paid $220,000, borrowed $225,000 plus $35,000 for renovations then owned it outright and fully renovated 4 years later and we only had average wages at that time, now can live here forever. Others can do what they wish, I will keep buying quality median price property in good areas, paying it off and buying more. But we need people that are anti property, they make great tenants for us!!! 
Posted by: Robert Gothard of Sydney 9:10am today 
Comment 34 of 99

and this blog hit the nail on the head.........


Well, this is why there are no economists in the BRW Rich 200 list  

hehehehehe sooo funny....excellent statement 

sales rose last month to 2.4 BILLION....

Ray White says investors returning to property

AAP
July 08, 2009 10:58am
Text size 

REAL Estate group Ray White says investors are returning to the property market after its sales for June rose by 33 per cent from the same month last year. 
Australasia's largest real estate company also forecast continue sales growth in the second half of calendar 2009 on the back of improved investor confidence.

Group sales for June rose to $2.411 billion, from $1.8 billion in the corresponding month in 2008.

"Despite months of negative reports on the economic downturn and the global recession, I think investors in Australia are starting to realise it's not the end of the world and they are regaining confidence,'' Ray White Deputy Chairman Sam White said.

"They're also starting to see that property investment has a lower level of risk when you compare it with the volatile sharemarket.

"Despite a small decline in the real estate market since early 2008, it is still actually performing quite well nationwide.''

Ray White's figures show property sales in all states grew in the double digits from a year ago, with New South Wales a stand out with sales growth of more than 40 per cent following a lift in high-end property sales.


http://www.news.com.au/business/story/0,27753,25750669-31037,00.html


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## michael_t_f (8 July 2009)

Yeah, I suppose these house prices will just keep doubling every 7 years, what happened to that?? lol


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## gfresh (8 July 2009)

Actual finance figures have only improved marginally, meaning actual capital gains are likely to remain low for a while.. sales really coud only look better compared to this time last year when they were practically zero in some segments!


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## Glen48 (8 July 2009)

The scary thing is that most people don't believe we have a debt problem down under.

The truth is, household debt is just as big in Australia as it is in America. And it's growing every day.

Thanks to credit cards, mortgages and car loans, Australians have racked up nearly $1 trillion in debt-equal to the entire GDP of the country. And the $44 billion in credit card debt alone (according to the RBA) amounts to $2,000 per Australian.

As worrying as this private debt trend is, the most alarming trend is Australia's growing public debt.

Here is a simple warning: if Australia's public debt continues to grow, the country will, like America, soon become a debtor nation-dependent on high-saving foreign creditors to fund government programs.

Am I exaggerating? Or being unnecessarily alarmist? Consider the facts:

The first wave of the Global Financial Crisis has seen a $20 billion government budget surplus transformed into $57.6 budget deficit. Whether you agree with the policies that produced this deficit is not the point. The point is, the deficit is growing.

The government deficit is already 5% of GDP. That's not bad compared to the U.S. and U.K. (12% and 13% respectively). But the Bank of International Settlements-the central bank to central banks-reckons that Australia's net public debt could grow to $203 billion by 2013-nearly 14% of GDP.

That means no matter which party controls the government in Canberra, Australia will have to sell nearly $315 billion in bonds each year to bridge the funding gap.

I'm sure I don't have to tell you that in a Credit Depression-where money is hard to borrow-finding $315 billion a year to fund Australia's growing deficit won't be easy.


It won't be cheap either. Interest rates will likely rise in order to attract investors to this debt. That means the cost of servicing Australia's debt is going up too-just as the debt itself is growing massively.

Public debt is set to skyrocket at exactly the time that governments all over the world are competing for capital.

Of course they will double every 7-10 yrs ( take your pick)???
From Money Morning


----------



## Uncle Festivus (8 July 2009)

kincella said:


> I am a financial adviser and always bullish on property.




Flashing lights & sirens - BS alert ahead from a financial advisor. Not many of those in the BRW Rich 200 list either? Must have lent out his dartboard to an economist 

Always  bullish on property? As always, fails to mention the fact that pretty much anyone, including me, who bought RE in the last 10-15 years would have made money (due to excess money supply), same as all the stock market experts who rode the bull and all of a sudden want to know how to short a stock.

The money supply genie giveth & the money supply genie taketh away even faster - how do you break the bad news to the lemmings gently? That's right, they blame someone else when the time comes to pay back the debt at higher rates or when they lose their job.

It's like watching a train wreck in slow motion :burn:


----------



## kincella (11 July 2009)

just correcting that post of festivus.....
it was the blogger who was a financial advisor......not me...but you made it look like me.....
haaa...I am nothing like a silly used car salesman  cum financial advisor.....

just so the few who hate the property keeps rising theme......its true....some properties rise faster than others.....some suburbs and streets slow down....but over all, over time, they all rise.....
its a ridiculously simple theme....and over 70% of our population are home owners, with another 20% property investors....so 90 % of the population succumbs to ownership at some time in their lives.....
and studies show...the younger ones can be against ownership....but eventually when ready for nesting...they too succumb.....
guess most of the against brigade are under 35 or do they still call them kids at 40....
and so far after over 2 years of GFC....we still have not seen any of the disastrous prophecies that were trolled by the non believers.....
I am not suggesting its over....but the low interest rates were the biggest factor....
the silly little bit of money for fhb grant of an extra 7000...was the be all and end all of the house prices holding up.....

ps there is some good money in other government grants out there....solar power ??? worth maybe 8000, solar hws 1600, rain water tanks 500....around 10,000....and that applies to every property I own.....x it by xx and look at the big savings for me.....plus carbon credits off the bills in the future....and the sell price for the house rises...to reflect the solar energy benefits....

and even further....one can apply for a Green Loan worth $10,000 interest free, how cool is that......

each of the tenants will save about 1500 pa on electricity bills......the water is not as good a saving....cause there is hardly any rain to begin with.....but whopping savings if you were in Cairns....


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## robots (11 July 2009)

hello,

wow:

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

massive 84%, well done AGAIN to those in there putting in, top effort brothers

keep those dollars racking up, 

cant believe it I got a letter from UWS this week to take up a position at the uni, a vacant desk in the economics department

thankyou
professor robots


----------



## wayneL (11 July 2009)

kincella said:


> just correcting that post of festivus.....
> it was the blogger who was a financial advisor......not me...but you made it look like me.....



No. You made it look like you because you didn't use the quote function



> quoted text[/quote}   <<==(but end in square bracket)


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## robots (11 July 2009)

hello,

i might take the train up there in a few weeks just for a meet and great session, survey the surroundings at UWS, have a ruski with the vice-chancellor

hope it doesnt mean i have to get a blog going

thankyou
professor robots


----------



## wayneL (11 July 2009)

A blog is _de rigueur_ robots.


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## kincella (13 July 2009)

so just getting back to the solar freebies....panels for electricity ...rebate of 8000....so I might have to pay, net cost to me after rebates $3000, guessing the solar HWS will cost about $1700..less 1600 rebate...net cost 100...
I intend to do both the rainwater tank and grey water...you only receive one rebate for one or the other....tanks about $500....guess grey water min cost of $500, but it could be more...
so spend about $13700, less rebates of 10,100 = net cost to me say $3600...thats a real good deal....tenants save about $1500 pa on electricity and hws, I save on the cost of town water...
and I am certain the increased capital costs will be reflected in the mv of the houses....


----------



## MrBurns (13 July 2009)

From Crikey - 



> In one of the more remarkable occurrences, residential property, despite macroeconomic indicators to the contrary, has been an incredibly resilient asset class this year. In fact, the "affordable" sector of the property market is trading at record high levels, while auction clearance rates in major cities remain above 70 percent (in Melbourne, the clearance rate is above 80 percent). The use of inverted commas around the word "affordable" is intentional -- for many, the "affordable" sector of the housing is perhaps ironically, relatively unaffordable.
> 
> To purchase a property within 15 kilometres of a major city, first home owners are required to spend often upwards of six times average incomes, double the amount previous generations would spend on a home. That means one of two things is happening; people really like buying homes these days, or punters are vastly overpaying for residential property, or perhaps a little of both.
> 
> ...


----------



## kincella (13 July 2009)

the next project I am looking at is insulating the windows....to stop the heat and cold coming in from the outside, or to stop it escaping from the inside....its rather cheap, about $20 per window,, of 1 metre x 1.6 metres....makes sense ...it was on that house and garden show recently
then we will have all the houses well protected and keep running costs down...
http://www.clearcomfort.com.au/howitworks.htm


----------



## robots (13 July 2009)

hello,

good day, hows it going?

another sour grapes article on Crikey, man Glen48 has informed us houses go up 0.1% pa, so just rent if its such a terrible deal 

sunshine and lollipops across the country, BIG UPS to those holding direct property

this is just amazing, forget options, cfd's, is the stock going to move this way or that, what if the premium on the option is this, my futures broker is on the phone

hang on i have to set the alarm for 2am, 

just wake up, get out and about and the $ are on the way

thankyou
professor robots


----------



## robots (13 July 2009)

hello,

when i pick-up my slab of Satanoperca we might hit the seats out the front of the town hall and drop a few, 

we might even see Keen walking the streets, he can come and mix it with some true great minds of the planet

thankyou
professor robots


----------



## tech/a (13 July 2009)

michael_t_f said:


> Yeah, I suppose these house prices will just keep doubling every 7 years, what happened to that?? lol




Yeh what a joke.

I bought 4 bedders in 1997 for $90K
Now 12 yrs later and they are $350K

$700K in another 7 yrs--yeh right!!
TOSSERS.


----------



## robots (13 July 2009)

hello,

check check:

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

more great reading, investors have been out and about for a while now

some i saw months ago are back on for lease and in most cases some updating has gone on, those with the $ can

special word out to a few from back in the day:

pepperoni
chops a must
numbercruncher
xao
ronald the financial advisor
numbercruncher
xao
stop the clock
numbercruncher
pommigranite

thankyou
professor robots


----------



## satanoperca (13 July 2009)

Hi,

Robots, just looking for the bike pump to get prepared for my bike ride down to St Kilda with a slab under one arm. August the 4th ABS stats - judgment day.

While it seems that property has not falling in value over the last six months while in the background the GFC was boiling away, why hasn't it increased more given :

1) Lowest interest rates in 46 years
2) Still low levels of unemployment <6%
3) A sound financial system - so I am told
4) Government handouts - FHBG and stamp duty reductions
5) Freely available credit - only minor tightening of credit
6) An endemic belief that property only goes up
7) Incredible capital gains for the last 18 years approx.
8) One of the few western countries not in a recession - technically
9) A government hell bent on stopping property prices from falling. 
10) Share market as an investment tool smashed during the last year
11) Population growth 1.8% approx p.a.
12) Low Interest rates on cash deposits

Why wouldn't you invest in residential property?

But, I do wonder how many of the above points need to change for property prices to fall or remain stagnate.

Cheers


----------



## kincella (14 July 2009)

I bet the kids dont like this story.....just goes to show what the smart money does....Land banking....I like that term....prices triple every 10 years....well look at this example.....7 times in 18 years....thats more than triple, and in less time......
Warning this is an extract................

THEY are Toorak's ghost mansions: grand houses that have sat unoccupied behind chained gates and boarded-up windows for years, even decades.

As Melbourne struggles with a housing shortage, some of the city's finest abodes are home to nothing more than dust and cobwebs.

Take, for example, a French Renaissance-style mansion in St George's Road that Asian-based property tycoon David Yu bought in 1991 for $5 million and has left unoccupied since.

The land alone, believed to be one of Toorak's largest allotments, could now be worth as much as $35 million.

Plans by Mr Yu to build a five-storey apartment block on the site were rejected a decade ago.

"He's just sitting on it," Kay and Burton director Ross Savas said

http://business.theage.com.au/business/palatial-spreads-kept-empty-thats-rich-20090713-disw.html


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## kincella (14 July 2009)

people heading into property, out of the stockmarket....yes and thats been my mantra for a couple of years now.....
extract follows........................

An undersupply of housing and weak returns from other assets has put the spotlight on investment property. John Collett talks to the experts.

Following the dismal performance of shares and super funds, many older investors are likely to have a renewed appreciation for the value of a reliable income stream generated by investment properties.

Super funds have posted their worst returns since super was introduced in 1992, with default funds falling, on average, 13 per cent for the year to June 30. More aggressive "growth" funds have lost about 20 per cent.

Baby boomers in particular, hit hard by these losses and the freezing of redemptions on mortgage, property and fixed-income trusts, are likely to be considering the merits of a rental property over which they can exercise their control.

There are signs this group has become disillusioned with the performance of their super funds and managed investments in general, as well as governments' constant tinkering with the super rules

http://www.theage.com.au/news/busin...rental-property/2009/07/07/1246732332878.html


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## MACCA350 (14 July 2009)

kincella said:


> Super funds have posted their worst returns since super was introduced in 1992, with default funds falling, on average, 13 per cent for the year to June 30. More aggressive "growth" funds have lost about 20 per cent.



Watching the Business channel yesterday they showed about 5 hedge funds that performed in the region of +35% over the last 6 months, many also performed well during the crash.

cheers


----------



## Beej (14 July 2009)

MACCA350 said:


> Watching the Business channel yesterday they showed about 5 hedge funds that performed in the region of +35% over the last 6 months, many also performed well during the crash.
> 
> cheers




All well and good - but few of these funds are available as an option to the mum & dad type retail investor..... although I think it is likely that more of these alternative investment funds will become available for such investors in the future. I would think there is definite demand there.

Re the Crikey article posted by Mr Burns, looks like the author there is starting to sound a little desperate that their published views have proven to be soooo wrong! 



> To purchase a property within 15 kilometres of a major city, first home owners are required to spend often upwards of six times average incomes, double the amount previous generations would spend on a home. That means one of two things is happening; people really like buying homes these days, or punters are vastly overpaying for residential property, or perhaps a little of both.




Note that they focus on affordability of "properties within 15kms of the CBD of a major city"!! LOL this is where all the PRIME real estate is! Unless buying apartments, I don't think suburbs in Sydney for example within 15kms of the CBD have been FHB territory since before WWII...... certainly weren't for my parents who were FHBs in the 60s, and certainly not for me when I was a FHB in the early 90s - honestly where do these guys get these fantasies from?? I mean it's pretty simple really - more people creating demand for a finite resource (houses within 15km's of CBD) = higher prices over time - FOREVER, due to increasing exclusivity of such properties. The only way around this is to build/expand new cities as the population grows and as existing cities reach practical capacity (Sydney may well be at or close to that point now?).

Cheers,

Beej


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## kincella (14 July 2009)

Beej, 
another of my mantra's....go out to the suburbs and buy the affordable house....we had to do that, if we wanted a house....if we only wanted to buy 15-20k's from the biggest cities....I would still be renting today....
plenty of affordable places...around 200k's, half hour travel time....
even that kid at 18 paying over 400k's is silly.....pay 200-250 k's.....
oh and 'get real'....none of us owe you anything....
we started at the bottom and worked our way to the top....
if you can figure out another way...go for it....but do not expect us to sell you our properties....or for anyone to drop the prices...and feel sorry for you...
whinging about the high prices...will not bring them down....in fact just sit back and watch them go even higher....


----------



## gfresh (14 July 2009)

Inner city wealth will always protect themselves from further development. Why would you erode your own wealth by reducing the scarcity of property by allowing people to build more in your area? It's all a croc 

Meanwhile.. 

http://business.theage.com.au/business/jobless-fears-hit-home-20090714-djco.html



> *Nearly forty per cent of working Australians do not have enough savings to last them more than one month if they lose their job*, as rising joblessness erodes household finances.




As suspected, the line here in Australia is very thin, and if (still if) unemployment is to rise into the 7's or 8's there is going to be very real pressure on a society very much swimming in a sea of private debt. Pray on that recovery being real eh


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## kincella (14 July 2009)

arhh...but at 10% we still have 90% employment


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## AQR (14 July 2009)

kincella said:


> the next project I am looking at is insulating the windows....to stop the heat and cold coming in from the outside, or to stop it escaping from the inside....its rather cheap, about $20 per window,, of 1 metre x 1.6 metres....makes sense ...it was on that house and garden show recently
> then we will have all the houses well protected and keep running costs down...
> http://www.clearcomfort.com.au/howitworks.htm




Off topic I know but you will be disappointed if you use that product.

Geoff.


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## kincella (14 July 2009)

please explain...is there a better product...or do they just not do what they promise?


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## gfresh (15 July 2009)

So, I just bought a house  expect the market to crash tomorrow .. sell sell 

You'll have to slap me if suddenly I spout dodgy reasons why housing is the greatest investment ever, and I can never lose on property, and I will double my money every 5 minutes or some such. 

620sqm 10km from Brisbane CBD anyhow, think that may provide some protection. The stupid thing I noticed in my looking is people seem happy paying more 15km further out in more working class suburbs which I can almost guarantee will come off next year.


----------



## Beej (15 July 2009)

gfresh said:


> So, I just bought a house  expect the market to crash tomorrow .. sell sell
> 
> You'll have to slap me if suddenly I spout dodgy reasons why housing is the greatest investment ever, and I can never lose on property, and I will double my money every 5 minutes or some such.
> 
> 620sqm 10km from Brisbane CBD anyhow, think that may provide some protection. The stupid thing I noticed in my looking is people seem happy paying more 15km further out in more working class suburbs which I can almost guarantee will come off next year.




Hey congrats gfresh!! If you are buying for PPOR purposes and for the long term, then I'm certain you will never look back and this will prove to be a great decision for you and your family! I'm sure you got good value too as there must be some good buys around - especially in Brisbane. 620sqm of prime Aussie soil 10km's from the CDB should put you in a pretty good area too for sure - are you north, west, or south of the city?

PS: Macquaries Equity Research group reckon all the housing bearishness is a bit over done now: (From http://www.macquarie.com.au/emg/prime/prime_prtradingpickofday_1.htm)



> 15 July 2009
> Australian housing: Testing the foundation
> 
> According to Macquarie Research Equities (MRE 15/7), the contentious issue of house prices has sceptics falling into one of two camps. On the one hand, many people have voiced concerns that the first home buyer led recovery in home lending is not sustainable and will see activity stagnate once the grants are removed. On the other side of the spectrum are those that believe the recovery has been too strong and is inflating a house price bubble, which will soon require the RBA to tighten policy and bring the recovery to an abrupt halt. MRE find both of these fears to be exaggerated. A common criticism of the boosted first home owner grants is that they merely bring forward demand from first home buyers. This demand is seen to be unsustainable due to the limited pool of potential first home buyers and the limited timeframe within which the grants are available. While the grant has spurred many people into action, it is likely that there was a growing pool of potential home buyers waiting for conditions to turn more favourable. The population in the 20-40 year old age cohort (potential first home buyers) has been growing at the faster than average rate of more than 1.5% per annum since 2005-06. This suggests there is currently a large stock of potential first home buyers in Australia, which could see the proportion of first home buyers remain higher for longer in the current cycle. On the other side of the spectrum are concerns that the housing market recovery is too strong, creating a housing bubble, with prices set to increase too rapidly. While Perth house prices surged in the last 5 years – and are now coming off – Sydney prices have gone sideways. While the early signs of demand have picked-up sharply, actual housing market transactions remain at historically low levels according to MRE. Similarly, any improvement in building approvals over 2H09 will be coming from a weak base. MRE do expect these transactions to increase sharply in 2H09. As such, MRE believe the Reserve Bank will not be in any hurry to tighten monetary policy during 2H09, with policymakers looking for a durable recovery in housing activity to offset inevitable weakness in non-residential construction in the year ahead.




Cheers,

Beej


----------



## gfresh (15 July 2009)

Thanks   It's in Mount Gravatt East, which is south. Nice quiet suburb near Holland Park/HP West, similar except the price tags are a bit more affordable. 

As article states, there is positive and negative signals, but keeping a feet in each camp with a PPOR is a nice two way bet in some ways. If the market really looks like it's going well in 2 years time, should still have enough left in the kitty to consider an IP. But if not, just stay put, and keep toying with the share market or keep it in the bank.

There seemed to be quite a few investors around the places I looked too south of Bris. They may take up some slack come early next year, if they are not starting to already.


----------



## Beej (15 July 2009)

gfresh said:


> Thanks   It's in Mount Gravatt East, which is south. Nice quiet suburb near Holland Park/HP West, similar except the price tags are a bit more affordable.




Nice area - I have friends who own/live in Holland park West actually, and I was just up there a few weekends ago again visiting. Lot's of nice traditional character Queenslander type homes on well kept garden blocks, well maintained, lot's of renovated/extended places etc. Quick trip up the freeway into the city as well!



> As article states, there is positive and negative signals, but keeping a feet in each camp with a PPOR is a nice two way bet in some ways. If the market really looks like it's going well in 2 years time, should still have enough left in the kitty to consider an IP. But if not, just stay put, and keep toying with the share market or keep it in the bank.
> 
> There seemed to be quite a few investors around the places I looked too south of Bris. They may take up some slack come early next year, if they are not starting to already.




Good strategy I think, and in fact quite similar to where I am at right now - focussing more on building up the share portfolio while the buying is still cheap. Re increasing investor activity, the same thing is starting to happen in Sydney anecdotally, and the finance stats etc are also starting to bear this out. I suspect that the trend of the self managed super fund types etc moving into the stability of "bricks and mortar" for steady rental income etc may be starting to come more into play, and that while I still don't see any great boom coming for a while, this will continue to keep a solid demand base in place through the next 1-2 years, and with it the possibility of some slow and steady growth.

Cheers,

Beej


----------



## trainspotter (17 July 2009)

*Hey, hey, hey ... it's the sunshine and lollipop brigade.*

Recent data releases have continued to paint the domestic economy and residential property market in a relatively positive light. Consumer confidence has remained in positive territory the last two months, unemployment figures are lower than most expected, housing finance commitments continue to trend upwards and interest rates have remained at 45 year lows. Additionally, auction clearance rates have remained robust around the nations largest auction markets. Melbourne, which is Australia’s largest auction market, has recorded clearance rates above 75 percent since late March.

Another key piece of data released this week was the National Australia Bank’s Business Survey which reported that business confidence has moved into positive territory for the first time since December 2007. Along with the good news on business confidence, the NAB survey shows business conditions improved sharply with the index returning to levels not seen since September 2007. This latest data also suggests that employers are not shedding staff as rapidly as was expected which may lead to unemployment levels remaining lower than the 8.5% forecast for mid next year. 

The number of new residential property listings across Australia remains at about 10,000 new properties being added to the market each week. The total number of properties being advertised for sale has also remained steady at about 115,000 dwellings. The fact that total stock levels are remaining steady indicates that absorption of stock is about neutral: as many properties are being sold as are being added to the market.


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## robots (20 July 2009)

hello,

good evening, apologies for the poor posting of recent times as have been in Mt Martha/Mornington for work commitments

wow, another big weekend on the auction scene, above 80% again, again again

thats 10wks running now, amazing

cant wait for rp data out so I can pickup my prize of satanoperca

thankyou
professor robots


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## satanoperca (20 July 2009)

robots said:


> hello,
> 
> cant wait for rp data out so I can pickup my prize of satanoperca
> 
> ...




ABS out 4th of August.

Tyres on bike are pumped and ready to go.

Cheers


----------



## robots (21 July 2009)

hello,

http://www.theage.com.au/national/economy-set-to-defy-gloom-20090720-dqt5.html

more interesting reading from a fellow economist, strange how many starting to sing a different tune

how time flies when you having fun, another 12mths will be gone soon and Australia will be still be on top

great effort by the Government

thankyou
professor robots


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## Buckeroo (21 July 2009)

robots said:


> hello,
> 
> http://www.theage.com.au/national/economy-set-to-defy-gloom-20090720-dqt5.html
> 
> ...




So, the future looks rosy for the economy because Access Economics says so? The same experts who failed to predict the financial crises?

And what about data like 90% of China's growth is attributed to massive bank lending. This economic spurt is running on debt that will collapse once the money runs out.

And the only way for average Joe Blow to buy a house now, is to borrow amounts he can't afford when interest rates start heading towards 10%. Yeah great future in property.

Cheers


----------



## kincella (21 July 2009)

Memo to Robots.....you have won the bet....it was too easy to predict....
so bring on the next bet...or forecast....
how about house prices to keep rising to Dec 09..............
or investors to take over from fhb's....or upgraders to keep the housing market churning over....

oh, and look at this....38% of aussie's June loans have been to people refinancing into low interest rates...
and fhb's finance has dropped to only 21% down from 32% in Mar 09

http://www.news.com.au/business/story/0,27753,25813417-31037,00.html


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## Mc Gusto (21 July 2009)

Buckeroo said:


> So, the future looks rosy for the economy because Access Economics says so? The same experts who failed to predict the financial crises?
> 
> And what about data like 90% of China's growth is attributed to massive bank lending. This economic spurt is running on debt that will collapse once the money runs out.
> 
> ...




Spot on my friend, spot on


----------



## Buckeroo (21 July 2009)

Just an observation, but has anyone noticed that the spokesman for Access Economics is actually KRudd disguised?


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## tech/a (22 July 2009)

> And the only way for average Joe Blow to buy a house now, is to borrow amounts he can't afford when interest rates start heading towards 10%. Yeah great future in property.




I agree with this astute warning.
Those that cant handle 10-15% interest rates in the not so distant future should avoid property for a number of years until the dust settles.

However those who can and have geared themselves to weather the storm will again reap massive gains.
Rental demand will just go through the roof.So those geared to accept 10-15% interest rates will also benefit from the massive rises in rent.

Inflation will take care of increasing building costs and along with it increase in domestic housing costs.(Towards the end of the Period of high interest rates)

Those who are best placed in this part of the property cycle will find some bargains. Those who cant find 50% down will of course mis out again


This thread has been going for years.
I'm hoping oneday someone proclaims that "NOW" is the time to buy property.
But I'm sure that day wont come---as Now IS the time to buy property just as it was last year and the year before and before that and next year and the year after and the year after that.

*Fear* will always be the buyers enemy.


----------



## Mc Gusto (22 July 2009)

Buckeroo said:


> Just an observation, but has anyone noticed that the spokesman for Access Economics is actually KRudd disguised?





This the same Access who claimed we were all doomed in January. To buy up on canned goods and prepare for the worst? All of these 'economists' should have to back up their current forecasts with their past claims...


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## Glen48 (22 July 2009)

Access Econ. only had 1 good idea  but they were wrong.
With USA paying $44,000USD a second in interest and looking for third  throwing money at every thing package and like Australia not asking like why the other two didn't work all I can see are things going down further for longer.


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## Soft Dough (22 July 2009)

tech/a said:


> 1. However those who can and have geared themselves to weather the storm will again reap massive gains.
> 
> 2. Rental demand will just go through the roof.So those geared to accept 10-15% interest rates will also benefit from the massive rises in rent.
> 
> ...




1. Nope, if capital growth stalls those who have geared will go backwards.

2. How will rent prices rise when household incomes decrease and unemployment increases?

3. No the last 6 months has been the right time to buy shares.  I think that there is still a lot of risk in buying property, albiet the risk is moderated by a short sighted prime minister who has no idea where the money for the country actually comes from.

4. Wrong, greed in the medium term will be the enemy.  Prices can never keep going up much faster than inflation ( historic growth is almost at inflation levels in the long term ), and a correction, either a fall or stagnation in prices ( see point 1 ) is going to happen.


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## kincella (22 July 2009)

Tech...you will scare the kids off with a 10-15% rate call....
I doubt that rates will rise over the next 2 years.....but people should factor in an average rate of 6.5 -7% for the long term.......
house growth has been a modest 1 -3% over the past year...not a 40% drop as some were screaming.....but look at the hyper enthusiasm with the stock market now.....we are not out of the woods just yet......some sobering up to do for another year IMO

*Don't bet on an early rate rise*
extract from the article......

And a soft labor market means no rate rise. That was highlighted by Macquarie Bank chief interest rate strategist Rory Robertson in a prescient note just ahead of the board minutes:

''Even when key developed economies start growing again rather than shrinking, as they will, the big issues will be the pace of growth over the next year or two - probably seriously sub-par on average - and the extent of remaining excess capacity - remaining huge,'' wrote Robertson.

The RBA said much the same thing, but in more restrained language and with no dashes: 
''The large downside risks had abated. Nonetheless, the recovery was likely to be gradual, reflecting the weakness of consumption in the developed countries as households saved more, as well as the effects of the stress in the global financial system. Given this outlook, spare capacity was likely to accumulate for some time and unemployment in the advanced economies was likely to increase further.''

Robertson summed it up (before reading the minutes) thus:
''With wages and core prices growth continuing to decelerate, it'll be hard for central banks to make a strong case to hike rates for at least a year or more.''

''In Australia, the trough in official interest rates will be locked-
only once a peak in the unemployment rate - near 7%, 8% or 9% - is apparent to policymakers.  In the US, with the latest Payrolls report showing net job losses of about half a million in June, it's still a bit early to pay much attention to demands for "exit strategies''.  

http://business.smh.com.au/business/dont-bet-on-an-early-rate-rise-20090721-drim.html?page=2


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## gfresh (22 July 2009)

Well you're going to need rampant inflation of 10%+, to give us these 10-15% rates. To make it a decent real investment, property would need to be going up at 15% y/oy for a sustained period .. 

I look forward to our sharemarket exploding in rampant commodity speculation if such massive inflation is to be the case. 8000 here we come! 

8.5% was enough to really put the knife into the property market last time. 10% or more would burn it to a crisp.


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## satanoperca (22 July 2009)

A quick synopsis of my target property area.

Sold my apartment in Docklands, Jan 09. Since then two very similar properties have sold for 7% & 10% less.
Rentals, very few available around Jan in price target, approx 2, now there is 10 or more.

Port Melbourne houses, prices dipped at the end of 08 and have come back in the last few months strongly.
Have been to several auctions, with the majority properties returning to the market as rentals. What seems strange is the high selling prices and low rental returns. Eg Sold for $680K and been on the rental market for 1 month asking $450 p.w. %3.5 gross return. Another $850K, rental $570 p.w, 3.5% gross return.
Rentals in Port Mebourne, many available in targeted price range, was not the case in Jan and seem to have come down by 10% in the past six months.

Note : just my observations based on a small sample size.

Cheers


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## Buckeroo (22 July 2009)

gfresh said:


> I look forward to our sharemarket exploding in rampant commodity speculation if such massive inflation is to be the case. 8000 here we come!
> .




Whats your reasoning for the share market exploding if hyper-inflation occurs?

If it does, all I can see is everyone will be broke due to the excessive personal debt - any spare cash will be put into interest payments. So I'd expect spending on goods & services would be limited to food - not much iron goes into food I'm afraid.

If anything, a depression I reckon would be better than hyper-inflation that's been generated by Governments. Yep my asset values will decline in a depression but at least people will still be able to afford their debts. Cash will still hold value.

What do others reckon, prefer depression or hyper-inflation and for what reasons?

Cheers


----------



## Beej (22 July 2009)

> Posted 22 Jul 2009 8:52 AM
> RBA vs Steve Keen
> 
> Oh dear. Life must be really tough for all those brave commentators willing massive house price falls. (I guess they got the media air time they wanted.) Based on the RP Data-Rismark numbers, Steve Keen will be hiking to Mount Kosciuszko in June this year (in fact, he should be pulling on the winter weather gear in approximately one week’s time, if he was to treat his bet with Rory Robertson literally – I know Steve will, however, argue that he wants to see the index sit above its February 2008 peak for a number of months before embarking on his long journey).
> ...




From:
http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail

Wheres Numbercruncher? Wasn't he always badgering us for evidence last year of rising prices? Well here it is for all to see. Across Australia, ow end up over-all since peak of early 2008, mid-range back where it was then and a little bit, only top 20% still down from early 2008 peak, but up significantly from the low late last year. (See attached price graph).

Cheers,

Beej


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## Taltan (22 July 2009)

tech/a said:


> I
> I'm hoping oneday someone proclaims that "NOW" is the time to buy property.
> But I'm sure that day wont come---as Now IS the time to buy property just as it was last year and the year before and before that and next year and the year after and the year after that.




Please explain how last year was the time to buy property. Per the optimistic RP Data. Property fell 2.6% in 2008 and is up 4% in 2009. Now of course considering the improvement in renovated houses, property into which no money was put in lets say conservatively fell 3% and than rose 3%. So if you bought in Jan 2008 per RP Data you have earned thus far just under 0%. So would putting your money in a non-interest earning bank account not been a better option???


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## gfresh (22 July 2009)

Buckeroo said:


> Whats your reasoning for the share market exploding if hyper-inflation occurs?




It depends on whether it were high inflation with low growth or high inflation with reasonable growth. If we were to get into the former, then I can't see the RBA jacking up the rates until the growth signals were there. Their mandate isn't simply to fight inflation, but to do so hand-in-hand with growth. 

The latter, well, under that scenario you would expect things to be doing ok in the broader economy, so people have the income to pay higher rates.  If not and the economy struggles, the RBA drops rates, etc. But of course what the rest of the world does plays a part and that is probably the curve ball. 

My reasoning for a strong stock market is that if hyper-inflation were to take place, whatever profits companies are making will be higher (even just in nominal terms as inflation runs away), as people will be made to pay more for the goods and services sold. These should result in higher profits, and higher share prices, even if it's simply in nominal terms. They may not be selling or producing any more items, just the cost of these items is higher. 

Under hyperinflation, funds will flow in to Australia buy anything exposed to commodities (if we haven't sold it all that is), pushing those exposed stocks higher, as well as our dollar. I mean we've already seen this occuring before the end of the bust, and even now all the traders are trying to fight inflation by speculating on commodities once again, and our market is being pulled up with it.  




Buckeroo said:


> If anything, a depression I reckon would be better than hyper-inflation that's been generated by Governments. Yep my asset values will decline in a depression but at least people will still be able to afford their debts. Cash will still hold value.




In the Depression scenario, most people are out of work, and simply can't afford to pay their debts either, so still can't afford to put food on their table and have to burn their excess cash simply living. So similar end result.


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## kincella (22 July 2009)

well lets say one did buy in 2008 at 3% discount or 15,000 less on a 500k house....apart from the high interest rates until Oct 08....now the house gained 3% so in front now by 15,000....and opportunity to pay down the loan faster with the low 5% interest rates.....
or if it was rented out at 4% say 20,000 in....less 40,000 interest expense
claim the loss of 20,000 off tax at 30% = 6000 refund of tax....net loss 14,000 for the year...plus capital gain 15,000....about even....but there could be building allowance and depreciation claims, rates and insurance to increase the losses and increase the tax refund...
the next year rent stays the same...but the interest expense decreases to 5% say 500k @ 5% = 25,000.....and the capital gain of 3% ......
each year the loan reduces, the interest cost is reduced, and the capital gain stays a modest 3%......
sounds boring...slow and steady until one day the house is worth 750k's..the loan is down to 250ks.....thats what entices people into property.....
if one has a good job or career they enjoy....the property is a passive investment.....no need to spend too much time on it....just get on with the rest of their life...


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## kincella (22 July 2009)

my friends...you are going to love this site I just found....so add it to your favorites...hmmm 9% pa growth year on year for the past 54 years....it cannot get much better than that, for a record, for a passive and safe investment.....

extract...............
Of course, asset prices tend to exhibit exponential growth, so it is far better to look at historical prices on a logarithmic scale. This reveals a striking trend. The growth of Sydney property prices has been remarkably consistent at around 9% per annum over the last 50 years.

Sydney Property Prices (log scale)
Prices for Australia overall show a similar trend, with average prices over the six major capital cities growing at an average of 8.6% per annum since 1955.

http://www.stubbornmule.net/2009/06/property-prices/


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## explod (22 July 2009)

kincella said:


> my friends...you are going to love this site I just found....so add it to your favorites...hmmm 9% pa growth year on year for the past 54 years....it cannot get much better than that, for a record, for a passive and safe investment.....
> 
> extract...............
> Of course, asset prices tend to exhibit exponential growth, so it is far better to look at historical prices on a logarithmic scale. This reveals a striking trend. The growth of Sydney property prices has been remarkably consistent at around 9% per annum over the last 50 years.
> ...




I absolutely love your enthusiasm kincella, and Robots of course as well.  You have obviously done well out of property and it has been fantastic since I purchased my first home for $2000 back in 1968.

However 80 years ago the majority of ordinary people lost thier jobs and thier homes and walked the streets and outback roads in search of any opportunity just to ease the pain in empty stomachs.

But it can never happen today, they just print a bit more money, lend it out and build the ponzi higher.   It is happenning in western countries overseas, police are on clifftops in Ireland to stop suicides over the side.   The rate here is the highest ever too.

I live in a good area on the Mornington Peninsula which has had a great run in property the last few years.   Every second new house has a tradie living in it with a mortgage and they did well.  They are losing thier jobs in droves, the building has stopped.  Some are wandering the streets and crime particularly burglaries are up.

There are very many other signs and if you are receptive you can read up on them.  North QLD, cant sell and so on.

The point I am leading to is that its been great but maybe not one to be so *bullish* about at the moment.


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## kincella (22 July 2009)

Explode,
my bullishness has to be read  in the context of another 30 years of investing in this asset class.....so its not for the reader to rush out and buy property right now....
those tradies will find work if they really want it......private clients need renovations etc....tradies have made stacks of money past 10 years....they have followed the money....in lots of places the only tradies we can get are the 'grey army'...old codgers, who just do small jobs....or otherwise you pay through the nose
just got a quote for a rain tank and grey water at over $3000 and thats after the rebate....I know the tanks are under $500.... 
noticed another big double block has been demolished this week....about 300metre frontage...just around the corner....
sister just sold her place in FN QLD...shes moving south
those are bumps and troughs in the road to success.....it will not be a 5 or 10 year drought for anyone...
I know its not all roses, in the short term, but it will be again later.....
cheers


----------



## explod (22 July 2009)

kincella said:


> Explode,
> my bullishness has to be read  in the context of another 30 years of investing in this asset class.....so its not for the reader to rush out and buy property right now....
> those tradies will find work if they really want it......private clients need renovations etc....tradies have made stacks of money past 10 years....they have followed the money....in lots of places the only tradies we can get are the 'grey army'...old codgers, who just do small jobs....or otherwise you pay through the nose
> just got a quote for a rain tank and grey water at over $3000 and thats after the rebate....I know the tanks are under $500....
> ...




Can see no reason for the "Explode" my post was reasonable in the current climate.

And maybe you are correct, as long as you own your properties outright (no debt) you will be fine.

The bullish stance to those more vulnerable can lead them astray.

And most of the young tradies would have no idea when it comes to fixing or working out solutions to real poblems.   Give them a nail gun and a frame no worries.   But repair footings or a rotten toilet floor and theyd be sooner on the dole.


----------



## moXJO (22 July 2009)

I'm a tradie and I'm still flat out, plus I don't advertise to boot. And that’s in a town with 10% unemployment. The good money has gone though.
The housing market where I live is very mixed atm. They are ever so slowly coming down. Some areas are close to 50% down from the heights of the bubble in the area. But there were some real s'holes well overpriced. The good areas are still holding ground, and the still seem to be selling fast. Commercial is dead and not moving though.


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## robots (22 July 2009)

hello,

the professor is in the house, great posts again today

thanks Kincella, yes looks good as gold a slab is on the way for Professor Robots and S.Keen is heading up Kosi (great area so he should have a good time)

just nirvana out there in society, life is such a ride

now what was that last parting shot before the internet crashed in the UK:

st kilda units down 50% 2009, fabulous, you still down bro

thankyou
professor robots


----------



## trainspotter (22 July 2009)

*Hey, hey, hey, it's the brickbats and boquet brigade*

Major syndicate has fallen over in small country WA town to the tune of thirty million. No K-Mart for the needy. CBD exposure is down 23% and rising. 

Flat stats on housing and anything above 500k is dismal. Residential building licences down by 43% on same time last year. Vacant land wiped off 20k and State Revenue Department has sent REFUND cheques to land holders for Land Tax.

Yippeeee ... tell me why I am in property again?


----------



## Soft Dough (22 July 2009)

kincella said:


> my friends...you are going to love this site I just found....so add it to your favorites...hmmm 9% pa growth year on year for the past 54 years....it cannot get much better than that, for a record, for a passive and safe investment.....
> 
> extract...............
> Of course, asset prices tend to exhibit exponential growth, so it is far better to look at historical prices on a logarithmic scale. This reveals a striking trend. The growth of Sydney property prices has been remarkably consistent at around 9% per annum over the last 50 years.
> ...




Not sustainable.

Brought about by a generational change and the baby boomer capitalism.  Tell me how are the increases in price going to be sustained with an ageing population, where incomes are going to decrease and taxes for baby boomer services are going to increase.

How can comparative housing continue to increase at a compound rate, in excess of wages growth?  It aint going to happen.

If you look at quality and inflation adjusted graph, there is considerable correction still to come.


----------



## Taltan (23 July 2009)

kincella said:


> well lets say one did buy in 2008 at 3% discount or 15,000 less on a 500k house....apart from the high interest rates until Oct 08....now the house gained 3% so in front now by 15,000....and opportunity to pay down the loan faster with the low 5% interest rates.....
> or if it was rented out at 4% say 20,000 in....less 40,000 interest expense
> claim the loss of 20,000 off tax at 30% = 6000 refund of tax....net loss 14,000 for the year...plus capital gain 15,000....about even....but there could be building allowance and depreciation claims, rates and insurance to increase the losses and increase the tax refund...
> the next year rent stays the same...but the interest expense decreases to 5% say 500k @ 5% = 25,000.....and the capital gain of 3% ......
> ...




Did you note comprehend my question or do you conveniently igonre its facts? Obviously no-one is going to give you a house at a 3% discount so that 500k house falls 15k (as prices are down 3%). You are not in front 15k. Do you not understand maths. If that is the case I will quickly remind you. If you bought a 500,000 house in Jan 08 that went down 3% its value in Jan 09 was 485,000. If it goes back up 3% its current value is 499,550 so you are not up 15k


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## kincella (23 July 2009)

nit picking now...your question was raised with a quote from Tech a....

regardless....
if house prices were off 3% in 2008....that is 15000 on a 500k prop....
and drum roll....when prices gained 3% in 2009....that was 14550......
do I care about 450 in the greater scheme of things.....
apparently you dont understand....in my example the buyer bought at the discounted price of 485 k's.....so he is in front when the prices rose this year by 3%, and said house is now valued at 500k
oh and just to make things more complicated for you......I used the term discount....but houses were selling for the lower amount....interest rates were high, with hardly any buyers.....truthfully that 500k house would probably sell for 600k's today...since rates are so low, and the fhb market was so hot....but we will stick to the median price for the exercise...
and yes I do tend to ignore posts some times.....because I am too busy, or have other more interesting things to do....or will leave it to another poster, with another view.....
you seem rather angry......like the attempt to belittle me.....
and btw my maths is ok....

here's what I said in that post...............
well lets say one did buy in 2008 at 3% discount or 15,000 less on a 500k house


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## Taltan (23 July 2009)

you responded to my question with an example but put your own twist of a 15,000 discount to distort the purpose of the whole exercise. I was just inquiring whether you don't want to acknowledge what I said so conveniently changed the scenario or whether you were so stupid so as to not understand what I was saying. Turns out its the former.


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## Mc Gusto (23 July 2009)

kincella said:


> my friends...you are going to love this site I just found....so add it to your favorites...hmmm 9% pa growth year on year for the past 54 years....it cannot get much better than that, for a record, for a passive and safe investment.....
> 
> extract...............
> Of course, asset prices tend to exhibit exponential growth, so it is far better to look at historical prices on a logarithmic scale. This reveals a striking trend. The growth of Sydney property prices has been remarkably consistent at around 9% per annum over the last 50 years.
> ...




Looking at those charts and the rise of almost epic proportions over the last 10 years you have to ask yourself whether that is sustainable..? I say no. You then ask whether the current level is maintainable..? For that i am not sure. I feel very sory for those jumping in at the bottom of the pyramid with all the incentives they are receiving currently....where will they be in 12-24 months.


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## kincella (23 July 2009)

you dont see a pattern after 54 years...and believe it has to reverse the trend....
currently the govt is allowing immigration...is it 300,000 per annum ???
Melb receives 1500 people per week....you doubt that puts a strain on housing....all competing for inner city houses
I wish we did not have such high immigration...but thats another subject60 

and was it 1960 when they opened the immigration gates to all and sundry


----------



## Mc Gusto (23 July 2009)

i am confident house prices will drop over the next 12 - 18 months

stock will come on

demand will decrease

unemployment will rise

it may not be a significant drop (20%+) but it will drop.

thanks


Gusto


----------



## Mc Gusto (23 July 2009)

kincella said:


> you dont see a pattern after 54 years...and believe it has to reverse the trend....
> currently the govt is allowing immigration...is it 300,000 per annum ???
> Melb receives 1500 people per week....you doubt that puts a strain on housing....all competing for inner city houses
> I wish we did not have such high immigration...but thats another subject60
> ...





i see a pattern up to about 1985 and then a huge uptrend. what is this 54 years?


----------



## kincella (23 July 2009)

well lets go back to the 1920's shall we....was there electricity on the streets then....my father was running a taxi service in Melbourne....with a horse and cart...6 horses in front....carting the soldiers to the ships going to war or coming back from the wars.....hardly many cars on the road then....
my mother who he had not met at the time was driving a 1925 MG sports car
there was no immigration compared to today....
oh for the good old days...not
hardly worth comparing to today
the charts show 1955 to 2009...= 54 years


----------



## trainspotter (24 July 2009)

*Hey hey hey ... it's the sunshine and lollipops brigade!*

Stolen from RP DATA:-

There are currently 113,000 residential homes for sale across Australia with an estimated market value of just over $40 billion. The total number of properties being advertised for sale around Australia has moderated over the last year, with current market stock about 13 percent lower than the same time last year. Auction clearance rates last week remained robust with Sydney and Melbourne both recording clearances above 80 percent. This week’s feature article provides an overview of auction markets around Australia over the last year, highlighting the improvement in clearance rates particularly in the key auction markets of Sydney and Melbourne. 

With conditions in Australia’s real estate market improving, so too have auction clearance rates. On average, 70 percent of auctions over the last month have recorded a successful outcome, compared with just 46 percent at the end of last year. 

Does not mention if the price is rising or investors are just quitting stock to stay liquid.


----------



## gfresh (24 July 2009)

The bullish r/e brigade is really working overtime now in every media outlet they can get their snout into.. little sickening, but can't expect much better from sales people. 

Yup, many are quitting, but scores of FHB are taking their place, which will bring some stability as long as they don't get rate toasted.. Most of the places on the market that I looked at was ex-rental, or currently rented. Most of them a little scrappy, many rubbish. But they will pass from those without the motivation/cash to fix them up, to those that may.


----------



## robots (25 July 2009)

hello,

another great week in Australia and would like to welcome any new Australian who made it to our shores this week

enjoy some fine reading at ASF

hey hey hey:

http://www.smh.com.au/national/firsthome-incentive-is-deterring-more-buyers-20090724-dw9s.html

this is just great, they all going to wait until boost ends which may mean the demand will just continue to roll on and on 

fabulous, hold onto those titles brothers

thankyou
professor robots


----------



## robots (25 July 2009)

hello,

congratulations:

http://www.reiv.com.au/news/details.asp?NewsID=809

fantastic effort by Steven, not easy out the front of a crowd conducting the fairest sale process on the planet

thankyou
professor robots


----------



## robots (25 July 2009)

hello,

ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt

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

massive 87%, hahahahahahaha man life just keeps rolling on and on and on 

what a day out there again, look just a few words,

well done to all out on the streets, nirvana

just amazing coming up to 4yr anniversary on the king of all property threads, 

maybe some air time for that thread would be good for the new Australians that have settled in to the finest country in the world, anyone got a link

thankyou
professor robots


----------



## robots (25 July 2009)

hello,

anybody out there?

thankyou
professor robots


----------



## trainspotter (25 July 2009)

Still absorbing the figures robots. Normal transmission will resume once I have fed the hamster who runs around inside the little wheel to keep my laptop fired up.


----------



## knocker (25 July 2009)

robots said:


> hello,
> 
> anybody out there?
> 
> ...




Attention seeker.


----------



## robots (25 July 2009)

robots said:


> hello,
> 
> ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt ReD aLeRt
> 
> ...




hello,

what an effort today, well done and the $ just keep rolling in 

thankyou
professor robots


----------



## trainspotter (25 July 2009)

http://www.abc.net.au/unleashed/stories/s2332283.htm


----------



## robots (25 July 2009)

hello,

its just great, rolling with Kincella and Beej just plodding along enjoying the ride of the one and only

i cant believe it, amazing, hahahahahahahaha

do you reckon Numbercruncher will pop back one day?

thankyou
professor robots


----------



## kincella (25 July 2009)

geez, dont hear from Robots all week, then I pop out for a few minutes and here he is...posting madly away.....
all those people buying the houses, must have the same disease as those on the stockmarket....
they are going too hard and too fast imo.....
do they really think its all behind them.....
oh well maybe they know something that I dont
cheers


----------



## MrBurns (25 July 2009)

robots said:


> hello,
> congratulations
> http://www.reiv.com.au/news/details.asp?NewsID=809
> fantastic effort by Steven, not easy out the front of a crowd *conducting the fairest sale process on the planet*thankyou
> professor robots




The Auction system is the most shonky rip off ever perpetrated on decent human beings.

Until recently some auction consisted entirely of vendor fake bids until some unsuspecting interested party was sucked in and sold up as far as the agents could fake it.

*I saw an Auction once where there was furious bidding between a few parties and a young couple won the day, the young wife cried and thanked the agent for helping them all through the sale process prior to the auction, later the agent told me they were the only bidders.*

Does it still go on ?, of course it does,


----------



## robots (25 July 2009)

hello,

apologies Kincella, have been on Mornington Peninsula at parents and my fathers internet plan is very very low (200mb) so i dont use it too much when staying there

thankyou
professor robots


----------



## MrBurns (25 July 2009)

> massive 87%, hahahahahahaha man life just keeps rolling on and on and on




87% what does that translate into numbers of FHB's who will go down the gurgler in the next 18 months. hahahahaha your way out of that one


----------



## trainspotter (25 July 2009)

robots said:


> hello,
> 
> apologies Kincella, have been on Mornington Peninsula at parents and my fathers internet plan is very very low (200mb) so i dont use it too much when staying there
> 
> ...




Don't take this the wrong way robots BUT if the money is rolling in on the housing estates that you have your fingers in, why don't you increase the bandwidth for the parents to something sustainable so that way when you stay there you can post at an even pace?


----------



## kincella (25 July 2009)

Hi Robots, no apologies required....it was just intended as a pun or joke...nothing more.... when I go to the country, I only use the internet shops for 1/2 hour a day....read the news etc.....use it as a break away from blogging, and sitting behind a screen all day....
I am due to go there again ,soon as I can get some of this work completed....
I want to buy a house for a family friend, do it in my name, and he just treats it as his own and pays it off...do all the solar panels etc so he can have some comfort....he is one of those who had a motor bike injury years ago and hurt his back and his knee....he does not earn enough to get a loan himself, but I aim to get a cheap house for him and lock in the low rates...similar position for him as paying rent....but this way there will be a comfortable house rather than what he pays for now....
I try to look after family with housing ..so there are at least more  3 houses I would like to get my hands on......
cheers


----------



## robots (25 July 2009)

hello,

great suggestion Trainspotter on my next visit (next week) i will sort it out for them

i might see if I can access my Melbourne University account and some how get that running at the parent's place

thankyou
professor robots


----------



## kincella (25 July 2009)

there is a wireless modem you can take with you....but the telstra wireless modem I had here for a month....kept going out, several times a day,...in the middle of banking and its stopped working....then I told them to shove it....
or it might be cheaper to just go to an internet cafe for half an hour....
there is a prepaid wireless modem for about $120 with 5 gb.....seems expensive but you just take it with you...and then hope it works...


----------



## MACCA350 (25 July 2009)

Like we found out in the other thread, 

in June there were 5193 first home buyers for VIC. 
Last week REIV sales were 1135 total
This week REIV sales were 1116 total

Looks to me like first home buyers are the ONLY ones buying.........not what I'd call a healthy market........weren't FHB only about 20% of the overall market

cheers


----------



## trainspotter (25 July 2009)

robots said:


> hello,
> 
> great suggestion Trainspotter on my next visit (next week) i will sort it out for them
> 
> ...




Excellent news ... will also help you relieve some pressure from "post" bandwidth depression !


----------



## trainspotter (25 July 2009)

MrBurns said:


> 87% what does that translate into numbers of FHB's who will go down the gurgler in the next 18 months. hahahahaha your way out of that one




Wouldn't take much for the bubble to burst when rates increase. Debt Servicabilty Ratio increase to above 33% of general household income and REPOMAN comes into play. Especially when Kruddy 747 is belting us with a big stick telling us that things are gonna get worse. Oh yeah, got the new house so need the new car sapping $500 a month in repayments. What's that ? YOUR'E PREGNANT? But we got this loan on TWO incomes. How can we survive just on my income alone? 

*Mortgage repossessions - Record Number of Repossessions in WA WACOSS 30th June 2009 Press Release*

“The record number of property repossessions recorded in 2008-09 shows that WA households are struggling to keep up with their mortgages as unemployment begins to grow”, said Sue Ash, CEO of the Western Australian Council of Social Service. Figures released today by the Supreme Court of Western Australia show that 1336 property possession applications were made to the court in 2008-09. This is nearly double the 686 recorded in 2007-08, which was itself the highest number on record. 361applications were made between April and June of 2009.

“The number of unemployed people in WA has more than doubled in only eight months, increasing from 28 000 in October 2008 to 60 000 in May 2009. This sudden spike in unemployment is clearly having an effect on some West Australians’ ability to pay their mortgage”, said Ms Ash.

OOOOOOOOOOOPSSSSSSSSS ... fetch me my umbrella ... no sunshine here.


----------



## robots (25 July 2009)

trainspotter said:


> Excellent news ... will also help you relieve some pressure from "post" bandwidth depression !




hello,

bloody hell i have another illness, aDd, bi-polar, schizzoid and now "post" bandwidth depression

oh well, just get on with it i guess

thankyou
professor robots


----------



## knocker (25 July 2009)

robots said:


> hello,
> 
> bloody hell i have another illness, aDd, bi-polar, schizzoid and now "post" bandwidth depression
> 
> ...




Go robi, you can do it. Only two months to go!!!:


----------



## Dowdy (25 July 2009)

Hey robots, 

  Since you're a self proclaimed Professor of Economics at Melbourne University, perhaps you can explain to me what inflation is?

You claim to be king of this thread on several occasions so perhaps the bears can learn something off you.


----------



## Bill M (26 July 2009)

Time to give an update on what's happening here on the Northern Beaches Sydney. Still very high demand and very low supply, everything is sold in no time. The market is heading upwards all the time.

--------------
_With more than two dozen people inspecting property at each open and an army of cashed-up buyers who sold to first home buyers, there is something of a scramble to secure property in the next range and some agents say they virtually have nothing left on their books._ 

Link to story here.

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

Yesterday I went to the Central Coast (about 1 and a half hours north of Sydney) looking for a home to buy. Even up there demand is outstripping supply. There were buyers everywhere and prices have moved upwards from 9 Months ago. A lot of the open for inspections had older couples looking to secure that house (not first home buyers). Display homes the agents were using were sold and they were leasing it back from the buyers so they could continue to use them. Properties are being sold very quickly. My mate who bought up there 9 Months ago came out with us for the day and says prices have moved significantly since he bought. Nothing we saw jumped out and grabbed us, it's a matter of keeping on looking. One thing for sure house prices are rising and with a lot of buyer demand it will continue to do so, no doubt.


----------



## robots (26 July 2009)

Dowdy said:


> Hey robots,
> 
> Since you're a self proclaimed Professor of Economics at Melbourne University, perhaps you can explain to me what inflation is?
> 
> You claim to be king of this thread on several occasions so perhaps the bears can learn something off you.




hello,

i have a research paper coming out on inflation in the near future, my team at Melbourne University has just been put together 

the general focus is on how inflation has no material affect on people during their working days

thankyou
professor robots


----------



## Beej (26 July 2009)

Bill M said:


> Time to give an update on what's happening here on the Northern Beaches Sydney. Still very high demand and very low supply, everything is sold in no time. The market is heading upwards all the time.
> 
> --------------
> _With more than two dozen people inspecting property at each open and an army of cashed-up buyers who sold to first home buyers, there is something of a scramble to secure property in the next range and some agents say they virtually have nothing left on their books._
> ...




Yep BillM is spot on. To add more to this view, Sydney auction clearance rate was 72% yesterday, 135 sold at auction, median price was $640k. (http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf). Lot's of $1M+ in there (over 30 = 20%+ of properties sold), and several $2M/$3M and even a $4M sale. It looks to me like the heat is now turning up a bit in the mid range and the top end is moving again - it's definitely not just all about FHBs in Sydney........

PS: This is not OPINION about what might happen in the future, I am simply pointing out information showing what is actually happening right now. Unsurprisingly, what is actually happening is completely different to all the bearish predictions made on this and the other thread up to 1.5 years ago by the same posters that are still here now making the same old predictions, or new posters repeating those tired predictions once again..... the crash is always 6-12 months away it seems!

Cheers,

Beej


----------



## robots (26 July 2009)

hello,

good morning,

if you in Melbourne today, get on down:

http://www.theage.com.au/national/hiphop-helps-build-bridge-for-citys-newcomers-20090725-dww4.html

some fabulous Australians on the mic, i wonder if they could have an open mic session

thankyou
professor robots


----------



## robots (26 July 2009)

hello,

REIV jun Q09 results out next saturday, so we hooking up Satanoperca on Sunday at South Melbourne?

thankyou
professor robots


----------



## Dowdy (26 July 2009)

robots said:


> hello,
> 
> i have a research paper coming out on inflation in the near future, my team at Melbourne University has just been put together
> 
> ...





Perhaps you should work on another paper/ pull another one out of your ass.

90% unemployment in Zimbabwe would make you argument irrelevant


----------



## tech/a (26 July 2009)

Inflation---what inflation.


----------



## robots (26 July 2009)

Dowdy said:


> Perhaps you should work on another paper/ pull another one out of your ass.
> 
> 90% unemployment in Zimbabwe would make you argument irrelevant




hello,

yes and people's wages are those that were present in 1960, its a non-event and my team will be putting together a superb paper in the near future

the university has funded the project, although a bit concerned with my secondhand desk as it has "SK was here" carved into the top

thankyou
professor robots


----------



## knocker (26 July 2009)

robots said:


> hello,
> 
> i have a research paper coming out on inflation in the near future, my team at Melbourne University has just been put together
> 
> ...




I am putting together a paper for my thesis entitled " the effect of psychotic drugs on property speculators". Would you mind if I included you in my survey robots.

Knocker

(Soon to be professor knocker).


----------



## robots (26 July 2009)

hello,

no worries, its an intense time i would imagine doing a thesis so anything to help

i have been fortunate that Melbourne University (like western Uni) recognised my service to the subject and presented me with an honorary position

goodluck

thankyou
professor robots


----------



## knocker (26 July 2009)

Thanks champ. Good to see you taking one for the team lol


----------



## kincella (26 July 2009)

Hi Robots, now I have no idea whether you are joking about your job or not....?
maybe you can send me a PM
Dowdy, there is no need to talk like that...certainly not on a public forum....I dont like feral talk


----------



## knocker (26 July 2009)

tech/a said:


> Inflation---what inflation.




Yes and you can buy a pack of lifesavers with that lol


----------



## Beej (26 July 2009)

knocker said:


> I am putting together a paper for my thesis entitled " the effect of psychotic drugs on property speculators". Would you mind if I included you in my survey robots.
> 
> Knocker
> 
> (Soon to be professor knocker).




Don't you claim to be a property speculator though yourself? Buying up big time o/s right now? So I guess you could write that paper based on personal experience? It certainly explains a lot! 

Beej


----------



## knocker (26 July 2009)

Beej said:


> Don't you claim to be a property speculator though yourself? Buying up big time o/s right now? So I guess you could write that paper based on personal experience? It certainly explains a lot!
> 
> Beej




Not buying up big time already lol Besides which this thread is about Australia is it not.:


----------



## Dowdy (27 July 2009)

kincella said:


> Dowdy, there is no need to talk like that...certainly not on a public forum....I dont like feral talk




And i don't like phoney claims about degrees. It's long past the stage where it was considered a joke

It's lying as he does he and passed it off as truth.  

Any other forum it would be considered trolling. 

It's also an insult to anyone who has a economics degree. 

If this was a medical forum and i claimed to be a doctor and wasn't, would you tell me to get rid of my bogus claims?


----------



## gfresh (28 July 2009)

http://www.abc.net.au/news/stories/2009/07/28/2638133.htm

Signs of US recovery ? take it as you will I guess.. 



> Signs of revival in US housing sector
> 
> By North America correspondent Lisa Millar and wires
> 
> ...


----------



## Uncle Festivus (28 July 2009)

Good news??


> Figures released in the US indicate the housing market may be starting to recover, with new home sales soaring in June.
> 
> In an increase that took economists by surprise, the June hike in new home sales was the biggest in more than eight years.



Then comes the bad news!


> Sales prices fell, however, suggesting builders have been cutting prices to clear inventory.




Still, only 4 more years to clear the backlog?


----------



## kincella (28 July 2009)

I just love the way you guys keep going on about the US market...where they have in excess of a million surplus houses...and NINJA loans....
in fact I would love for you to go over there and buy some of those cheap houses...you know the ones for $1000, and then pay the govt about $8000 in taxes a year...where the neighbours have ripped out all the copper and anything else thats worth 2 cents...
or the mansions...for 100k's....and loving the neighbourhood's they are in...


----------



## Uncle Festivus (28 July 2009)

kincella said:


> I just love the way you guys keep going on about the US market...where they have in excess of a million surplus houses...and NINJA loans....
> in fact I would love for you to go over there and buy some of those cheap houses...you know the ones for $1000, and then pay the govt about $8000 in taxes a year...where the neighbours have ripped out all the copper and anything else thats worth 2 cents...
> or the mansions...for 100k's....and loving the neighbourhood's they are in...




As much as you would like to think that Aus is somehow economically divorced from the USA, and the rest of the world for that matter, there is no such thing as a free lunch. The global competition for stimulis debt is going to force rates up eventually. Australians have never had it so good; just a pity that KRudd has 'sold us forward' in order to achieve this?


----------



## Buckeroo (28 July 2009)

Uncle Festivus said:


> As much as you would like to think that Aus is somehow economically divorced from the USA, and the rest of the world for that matter, there is no such thing as a free lunch. The global competition for stimulis debt is going to force rates up eventually. Australians have never had it so good; just a pity that KRudd has 'sold us forward' in order to achieve this?




I'd be interested to see this chart continued for 2008 - any chance?

Cheers


----------



## kincella (28 July 2009)

New development plan for Qld southeastJuly 28, 2009 - 11:59AM 

Australia's fastest growing region, Queensland's southeast corner, will need an extra 754,000 homes to cater for population growth, a new report shows.

Planning Minister Stirling Hinchliffe on Tuesday released the updated South East Queensland Regional Plan in Brisbane, which will govern how the region is managed from this year to 2031.

Mr Hinchliffe told reporters the region's population would grow from 2.8 million to 4.4 million by 2031 and require 754,000 extra dwellings.

He said the regional plan would encourage development away from the coast and towards a corridor west of Brisbane

http://news.theage.com.au/breaking-...ent-plan-for-qld-southeast-20090728-dzgr.html


----------



## Beej (28 July 2009)

Buckeroo said:


> I'd be interested to see this chart continued for 2008 - any chance?
> 
> Cheers




Yes that would be interesting! Another interesting chart would be the % of household income required to SERVICE the debt. At the end of the day it is serviceability that matters in these things, despite all the alarming graphs that the likes of UF like to post around that ignore this most important part of the "debt statistics".

For example - *since the end of 2007 (the end of UFs chart), the cost of servicing debt for households in AU has REDUCED by 40+%!* So if the 160% debt/income level didn't precipitate a massive crisis back then, it's hardly going to precipitate one now is it? Of course in the future interest rates may rise again, but they would now have to rise 80% to increase the debt serviceability cost back to where it was at the end of 2007 - a level which in a healthy economy (which we would have if interest rates rise that high again), was shown to be essentially sustainable - certainly not so bad that it crashed our property market or anything....

So as usual the absolute debt number focused gold bug/Austrian school types just miss the point (ie serviceability) and that's why they are turning out to be wrong in just about everything at the moment.

PS: I'm expecting a bunch of responses citing unemployment now.... as has been covered before, for unemployment on it's own to trigger a "debt serviceability crisis" and therefore a wave of forced property selling pushing prices down, it would need to rise very quickly to levels not seen since the 30s. That is looking like a very remote possibility at this juncture. Slowly rising unemployment peaking somewhere below 10% is just not going to provide the catalyst required - especially as we know the government/banks etc will pull out all stops to minimise the level of mortgage defaults if they start to rise too much beyond their current infinitesimal levels!

PS: One final question; UF in your chart how is "Household Disposable Income" defined? Does that have living expenses + taxation taken out or just tax? Given that mortgage payments are such a large portion of living expenses, I hope it is simply after tax household income, otherwise it's a pretty useless stat really?

Cheers,

Beej


----------



## Uncle Festivus (28 July 2009)

Beej said:


> PS: One final question; UF in your chart how is "Household Disposable Income" defined? Does that have living expenses + taxation taken out or just tax? Given that mortgage payments are such a large portion of living expenses, I hope it is simply after tax household income, otherwise it's a pretty useless stat really?
> 
> Cheers,
> 
> Beej




You would have to ask the RBA & the US Fed for that? The point being the relative levels of the 2 indicators. Whereas the unsustainable bubble has well and truly popped in the US, the bubble has only just started to grow even bigger for Australian homebuyers, due solely to the government subsidy and continuing influx of unproductive migrants competing with the incumbents and forcing up prices? Things are so good, all those retirees who were going to rely on their share based super are now having to stay in the workforce indefinitely now, competing with school leavers and migrants.

With interest rates at record lows it's obvious that people have a lot more money not going into paying off a mortgage and can be spent on 'other' things, hence apparently no recession? They are at record lows for a reason, and when/if those reasons are removed they will go back up, only this time only after sucking in a whole new demographic loaded with mortage debt. How do I know this - Kevin told me  

The seeds of Australia's recession are being sown right now?


----------



## Beej (28 July 2009)

Oh look here is a graph of the serviceability:




(Looks like that's where UFs chart came from as well - http://www.whocrashedtheeconomy.com/?page_id=3). Of course they stop this chart at the end of 2007 as well. Given that interest rates have dropped by 40%, and it is unlikely that total household debt has increased since then (it's probably gone down a bit), that means the cost of serviceability would now be at about 8% of household disposable income - a level it has comfortably been at several times in the recent past. 

Additionally, disposable income has been rising in real terms for the past 20 years, and the past 10 years in particular, so relative to the cost of the basics of living - people have more, and therefore can actually AFFORD to spend more of it as a proportion of the total income if they want, without it being a problem. Right now they aren't doing this anyway, in fact it has been reported that most households have not adjusted mortgage payments as interest rates fell - choosing instead to pay down the debt faster - or as UF posted above, perhaps spending some of the difference to boot and helping to keep the economy up.

So really - where's the big problem here?

Cheers,

Beej


----------



## Uncle Festivus (28 July 2009)

Beej said:


> Oh look here is a graph of the serviceability:
> 
> (Looks like that's where UFs chart came from as well - http://www.whocrashedtheeconomy.com/?page_id=3). Of course they stop this chart at the end of 2007 as well. Given that interest rates have dropped by 40%, and it is unlikely that total household debt has increased since then (it's probably gone down a bit), that means the cost of serviceability would now be at about 8% of household disposable income - a level it has comfortably been at several times in the recent past.
> 
> ...




No problem really, debt is debt.


----------



## Beej (28 July 2009)

Buckeroo said:


> I'd be interested to see this chart continued for 2008 - any chance?
> 
> Cheers




Here's one that goes to Sep-08:







(From: http://www.treasury.gov.au/documents/1451/HTML/docshell.asp?URL=06 Household saving in Australia.htm which is a good read actually!)

Cheers,

Beej


----------



## prgudula (28 July 2009)

http://business.theage.com.au/business/rba-warns-of-housing-price-bubble-risk-20090728-dzjy.html

any comments


----------



## MrBurns (28 July 2009)

prgudula said:


> http://business.theage.com.au/business/rba-warns-of-housing-price-bubble-risk-20090728-dzjy.html
> 
> any comments




and further to that - 

http://www.abc.net.au/news/stories/2009/07/28/2638728.htm


----------



## kincella (28 July 2009)

Stevens is the mole who increased the rates every month for 18 months.....he is absolutley hopeless in his role....not only screwing the home owner, but all the small business employers....who are the biggest employers in this country.....
I cannot use the words to best describe his actions on a public forum ...


----------



## Uncle Festivus (28 July 2009)

kincella said:


> Stevens is the mole who increased the rates every month for 18 months.....he is absolutley hopeless in his role....not only screwing the home owner, but all the small business employers....who are the biggest employers in this country.....
> I cannot use the words to best describe his actions on a public forum ...




End of the free ride for the property leeches eh? As usual,  all those who have been living within their means will have to pay for those who don't.


----------



## Uncle Festivus (28 July 2009)

Mr Stevens said today - 


> "It is becoming more common for Australians to see the glass as half full than as half empty,'' he said.
> "Put another way, we can much more easily imagine upside risks to the outlook, to balance out the downside ones, than was the case six months ago,'' he said, citing improving consumer confidence, a slower pace of unemployment rises, and stronger-than-expected economic growth.




He's beginning to sound a lot like the permabulls in here - a kindred spirit perhaps 

Just don't take away the punch bowl just yet, the party is just getting started


----------



## Beej (28 July 2009)

Uncle Festivus said:


> Mr Stevens said today -
> 
> 
> He's beginning to sound a lot like the permabulls in here - a kindred spirit perhaps
> ...




Well that's good - as he is in a position to influence what actually happens to a far greater extent than any of us here!

Beej


----------



## MACCA350 (28 July 2009)

Beej said:


> Well that's good - as he is in a position to influence what actually happens to a far greater extent than any of us here!
> 
> Beej



Good for some, not so good for those hard working average aussies just trying to get the good old aussie dream of owning their own home

Sometimes bull property mentality really really annoys me.
I have no problem with property being "safe as houses" since the whole point of a house is to live in, but if the bulls had their way houses would be out of reach for everyone but the top 1% of the income earners.............and that once attainable "aussie dream" would be just that........a dream

<rant over>

cheers


----------



## Mofra (28 July 2009)

Wow, alot has changed here in the past few months 

Only change for me personally is an increase in rental return. All figures in the world don't matter if your reality/portfolio/situation is performing well.

Still renting the place I live in FWIW.


----------



## Dowdy (28 July 2009)

kincella said:


> I just love the way you guys keep going on about the US market...where they have in excess of a million surplus houses...and NINJA loans....




You're forgetting what OUR version of the NINJA loan is - the government grant


----------



## wayneL (28 July 2009)

Dowdy said:


> You're forgetting what OUR version of the NINJA loan is - Working Australians having their hard earned taken for somebody else's deposit.




Corrected for accuracy.


----------



## Julia (28 July 2009)

kincella said:


> Stevens is the mole who increased the rates every month for 18 months.....he is absolutley hopeless in his role....not only screwing the home owner, but all the small business employers....who are the biggest employers in this country.....
> I cannot use the words to best describe his actions on a public forum ...



In an interview with Mr Stevens on ABC Radio's "PM" this evening, he even admitted the downturn had not been nearly as severe as the bank had anticipated.   (Obviously implied here is that - had they known armageddon was not going to occur - they'd not have been so aggressive in reducing interest rates.)

It hardly gives us much faith in their predictions for the future.




MACCA350 said:


> Good for some, not so good for those hard working average aussies just trying to get the good old aussie dream of owning their own home
> 
> Sometimes bull property mentality really really annoys me.
> I have no problem with property being "safe as houses" since the whole point of a house is to live in, but if the bulls had their way houses would be out of reach for everyone but the top 1% of the income earners.............and that once attainable "aussie dream" would be just that........a dream
> ...



Macca, I'm not sure that's fair.  I can remember paying 22% on IP mortgage.
And yes, it was very tough going.


----------



## Buckeroo (28 July 2009)

MrBurns said:


> and further to that -
> 
> http://www.abc.net.au/news/stories/2009/07/28/2638728.htm






> Quote from the above article reads:
> 
> Real estate risks
> 
> Mr Stevens particularly singled-out housing as an area where debt had been used to fuel unsustainable house-price growth, rather than addressing the housing shortage by building more dwellings.




Good one Burnsey, I wonder why he didn't warn KRudd about the dangers of encouraging this?

Thanks for the chart Beej - I've always wondered at what point the debt ration becomes unsustainable. 

I suppose if it maxes out, the banks can always bring out new products such as generational loans - you get your kids to pay off the family home after your gone.

Cheers


----------



## Buckeroo (28 July 2009)

Julia said:


> Macca, I'm not sure that's fair.  I can remember paying 22% on IP mortgage.
> And yes, it was very tough going.




Yep, in the early 80's, I had a 21% rate - after 5 years I had almost paid the principal in interest alone - ouch!!


----------



## MrBurns (28 July 2009)

Buckeroo said:


> I suppose if it maxes out, the banks can always bring out new products such as generational loans - you get your kids to pay off the family home after your gone.
> 
> Cheers




Good point Buckaroo, generational loans are in Japan I think and if the boom doesnt go bust that would be the only way to go.

It will go bust though, history always repeats itself.


----------



## naughtynickers (28 July 2009)

I would just like to thank everyone for all their posts in here.
I have spent a month going through the whole thread to help me make a decision with an investment property I own with some family members.
One wants to sell one wants to hold. The deciding vote was mine.

I have decided to sell not just based on info here but on a lot of factors.
We bought the property for 280K in Northcote in Melbourne 5 years ago and looks like we can get around 420K for it now. 

I would rather cash in now then wait 6-12 months when unemployment is rising still banks are much more dilligent in lending and their is no grant, I think sometimes logic has to rule and if someone wants to pay that much for a ****ty little apartment well I fell sorry for them, I can't see it moving another 50% in another 5 years. 
But yeah be intresting to see what happens. Thanks again for all the posts.


----------



## Buckeroo (28 July 2009)

naughtynickers said:


> I would just like to thank everyone for all their posts in here.
> I have spent a month going through the whole thread to help me make a decision with an investment property I own with some family members.
> One wants to sell one wants to hold. The deciding vote was mine.
> 
> ...




Good for you - got a tidy profit there. Only thing now is to decide where your going to invest the proceeds.

Cheers


----------



## MACCA350 (29 July 2009)

Julia said:


> Macca, I'm not sure that's fair.  I can remember paying 22% on IP mortgage.
> And yes, it was very tough going.



I'm sure it was, could you imagine paying 22% on the average $450k house now...........that's near $100k per annum just for the interest..........then again housing was much more affordable back then.

Does it not concern you that your grandchildren or great grandchildren may never be able to buy a house on their own two feet, partially(maybe wholly) because we let our housing become an investment portfolio?

cheers


----------



## Beej (29 July 2009)

MACCA350 said:


> I'm sure it was, could you imagine paying 22% on the average $450k house now...........that's near $100k per annum just for the interest..........then again housing was much more affordable back then.




Actually housing wasn't more affordable back then - it was CHEAPER if you want to use a basically useless measure like the median wage multiple, but because the availability of credit was much tighter and the cost of credit was so much higher (22% remember!!!) affordability in the late 80s was actually far worse than right now. It improved dramatically in the early 90s as inflation and interest rates fell heaps, then worsened as house prices rockets from the late 90s through to a couple of years ago. Just look at the housing component of the debt servicibility graph I posted to see how it has actually changes over the last 20 years or so.

Because inflation and interest rates have been low now for so long, and because debt has expanded as a result, we won't likely see 22% interest rates for a very long time (decades - and many other things would have to change/shift first), as rates getting towards 10% has the same impact in terms of the impact of monetary policy in the economy. If anyone buying now makes sure they could get by with rates at say 10% then they should OK barring a complete economic melt-down of some sort.

PS: On the whole "bull attitude" rant thing, I don't wish for huge house price increases across the board, far from it. As a PPOR owner and cash flow positive IP owner, I'm doing fine even if prices stay flat-ish and feel pretty good if they just go up with inflation. What erks me is the "house price crash brigade" who think that affordibility is addressed by a price crash - ie by punishing all the hard working people who over past years saved a deposit, took the risk of buying, maybe read the market correctly and invested in a bit of property here and there, paid down their mortgages etc and essentially "played the game" as I believe you have to if you want to get ahead in this world. 

This "prices must crash so I can get what I want" attitude, often dressed up with some sort of moral high ground emotional BS about wanting their kids to able to buy a house etc is very selfish as well as unrealistic IMO. Housing affordibility is a real issue, but it can only be addressed in the long term through de-centralisation, the growth and development of new economically viable urban centres/cities rather than trying to continue to expand the existing (already full) major cities of Australia. Ie we become more like the US with more, smaller cities, spread out more - then you will get cheaper houses for all, but that is the only realistic way this will ever be solved long term. A crash due to some economic shock (if any ever occurred which) would only ever be temporary and followed by another boom unless the ultimate supply constraint issues are addressed.

Cheers,

Beej


----------



## kincella (29 July 2009)

*Everyone's getting on bull express: optimism returns*
not I....its just irrational exuberance imo
extract..........................

The RBA's Stevens would have nothing of the US gloom and economists were upgrading 2010 calendar-year growth forecasts after his speech yesterday. 

Westpac last week increased its GDP estimate from 1 to 2 per cent growth and, importantly, Stevens cited the bank's bullish consumer confidence surveys. 

By contrast, NAB's business confidence surveys are not nearly so bullish and, when you ask business about new investment, the response is zero. 

But everyone is climbing the bullish express, jumping on slightly better than expected profits from consumer products company GUD yesterday as a sign that all is OK with the world. 

Boral's stock has increased by 25.9 per cent since the end of June and Hardie by an extraordinary 21.6 per cent from albeit depressed levels, as both have significant US earnings. 

The S&P200 index is up 2.9 per cent in the past week, by 5.4 per cent this month and now 12 per cent this year, which isn't a bad performance given prevailing wisdom says the economy is still contracting. 

Now the crisis has passed, the market is seeing only blue sky ahead and that is a dangerous position demanding some caution. 

http://www.theaustralian.news.com.au/business/story/0,28124,25849972-5013408,00.html


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## gfresh (29 July 2009)

MACCA350 said:


> Does it not concern you that your grandchildren or great grandchildren may never be able to buy a house on their own two feet, partially(maybe wholly) because we let our housing become an investment portfolio?




Looks like the trend will eventually be shifting from 70% home ownership to 60% or even less.. property owned by the hands of a few, like in a few other countries. This will be thanks to woefully inadequate planning, hands in too many pockets, and many other factors that are pretty hard to wind back without massive revolutionary change. 

Already "high density" seems to be the buzz word thrown around in the latest city plans, so don't expect anything less than land being worth a fortune and those developing the land to be piling in the profits. 

So what are you going to do about it?


----------



## Mofra (29 July 2009)

MACCA350 said:


> Does it not concern you that your grandchildren or great grandchildren may never be able to buy a house on their own two feet, partially(maybe wholly) because we let our housing become an investment portfolio?



I'd be far more concerned if they adopted such a defeatist attitude towards life.


----------



## Buckeroo (29 July 2009)

gfresh said:


> Looks like the trend will eventually be shifting from 70% home ownership to 60% or even less.. property owned by the hands of a few, like in a few other countries. This will be thanks to woefully inadequate planning, hands in too many pockets, and many other factors that are pretty hard to wind back without massive revolutionary change.
> 
> Already "high density" seems to be the buzz word thrown around in the latest city plans, so don't expect anything less than land being worth a fortune and those developing the land to be piling in the profits.
> 
> So what are you going to do about it?




Can this be multiple choice?

a. run for the hills
b. buy up land now until there is no tommorrow
c. become a developer
d. apathy

I'm inclined to reckon d would be the most popular choice

Anyway, in Queensland there may be a few politicians with their hands in the property stakes - may be an interesting 6 months. No doubt, Joe will be turning over in his grave!

Cheers


----------



## MrBurns (29 July 2009)

Mofra said:


> I'd be far more concerned if they adopted such a defeatist attitude towards life.




Thats easy for you to say, how much deposit did you have to raise for a house ? $5000 or $10,000 ?
Try $100,000 and see how chirpy you feel then.


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## Largesse (29 July 2009)

http://www.theage.com.au/national/rate-rise-looms-as-economy-recovers-20090728-e06u.html


Expert from above link

" ‘‘Households can afford it,’’ said Macquarie Bank strategist Rory Robertson. *‘‘None of them would have taken out a loan expecting these historically low rates to last.’’* "


Ok, i'm going to run a book on how long this guy keeps his job for.

I'm offering even money that he is out of work before this time next year.


any takers?


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## MrBurns (29 July 2009)

Largesse said:


> http://www.theage.com.au/national/rate-rise-looms-as-economy-recovers-20090728-e06u.html
> 
> 
> Expert from above link
> ...




He's way out of touch.

see this from Crikey today - 



> Glenn Stevens' vision of a frugal Australia
> Glenn Dyer writes:
> 
> "Rate rise looms", "Australian Headed for Housing Bubble", "Banks Warned on Guarantees" were just some of the headlines from Tuesday's Sydney speech delivered by Reserve Bank Governor Glenn Stevens, but there was a much more important message buried underneath.
> ...


----------



## MACCA350 (29 July 2009)

Beej, you may not be concerned about future generations but having 3 young children, I am, call it emotional BS if you like.

My father(teacher) bought his first home($115k) and serviced it with a single income($30k) while supporting a family of 6, try doing that now with a median house on a single teachers income.........excuse me if I disagree with you on the affordability point.

We'll just have to agree to disagree, IMHO property should have never been allowed to become the investment goldmine that it has.

cheers


----------



## Buckeroo (29 July 2009)

MrBurns said:


> Thats easy for you to say, how much deposit did you have to raise for a house ? $5000 or $10,000 ?
> Try $100,000 and see how chirpy you feel then.




Talking proportions, in the 80's we had to save 30% of the cost to secure a loan from the banks.

So my first house (in NZ) was $73,000 and had $25,000 saved. Did this through a home ownership account with the bank (actually my wife had the account). We saved for around 5 years, we'll, she saved most of it.

Anyway and get this, when we did ask for a loan, we had to go in for an interview - there were 3 people at a desk grilling us about how we would pay it back. 

Welcome to your future people

Cheers


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## kincella (29 July 2009)

well Macca....you can buy a house for 200-250 k's today around Melb, and probably get about $40,000 govt grants to help, and surely you are earning min 60 k in wages.....
so you are in a better position than your father with the grants....or in the same position otherwise....
what is wrong... is the young ones who want to buy a 600k plus house as their first home


----------



## Beej (29 July 2009)

kincella said:


> well Macca....you can buy a house for 200-250 k's today around Melb, and probably get about $40,000 govt grants to help, and surely you are earning min 60 k in wages.....
> so you are in a better position than your father with the grants....or in the same position otherwise....
> what is wrong... is the young ones who want to buy a 600k plus house as their first home




+1! 

Macca, I noticed you ignored most of the other points in my post, other than saying you disagree with them. Do you disagree that the actual way to address housing affordability is to de-centralise,  build more houses and create more economically viable urban centres? Read Buckaroos post for a reality check on what it was like buying a house in the 80s!

I have young kids too - but they are being raised to understand how the world works and how to get ahead in it so they don't just sit back and whinge about the things they don't have/can't afford. I have no doubt that my kids will be able to afford a house in Sydney (or anywhere else in Australia) when their time comes!

Cheers,

Beej


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## Buckeroo (29 July 2009)

kincella said:


> ..
> what is wrong... is the young ones who want to buy a 600k plus house as their first home




Yep, a lot of young people do seem to have bigger & more lavish houses than their parents. 

Cheers


----------



## MACCA350 (29 July 2009)

kincella said:


> well Macca....you can buy a house for 200-250 k's today around Melb, and probably get about $40,000 govt grants to help, and surely you are earning min 60 k in wages.....
> so you are in a better position than your father with the grants....or in the same position otherwise....
> what is wrong... is the young ones who want to buy a 600k plus house as their first home



I'm talking median prices, you'll find 115k pretty close to the median for 20 years ago.

cheers


----------



## knocker (29 July 2009)

kincella said:


> well Macca....you can buy a house for 200-250 k's today around Melb, and probably get about $40,000 govt grants to help, and surely you are earning min 60 k in wages.....
> so you are in a better position than your father with the grants....or in the same position otherwise....
> what is wrong... is the young ones who want to buy a 600k plus house as their first home




Don't know what you are puffing on bro. Minimium wages at least 60k lol tell that to the majority that are on 40-50k max. Take out cost of living and other expenses and they probably have maybe 200$ to spare a week.


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## Beej (29 July 2009)

MACCA350 said:


> I'm talking median prices, you'll find 115k pretty close to the median for 20 years ago.
> 
> cheers




Yes but the "median" house is about 50% bigger/better than the median house back then. For $250k in Melbourne today you should be able to get something that is about the same as that $115k median house 20 years ago.

PS: In 1989 the median house price in Sydney was over $200k......life went on.....


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## MrBurns (29 July 2009)

I bought a house in 1978 for $40,000 on bugger all deposit from what I remember.

Different story now, you have to have $100's of thousands to get a decent place and thats just the deposit, no wonder they're all on drugs and binge drinking, unless mum and dad drop dead and leave them the farm they'll be renting crap forever, I hate the BS about "learn the hard way" and "work hard", *YOU* get out there save $150k then service a $250k loan and bring up a family, it's all BS
Made worse by negative gearing and lately by Mr BS himself , KRudd,  stuffing it up for generations to come.

I agree with MACCA350

I'd be happier if my $2M house was worth half that and everyone elses as well, and it may just happen, give future generations a break.


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## MACCA350 (29 July 2009)

Beej said:


> Yes but the "median" house is about 50% bigger/better than the median house back then. For $250k in Melbourne today you should be able to get something that is about the same as that $115k median house 20 years ago.



Doubt it, we're talking build. 115k for a 20sq 4br home on a 600m2 block. 
Same size block now costs around 150-200k 
20sq house around 150-180k
carpets tiles etc 20k
total 320-400k not inc site costs, taxes etc



> PS: In 1989 the median house price in Sydney was over $200k......life went on.....



And based on this in Melbourne it was around 140k

cheers


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## MACCA350 (29 July 2009)

That's 20 living squares, no garage or outdoor areas, virtually all houses now come with a double garage(min 3.5sq) and many developers now mandate you must have a double garage. So to get the same living space you need a 23.5sq house(I haven't factored that into the figures above)

cheers


----------



## kincella (29 July 2009)

Question for Burnsie....what on earth would you advise the young ones today wanting to get into their own home.....????
as for Macca....there are plenty of new houses on the outskirts for the prices I quoted....Vic govt with faster trains and the new freeways and tollways...mean 30-60 mins travel to the city...but not everyone works in the city...affordable houses, but not at 400k's.....you need to have a life, not be silly and pay all your money into housing...
the govts not going to do anything too fast about the housing problem...and then its going to the outer suburbs...
if you must go to the inner city...then its an apartment thats affordable...
I say there is affordable housing out there for everyone...


----------



## trainspotter (29 July 2009)

Like Mullewa. $49,500 for fibro 3 x 1 on 871sqm block.  Population 726 people of non reflective skin type. 1 billion flies. Great place to drive through.


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## kincella (29 July 2009)

we keep saying Australia is different, most of our population live in the cities , and if that is the most popular place, and everyone wants to be there, the prices will be higher...
its not a god given right that the kids have to live in the middle of the place...start on the edge , then as you step up the career ladder, then move up the house ladder...
or send all the immigrants back home...that should free up a lot of housing...
or stop the bl......y immigration numbers...slow it down...
actually I bet we are still in a similar situation in 10 years time


----------



## kincella (29 July 2009)

instead of this thread being a great big whinge, and the ridiculous idea of prices dropping suddenly...how about some ideas on how  to get into a house within the next 5 years.....knowing the contraints with state govts releasing more land in the outer suburbs....
oh and btw...my first house was 12 squares...look at the kids now...it must be 20 plus squares...
and my other properties are still within that range...they are older houses, not mansions


----------



## MACCA350 (29 July 2009)

kincella said:


> Question for Burnsie....what on earth would you advise the young ones today wanting to get into their own home.....????
> as for Macca....there are plenty of new houses on the outskirts for the prices I quoted....Vic govt with faster trains and the new freeways and tollways...mean 30-60 mins travel to the city...but not everyone works in the city...affordable houses, but not at 400k's.....you need to have a life, not be silly and pay all your money into housing...
> the govts not going to do anything too fast about the housing problem...and then its going to the outer suburbs...
> if you must go to the inner city...then its an apartment thats affordable...
> I say there is affordable housing out there for everyone...



Like Burnside heights or Doreen.........they are the outskirts and they're the places I used for land quotes. 

603m2 190-200
550m2 199k
432m2 179k


We're settling our 800m2 block next month, still deciding on a house/builder

cheers


----------



## robots (29 July 2009)

hello,

yeah top effort Kincella, and congratulations must go to Gav, fellow Professor Frink and now Gfresh for purchasing a home and hope they have many happy moments at their abode

just keep saving and saving hard, put the $ away as early as you can, so to any 16-18yr olds start piling it away, hammer your parents for extra $ for birthdays, christmas, chores etc

focus on your income, promotion, overtime, totally new career

i like the story of Tom Elliot (mme capital) who had an option of getting a new bike or shares for his birthdays, he took the shares

this is fabulous

and look out for the REIV results on Saturday, will be celebrating with a serve of the succulent bird at my favourite Indian restaurant

thankyou
professor robots


----------



## MrBurns (29 July 2009)

kincella said:


> Question for Burnsie....what on earth would you advise the young ones today wanting to get into their own home.....????
> ...




Save like buggery
Get a "nice" location 
Get the worst house in the best street you can afford
Beg your mother and father for help.

Wait................the bubble WILL burst then make your move, no hurry, give it a year or 2


----------



## trainspotter (29 July 2009)

Keystart Govt loan 2% deposit. Start at what you can afford then work your way up as lifestyle improves. Other option is to buy block first and pay off as much as you can whilst interest rates are LOW.


----------



## MrBurns (29 July 2009)

trainspotter said:


> Keystart Govt loan 2% deposit. Start at what you can afford then work your way up as lifestyle improves. Other option is to buy block first and pay off as much as you can whilst interest rates are LOW.




Dont worry about interest rates the higher they go the less you'll pay for a property.


----------



## Mofra (29 July 2009)

kincella said:


> instead of this thread being a great big whinge, and the ridiculous idea of prices dropping suddenly...how about some ideas on how  to get into a house within the next 5 years.....knowing the contraints with state govts releasing more land in the outer suburbs....



That's a very good question, and I'd expect people who have achieved success in any field have asked themselves a similar question.
Instead of _can_ I get a desired result, ask _how_ can I get a desired result. 

I'm fortunate enough to be able to buy a house to live in if I wanted to, but didn't start out in this way. I'd personally advise against holding a prejudice against one or more asset classes for a start


----------



## Uncle Festivus (29 July 2009)

It's pretty simple really - migrants & investors (with the backing of the banks) are the causes of housing unaffordability for the incumbent population. 

 If every migrant was self sufficient in creating housing and not competing with the existing population then housing would be more affordable and migrants wouldn't be such a burden on society ie their real cost wouldn't be hidden? Every new house built would get a certificate from the local council. These certificates would then be bought by migrants as part of their requirement to settle here. It would then be up to them where or how they lived, but a new dwelling would have been built regardless.

Get rid of negative gearing for investors so that their fellow taxpayers didn't subsidise their lifestyle, and pay their share of the tax burden. Tax breaks only for building new houses or units.


----------



## MrBurns (29 July 2009)

Uncle Festivus said:


> Get rid of negative gearing for investors so that their fellow taxpayers didn't subsidise their lifestyle, and pay their share of the tax burden. Tax breaks only for building new houses or units.




Get rid of it for residential property, for commercial it's quite legitimate.


----------



## wayneL (29 July 2009)

Uncle Festivus said:


> It's pretty simple really - migrants & investors (with the backing of the banks) are the causes of housing unaffordability for the incumbent population.
> 
> If every migrant was self sufficient in creating housing and not competing with the existing population then housing would be more affordable and migrants wouldn't be such a burden on society ie their real cost wouldn't be hidden? Every new house built would get a certificate from the local council. These certificates would then be bought by migrants as part of their requirement to settle here. It would then be up to them where or how they lived, but a new dwelling would have been built regardless.
> 
> Get rid of negative gearing for investors so that their fellow taxpayers didn't subsidise their lifestyle, and pay their share of the tax burden. Tax breaks only for building new houses or units.






MrBurns said:


> Get rid of it for residential property, for commercial it's quite legitimate.



In normal business, there must be an intention to make a trading profit. You have to be profitable 2 years out of 7 (IIRC). 

If a residential investment is made with the intention of making a "trading" profit soon, then I think the tax deduction is legit. However if there is no prospect of profit anytime soon, the deduction should be disallowed. That's how the rest of business operates and see no reason why the business of supplying long term residential accommodation should be any different.

Of course there is the law of unintended consequences though. It could force prices down to economically legitimate levels, but it could equally force rents up.


----------



## MrBurns (29 July 2009)

wayneL said:


> If a residential investment is made with the intention of making a "trading" profit soon, then I think the tax deduction is legit.
> .




Would be fairer to somehow filter these from the owner occupied properties.

Impossible so just exclude it from the entire residential sector.

Watch the market flooded with places for FHB's to live in then


----------



## Uncle Festivus (29 July 2009)

wayneL said:


> In normal business, there must be an intention to make a trading profit. You have to be profitable 2 years out of 7 (IIRC).
> 
> If a residential investment is made with the intention of making a "trading" profit soon, then I think the tax deduction is legit. However if there is no prospect of profit anytime soon, the deduction should be disallowed. That's how the rest of business operates and see no reason why the business of supplying long term residential accommodation should be any different.
> 
> Of course there is the law of unintended consequences though. It could force prices down to economically legitimate levels, but it could equally force rents up.




I can't see how property investors who buy existing properties contribute to supplying residential accom? Their aim is capital appreciation while reducing income tax?  Society needs to make it more attractive for people to build more dwellings to bring prices down, and make it less attractive for speculators who contribute to inflating prices?

Glen Stevens has said as much yesterday, saying funds are being mis-directed into unproductive existing housing instead of building new dwellings.


----------



## wayneL (29 July 2009)

Uncle Festivus said:


> I can't see how property investors who buy existing properties contribute to supplying residential accom? Their aim is capital appreciation while reducing income tax?  Society needs to make it more attractive for people to build more dwellings to bring prices down, and make it less attractive for speculators who contribute to inflating prices?
> 
> Glen Stevens has said as much yesterday, saying funds are being mis-directed into unproductive existing housing instead of building new dwellings.




Yes partly agree. We need suppliers of accommodation because not everyone wants or can be an OO. I currently rent by choice, because I'm in a nomadic phase. I want there to be LLs to rent me a decent house. I see no challenge with that.

But I totally agree about the damage of price speculation. It is a malinvestment and does mis-direct capital. That's why the system should encourage trading profits. If people invest for trading profits, obviously the purchase price becomes an important factor. If the rent market is $400 then the purchase price should reflect that, ergo, prices should be much lower.


----------



## MACCA350 (29 July 2009)

It's been stated that house prices double about every 7-10 years.
Looking at wages I'm taking a stab at them doubling every 15-20 years.

You can't tell me that is sustainable, yes interest rate drops have countered some of that difference recently but with the cash rate at 3% any further drop will have little effect and cannot counter the above conditions if they continue

What about in 40 years(when my grandchildren will be buying houses)? Say we use these average numbers as an example

2009
house 450k
income 50k

2019
house 900k
income 75k

2029
house 1.8M
income 100k

2039
house 3.6M
income 150k

2049
house 7.2M
income 200k

Try paying off $7.2M with a $200k income in 30years 

A few things could happen:
1 house prices don't keep doubling every 10 years and instead increase at a sustainable rate in comparison to income
2 incomes increase to match the rate of house prices
3 housing prices crash and return to a sustainable growth rate
4 housing becomes the domain of the rich 0.1% of income earners and everyone else gets stuck in government built high-rise flats.......Judge Dredd style(ok maybe 100years down the track )
5 dunno, haven't thought of one yet...........anyone else have a 5th

cheers


----------



## Beej (29 July 2009)

MACCA350 said:


> It's been stated that house prices double about every 7-10 years.
> Looking at wages I'm taking a stab at them doubling every 15-20 years.
> 
> ......




Of course that would be unsustainable! Personally, I've never believed the all houses double every 7-10 years thing anyway; I think in the past house prices have, on occasion, doubled every 7-10 years, but not always, and a lot of that increase has been pure inflation in the past. Your wage doubling figures are of course based on the past decade or so which have had very low inflation - in the 70s/80s it was common for wages to double within 10 years or less by the way - and no surprises that house prices went up *back then* just as fast or faster.

My first PPOR went up by maybe 60% in 7 years (92-99), and my 2nd house did double in 9 years (99-08), but I renovated it to achieve that so put extra capital in along the way, plus that period included the big boom years. I think the next 10 years will see much more moderate house price growth, but growth none-the-less.

Cheers,

Beej


----------



## MACCA350 (30 July 2009)

Just realised I didn't compound the income figures 2049 should have ended up as 253k

cheers


----------



## robots (30 July 2009)

hello,

there's no issue out there in the property world, nothing broken

so everything okay,

hey hey hey:

http://www.theage.com.au/national/house-prices-surge-at-top-end-20090729-e1k8.html

amazing, what a place in time for Australians

with many claiming an event worse than the 1929 depression and houses/units still going strong, utopia brothers

if you see some stooge in the office today let them know 

walkin' tall,

thankyou
professor robots


----------



## robots (30 July 2009)

hello,

special word out to:

Numbercruncher
Pepperoni
Chops
financial advisor guy
Numbercruncher
Xao
Kimosabi
Numbercruncher

enjoy the day brothers if you are reading, i think the internet in the UK has just gone down

looking forward to get my slab and lunch on sunday

thankyou
professor robots


----------



## tech/a (30 July 2009)

moses said:


> Time to change subjects...
> 
> Reasons.
> 
> ...




Moses How many did you end up buying?


----------



## kincella (30 July 2009)

my 2 cents worth again....
Mofra said "Instead of can I get a desired result, ask how can I get a desired result." 

When I set out my plan to achieve my goals, an important part was to double my salary, or income every 5 years, for the next 20 years. How I achieved my goal was through further study, and experience. I did change employers to achieve my goals, then eventually became self employed. 
I achieved my goals, and doubled my income every 5 years. Makes a huge difference when contemplating other achievements on the list of things to do.

Not all, or every property will double over a ten year period. So you dont have to worry too much. Some will go higher and some will not. Try using an increase of 30% or 3%pa over 10 years, just keeping in line with inflation is a better guide.

Macca...just wondering, you keep using the one wage in your estimates, rather than the normal of 2 wages, and you dont sound like you are convinced that buying a house is good for you. ??? Are you feeling pressure to buy ? Why not stay renting if you are more comfortable with that strategy.
Oh and your figures are all wrong, in so far as, a bank will not lend 450k's on an income of 50k's...they would need closer to an income of 80-100k's 
or would lend only 200k's or less on an income of 50k's


----------



## MACCA350 (30 July 2009)

kincella said:


> Macca...just wondering, you keep using the one wage in your estimates, rather than the normal of 2 wages, and you dont sound like you are convinced that buying a house is good for you. ??? Are you feeling pressure to buy ? Why not stay renting if you are more comfortable with that strategy.



I use one wage because I believe we shouldn't need 2 wages to service a house loan, I realise that's become unrealistic for most over the last 10years or so. Not a problem for us though, we're buying with cash.
Buying a house is good for us, we've spent about a year looking for the right one for us............but I do feel pressure, but mostly from the Mrs


> Oh and your figures are all wrong, in so far as, a bank will not lend 450k's on an income of 50k's...they would need closer to an income of 80-100k's
> or would lend only 200k's or less on an income of 50k's



That's irrelevant to the point of my example.


----------



## kincella (30 July 2009)

funny about that, here you have been 'going on' about the high cost of housing, how unaffordable it is, you posted the figures yesterday using the one wage theory and prices doubling etc....
but today that is irrelevant..........the fact that on a single low wage one could not get a loan, and further to that, they would never be able to save up to pay cash either
and now today, you are buying a house for cash (well what else would you use...gold ?) so we are to assume you dont need a mortgage and can live on one income....
well you are not the ordinary average bloke, who does require a mortgage and two incomes to support it....

on another forum about 2 years ago, this bloke came on saying he earnt 50k pa, had a spouse at home and one child....whinged how could he ever pay off a 450k loan.....and why should the wife go to work etc...but demanded he was entitled to the median house value for a home here...
then about 6 months later, he was bragging, that he had paid cash for a million dollar house in Darwin........
who knows what to believe of some posters....


----------



## MACCA350 (30 July 2009)

kincella said:


> funny about that, here you have been 'going on' about the high cost of housing, how unaffordable it is, you posted the figures yesterday using the one wage theory and prices doubling etc....
> but today that is irrelevant..........



My point was to illustrate what happens if house prices double every 10years as has been suggested so many times and wages double every 20years


> the fact that on a single low wage one could not get a loan, and further to that, they would never be able to save up to pay cash either



Yes and my point was if things continue as they have it will get worse. I gave some possible consequences, do you have an opinion on which would happen or have any other possible outcomes? 



> and now today, you are buying a house for cash (well what else would you use...gold ?) so we are to assume you dont need a mortgage and can live on one income....



I personally don't call credit cash, apologise if it caused confusion


> well you are not the ordinary average bloke, who does require a mortgage and two incomes to support it....



Agreed, but it is irrelevant to my opinion on the state of our housing market



> on another forum about 2 years ago, this bloke came on saying he earnt 50k pa, had a spouse at home and one child....whinged how could he ever pay off a 450k loan.....and why should the wife go to work etc...but demanded he was entitled to the median house value for a home here...
> then about 6 months later, he was bragging, that he had paid cash for a million dollar house in Darwin........
> who knows what to believe of some posters....



Fair enough.

cheers


----------



## gfresh (30 July 2009)

Building approvals out, showing further gains.. 

http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0?OpenDocument

Quick chart.. VIC never really suffered much of a downturn.. QLD coming off it's low base.. not much happening in NSW to address supply:


----------



## kincella (30 July 2009)

another friend, bought Sep 04 outer eastern  suburbs Melb for 240k, borrowed 200k's, mv now almost 5 years later 450....almost doubled (the market was flat back to zero at that time) so she bought low, and fixed a low rate for 5 years of under 7%....paid extra capital off the loan, the loan balance now 130k's, looking to buy a bigger house for 600k's....so now has 320 k's cash (started with 40, paid about 50k's interest, put in another 70 capital)
buy next house (upgrading) say 600k, less 320 deposit, borrows 280...she will probably get a fixed loan around 5.5 or 15400 interest pa.....
so the new loan is only 80k's higher than the original, and she is earning a stack more money than 5 years ago....
was she just lucky, prudent, smart...and now that will be their home for the next 20 years, while they are nesting......

extract...........

*First-home buyers willing to live in outer suburbs*
Stevens spoke of the importance for economic recovery of increasing the nation's housing stock, Mr Salt said there was strong demand for cheap housing on the city fringes, The Australian reports.

But property analysts said government fees and charges on new housing developments were an impediment to supply. 

"Migration figures out this week show Australia's population is still growing at record rates, and these people must live somewhere. They go to the most affordable areas, and the fastest growing area at the moment is Melbourne's western front - places like Werribee, where you can still pick up a house and land package for less than $260,000," Mr Salt said.

http://www.news.com.au/business/money/story/0,28323,25856091-5013951,00.html


----------



## Mofra (30 July 2009)

MrBurns said:


> Would be fairer to somehow filter these from the owner occupied properties.
> 
> Impossible so just exclude it from the entire residential sector.
> 
> Watch the market flooded with places for FHB's to live in then



Political reality dictates that this is an unlikely scenario. As one politician said not long ago, rising house prices = happy voters. K Rudd has shown he's more than happy to keep splurging cash if it makes him popular with the rank & file; judging by the recent polls, it's working.


----------



## kincella (30 July 2009)

this from Morrel and Koren...the buyers advocates........
so lets forget about graphs....it may have more to do with people sick of the stockmarket, and lack of supply of good  quality housing on the market....

an extract.......................
If you were looking for evidence of the strength of the market, you could have spent an instructional half hour at 49 Urquhart Street, Hawthorn on Saturday. It’s a good 20’s style home, north facing, and ticks a lot of boxes. The quote range was $1.4-1.6 million. It was on the market at $1.7 million and sold for $2,110,000.

What makes that instructional is that there were four parties still bidding beyond $2 million.

It breaks all records for the area. It suggests that the market has in many cases passed the peak of the 2007 boom and, if anything, is still moving up.

We spoke to one of the underbidders – still in a state of shock – who thought $2,050,000 would have been enough to buy the property. Bewildered and frustrated, they just want to buy a house and there are none for sale. They’re reaching boiling point.

In real estate terms, Melbourne appears to have repealed the law of gravity. We’re defying national and international trends and historic norms of what’s affordable.

What explains it?

Scarcity is the great contributor (no prizes for pointing that out), but no matter how scarce, buyers still need money and, theoretically, there’s not a lot of that about.

Peel a few layers from that onion (we’re still in the kitchen) and you start to uncover some significant exceptions:

there’s the just plain wealthy and they’re still rich 
there are people such as medical specialists who have done well, who continue to do well, and who had planned to use the downturn to trade up 
there are younger couples who are being underwritten by parents who believe there is more benefit in helping their kids now than by making them wait ’til the will is read 
there’s the view expressed by a client of ours that he needs a house for 300 sleeps a year and they may as well be good ones because he doesn’t get that out of a stock certificate – suggesting there has been some flight from the stock market 

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


----------



## trainspotter (30 July 2009)

*Hey Hey Hey it's the Sunshine and Lollipops Brigade*

A 4.5 per cent increase in Australian home values in the first half of 2009 heralds good news for the property market with improvements being recorded across all market price segments according to the combined RP Data-Rismark National Home Value Indices out today.

RP Data national research director Tim Lawless confirmed that prices improved across all price segments over the last six months, however growth is moderating as we move into the second half of 2009. 

Rismark International managing director Christopher Joye said “Outside of cash, Australian residential property has proven to be a safer store of wealth for households than shares or commercial property.” 

Mr Lawless said “The recovering residential environment comes as consumer and business confidence records large improvements. Housing finance approvals are trending upwards for both owner occupiers and investors, and auction clearances are averaging more than 70 percent across the nation.”


----------



## moses (31 July 2009)

tech/a said:


> Moses How many did you end up buying?



Not enough. Only one since I wrote that, but more on the way. 

Our plans were scuppered when the market fell over and suddenly there were no buyers for my subdivision which consequently stuffed cashflow, values and removed a source of deposits. Bugger. 

My real mistake was to try property development (subdivision) in hope of a higher quicker return. It seemed like a good idea then, but I've found I just don't have the time to make it happen and then got caught by the downturn before selling a single block. That mistake even forced me to sell an IP I'd rather have kept in a falling market (not good). We've hung on, swapped a country property for a rental city residence to refinance and are now back in the sharemarket. We hope to get our blocks moving in the spring which should provide deposits for the next round of IPs.


----------



## kincella (1 August 2009)

this is one terrific read, it has messages for both bulls and bears, pick the next hotspot....St Kilda is mentioned, Robots you will love it, and many spots in Sydney that will be known to Beej...
even Albury is noted as a hot spot.....
funny thing is some of us have known this for a few years now, so its good to see the valuers finally catching on...
reminds me..must check out Colliers for Commercial property, see how their hot spots are going
http://www.htw.com.au/Downloads/Files/210_August_2009_Month_In_Review.pdf


----------



## trainspotter (1 August 2009)

Geraldton. Oakajee announcement

http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=157388


----------



## robots (1 August 2009)

hello,

well good evening and hope all enjoyed the day

thanks KIncella, great report and amazing commentary on St Kilda, it sure comes down to location location location

hey hey hey hey hey hey:

http://www.news.com.au/heraldsun/story/0,21985,25863985-661,00.html

the greatest financial event and some say bigger than 1929 and presto bricks & mortar shine again, this is amazing, just amazing

median unit price up 8.3%, cant even remember that posters name who keeps hounding me on it

a HUGE well done to those in the scene, Gav and Frink have timed it well most likely

thankyou
professor robots


----------



## robots (1 August 2009)

hello,

more great reading:

http://www.theage.com.au/national/housing-market-rebounds-20090731-e4k8.html

well done everyone, the $ just keep rolling, this is so easy

amazing, well done again

thankyou
professor robots


----------



## kincella (1 August 2009)

well Robots, if you liked that one, you will like this one too, Port Adelaide grew by 29% this year...

Suburbs home to high prices
 Bridget Carter | August 01, 2009 
Article from: The Australian 

THEY are the postcodes people never want to leave.

It's these boutique suburbs - the ones between five kilometres and 15km from big city centres and home to upwardly mobile people with secure jobs - that are driving what Reserve Bank governor Glenn Stevens fears is a property bubble. 

Research commissioned by The Weekend Australian from RP Data shows capital gains of as much as 29 per cent in the year to May in the nation's "middle band" suburbs, despite the national economic downturn. 

Agents and analysts say the strong demand for the boutique suburbs will remain until next June, and reject concerns by Mr Stevens, who on Tuesday flagged the risk of a property bubble inflated by the current low interest rates and the first-home buyer grant
*****Raine and Horne South Australia state manager Kevin Magee said extra infrastructure around Port Adelaide and defence spending was driving capital gains. RP Data found Nailsworth, in the Adelaide Hills, recorded the greatest capital gain in the country, of 29 per cent.
the above are extracts only...read the full story for your state

http://www.theaustralian.news.com.au/business/story/0,28124,25865099-25658,00.html


--------------------------------------------------------------------------------
.
The owner of McDonalds once asked Harvard students if anyone knew how he made his money.
They answered easy, making hamburgers. 
No he replied. I own the best real estate in every capital city in the world>*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer..


----------



## kincella (3 August 2009)

I bet some of you can relate to this.....people so frightened that if they sell the old home to upgrade, they will not find their next home, so they are holding the old home (due to good returns from the low rates) and just buying the next home...so at least they are guaranteed to have a home....so in fact are increasing their property holdings....thats my strategy as well.....interesting

extract................
In Melbourne, buyer advocate JPP says in its newsletter that as interest rates remain on a par with rental returns many people are simply buying their next home and not selling their existing one. We are about to see a fundamental change in property ownership during the next generation, it says, with people who have property increasing their holdings and those who have never had the opportunity to get into the market. 

The supply of housing has been a long-term issue in Australia, but Stevens's comments highlight just how crucial it will be in a new, more frugal economy. 

http://www.theaustralian.news.com.au/business/story/0,28124,25862876-25658,00.html


----------



## trainspotter (3 August 2009)

*Hey hey hey put away the umbrella and come out to play*

REAL estate group Ray White says prestige property sales have rebounded after falling during the economic downturn. In a sign top-end buyers are returning to the market, Ray White chairman Sam White said there was a revival in the prestige sector although it did not release actual figures.

But Mr White said the market has "definitely dusted itself off'' from the worst of the global financial crisis.

He said sales of prestige properties had been given a boost by the shortage of lower-end properties as a result of the first home owners grant. He said first home buyers were now looking at properties priced in the $500,000 to $750,000 price range.

"Buyers are recognising that there is a rare chance now to get into the top-end of the market and save between 10 to 15 per cent and achieve benefits in the long term,'' Mr White said.

He said the renewed activity came from long-term investors and overseas interest. The company said a Sydney property priced at more than $6 million was recently bought by a British man the day it went on the market.

The statement from Ray White comes amid a swathe of positive economic news.


----------



## MACCA350 (3 August 2009)

trainspotter said:


> He said first home buyers were now looking at properties priced in the $500,000 to $750,000 price range.



"DANGER Will Robinson, DANGER!!"

cheers


----------



## Buckeroo (3 August 2009)

MACCA350 said:


> "DANGER Will Robinson, DANGER!!"
> 
> cheers




Yea, I agree - this guy must be lost in space somewhere. Maybe close to the sun?

Cheers


----------



## Mc Gusto (4 August 2009)

MACCA350 said:


> "DANGER Will Robinson, DANGER!!"
> 
> cheers




absolutely! so first home buyers are now looking at houses 500 - 750k??! wonder what the average income / deposit and general history of savings looks like for these buyers..? You'd want to hope it was strong!

Thanks

Gusto


----------



## Beej (4 August 2009)

Mc Gusto said:


> absolutely! so first home buyers are now looking at houses 500 - 750k??! wonder what the average income / deposit and general history of savings looks like for these buyers..? You'd want to hope it was strong!
> 
> Thanks
> 
> Gusto




I am sure *some* FHBs are looking in this range, but *most* are not. I know people with a $200k deposit and a dual income of $150k plus that are looking in this range; but I think they would be in the top 10-20% of FHBs.

In other news just in see (http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument) - the ABS stats are finally catching up with what has been happening in the housing market, with *the ABS June quarter house price index showing a 4.2% INCREASE nationally* - note this is more than the APM, Residex and RP-Data figures for the June quarter, which makes them all about the same for the half year so far given the ABS negative result (which has been revised upwards by the way from -2.2% to -1.5%) for the March quarter, which was in contrast to the other indices.



> ESTABLISHED HOUSE PRICES
> 
> Quarterly Changes
> * Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities increased 4.2% in the June quarter 2009.
> ...




So every cities detached house prices up including Perth and Brisbane, which I didn't think would happen, but there you go. Sydney/Melbourne leading the way, and Darwin finally slowing down a little.

Looks like Ass Prof. Steven Keen is going for a long walk! I've seen bad calls in my time but that one really takes the cake.

Cheers,

Beej


----------



## trainspotter (4 August 2009)

Buckeroo said:


> Yea, I agree - this guy must be lost in space somewhere. Maybe close to the sun?
> 
> Cheers




Ray White chairman Sam White should change his name to Icarus.


----------



## Mofra (4 August 2009)

Beej said:


> Looks like Ass Prof. Steven Keen is going for a long walk! I've seen bad calls in my time but that one really takes the cake.



Are you talking the selling of house many months after he called the financial crisis (which admittedly he got right eventually after a few years of predictions) thereby catching the dip in prices, the immediate jump in prices in his area the quarter following the sale, or they signs of life that are emerging from many markets worldwide?


----------



## kincella (5 August 2009)

must make it very hard to buy a home over there, in the wild old USA, for those at the bottom of the scales
and do they only get the dole for 6 months at a time ??

Rich v poor gap is widening
Leela de Kretser

August 04, 2009 12:00am
IT IS often noted that, as the world's most powerful economy, the US has left its poorest citizens living in a virtual third world.

In New York, despite all the money that was made on The Street in the past three decades, almost 20 per cent of families live below the federal poverty line. 

In a six-block radius bounded by Fifth and Park Avenues, the wealthiest households in the country earn a median income of $US188,697 ($A225,400), according to an analysis of census data by the New York Times. 

Sixty blocks up the road, in East Harlem, the country's poorest households depend on an annual median income of $9320
http://www.news.com.au/heraldsun/story/0,21985,25876937-664,00.html


----------



## kincella (5 August 2009)

notice how we have been leading with the housing recovery...now the US is beginning to follow
if you study the charts thoroughly, you will have noticed the trend.....
those who followed the media instead....would be the losers
now the media is back to screaming about a bubble again...
modest gains in Syd and Melb of 4-5% is not a bubble....
its a shortage of houses....in the most populous places...where everyone wants to live....
you can buck the trend and go further out...go past the magical 15klm's from the city....find affordable housing there....then sit back and watch as the city has to move further out
I dont believe states will do anything soon to relieve the shortage


----------



## Beej (5 August 2009)

Mofra said:


> Are you talking the selling of house many months after he called the financial crisis (which admittedly he got right eventually after a few years of predictions) thereby catching the dip in prices, the immediate jump in prices in his area the quarter following the sale, or they signs of life that are emerging from many markets worldwide?




 Yes Mofra you are right - there were quite a few dud calls from our friend Prof Keen! I was referring specifically though to his "median house prices in Australia to fall 40%" that got so much publicity last year.  

I think technically Prof Keen hasn't lost his bet with Rory Robinson yet based on ABS data, as the national median needs to surpass the previous peak (and we are currently 1.5% below that). I reckon the Q3 ABS numbers should seal his fate re that wager though. He has already lost based on the RP-Data, APM and Residex numbers, which seem to lead the ABS stats it seems by a couple of months in terms of what's happening in the market.


Cheers,

Beej


----------



## gfresh (5 August 2009)

It would be embarassing for SK.. the media will be all over it, front page material maybe?  Then again, if you make big bets, you gotta carry through if they go wrong.



			
				kincella said:
			
		

> I dont believe states will do anything soon to relieve the shortage




Queensland has a bit of a master plan in the works to expand out west towards Ipswich and some higher density in the north of Brisbane.. I am not sure if it will carry through to effective managemnet but they are definitely wetting themselves over the growth forecasts that are out there and what to do about it.


----------



## kincella (6 August 2009)

added extra...heard on news this week, more exemptions for foreigners to buy OZ property, and businesses...mentioned 180 million...or more
interesting....will post link when I can find it...now back to this article.....
increasing competition out there...now this as well...

CHINESE developers could soon be circling cheap residential land on offer in Australia, with many already trawling through bargain-priced assets in the US, according to the new Asian head for real estate firm CB Richard Ellis.

Residential land sites in Australia, particularly in Queensland, have been severely discounted, with few parties able to develop them, given the banks' tight lending criteria. 

As a result, many owners are opting to sell up, rather than pay steep holding costs while they wait for the market to rebound. 

http://www.theaustralian.news.com.au/business/story/0,28124,25888419-25658,00.html


----------



## Buckeroo (6 August 2009)

kincella said:


> CHINESE developers could soon be circling *cheap residential land on offer in Australia*, with many already trawling through bargain-priced assets in the US, according to the new Asian head for real estate firm CB Richard Ellis.
> 
> Residential land sites in Australia, particularly in Queensland, have been severely discounted, with few parties able to develop them, given the banks' tight lending criteria.




Cheap land? - where? 

The reason why no developers here in Australia are developing is because its too expensive & there is no one in this country who can afford to buy it, particularly once interest rates start climbing.

So why would the Chinese be silly enough to buy land other developers are off loading?

And of course there are heaps of experts out there telling us how lucrative property is at the moment.....mmmm I wonder why!

Cheers


----------



## knocker (6 August 2009)

kincella said:


> added extra...heard on news this week, more exemptions for foreigners to buy OZ property, and businesses...mentioned 180 million...or more
> interesting....will post link when I can find it...now back to this article.....
> increasing competition out there...now this as well...
> 
> ...




Just what we need. Australia soon to be renamed Chinaustria, a satellite communist state.  No need for Krudds immigration policies now.


----------



## Mc Gusto (7 August 2009)

I am struggling with the fact that Australia can be seemingly so decoupled from the global economy. Seems we are defying gravity with house prices, unemployment etc.

Is it sustainable? Are we delaying the inevitable or will it all come to a grinding halt and the effects of the global downturn be trully felt.

Lets face it - for a lot of us it is a matter of 'recession, what recession..?'

This is not meant in anyway to undermine the people who have lost their jobs or houses due to the industry they work in. More about Australia as an economy. 

I am absolutely miffed as to the confidence people are showing in bricks and mortar just at the moment. Long term no issue. Short term i remain bearish as i am thinking the most recent gains are a bubble.

Thanks

Gusto


----------



## robots (8 August 2009)

hello,

wow:

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

its on again, and when rates go up we get extra as well, costs extra so nothing really changes

this is amazing, well done brothers, australia the place to be

thankyou
professor robots


----------



## robots (8 August 2009)

hello,

i still havent heard from Satanoperca regarding my reward from the bet i accepted

will report this poster to the Code of Conduct panel for a resolution

thankyou
professor robots


----------



## MrBurns (8 August 2009)

robots said:


> hello,
> 
> i still havent heard from Satanoperca regarding my reward from the bet i accepted
> 
> ...




He's probably getting quotes on slabs and parmas


----------



## MrBurns (8 August 2009)

Mc Gusto said:


> I am struggling with the fact that Australia can be seemingly so decoupled from the global economy. Seems we are defying gravity with house prices, unemployment etc.
> 
> Is it sustainable? Are we delaying the inevitable or will it all come to a grinding halt and the effects of the global downturn be trully felt.
> 
> ...




It is a bubble, very strange goings on indeed, when interest rates go up and the housing grant bribe is removed we will see a different scene.


----------



## knocker (8 August 2009)

robots said:


> hello,
> 
> wow:
> 
> ...




wow robi, you must be on some good **** today. well done bro.


----------



## Beej (8 August 2009)

MrBurns said:


> It is a bubble, very strange goings on indeed, when interest rates go up and the housing grant bribe is removed we will see a different scene.




Oh is that what we are waiting for now? I thought it was bank collapses and credit rationing? Oh hang on that didn't happen, then wasn't it meant to be mega-high unemployment and a wave of foreclosures/bankruptcies?/forces-sales? Oh hang that hasn't happened either.... 

So now it's back to waiting for high interest rates and no FHB grant boost is it? You mean just like we had in mid-2008, plus a full blown global financial crisis, crashing stock market, contracting GDP etc at the same time as well?? And yet prices barely fell then and have now come back?? Strange isn't it?

In the meantime Sydney auction clearance rate 74% today.....

PS: An article from Chris Joye about the so called "bubble" calls on AU resi real estate: http://www.businessspectator.com.au...-trouble-pd20090807-UNVWK?OpenDocument&src=is

Cheers,

Beej


----------



## MrBurns (8 August 2009)

Beej said:


> Oh is that what we are waiting for now? I thought it was bank collapses and credit rationing? Oh hang on that didn't happen, then wasn't it meant to be mega-high unemployment and a wave of foreclosures/bankruptcies?/forces-sales? Oh hang that hasn't happened either....
> So now it's back to waiting for high interest rates and no FHB grant boost is it? You mean just like we had in mid-2008, plus a full blown global financial crisis, crashing stock market, contracting GDP etc at the same time as well?? And yet prices barely fell then and have now come back?? Strange isn't it?
> In the meantime Sydney auction clearance rate 74% today.....
> Cheers,
> Beej




We were always waiting for the bribe to cease but Rudd the Wrecker extended it to get some more adulation, the rise in interest rates is just the sealer of the deal.

Both events are coming just wait for it.

I've seen bubbles before but this is the mother of them all.

Clearance rates are up but numbers are down, doesnt really matter nothing will stop whats to come for the housing market.

If you were so confident you wouldnt be so defensive.


----------



## kincella (9 August 2009)

this extract from Christopher joye's article from Beej's post sums it up nicely...
and I note the angst against property rising modestly, however its all safe and sound in the stockmarket again....the stockmarket can rise 50% in a week but we dont hear the word boom, from that crowd do we...

and some iriots on another forum think, govt provided public housing units will bring rents down for everyone, and so crash the property market for investors......
the extract..................

In turn, most of the analysts, strategists, economists, investors and journalists’ business models are built on these asset-classes succeeding. It therefore makes little commercial sense to bludgeon them with the relentless hysterics we hear about housing. 

In contrast, bricks and mortar is easy game. There are few if any institutional constituents to annoy. Just anonymous individual families with little authority and influence. Indeed, if you can spook as many as these retail punters as possible, you might just convince them to put more of their wealth into, say, shares. 

Making unsubstantiated claims about a forthcoming housing Armageddon is a win-win situation. With one hand you distract attention away from the poor performance of your own Australian equities portfolio, while with the other you boost the likelihood of unsuspecting retail money flowing your way.

A related and utterly false allegation that one often hears is that housing investment is “unproductive”. I saw this claim in yesterday’s Australian Financial Review – but it is another one of these very convenient but grossly flawed dogmas that suit certain stakeholders (in the case of the AFR article, those lobbying for better tax treatment for their own businesses).


----------



## MrBurns (9 August 2009)

kincella said:


> this extract from Christopher joye's article from Beej's post sums it up nicely...
> and I note the angst against property rising modestly, however its all safe and sound in the stockmarket again....the stockmarket can rise 50% in a week but we dont hear the word boom, from that crowd do we...
> 
> and some iriots on another forum think, govt provided public housing units will bring rents down for everyone, and so crash the property market for investors......
> ...




I was a real estate agent for over 20 years, real estate is the only asset class I trust but to mindlessly ignore it's booms and busts is just silly, but does make opportunities for those that are more realistic.


----------



## kincella (9 August 2009)

who is mindlessly ingnoring the booms and the busts....are you saying I am ?
well I bought most of the recent properties in 2000 to 2002, sold some in 2004 looking to buy again if and when the heat comes off.....biggest opportunities were missed last year up to Oct.....
and if you hold property for 10 years...you will see booms and busts within that time frame...


----------



## Buckeroo (9 August 2009)

Yep Kincella/Beej, your right - the economy is looking fantastic so you should by all means make the most of it.

But when it turns, I hope you will have the courage to stay & take your licks on ASF?

Cheers


----------



## kincella (9 August 2009)

I have never said the economy is fantastic....I really only comment on housing and the reasons why it holds up....
how is the stockmarket then .....the gambling den...
I believe its just a roller coaster on the economy for another year or more


----------



## Buckeroo (9 August 2009)

kincella said:


> I have never said the economy is fantastic....I really only comment on housing and the reasons why it holds up....
> how is the stockmarket then .....the gambling den...
> I believe its just a roller coaster on the economy for another year or more




Ok fair enough, should have said property market.

But, I'm concerned about the people who are obtaining bigger & bigger loans to purchase homes. And it not because of house prices being overvalued, its because interest rates are abnormally low. This & the government handouts is causing the bubble.

When this bubble bursts (or if you like when interest rates begin rising), it will be horrific not only to these people, but to us investors. So I say phooey to the real estate agents etc who are encouraging the emotive side of people to think they are missing out & coercing them to pay higher prices. 

They won't be missing out on the pain of bankruptcy.

Cheers


----------



## Beej (9 August 2009)

MrBurns said:


> I was a real estate agent for over 20 years, real estate is the only asset class I trust but to mindlessly ignore it's booms and busts is just silly, but does make opportunities for those that are more realistic.




Yep that's exactly right - but I hope you are not suggesting that I have "mindlessly" ignored the property boom/bust cycle? As described in many posts here last year, after watching the market last year I decided that Nov/Dec was likely going to be the best time to upgrade my PPOR, with prices having fallen more heavily in the price range that I was buying into (~$1.5M-$2M range) vs the one I was selling into (2 properties, one ~$1M and one sub $500k). 

Well it turns out that my call was a good one - would you agree? Since I bought my new PPOR, based on recent sales in my area it seems that I have saved/made at least $150k so far by taking this action when I did. So I don't think people like myself and Kincella etc are being naive about the property cycle at all - I think in fact our actual actions and the benefits we have gained from them show that we understand the market (at least in our respective area's) better than most of the un-informed and often near-hysterical commentary you find about the place!

What happens from here? Is there a new boom coming? I actually don't think so. In Sydney at least, after 4-5 years of relative stagnation in nominal prices already (that's hardly a bubble by the way!), I think we are about where the market was in 1991/92 right now. The falls are done, the top-end has taken the hardest hit, there *were* some mega-bargains for those cashed up and with the guts to buy when everyone else was too scared. Prices have since risen again, bargains are now few and far between, and interest rates/government grants etc have put a solid floor under the market. We may well see some more moderate median price declines next year, but they will be small if they happen. After that prices will start to slowly rise again for the next 5 years, probably at something like a 5% pa rate or there-abouts on average. Look at a house price chart from the 90s and you will get the idea IMO. 

Other parts of Australia have risen much more than Sydney in the past 5 years, so the outlook may be a little different for them - but I suspect it will only mean a higher chance of falls next year, followed by less growth (maybe below inflation) for the 5 years after that - or it may not! Maybe the shift in city relative pricing in the last 5 years is permanent??

Cheers,

Beej


----------



## Beej (9 August 2009)

Buckeroo said:


> When this bubble bursts (or if you like when interest rates begin rising), it will be horrific not only to these people, but to us investors. So I say phooey to the real estate agents etc who are encouraging the emotive side of people to think they are missing out & coercing them to pay higher prices.




But Buckeroo - is your memory so short that you have forgotten we already went through the high interest pain thing through 2007 and into mid 2008? Did the housing market collapse then? No - it certainly was under some pressure, and lower priced area's in Sydney in particular struggled and saw prices fall for a while there, but there was no great collapse. Since then over-all house-hold debt levels have actually fallen - so what makes you think rising interest rates in a few years will have any more of an impact than they did in the last 2 years??? What's more, the guys with their hands on the monetary policy levers (ie the RBA), don't want a house price collapse (due to the wider implications for economic growth etc) - so as soon as things start to look too bad in that regard you can bet your last dollar they will not raise rates any further, and will probably cut them again, and the cycle starts all over.....

Cheers,

Beej


----------



## kincella (9 August 2009)

most people are not that stupid to just rely on the low rates, they will have factored in rates of 6.5- 7% as the average....some were very smart, bought low priced houses with low rates...
most commentators including stevens is saying it will be 2 years and the cash rate back to 5%...= 7% loan rates.....thats if the economy is strong....


----------



## Buckeroo (9 August 2009)

Beej said:


> But Buckeroo - is your memory so short that you have forgotten we already went through the high interest pain thing through 2007 and into mid 2008? Did the housing market collapse then? No - it certainly was under some pressure, and lower priced area's in Sydney in particular struggled and saw prices fall for a while there, but there was no great collapse. Since then over-all house-hold debt levels have actually fallen - so what makes you think rising interest rates in a few years will have any more of an impact than they did in the last 2 years??? What's more, the guys with their hands on the monetary policy levers (ie the RBA), don't want a house price collapse (due to the wider implications for economic growth etc) - so as soon as things start to look too bad in that regard you can bet your last dollar they will not raise rates any further, and will probably cut them again, and the cycle starts all over.....
> 
> Cheers,
> 
> Beej




OK, I'll try an answer:

Australia's interest rates then were never as low as they are now, granted they are not 1% such as in the US, but it does set the scene for some turbulent times particularly when coupled with the near panic response caused by the first home buyers handouts.

The problem lies in the capability of people to absorb increases in interest rates. The first home buyers for instance, how much do you reckon they can absorb? Maybe 5%? After that its free fall. And yes, they aren't stupid, they are though, gullible because of their inexperience.

Anyway, you shouldn't rely on recent boom history as an indication of things to come, its pure folly. 

Its far more realistic to think of how things will pan out with the current circumstances. For instance, higher taxes, higher interest rates, high indebtedness of consumers, loss of incentives from the Government and the stimulus construction program (will drive up building costs). 

Incidentally, they weren't high interest rates in 2007, they were just in the normal monetary band to combat minor inflation. And yes debt levels have fallen slightly - only because wisely, people are beginning to save and it will continue. And wasn't it Stevens & economists that have been getting everything wrong?

I invest in real estate, have been for 30 years and am worried about the future - I can't see anything rosy for quite some time.

Cheers


----------



## Beej (9 August 2009)

Buckeroo said:


> OK, I'll try an answer:
> 
> Australia's interest rates then were never as low as they are now, granted they are not 1% such as in the US, but it does set the scene for some turbulent times particularly when coupled with the near panic response caused by the first home buyers handouts.
> 
> ...




These were all the exact same arguments people were making back in 2000 when interest rates were about 1% higher than they are now.....

Look - since 2007/08 (only 1 year ago) the FHB buying of the past 9 months hardly changes anything - you are talking about ~100,000 new home owners, of whom at least 60,000+ would have bought anyway even if there were no grants and so on. So out of the 8M Aussie households, or out of even the 1/3 of them with a PPOR mortgage (= ~3M let's say), that 40,000 recent grant induced FHB group represents only 0.5% of total households, or 1.3% of mortgaged households. As you can surely see, things have not changed *that* much - so we know that even if interest rates hike back up to 9% again like last year, we have already seen what impact that would have. Rates will NOT go higher than this unless we really start to have a serious inflation problem down the track - in which case wages will be going up as fast anyway and all that mortgage debt will get inflated away. 

So in either case it's not going to matter *that* much - certainly that scenario is not going to be the trigger for a crash/collapse.

PS: At current debt levels, 9% was considered to be "high" - high enough to be a major factor in the change of commonwealth government; just think about the implications of that for the future for a minute.....

Cheers,

Beej


----------



## gfresh (9 August 2009)

Yeah, what I was going to say.. FHB who have bought in the last 12 months aren't going to be enough the entire housing market down even if every single one had to sell. It's been a large percentage of houses sold in the last 10 months, but as the entire market 1 year worth of sales is still only a fraction of total homes.


----------



## Dowdy (9 August 2009)

gfresh said:


> Yeah, what I was going to say.. FHB who have bought in the last 12 months aren't going to be enough the entire housing market down even if every single one had to sell. It's been a large percentage of houses sold in the last 10 months, but as the entire market 1 year worth of sales is still only a fraction of total homes.




But people are forgetting the the FHB are they only ones keeping the housing industry strong these days. 

When interest rates rise and the government grant goes and the FHB market crashes, then there goes the market and we'll see a normality in prices


----------



## robots (9 August 2009)

hello,

and that will be an even better time for the HOLDERS of property Dowdy, the q at the door will be fantastic

thankyou
professor robots


----------



## Buckeroo (9 August 2009)

Beej said:


> These were all the exact same arguments people were making back in 2000 when interest rates were about 1% higher than they are now.....
> 
> Look - since 2007/08 (only 1 year ago) the FHB buying of the past 9 months hardly changes anything - you are talking about ~100,000 new home owners, of whom at least 60,000+ would have bought anyway even if there were no grants and so on. So out of the 8M Aussie households, or out of even the 1/3 of them with a PPOR mortgage (= ~3M let's say), that 40,000 recent grant induced FHB group represents only 0.5% of total households, or 1.3% of mortgaged households. As you can surely see, things have not changed *that* much - so we know that even if interest rates hike back up to 9% again like last year, we have already seen what impact that would have. Rates will NOT go higher than this unless we really start to have a serious inflation problem down the track - in which case wages will be going up as fast anyway and all that mortgage debt will get inflated away.
> 
> ...




Ok Beej, we could go argument/counter argument for some time & still won't change our positions on property. I suppose the future will finally give the correct answer

Cheers


----------



## robots (9 August 2009)

hello,

here we go Beej, another 12mths, 24mths, 36mths for "it" to occur

special word out to "house prices to stagnate for years", the original back in 2005

paradise for the holders, well done give yourself a pat on the back for the hard work and smart decisions many have made

the one and only top of the list tax free investment vehicle keeps on and on

thankyou
professor robots


----------



## robots (9 August 2009)

Buckeroo said:


> Yep Kincella/Beej, your right - the economy is looking fantastic so you should by all means make the most of it.
> 
> But when it turns, I hope you will have the courage to stay & take your licks on ASF?
> 
> Cheers




hello,

i am still waiting for an ASF member to take the licks at the pub but has gone quiet

thankyou
professor robots


----------



## Buckeroo (9 August 2009)

robots said:


> hello,
> 
> i am still waiting for an ASF member to take the licks at the pub but has gone quiet
> 
> ...




Hasn't turned yet dummy!

As soon as it does, I will take your offer at the pub - thanks

Cheers


----------



## MACCA350 (9 August 2009)

robots said:


> hello,
> the one and only top of the list tax free investment vehicle keeps on and on



And right there is part of the problem and a right sting in the tail for the present and future home ownership dreams of our average citizens..........why, because it inflates prices.........less investment geared incentives = less investors = less demand = lower prices.

They need to get the balance right, at the moment housing is like candy to investors..............and it should be like meatloaf

cheers


----------



## robots (9 August 2009)

Buckeroo said:


> Hasn't turned yet dummy!
> 
> As soon as it does, I will take your offer at the pub - thanks
> 
> Cheers




hello,

wasnt talking about you but another poster who put a bet on the table, i accepted and WON bigtime, bigtime

poster disappeared, my word is bond unlike other forum users

thankyou
professor robots


----------



## Largesse (9 August 2009)

robots said:


> hello,
> 
> wasnt talking about you but another poster who put a bet on the table, i accepted and WON bigtime, bigtime
> 
> ...





Robots,

A True Gentleman. Gracious in victory, even when the lesser man will not honour his wager.

The world needs more Men like yourself.


----------



## grace (9 August 2009)

Those who say that interest rates at 2007 were high are just plain crazy.  I paid 11.5% (and up to 13.5%) variable on my first home loan in the early 90's.  Put down 30% deposit and had a very good job.  I shopped around at the time and that was the best rate going.  

The other interesting thing is that FHB's are currently gaining their loans at 95% debt and 40% with personal guarantees from Mum and Dad.  Normally this would be 5% with personal guarantees from parents.  I can see some big problems coming there.


----------



## knocker (9 August 2009)

robots said:


> hello,
> 
> wasnt talking about you but another poster who put a bet on the table, i accepted and WON bigtime, bigtime
> 
> ...




Well done robots. You are an absolute legend in your own lunch time.


----------



## aleckara (10 August 2009)

grace said:


> Those who say that interest rates at 2007 were high are just plain crazy.  I paid 11.5% (and up to 13.5%) variable on my first home loan in the early 90's.  Put down 30% deposit and had a very good job.  I shopped around at the time and that was the best rate going.
> 
> The other interesting thing is that FHB's are currently gaining their loans at 95% debt and 40% with personal guarantees from Mum and Dad.  Normally this would be 5% with personal guarantees from parents.  I can see some big problems coming there.




Hi Grace,

A few bad assumptions here. Firstly don't be so naive to suggest that most parents help their children into a home. In fact most "parents" I've met are thinking about their retirement and think their children are spoilt and have it "so much easier than them". It's what all parents think most of the time. With many family breakups happening all across the country I don't see the large population of parents equipped to do this.

High interest rates are better for home buyers anyway. Because in this country a stimulus doesn't result in too many houses built due to governmental constraints, profit gouging and many other things as soon as interest rates fall or grants are given the price rises to accommodate the new money in the market. At least with a high interest rate your savings account can beat house price inflation and you have an incentive to save for a new deposit. There are many FHB's that feel helpless to save for a deposit. As they are saving the house is getting further and further away from them since their accounts are not beating the growth rate in the housing market. Many people are "scared" that it will rise more and when buyers feel helpless like this the FHB works so well. Having money now means you can get on the train quick before it is too late.

I think the whole FHB in general is a bad idea. It definitely does increase the interest rate sensitivity of the country as many borrowers can't afford higher rate repayments.


----------



## Mc Gusto (10 August 2009)

sunshine and lollipops....lets just keep paying more for houses..it's keeping the economy afloat isn't it?

AUSTRALIAN house prices were overvalued by between 5 and 15 per cent even before prices surged another 4 to 5 per cent in the June quarter, the International Monetary Fund has warned.

The IMF's annual review of Australia has issued a sharp warning for the first time that the high and rising levels of household debt and net foreign debt make it vulnerable to a sudden collapse in the confidence of global investors.

''Australia's persistent current account deficit, sizeable short-term external debt, and the worsening households' balance sheets were seen as vulnerabilities,'' the IMF's board concluded.

A similar warning was delivered by IMF staff who visited Australia in June to meet Treasurer Wayne Swan, Reserve Bank governor Glenn Stevens and senior officials.

''In the past, Australia has readily financed its current account deficit, but global capital markets and the availability of capital have become more challenging,'' the staff report said.

''Staff projects an increase in net foreign liabilities to 70 per cent of GDP by 2014, assuming current account deficits of about 4 per cent of GDP are sustainable.''

If markets decide they are not, the report warns, a capital shortage could reduce future growth.

Neither the staff nor the board proposed ways to reduce Australia's dependence on debt, other than to urge the authorities to lean on the banks to reduce their short-term foreign debt - which banks are already doing.

The IMF's concern matches the views put by Mr Stevens last month, when he warned that Australia and the world would have to get used to working with less debt and ''scarcer and more expensive credit'' in future.

The IMF praised the Rudd Government for its fiscal stimulus, calling it a ''timely policy response, which has effectively cushioned the impact of the global financial crisis on the Australian economy''.

It estimates that, while the discretionary fiscal easing will amount to more than $100 billion or 8 per cent of GDP by 2012, the benefit the economy derives from it will be close to 10 per cent of GDP over that time.

But it forecasts that Australia's recovery will be slower than Treasury and the Reserve Bank predict, with growth of minus 0.5 per cent this year, 1.5 per cent in 2010 and 2.8 per cent in 2011.

If so, it says, the Government's debt will take longer to repay than Treasury forecasts, with net debt in 2019 likely to be 10 per cent of GDP rather than the 4 per cent officially predicted.

http://www.theage.com.au/national/debt-a-threat-to-growth-says-imf-20090809-ee9x.html


----------



## MrBurns (10 August 2009)

Mc Gusto said:


> sunshine and lollipops....lets just keep paying more for houses..it's keeping the economy afloat isn't it?
> 
> AUSTRALIAN house prices were overvalued by between 5 and 15 per cent even before prices surged another 4 to 5 per cent in the June quarter, the International Monetary Fund has warned.




But when will it correct ?
I will be one hell of a correction when it does.

Ever time I go to an open for inspection it's almost all Chinese people attending, I think KRudd is smuggling them in overnight then when it reaches a certain saturation he will get up one morning and only speak Chinese from then on and welcome us to the new Australia.


----------



## grace (10 August 2009)

aleckara said:


> Hi Grace,
> 
> A few bad assumptions here. Firstly don't be so naive to suggest that most parents help their children into a home. In fact most "parents" I've met are thinking about their retirement and think their children are spoilt and have it "so much easier than them". It's what all parents think most of the time. With many family breakups happening all across the country I don't see the large population of parents equipped to do this.




The 40% of FHB's with parents giving personal guarantees are current stats coming from the Banks.  I'm very worried for both the FHB's and the parents in relation to this.  I can see a heap of pain coming for both parties.


----------



## satanoperca (10 August 2009)

robots said:


> hello,
> 
> wasnt talking about you but another poster who put a bet on the table, i accepted and WON bigtime, bigtime
> 
> ...




And who would you be referring to?



Largesse said:


> Robots,
> 
> A True Gentleman. Gracious in victory, even when the lesser man will not honour his wager.
> 
> The world needs more Men like yourself.




Grow up and don't make assumptions about someone who you know nothing about.

Robots, I have a life outside ASF and do not always check. Try sending mail before you assume that I would not honour the bet.

I will contact you privately about catching up on the weekend down in St Kilda with a case of beer and parma at the local. Gee you won big time!!!

Yes, you won the bet, RE was up for the first six months of the year, but still down YoY according to the weighted average supplied by the ABS.

Given the following :
   Historically low interest rates
   Government handouts everywhere
   Low unemployment 
   A biased media
   Freely available credit

I cannot understand why they didn't go up even more. When one or more of these conditions changes, will they be able to keep going up. Only time will tell.

Given the above, are you willing to place another wager on property prices, you can come up with the terms and conditions?

Cheers


----------



## MrBurns (10 August 2009)

satanoperca said:


> And who would you be referring to?
> Grow up and don't make assumptions about someone who you know nothing about.
> Robots, I have a life outside ASF and do not always check. Try sending mail before you assume that I would not honour the bet.
> I will contact you privately about catching up on the weekend down in St Kilda with a case of beer and parma at the local. Gee you won big time!!!
> ...




I didnt think you'd disappeared, your earlier comments about the bet didnt sound like someone who would avoid the cost of a few beers and a parma.

You're right on the housing even the IMF is warning us now, this could be VERY nasty, I've seen housing slumps before but I'm getting a real bad feeling about this one.


----------



## trainspotter (10 August 2009)

_*Stimlus, rates drive rise*_ Posted Tue Aug 4, 2009 12:03pm AEST 

http://www.abc.net.au/news/stories/2009/08/04/2645528.htm

Mr Christopher says it is clear that Federal Government and Reserve Bank policies are driving the sharp price rises.

"The reason why we're having this rise is because of macro factors, being the cuts in interest rates and the expansion of the First Home Owners Grant scheme," he said.

Louis Christopher also expects the price rises to continue over the next few months.

"I believe that the next quarter, being the September quarter, we are likely to see further rises," he said. 

"When we look at the most recent short-term indicators, such as auction clearance rates, stock on market levels, housing finance, they're all indicating right now that this current quarter is also experiencing house price rises."

He thinks the size of the bounce may cause the RBA and Government to look closely at how they can contain the price explosion if it does persist beyond the current quarter.

"Over the medium to long-term, this certainly raises some key questions for the Federal Government and the Reserve Bank of Australia," he said. 

*"Clearly having prices rising at nearly 5 per cent a quarter, each quarter, is not sustainable, and it certainly risks building another housing bubble."*

The Reserve Bank governor, Glenn Stevens, already gave a stern warning in a speech last week about the dangers that a lack of home construction and the consequent rise in existing house prices would pose for Australia's economic recovery.


----------



## satanoperca (10 August 2009)

Flip of a coin :

Heads - housing led recovery
Tails - housing led recession

The coin is still in the air.


----------



## MrBurns (10 August 2009)

satanoperca said:


> Flip of a coin :
> 
> Heads - housing led recovery
> Tails - housing led recession
> ...




Recovery ? I think it's over recovered to buggery.


----------



## satanoperca (10 August 2009)

http://news.brisbanetimes.com.au/breaking-news-business/aussie-average-new-mortgage-highest-ever-20090809-ee0y.html

Average mortgage/Average Income = Approx. 7

Sustainable, yes, just don't let IR, unemployment and tax rates increase and government stimulus, credit availability,government revenues, credit growth and debt decrease. 

And if that doesn't work out we can always look to the Dragon to buy the whole country.

Cheers


----------



## robots (10 August 2009)

hello,

thanks Largesse, 

just plodding along and asking the questions, ASF Members List allows you to check up when people last logged and I find it a great resource

no double or nothing for Robots, i like collecting 

wouldnt have a clue about the future direction just in for the ride

won BigTime

thankyou
professor robots


----------



## Beej (10 August 2009)

robots said:


> no double or nothing for Robots, i like collecting




Hey Robots - you could collect, but still make a new bet? I think that's what satanoperca was asking for anyway?

Cheers,

Beej


----------



## robots (10 August 2009)

hello,

yes i know, but i lucked that one and will enjoy it in all its glory when the day arrives

thankyou
professor robots


----------



## satanoperca (10 August 2009)

Thanks Beej, that is what I intended, a new bet, keeps things interesting.

Yes Robots, you will collect as I am looking forward to meeting the man behind the Robot.

Cheers


----------



## robots (10 August 2009)

hello,

look look:

http://news.theage.com.au/breaking-...ck-up-further-in-july-govt-20090810-efhz.html

its even going off its head in China, amazing

well done, this is fantastic

thankyou
professor robots


----------



## kincella (11 August 2009)

this one is for the bears.............some food for thought

if only some could get their hands on those spare bedrooms, there are enough spare bedrooms to look after the population growth for the next 20 years.....sigh and some have two spare rooms....love these reports...so if we all give up our spare rooms, and share them with some strangers then everything will be Ok.......
I wonder why we have spare rooms, are we stupid, did we buy a 3 bedder when we only needed two....or could it be we like having a spare room or two.....
well I love my spare rooms, and they are filled with...whatever I choose...and no way am I going to let a stranger in to share my spare rooms....and I doubt anyone will either...in fact up until 2006 (love the relevant dates, takes them 3 years to tell us news)the people choosing a bigger house with 2 spare rooms, and less people per house has been increasing at an (alarming) ...double the rate....ok so the alarm is for the bedrooms....hehehehehe 

Room to spare as city sprawlsAugust 11, 2009 
A THIRD of Melbourne bedrooms are now unoccupied, according to a state department report.

As the Government extends the city's urban growth boundary by thousands of hectares, a Transport Department report showed there were already 1.3 million spare bedrooms in existing suburbs, enough to accommodate projected population growth during the next 20 years.

Almost 70 per cent of houses within current city limits had extra bedrooms, with the highest proportion in the wealthy eastern and bayside suburbs, and in outer growth suburbs where the blocks are comparatively larger.

The report showed increased wealth had led to homes being built larger than ever, with the number of households having two or more spare bedrooms in the decade to the 2006 census more than doubling. At the same time, the number of people per household had shrunk.

http://www.theage.com.au/national/room-to-spare-as-city-sprawls-20090810-efl6.html


----------



## gav (11 August 2009)

LOL kincella, an 'interesting' article...

Well I have 2 spare bedrooms, doubt anyone would want to sleep in them though - full of old Army gear, my smelly gym gear and my computer.  No way I'd rent it out to strangers, I won't even let family live with me!


----------



## Uncle Festivus (11 August 2009)

satanoperca said:


> Flip of a coin :
> 
> Heads - housing led recovery
> Tails - housing led recession
> ...




I still can't see the point in subsidising existing housing, making them even more unaffordable/expensive - the only way housing is going to lead a recovery if they build new dwellings? Perhaps some of the permabulls can explain it a bit better?



robots said:


> hello,
> 
> look look:
> 
> ...




It's called an out of control stimulis bubble - should be spectacular to watch it burst


----------



## gfresh (11 August 2009)

kincella said:


> and no way am I going to let a stranger in to share my spare rooms....and I doubt anyone will either




I would..


----------



## Mc Gusto (11 August 2009)

Uncle Festivus said:


> It's called an out of control stimulis bubble - should be spectacular to watch it burst




agreed


----------



## trainspotter (11 August 2009)

Wait until this guy comes out to play. Won't be too far away now kiddies. Interest rates are rising as we speak, just call your local CBA. "The days of the 0.25 per cent movement look to be over," Mr Kolenda said. "When the RBA moves again they will probably do so decisively with increases from 0.50 per cent and 1.0 per cent." 

http://www.news.com.au/business/money/story/0,28323,25908717-5016110,00.html


----------



## MrBurns (11 August 2009)

trainspotter said:


> Wait until this guy comes out to play. Won't be too far away now kiddies. Interest rates are rising as we speak, just call your local CBA. "The days of the 0.25 per cent movement look to be over," Mr Kolenda said. "When the RBA moves again they will probably do so decisively with increases from 0.50 per cent and 1.0 per cent."




How sweet it is.......... I think we should only have quotes from this guy in future no more from the housing permabull tossers.


----------



## Mofra (11 August 2009)

MrBurns said:


> How sweet it is.......... I think we should only have quotes from this guy in future no more from the housing permabull *tossers*.



Wow, that lack of housing crash seems to really be stinging


----------



## Mofra (11 August 2009)

Uncle Festivus said:


> I still can't see the point in subsidising existing housing, making them even more unaffordable/expensive - the only way housing is going to lead a recovery if they build new dwellings? Perhaps some of the permabulls can explain it a bit better?



If you're looking for sound economic reasoning, you're out of luck. It's all about votes; as often said in confidence by politicians "rising house prices make for happy voters". 

I tend to be results dirven so I tend to care a little less about the journey than most. If the gummint instead decided to fund emus instead of housing I'd be covered in feathers right now.


----------



## MrBurns (11 August 2009)

Mofra said:


> Wow, that lack of housing crash seems to really be stinging




I was just a little inspired by those comments


----------



## kincella (12 August 2009)

just to give some of you an example of how to become a millionaire....
you need to find a good mentor....heres some clues

THERE'S no doubt property development is a big, lucrative business.

You only have to scan the rich lists from around the world to see the number of multi-billionaires who made their fortunes from property.

Australia is no exception, and many of our wealthiest people made their first million dollars using property.

So where does a budding property developer start?

And budding doesn’t necessarily mean young.

More older Australians are expected to turn to property development and renovation following the recent cut to superannuation deposit limits.

According to the Australian Institute of Architects advice service, Archicentre, cutting the maximum $100,000 super contribution limit to $50,000 is likely to result in a surge in renovation and development activity by baby boomers.

http://www.news.com.au/business/money/story/0,28323,25907417-5013951,00.html


----------



## Taltan (12 August 2009)

Mofra said:


> If you're looking for sound economic reasoning, you're out of luck. It's all about votes; as often said in confidence by politicians "rising house prices make for happy voters".
> 
> I tend to be results dirven so I tend to care a little less about the journey than most. If the gummint instead decided to fund emus instead of housing I'd be covered in feathers right now.




I agree but there are limits, don't you think US, UK, NZ & European politicians also wanted to win elections?


----------



## MrBurns (12 August 2009)

From Crikey, a bit of common sense - 



> Everything's distorted from inside this housing bubble
> Adam Schwab writes:
> 
> We may sound a little like a broken record on Australia’s residential housing market. Based on metrics like disposable income-median property price or relative debt levels, Australian house prices appear extraordinarily expensive. Housing price data is thumbing its nose at our claims, continuing to rise (significantly in the most recent quarter), even as GDP remains stagnant or falls and unemployment edges higher.
> ...


----------



## knocker (12 August 2009)

MrBurns said:


> From Crikey, a bit of common sense -




Not long now before the brown sloppy stuff hits the fan.


----------



## MrBurns (12 August 2009)

knocker said:


> Not long now before the brown sloppy stuff hits the fan.




I think KRudd will prop it up somehow untill he's a long way from an election anyway.


----------



## Mofra (12 August 2009)

Taltan said:


> I agree but there are limits, don't you think US, UK, NZ & European politicians also wanted to win elections?



Yes I do, however we clearly have a different market here which the results thus far attest to.


----------



## kincella (12 August 2009)

some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one.....  house prices keep falling thread....
and leave this thread to the winners....


----------



## MrBurns (12 August 2009)

kincella said:


> some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one.....  house prices keep falling thread....
> and leave this thread to the winners....




This *IS* the losers thread, didn't you see the writing on the wall ?


----------



## satanoperca (12 August 2009)

kincella said:


> some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one.....  house prices keep falling thread....
> and leave this thread to the winners....




Leave it for the playground.

Property is about housing the work engine of an economy, people.


----------



## Mofra (12 August 2009)

MrBurns said:


> This *IS* the losers thread, didn't you see the writing on the wall ?



Yep, Steven Keen did really well out of selling his property at the bottom of the market


----------



## Beej (12 August 2009)

MrBurns said:


> This *IS* the losers thread, didn't you see the writing on the wall ?




Mr Burns if you are so certain of this why don't YOU follow Prof Keens example and sell your $2M Melbourne house and buy a similar one back in a couple of years for half the price, and pocket the difference???

Cheers,

Beej


----------



## moXJO (12 August 2009)

I went to buy a unit in a block of four priced at $195k but it sold the following week (3 weeks on market, about a month ago). Now another unit in the same block is for sale this time for $235k Think I will pass on that unless I can haggle them down. Properties are moving very fast here. Good quality houses are just not coming on the market, and the crap ones that are on there now are expensive+. 

The market down here seems to have swung to extremes the past year.


----------



## MrBurns (12 August 2009)

Beej said:


> Mr Burns if you are so certain of this why don't YOU follow Prof Keens example and sell your $2M Melbourne house and buy a similar one back in a couple of years for half the price, and pocket the difference???
> 
> Cheers,
> 
> Beej




Too lazy of course.

Spoke to someone today who tried to sell their $1.4 m house in Melbourne , marriage breakup, no takers so she bought her husband out, where's the boom there ?


----------



## Buckeroo (13 August 2009)

kincella said:


> some of you guys are on the wrong thread....go back to the losers thread....ahmm...you know the one.....  house prices keep falling thread....
> and leave this thread to the winners....




Fair comment, but this thread would be boring as hell if only the affirmative people where posting don't you think?



> Property is about housing the work engine of an economy, people.




Well said satanoperca, this is such an important point that is lost in the rush to make a buck. Having affordable housing for workers is part of the productivity equation that makes economies thrive.

Cheers


----------



## Mofra (13 August 2009)

MrBurns said:


> Spoke to someone today who tried to sell their $1.4 m house in Melbourne , marriage breakup, no takers so she bought her husband out, where's the boom there ?



Maybe their house is only worth $1.35m


----------



## Mc Gusto (13 August 2009)

Everything’s distorted from inside this housing bubble
by Adam Schwab
We may sound a little like a broken record on Australia’s residential housing market. Based on metrics like disposable income-median property price or relative debt levels, Australian house prices appear extraordinarily expensive. Housing price data is thumbing its nose at our claims, continuing to rise (significantly in the most recent quarter), even as GDP remains stagnant or falls and unemployment edges higher.

Data released by the ABS earlier this week indicated that financing commitments for owner-occupied and investor housing grew by a further 1.8% in June (0.3% on a seasonally adjusted basis).

There have been many ‘reasonable’ explanations provided for ever increasing residential property prices (the median house price in Sydney is now $547,000  ”” almost ten times median income levels). Most common is the ‘supply’ argument: that hundreds of thousands of people are moving to Australia and they need to live somewhere. Or that Australia is a highly urbanized country and this vindicates a median house price which is more than double that of the United States.

Those reasons appear to make sense. But then again, during a bubble lots of things appear to make sense which in hindsight, are ludicrous. Remember the dot.com boom, when it was commonly thought that business over the internet would take over from bricks and mortar? This meant that at one point the loss-making pets.com was worth more than US$100 million before collapsing into liquation after 268 days.

There are two major causes for the recent residential property bubble  ”” first, government meddling (specifically through the first owner’s grant, but also bank funding guarantees). This is providing house buyers with more cash (which is then leveraged up substantially) to purchase their dream home.

The second reason for the bubble is the Big Four banks’ continued willingness to lend money to home buyers on exceedingly generous terms, upwards of 90 percent loan-to-valuation ratios. If banks took a more prudent approach and cut LVRs to say 70 percent, we would witness a rapid, almighty slump in property prices (most notably at the lower end). Banks of course don’t want this, the collateral (security) underpinning the loans they have already made are other houses. Banks don’t usually like to destroy the value of their collateral  ”” it isn’t good for business (or more pertinently, for bankers’ salaries).

The supply argument is not actually incorrect. Supply issues are clearly having a short-run effect on prices. However, eventually (and it may take years for these structural changes to transpire) the supply curve will adjust. If property prices become too expensive, immigrants will opt to relocate to other countries, where the cost of living is more bearable. People will also move further away from expensive cities. Japan is a far more urbanized country than Australia yet since 1991 Japanese city property prices have suffered a remarkable downturn, falling for 15 consecutive years.

It took a decade for Japan’s property boom to finally burst but eventually, supply readjusted and prices plummeted, even in Tokyo, which has a population of more than twelve million but is far smaller in geographical size to Melbourne which has a population of less than four million.

The slow moving supply curve was well explained by Nobel prize winning economist, Robert Shiller in The New York Times recently when he noted:

Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market.

Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.

Among couples sharing a house, for example, any decision to sell and switch to a rental requires the assent of both partners. Even growing children, who may resent being shifted to another school district and placed in a rental apartment, are likely to have some veto power.

Business Spectator and Crikey contributor, Chris Joye, was correct last week when he noted residential property isn’t the only asset bubble ”” witness the dramatic collapse in commercial property prices in Australia (and rapidly increasing vacancy rates) or sharp loss in equity values last year.

However, simply because there are other asset price bubbles which are more obvious and more reactive to economic conditions doesn’t mean that the price of much of Australia’s urban residential property has not far exceeded its intrinsic value.

As long as Australia’s banks have an interest in propping up residential property, the bubble will be tentatively kept alive. However, the risks of this path are significant. As Dan Denning in the Daily Reckoning noted presciently yesterday:

The bigger risk … is that Australia’s banks will become increasingly reliant on rising house prices to spur demand for new mortgages. That’s the process that contributes to earnings and keeps the balance sheet ticking along. The loans made to mortgagees go on the balance sheet as assets. They are funded from money borrowed abroad, which goes on the balance sheet as a liability.

The trouble here is that assets can change in value while liabilities do not. The debt has to be repaid, even if house prices fall. Australia’s banks are gambling with the capital structure of the entire nation, sinking more and more borrowed money into residential housing. It’s the biggest and riskiest bet yet.

Yes. Big, risky and very stupid. As no doubt Japanese banks can attest.

http://www.crikey.com.au/2009/08/12/everythings-distorted-from-inside-this-housing-bubble/


----------



## Beej (13 August 2009)

Mc Gusto said:


> Everything’s distorted from inside this housing bubble
> http://www.crikey.com.au/2009/08/12/everythings-distorted-from-inside-this-housing-bubble/




Already posted by Mr Burns yesterday here:https://www.aussiestockforums.com/forums/showpost.php?p=473991&postcount=5915

As soon as they start going on about the Japanese property market I tune out........ Adam Schwab is wrong - he has been proven to be wong, and he is still wrong. His assumptions about what has happened are wrong and his views on what will happen are wrong.

Beej


----------



## kincella (13 August 2009)

your right Beej, tell them to do some reserch on Japan to find out what the problem is there.....its nothing like our situation at all...
oh and heard two analysts on radio this morning....both say interest rates will not rise before late 2010.....
cause there is all this other bad news still to turn up...to cool things down...in the interim....
oh and I have an extended family member wanting to buy a house....not a new home so only about 14-16000 govt grant....but they are a bit nervous...
so its easier for them if I buy the house and rent it out to them....they get all the benefits of ownership without responsibility....so not everyone is utilising the fhb grant....and the sale will show up as an investor purchase...
give them 5 years of being 'pretend owners' and we shall see how the attitude is after that.....
I have done it for two others in the past....they turned out to be...really positive home owners....then I transfer the house to them, they finance the loans themselves,(they get the house at the original price, and refinance the loan I had) and are then on their way....


----------



## Uncle Festivus (13 August 2009)

Buckeroo said:


> Fair comment, but this thread would be boring as hell if only the affirmative people where posting don't you think?
> Cheers



Usually pop my head up to see what the Latte trio are spruiking this week.....

After 5 years of flat to negative prices, we get a coupla months of stimulis assisted rises and the thread title finally has some truth in it?

So let's take it to the extrapolated conclusion - the median price get's to $1M+, everyone's working 2 jobs to pay for it, and little left over for the rest of the economy. Great standard of living & work/living balance there? Keep those migrants coming....


----------



## kincella (13 August 2009)

??? prices flat or stagnate for 5 years....must be overseas...not australian house prices......maybe some houses...like public housing, or in remote outback areas.....not here...what planet are you talking about
....................................
and this
so whats all this about...house prices rise about 3% and earnings up 6%.....for the past year.....
so where are the crowd that says house prices are too high, and way above the average earnings, for the average bloke ????? well thats never been the case,,,the average earnings are higher than house prices....and has been so for many years now.............

Average weekly earnings near $1200August 13, 2009 - 11:59AM 
Average weekly ordinary time earnings for adult full-time employees rose by 1.2 per cent in the three months to May for an annual rate of 6.1 per cent, seasonally adjusted, the Australian Bureau of Statistics said today.

The quarterly survey also showed AWOTE for the private and public sectors combined was $1196.50.

Private sector AWOTE was up 1 per cent in the quarter at $1174.50, seasonally adjusted, for an annual rise of 6.1 per cent.

Public sector AWOTE rose by 0.9 per cent to $1269.30, seasonally adjusted, in the same period for an annual rise of 5.7 per cent.

http://business.theage.com.au/business/average-weekly-earnings-near-1200-20090813-ej2y.html

There was no market forecast for this series.


----------



## Uncle Festivus (13 August 2009)

kincella said:


> ??? prices flat or stagnate for 5 years....must be overseas...not australian house prices......maybe some houses...like public housing, or in remote outback areas.....not here...what planet are you talking about




Somewhere like, um, remote little town called.... Sydney 



> The weather might be getting a bit nippy but Sydney's real estate agents are basking in the warm glow of recent sales figures showing property prices especially for units and townhouses are finally coming good.
> .........
> 
> The head of research at RP Data, Tim Lawless, says this boost in unit prices is good news for investors, who are now enjoying an annual rental yield of 5.6 per cent.
> ...



So RP Data is or is not reliable??

You property permabulls should get together so you can read from the same script


----------



## Taltan (13 August 2009)

kincella said:


> oh and I have an extended family member wanting to buy a house....not a new home so only about 14-16000 govt grant....but they are a bit nervous...
> so its easier for them if I buy the house and rent it out to them....they get all the benefits of ownership without responsibility....so not everyone is utilising the fhb grant....and the sale will show up as an investor purchase...
> give them 5 years of being 'pretend owners' and we shall see how the attitude is after that.....
> I have done it for two others in the past....they turned out to be...really positive home owners....then I transfer the house to them, they finance the loans themselves,(they get the house at the original price, and refinance the loan I had) and are then on their way....




So alltogether you miss out on the FHB, pay stamp duty twice and pay CGT on a main residence (when u transfer to them)???


----------



## kincella (13 August 2009)

dont really follow Sydney...Beej knows that place, but of course the median is lower...so blah blah blah....but overall I bet some stories are very different...
if 1000 sales are all at the bottom of the market...then of course they can say that....


----------



## kincella (13 August 2009)

Thats right Taltan....you do strange things for the family, and extended family...treat it as a learning exercise for them


----------



## Beej (13 August 2009)

Uncle Festivus said:


> Somewhere like, um, remote little town called.... Sydney
> 
> 
> So RP Data is or is not reliable??
> ...




That's true and something I have been pointing out here for nearly 18 months! All the house price growth (and all the angst!) in Australia has come from all other cities except Sydney. That is actually why I reckon that:

a) Sydney real estate in NOT in a bubble; it is poised for the next stage of growth, which will however be more moderate than the last stage (1996-2003; due to the one off factors that drove it then). I reckon in 10 years the Sydney median house price will be around $750k-$800k, assuming inflation/CPI remains at ~3% average levels through this period, and average full time wages will probably be ~$100k pa. If inflation breaks out, then things could look very different indeed and prices today will seem ridiculously cheap when we look back!

b) Prices in other cities are either in a bubble, OR they have gone up for the same reasons Sydney prices went up 5-10 years earlier, and the fundamentals behind that may be permanent? I suspect the Melbourne and Brisbane price rises might be more permanent than say the Perth or Darwin ones. The last 5 years in Sydney might give you a pretty good indication what these other markets might look like over the next 5 years.

PS: You have highlighted well the problem with labels like "permabulls" and "permabears". Why should they/we read from the same script? I have my own independent views thanks and will read from my OWN script! As I am sure will Kincella, and yourself UF!

Cheers,

Beej


----------



## dhukka (13 August 2009)

Interesting data in CBA's FY09 results on their home loan portfolio. Home loans that are past due *more than 180* days increased *107%* in the last 12 months, home loans *90 - 179* days past due up *67%* and home loans 60 - 89 days past due are up *70%*. However the dollar amounts aren't huge, only *3%* of CBA home loans are past due to some degree with more than *50%* in the *1 - 29* days past due category.  Still mortgage stress is clearly on the rise in Australia.


----------



## MACCA350 (13 August 2009)

I wonder how many of those are part of Rudd's 12month mortgage relief for the unemployed.

.........what happens after the 12 months for those loans? 
.........are they repossessed? 
.........or will Rudd tell the banks to put it off for another year?
.........how long will the banks put up with that before pulling the plug to get their cash back?

cheers


----------



## satanoperca (13 August 2009)

Riddle me this.

If you had invested $400K in 2002 and it returned $425K in 2009 would you think this is a good investment?

Hint, if inflation was running at 3% you would need $480K



Beej said:


> I reckon in 10 years the Sydney median house price will be around $750k-$800k, assuming inflation/CPI remains at ~3% average levels through this period, and average full time wages will probably be ~$100k pa.




This would seem quite realistic, given the median is around $570K in Syndey this would mean a approx 45% increase or 4% p.a growth. Just 1% above inflation - heard that somewhere before.

Answer to riddle.

That was the result if investing in the Sydney property market over the last 6 years according to ABS weighted average figures for Sydney.

Disclaimer : calculation based on a nice bottle of Cab Sav from W.A

Note : past prices are not a forecast of prices in the future


----------



## trinity (13 August 2009)

http://www.news.com.au/business/money/story/0,28323,25923902-5013951,00.html

http://business.smh.com.au/business/first-homebuyers-hopes-dashed-20090813-ejc6.html

2 articles on housing on the same day.  One is housing affordability, other is prices have actually gone up.


----------



## Beej (13 August 2009)

satanoperca said:


> Riddle me this.
> 
> If you had invested $400K in 2002 and it returned $425K in 2009 would you think this is a good investment?
> 
> ...




Yep - but add 4%-5% rental return to your sums - either as rent actually received or as rent not having to be paid (even better as that's after tax dollars), and things look pretty good really even in this scenario 

Cheers,

Beej


----------



## Ben L (13 August 2009)

Just a question... is there a source to find out if properties are purchased by a single person or for example a couple?


----------



## Ben L (14 August 2009)

I put it down to these factors as to why property prices are rising.

1)Shortage of new dwellings.
2)First Home Buyers Grant.
3)Banks overlending.
4)Low interest rates.

IMO the first home buyers grant is the worst idea ever concieved. All it does is put more money into the seller of the property. We need more homes and we need them now.


----------



## Uncle Festivus (14 August 2009)

Beej said:


> That's true and something I have been pointing out here for nearly 18 months! All the house price growth (and all the angst!) in Australia has come from all other cities except Sydney. That is actually why I reckon that:
> 
> a) Sydney real estate in NOT in a bubble; it is poised for the next stage of growth, which will however be more moderate than the last stage (1996-2003; due to the one off factors that drove it then). I reckon in 10 years the Sydney median house price will be around $750k-$800k, assuming inflation/CPI remains at ~3% average levels through this period, and average full time wages will probably be ~$100k pa. If inflation breaks out, then things could look very different indeed and prices today will seem ridiculously cheap when we look back!




Well isn't that what inflation is - looking back and saying how cheap something was, but in fact when compared to todays value it was only a measure of currency value errosion, making today's value seem like a growth in 'wealth' when all it is is keeping pace (hopefully) with the increase in money supply from central banks, and retail banks then leveraging that money out into bubble world to continuously grow their business? (who, by the way, have increasingly relied on fees & charges to prop up the diminishing returns from bricks & mortar loan business)

Not many property advocates factor in 'inflation' into their sums when calculating their returns from their RE investments ie money supply inflation feeds price inflation, as in nearly everything else also. So has the 'value' of the property increased or just the money supply inflation? If 'inflation breaks out' then prices would only reflect that money supply increase; it may or may not reflect an underlying supply/demand premium as well?

Rising prices actually mean you will need to make a far greater percentage return _after_ inflation if property is to be a growth asset in the future? As prices rise (due to money supply inflation) it will be harder to firstly service the loan but to then have the asset appreciate faster than that inflation as well as net of purchasing costs and then ongoing maintenance. 



Beej said:


> b) Prices in other cities are either in a bubble, OR they have gone up for the same reasons Sydney prices went up 5-10 years earlier, and the fundamentals behind that may be permanent? I suspect the Melbourne and Brisbane price rises might be more permanent than say the Perth or Darwin ones. The last 5 years in Sydney might give you a pretty good indication what these other markets might look like over the next 5 years.
> 
> PS: You have highlighted well the problem with labels like "permabulls" and "permabears". Why should they/we read from the same script? I have my own independent views thanks and will read from my OWN script! As I am sure will Kincella, and yourself UF!
> 
> ...




So are you permanently bullish on property?


----------



## Uncle Festivus (14 August 2009)

Beej said:


> Yep - but add 4%-5% rental return to your sums - either as rent actually received or as rent not having to be paid (even better as that's after tax dollars), and things look pretty good really even in this scenario
> 
> Cheers,
> 
> Beej




Are you saying you calculate (increase) your return by adding in a 'rent not having to be paid' factor? Where do you subtract interest payments & purchase costs?


----------



## knocker (14 August 2009)

Look what are all you nancies waiting for. Just hop right in and buy buy buy ok. There's never a better opportunity to buy ok.


----------



## satanoperca (14 August 2009)

knocker said:


> Look what are all you nancies waiting for. Just hop right in and buy buy buy ok. There's never a better opportunity to buy ok.




Thats what the realestate agent told me yesterday, just before he told me he had sold his PPOR and was renting for the next year or so.

Never a better time to buy.


----------



## kincella (14 August 2009)

income is the division between inner city and the suburbs....
extracts from Bernard Salts article today
...............
To some extent the city has always harboured social and economic division. 

That the demographies of Toorak and Double Bay differ to those of Broadmeadows and Redfern is hardly surprising. This has always been the case; indeed, there is a niche for both rich and poor suburbs in every city. 

But what I am suggesting is more broadly based. I am suggesting that there is almost a regionalisation of wealth, income and culture based on urban geography. 

Battlers, migrants and assorted low-income earners who formerly lived in the inner city are now being flung out, as if by some centrifugal force, to the city's edge. 

What is left in the inner city is an odd coalescence of tribes - namely students, singles, couples, dinks, gays, expats, corporates, divorcees and, most important of all, the professional and entrepreneurial classes. 

One of the key drivers of social division within the city is income. Between 1996 and 2006 the average income per person in Melbourne's Melton and Wyndham and Sydney's Blacktown and Penrith hovered a few percentage points above or below the Australian average. For this entire decade these edges of our largest cities represented the heartland of "average Australia". 

However, it was a different story in the city centre. In Sydney's inner-western municipality of Leichhardt, income levels on a per-person basis jumped from 43 per cent to 73 per cent above the Australian average over the decade to 2006. Upwardly mobile Leichhardt moved mightily upmarket in a decade. The same upshift applied to Melbourne's City of Port Phillip, where income levels moved from 27 per cent to 50 per cent above the Australian average in a decade
http://www.theaustralian.news.com.au/business/story/0,28124,25920990-30538,00.html


----------



## Beej (14 August 2009)

Uncle Festivus said:


> Are you saying you calculate (increase) your return by adding in a 'rent not having to be paid' factor? Where do you subtract interest payments & purchase costs?




Well if you don't pay interest on your PPOR then the rent "saved" is a true after tax return on the capital invested  - so if the value keeps pace with inflation, plus even 1%, plus the rent saved, = a pretty good low risk, inflation hedged and CAPITAL GAINS TAX FREE investment . On an IP, of course you factor interest in, but only the actual cost after accounting for tax deductiblilty etc.

Look let's use my scenario which as had been pointed out provides a 1% return above inflation (very conservative - of course there is a good chance that if you buy the *right* property in the *right* location you could gain a much greater return that this, but anyway....). Let's say you buy an IP, borrow 90% of the cost - fixed rate loan at say 6.5%, and your marginal tax rate is 45%. Rental yield is say 5.5% (Sydney average for units). Let's deduct 1% from the rental yield to cover annual costs, so net 4.5% yield. Interest cost after tax deduction is actually 3.25% of property value (90% x 6.5% x 55%) net.

So you NET gain from property = 4.5% (net yield) - 3.6% (net interest/costs) + INFLATION on capital, + 1% = 2.25% of total property value.

Doesn't sound like much, but remember that's with only 10% of the total value put in by you! If the place is worth say $300k, that's $6750 pa profit, or 22.5% return on your capital actually invested. That profit increases every year as the value of the property increases (even just with inflation) due to interest only being paid on 90% of the initial purchase capital.

Now of course there is risk as well - the value might fall in the short term, or maybe you have bought in the wrong location and you don't keep pace with inflation. Likewise you could also make a lot more money if you bought well. My example is also simplistic in that you have to account for buying/selling costs. My point though is that even with only 1% growth above inflation, over time a very good return on initially invested capital can be made. You can even borrow 100% and invest zero of your own capital  But the risk rises accordingly as well.

I'm also not saying that my example would be the BEST long term investment at all times and at any time. Right now there clearly seems to be more potential in shares than in say Sydney property (or least that was the case 3-6 months ago!), but in terms of diversification and place to park personal wealth, property is still an important asset class IMO which is ignored at your own financial peril!



> So are you permanently bullish on property?




Well depends what you mean - in the long term I believe property will in most cases provide at least the sort of returns I outline above, but of course prices occasionally fall as well. I don't think the fundamentals under-pinning the market in AU and Sydney in particular are likely to change anytime soon.

So what I DON"T subscribe to are the "property prices to crash up to 40%" type bearish outlooks. I think PPOR ownership over the long term is an essential part of the road to financial independence for 95% of people - the forced saving of having to pay off a mortgage plus the inflation hedging + real growth provided in the capital appreciation leaves most people in a much more solid financial position than the alternative.

Property investment is a different kettle of fish - timing is more important, as is buying the right property - but again, with a long term outlook it can be a very profitable investment, both in terms of ability to generate consistent, inflation hedged cash-flow (important if you are living off your investments) , and steady real capital growth as well. Additionally the potential to add value through your own work/effort (renovations etc) is another added benefit (if you are that way inclined). Property flippers and people that don't do their sums properly or who don't understand the risk should stay well clear of property investment.

Cheers,

Beej


----------



## kincella (14 August 2009)

another confirmation of what I have been saying for the past couple of years,.....its called upgrading the home
extract..................

The Stockland boss says residential sales are now starting to switch more to people trading up than simply entering the market for the first time, and commercial property buyers who were telling everyone they would wait until prices dropped 30 per cent are now back looking. 

Quinn has just downsized his own property, shifting from Killara to McMahons Point in Sydney. 

It's the same land size as most of his residential clients (about 530sqm) but he is paying more than 27 times the average Stockland lot price of $206,000 for the family home.
http://www.theaustralian.news.com.au/business/story/0,28124,25921256-25658,00.html


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## Beej (14 August 2009)

Beej said:


> So you NET gain from property = 4.5% (net yield) - 3.6% (net interest/costs) + INFLATION on capital, + 1% = 2.25% of total property value.
> 
> Doesn't sound like much, but remember that's with only 10% of the total value put in by you! If the place is worth say $300k, that's $6750 pa profit, or 22.5% return on your capital actually invested. That profit increases every year as the value of the property increases (even just with inflation) due to interest only being paid on 90% of the initial purchase capital.




Actually a couple of errors in my example - net gain calc should be:

3.025% (rental yield of 5.5% after tax) - 4.15% (6/5% interest +  1% costs after tax deductability based on 45% marginal rate) = -1.125%. Then + inflation (say 3%) + 1% real growth = 2.875% net return.

That equals $8625 nominal return pa = 28.75% leveraged return on invested capital of $30k in the example. So although the nominal return is still just below the rate of inflation against the purchase price of the property, the leveraged return on capital invested is still way ahead of inflation in this scenario. Over time the return increases as the interest cost is constant while the rental return increases.

Cheers,

Beej


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## Buckeroo (14 August 2009)

Hey, what's the go? - Beej & Kincella in stereo

Cheers


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## trainspotter (14 August 2009)

*Sunsine and lollipops boys, just smile and wave !*

""This week we saw three key data releases that all suggested the Australian residential property market should continue to provide modest improvements over the coming months. Housing finance commitments again trended up, with the value of housing loans taken out in June at their highest level since June 2007. Investor activity is also ramping up, with investors now comprising one quarter of housing finance commitments. Both business confidence and consumer confidence also continued to rise with both indicators now above the all important 100 point mark where optimists outweigh pessimists. Consumer confidence is now at its highest level in two years. Business confidence hasn’t been this high for almost two years."

Lifted gratuitously with forethought and malice from RP DATA.


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## Buckeroo (14 August 2009)

trainspotter said:


> *Sunsine and lollipops boys, just smile and wave !*
> 
> ""This week we saw three key data releases that all suggested the Australian residential property market should continue to provide modest improvements over the coming months. Housing finance commitments again trended up, with the value of housing loans taken out in June at their highest level since June 2007. Investor activity is also ramping up, with investors now comprising one quarter of housing finance commitments. Both business confidence and consumer confidence also continued to rise with both indicators now above the all important 100 point mark where optimists outweigh pessimists. Consumer confidence is now at its highest level in two years. Business confidence hasn’t been this high for almost two years."
> 
> Lifted gratuitously with forethought and malice from RP DATA.




I'm feeling chirpy, great news, things couldn't be better

Snap, bang, crash, #&@##, it all falls down

Cheers


----------



## trainspotter (14 August 2009)

*But wait .. there is more from the rainbows and silver lining bureau*

On a national basis over the 12 months to May 2009 the average hold period for houses was 7.5 years and the average hold period for units was 6.6 years. 

What this essentially means for houses is that 7.5 years ago the median value was recorded at $265,557 and in May this year the median house value was $495,700. Based on this, the average value of those houses sold last year has increased by $230,143 since purchased, at a rate of *8.7%* annually.

For units the national hold period is 6.6 years and based on a median value 6.6 years ago of $279,785 and a current median of $406,587, the average unit vendor during the last year has seen the value of their property increase by a total of $126,802 since they first purchased or by *5.8%* annually.

Go you good thing ! Ride 'em cowboy !!


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## Buckeroo (14 August 2009)

trainspotter said:


> *But wait .. there is more from the rainbows and silver lining bureau*
> 
> On a national basis over the 12 months to May 2009 the average hold period for houses was 7.5 years and the average hold period for units was 6.6 years.
> 
> ...




I've already profited by this and it was greeeeat! - will it happen again over the next 7.5 years? Some people think so.

Cheers

P.S. good to see you back trainspotter


----------



## trainspotter (14 August 2009)

I am putting all my eggs back into property (and my balls) to capture the market in 12 months time. I like the idea of green titles sitting in the safe. 

*Hotspots to be considered:*

*Geraldton* - Oakagee announcements - only "city" North of Perth
*Ipswich* - Fastest growing city in Australia - still bargains to be had
*Gympie* - Massive retirement belt - big blocks with strata potential (unit development)
*Collie* - Again - Due to doubling of power stations - surrounding areas

*Thanks Buckeroo for the pat on the back*


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## Mofra (14 August 2009)

http://www.news.com.au/business/money/story/0,28323,25927644-5013951,00.html

Rents to hold up / remain high over the next 12 months according to this article.


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## kincella (14 August 2009)

did a little exercise yesterday, checked out the realestate site for houses under 100k's in vic...there were thousands of them, nsw was similar, god help us if the sales of those homes were included in the median prices...which they are

at least the RBA was looking at providing more accurate data based on regions.....its copyright material so here's the link

Improving Median Housing Price Indexes Through Stratification 

Anthony J. Richards 
Reserve Bank of Australia - Economic Research
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=958159

http://www.anz.com/Aus/Promo/HomeEssentials008/Property1.asp


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## Buckeroo (14 August 2009)

trainspotter said:


> I am putting all my eggs back into property (and my balls) to capture the market in 12 months time. I like the idea of green titles sitting in the safe.
> 
> *Hotspots to be considered:*
> 
> ...




Good luck trainspotter, although I'm going to wait until black October has passed. Its harder to sell a house than shares if something happens.

Cheers


----------



## robots (15 August 2009)

hello,

just a quick update, still nothing brothers, havent heard 

thankyou
professor robots


----------



## kincella (15 August 2009)

Robots...what have you not heard ??? the bet  not settled ?

otherwise....kidding this move will not fire up the market even more....although if they wipe out exemption from capital gains on the PPOR there may be some reluctance to change houses, for some

Govts leaking potential changes....considering making the mortgage on the family home tax deductible.....but it may come with some pain....losing the exemption from capital gains tax when you sell it...and adding some extra tax if its sold for more than 2 mill.....
note 4000 homes sold last year for over 2 million, total of 10 billion dollars....so there are some smart people out there, making some good money...
while some people are still holding off from buying....waiting for those big drops....
if they do make the mortgage deductible, that will entice a lot more into the market, kidding it wont hot it up even more....
they need to address the shortage of houses..before any changes to tax....

heres the extract.......

THE Rudd Government is considering slapping a wealth tax on the country's most expensive family homes, according to The Australian.

The move is part of a wide-ranging and radical review of the tax system chaired by Treasury secretary Ken Henry.

The Government has asked Treasury to model various capital gains tax scenarios on family homes valued at $2 million or more, including making interest payments on mortgages a deductible expense.

An estimated 4000 homes were sold for $2 million or more last year, representing the top two per cent of residential properties.

The combined value of properties sold in the bracket was $10 billion.

Dr Henry, whose five-member panel will make its final recommendations on tax reform to the government in December, has indicated that one of the objectives of the tax review is to remove distortions in the taxation of savings.

The tax-free status of the family home has made it the "principal form of tax-preferred savings", according to the review's initial outline.

A spokesman for Wayne Swan yesterday declined to comment about the modelling being done by his department on capital gains on family homes.

"The Government will await the final report of the ... (tax review) panel due at the end of the year and will not be pre-empting that report," he said.

Residential property forecaster BIS Shrapnel estimates that 500,000 residential properties worth a total of $200 billion are sold in Australia each year.
http://www.news.com.au/business/story/0,27753,25932245-462,00.html


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## trainspotter (15 August 2009)

Buckeroo said:


> Good luck trainspotter, although I'm going to wait until black October has passed. Its harder to sell a house than shares if something happens.
> 
> Cheers




You are not picking up what I am putting down there Buckeroo. I posted that I have placed my hard earned $$$ back into property for an expectant rise in *12 months time*. In certain areas (like the ones I have suggested) there is a strong possibilty that a greater than 20% gain is likely with little effort and low risk. IMO. *SIP* Rule *S*hares *I*nterest *P*roperty ... I am reckoning that the heat is out of the market (for me that is) and talk of interest rates rising is filling the mass media so therefore PROPERTY is the next safe haven according to the formulae.


----------



## knocker (15 August 2009)

Just did a search of properties 75K and under. Thousands of them !!! Never a better time to be in real estate ROFLMAO


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## Buckeroo (15 August 2009)

trainspotter said:


> You are not picking up what I am putting down there Buckeroo. I posted that I have placed my hard earned $$$ back into property for an expectant rise in *12 months time*. In certain areas (like the ones I have suggested) there is a strong possibilty that a greater than 20% gain is likely with little effort and low risk. IMO. *SIP* Rule *S*hares *I*nterest *P*roperty ... I am reckoning that the heat is out of the market (for me that is) and talk of interest rates rising is filling the mass media so therefore PROPERTY is the next safe haven according to the formulae.




Unless you have some sort of double meaning, yep I think I am picking you up load & clear trainspotter....yes if all goes well and with interest rates rising, should be a good investment as long as inflation doesn't follow too closely behind.

But, I'm still of the mind though, there will be a financial collapse before the years out with no immediate recovery for a very long time. All this talk of coming out of recession & having instant prosperity just doesn't add up for me - and we seem to be getting close to euphoria again on the share market and I hardly noticed the other 3 stages occurring!

But I could be horribly wrong - ah well, miss out on a little profit. But if I'm right, the condom I'm wearing will hopefully shield me from the worse.

Cheers


----------



## trainspotter (15 August 2009)

Buckeroo typed:- "But I could be horribly wrong - ah well, miss out on a little profit. But if I'm right, the condom I'm wearing will hopefully shield me from the worse."

Like my Irish Uncle Paddy used to tell me "Wear three condoms, to be sure, to be sure, to be sure." LOLOL


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## robots (15 August 2009)

hello,

word out to Satanoperca, its on

thankyou
professor robots


----------



## knocker (15 August 2009)

robots said:


> hello,
> 
> just a quick update, still nothing brothers, havent heard
> 
> ...




Update about what Bro? Have you decided to decamp? Good to hear Robots welcome aboard, we certainly can use your spruiking skills on the other side.

thank-you

professor knocker.


----------



## robots (15 August 2009)

hello,

here we go again:

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

fantastic day, sun shining bright as always

well done, the auctioneers are putting in and getting some fine results

thankyou
professor robots


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## kincella (16 August 2009)

interesting  398 auctions valued at 250 mill
717 private sales valued at 301 million

*** house sold in Rosebud for $281,000..see top bargain houses, and it looks ok on the google map...unbelievable low price imo.....I know it used to be a bit of a daggy suburb..when we passed through on our way to our shack in Sorrento....

from REIV......
This week: 475
Last weekend: 412
This time last year: 451

S Sold at Auction: 315
SB Sold before Auction: 81
SA Sold after Auction: 2

Passed in: 77
Passed in on vendor's bid: 44

Clearance rate: 84%

Postponed:0
Withdrawn: 0
Auctions with no result: 23

PS Private Sales: 717

Total Volume (Auctions): $251.45mil
Total Volume (Private Sales): $301.46mil


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## Prem (17 August 2009)

Hye guys,

could someone point me in the right direction?

how has GFC affected Australian housing markets?


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## trainspotter (19 August 2009)

*Hey hey hey ... it's WA to lead the way !*

It is very unlikely that the Australian residential property market will plunge anywhere near the extent of that in the US, because we haven't been through a huge construction boom, borrowers haven't leveraged themselves to quite the same extent and we have strong immigration to underpin demand. Not only this but with our banking sector outperforming the overseas competitors in the way of "write downs" on bad debt it seems we have a very strong sector of growth in the housing market. Western Australia should fare better than most due to the Gorgon Gas project and the likely Oakagee announcement. (even though the graph doesn't concur)


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## kincella (20 August 2009)

Christopher Joye is one of the very few commentators, who can look past the media rubbish, and zoom into the real story and facts behind published data ....ie data provided by people with the skills....and information who publish these reports.........................
want to know the facts.....read this massive report......

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail
......................
so many posters here, appear to  just take the headlines from mainstream news,(versus the facts... truth) then use the media noise and stories, to comment on property in australia.......and form their opinions...

there is a huge difference between the two....one is fantasy to sell newspapers, the other is reality and the facts...

I had to take a trip a further 10klms away from the usual route recently,......I am amazed to say the least, at how much activity is going on around the leafy suburbs of inner Melb......trades men's trucks everywhere, and buildings being torn down or renovated, every street has so much going on....
conclusion...???? owners and investors are making the most use of the low interest rates to renovate and upgrade their properties.....
they are smart people.....this window of opportunity to maximise their dollars....
and for those out there waiting for house prices to go lower....its highly unlikely, when people are spending more money to upgrade their houses......
that means , it will cost more to buy the houses when those people eventually sell up....
oh and the above affords some protection for the future, against rising interest rates and inflation......
interest rates are not going to rise dramatically as some here predict.....
not when they will be paying off the huge government debt in taxes, for years to come....

Townsville is a basket case....all those storm people needing to sell up, and the over inflated prices for what really is just a small regional centre...its not a major city, not by any means, so why are the prices comparable with the majors of Sydney and Melbourne...they are not comparable....its like a hot stock story....hyped up on ....rubbish...only to fall over, leaving others to bear the brunt of the hype....


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## moXJO (20 August 2009)

kincella said:


> Townsville is a basket case....all those storm people needing to sell up, and the over inflated prices for what really is just a small regional centre...its not a major city, not by any means, so why are the prices comparable with the majors of Sydney and Melbourne...they are not comparable....its like a hot stock story....hyped up on ....rubbish...only to fall over, leaving others to bear the brunt of the hype....




Old GG must be holding the price up in Townsville.
I agree with the construction seems to be a lot of residential going up and renovations galore (lots of extensions). Commercial construction is dead though, and I do mean dead.


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## trainspotter (22 August 2009)

Picture of the young man who waited for house prices to come down.


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## robots (22 August 2009)

hello,

good evening

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

another terrific performance today, 82% clearance rate, this is amazing

thankyou
professor robots


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## knocker (22 August 2009)

trainspotter said:


> Picture of the young man who waited for house prices to come down.




More like picture of young man still paying off a huge mortgage on an over inflated family home ROFLMAO


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## trainspotter (22 August 2009)

You crack me up knocker. My kids can't wait to inherit my mortgage!


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## kincella (23 August 2009)

oh well, off to battle the crowds in Chapel St again, actually its like that everywhere around inner Melb atm....now takes hours to do anything at the weekend, sat in Chapel St for 10 mins yesterday without moving, carpark at Safeway in Toorak is mandatory 5 minutes wait minimum....they are all out there shopping.....
car wash and dog wash day today...then the dog goes for the eye operation tomorrow, $1000 bucks upfront...
oh and at the same time, mortgages are easily covered, and I have started spending again
the commercial property is going great guns, another cpi rise next week, admittedly its not as great this year, but the rent is tied to cpi increases, and that was over 21% over the past 5 years.....

forget the lollipops....this is champers moments, with lobsters:sheep:
cheers


----------



## robots (23 August 2009)

hello,

howdy Kincella, the sun out and lining us up for a great day

check this video:

http://www.youtube.com/watch?v=Zd5nb4jGYNA&feature=related

melbourne the back drop for this artist, just amazing globalisation, cant believe it

prices still going strong everywhere

thankyou
professor robots


----------



## kincella (23 August 2009)

THE average price of a Sydney home could rise by $100,000 in the next two years, according to an investment group. 
A shortage of homes and a growth in population will cause the property boom, The Investors Club says. 

Kevin Young, president of the group, which has 90,000 members in Australia, says the last spike in Sydney property prices occurred between 2002 and 2004 when the median house price surged by over $150,000 to $524,000 because of under-supply. 

"This spike in property prices was caused by an under-supply of houses relative to population growth which resulted in a major blowout in prices over this two year period," Mr Young said in a statement. 

"House prices in Sydney have been in recession for the last five years. 
http://www.news.com.au/story/0,27574,25968251-29277,00.html

"In contrast, other capital cities have recorded major growth in their median house prices during this five year period, with the median house price in Perth, for example, jumping by around $200,000 during this five year period.''

Mr Young says it has become difficult for developers secure building approval in Sydney. 

ps I only heard of this group last Friday, apparently my source says they are mainly interested in 'off the plans', whereas she prefers older homes in established areas.


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## trainspotter (23 August 2009)

My understanding on how the "Investor Club" works is that they purchase off the plan for a development at a set price. Pay a usual deposit of 10k or so and wait for the price to increase during the course of the development. Lets say you purchase a unit in a residential development for 400k and it takes 18 months for completion of project. Upon completion you flog it off for 450k to someone else. Technically you have done nothing wrong and generally you have a simultaneous settlement. Profit 50k and only stamp duty applicable. I have done the same myself on vacant land. Purchased 7 blocks of land for 80k each. Pay the deposit and stamp duty (approx $4,550 each). 11 month development lead in time. Sell 7 blocks for 110k each due to capital growth and strong demand. Love a rising market !! LOLOL.  This kinds of "risk" is extreme and it is a prerequisite to have BIG kahunas and also the funds to settle if necessary.


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## Macquack (23 August 2009)

kincella said:


> THE average price of a Sydney home could rise by $100,000 in the next two years, according to an investment group.
> A shortage of homes and a growth in population will cause the property boom, *The Investors Club *says.



Neil Jenman says -


> The Investors Club is not a club, but a marketing organisation which receives enormous fees for flogging properties for developers.



Jenman then refers to a quote from one of Queensland's most respected property valuers -


> The Investors Club is nothing more than a pretend form of organisation to sell overpriced and overvalued real estate to unsophisticated and gullible purchasers.



http://www.jenman.com.au/news_question.php?id=176


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## trainspotter (23 August 2009)

Sounds like my kind of club.  Nahhhhhhhh ... it was as I suspected though. Scalpers of the real estate world. Ok to perform these kinds of actions in shares but not so groovy when it comes to property. Especially the way these guys go about it. Nothing illegal in what they are doing either. If the property does not come up to valuation the deal falls over ... simple. But then again there are a lot of unscrupulous valuers out there as well.


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## robots (23 August 2009)

hello,

great day today, meet up with Satanoperca down in St Kilda, we enjoyed a great chicken parma at the Village Belle Hotel in Barkly st, get down there for a laugh

plenty of people out on Acland St, so will have to hit Chapel St Monday for a cafe latte

just hope S.Keen delivers on his bet like our man here at ASF Satanoperca 

we gave the top poster award to Kincella and we hope one day we can catch up with the legend

thankyou
professor robots


----------



## moXJO (23 August 2009)

robots said:


> hello,
> 
> great day today, meet up with Satanoperca down in St Kilda, we enjoyed a great chicken parma at the Village Belle Hotel in Barkly st




And you thought he was going to let you go hungry:


----------



## kotim (23 August 2009)

Friend of mine owns a number of untis in a place called Gladstone Queensland, which is one of the countries economic powerhouses in terms of mine development support etc.  He has not been able to rent them out and the ownly way he can is too substantially reduce the renting price which he is doing now.  In Gladstone there is a huge over supply of rental properties according to him.


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## kincella (24 August 2009)

Good on both of you Robots and Santanoperca.....settled like true gentlemen...
oh and thanks for the award, but I don't believe I deserve such an honour....
plenty of good tipsters here, they  just do not  post as often as I do...and I am mainly interested in a small section of the Melb and regional markets.....whereas Beej deserves an award for the Sydney markets...and others for their markets...

regardless of awards, its the people who have an eye for property and watch it on the ground, watch surrounding suburbs, and ignore the media sensationalism.......
around Toorak and surrounding suburbs, almost every street has tradesman working on renovations and upgrades, and a new building going up, or a property being demolished.....that tells me heaps about property, rather than the scary stories of rates going up, and disaster about to strike....from the media and all other analysts or economics people.......

here is todays news on Sydney......
Get in the queue for an Australian property boom
By Chelsea White
The Daily Telegraph
August 24, 2009 07:08am
 Open for inspection ... the Californian bungalow for sale in Iandra St, Concord West. Picture: Justin Lloyd  
Interest high at open houses 
Second-home bracket "a seller's market" 
Buying or Selling?: Property news 
IT'S the proof we've been waiting for that the housing boom is back - at dinner tables across the country talk is returning to the old conversation chestnut ... property.

While the global financial crisis made us all armchair investment analysts, now lower interest rates, government bonuses and the first home market boom was again making property the hot topic. 

 Do you agree? Tell us below

On any given Saturday huge numbers of prospective buyers are flocking to open houses everywhere. 

Nowhere is the craze more evident than in the median home market, where young families are trying to make the most of the demand from first time buyers to sell and trade up for more space. 

But with medium-priced houses in limited supply, real estate circles are rife with rumours of auction punch-ups and inspection queues rivalling nightclubs. 

http://www.news.com.au/business/money/story/0,28323,25970467-5013951,00.html

ps ...yes am sure we will catch up one day cheers


----------



## mythos (24 August 2009)

kotim said:


> Friend of mine owns a number of untis in a place called Gladstone Queensland, which is one of the countries economic powerhouses in terms of mine development support etc.  He has not been able to rent them out and the ownly way he can is too substantially reduce the renting price which he is doing now.  In Gladstone there is a huge over supply of rental properties according to him.




Not overly surprising. Gladestone is completely tied to the Mining industry. During the mining boom, too many people poured too much money into mining towns. Forgetting that mining has been traditionally quite cyclical. When the mining sector in QLD started winding back, people leave towns like Gladstone, as there are no other opportunities.


----------



## Mofra (24 August 2009)

kincella said:


> regardless of awards, its the people who have an eye for property and watch it on the ground, watch surrounding suburbs, and ignore the media sensationalism.......
> around Toorak and surrounding suburbs, almost every street has tradesman working on renovations and upgrades, and a new building going up, or a property being demolished.....that tells me heaps about property, rather than the scary stories of rates going up, and disaster about to strike....from the media and all other analysts or economics people.......



So you basically take notice of the people involved in the industry rather than sensationalist media stories designed to sell papers (which, in all honesty, would be the logical course of action). Sounds so simple & effective but it's amazing how many refuse to do so.


----------



## Glen48 (24 August 2009)

From Money Morning:
The facts are, as we suspected all along, the case for a housing shortage in non-existent. It does not exist. There is no housing shortage.

That's because it is price that is the major problem in the housing market. Prices are at unsustainable levels brought about by the manipulation of demand and supply by the various levels of government.

As soon as the manipulation ends, price discovery will lead to a collapse in the housing market.

Only then will the property spruikers realize there is not, and never has been a 'chronic' housing shortage

Any one got figures to refute this?


----------



## kincella (24 August 2009)

can some of you guys go over to the property forum, take a look now and again....there are some new posters over there with questions...am sure some on here can provide the answers for them...I would if I could, but I dont have the answers for them
cheers


----------



## robots (24 August 2009)

hello,

no worries Kincella, will whip over there and help out

thankyou
professor robots


----------



## Buckeroo (24 August 2009)

kincella said:


> oh well, off to battle the crowds in Chapel St again, actually its like that everywhere around inner Melb atm....now takes hours to do anything at the weekend, sat in Chapel St for 10 mins yesterday without moving, carpark at Safeway in Toorak is mandatory 5 minutes wait




And people still want to buy property there they can't afford knowing they will spend half their life in a line up? Huh, go figure

Cheers


----------



## Glen48 (24 August 2009)

My land lord turned up today and told me he is selling this house soon he paid me $250K in Sept. 2008 and tells me he needs to get $290 to break even and as he is a real estate agent there  are no fee's ...so house prices do rise..


----------



## Mofra (24 August 2009)

Glen48 said:


> From Money Morning:
> The facts are, as we suspected all along, the case for a housing shortage in non-existent. It does not exist. There is no housing shortage.
> 
> That's because it is price that is the major problem in the housing market. Prices are at unsustainable levels brought about by the manipulation of demand and supply by the various levels of government.



Glen, 

I know of plenty of bulls who don't believe there is a housing shortage if you use national figures, however there are areas of _high demand_ which is where they are looking to buy. 

Why do so many bears assume an inner city house has the same appeal as a shack 4 hours from anywhere? After all, the outback shack could theoretically address any perceived shortage couldn't it?

Location matters.


----------



## trainspotter (26 August 2009)

*Get in the queue for an Australian property boom*

IT'S the proof we've been waiting for that the housing boom is back - at dinner tables across the country talk is returning to the old conversation chestnut ... property.

http://www.news.com.au/business/money/story/0,28323,25970467-5013951,00.html


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## kincella (26 August 2009)

the news about all the asbestos thats in the houses....not just the fibro sheets....its almost everywhere....and the whole family exposed, not just the person handling the stuff....
I believe there will be a lot of people concerned now....and it will be reflected in increased activity in renovations and repairs to the homes...

look at this for all the products and uses...
www.asbestos.com

I copied this post (mine) from another forum

anyone else think this news is explosive ??
massive amounts of new claimants for compensation for the disease ???
homeowners will look to either seal up, or replace the asbestos related material....
look a lot closer at what asbestos is in their homes...in order to protect their families ...and apparently their animals....
3 dogs died at age 7, a later autopsy revealed the dogs had been running along sniffing the garden fence (as dogs do) except the fence had asbestos in it.....

I will be doing my own research about whats in my houses, and tradesman will need to have some good answers regarding safety issues, when working on any of my properties....
I believe there will be a lot of renovations to fix, rectify the asbestos problems in the houses after this news...
hmmm and the question of compensation from james hardie to fix my houses.....that should be an interesting question....


--------------------------------------------------------------------------------
.
The owner of McDonalds once asked Harvard students if anyone knew how he made his money.
They answered easy, making hamburgers. 
No he replied. I own the best real estate in every capital city in the world>*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller


----------



## Buckeroo (26 August 2009)

trainspotter said:


> *Get in the queue for an Australian property boom*
> 
> IT'S the proof we've been waiting for that the housing boom is back - at dinner tables across the country talk is returning to the old conversation chestnut ... property.
> 
> http://www.news.com.au/business/money/story/0,28323,25970467-5013951,00.html




Well if news.com.au says it, then it must be true - I better rush off and go down to the nearest listed property hot spot & buy something.

I think the media are having a field day with asbestos at the moment Kincella. Its funny how all this comes out immediately after ASIC fines Hardy directors. 

Asbestos has been out there for a long time & as long as its not disturbed, I've heard its fine. But I suppose if your a renovator & unaware of the dangers of asbestos or fail to recognize it, then you are probably going to die....eventually.

Cheers


----------



## kincella (26 August 2009)

Buckaroo, I would take the opposite approach and stay put...the article is written as a warning, not to jump in.....
as for asbestos....fine if you know where it is, so as not to touch or move it, or do anything else with it....but how many of us know where it is, in the first place....???
sure I will have a better idea now, after that news about the underlay has broken....so now some really serious research to find out where it is in my houses.......

did some calculations on a couple of my houses today....one has returned capital growth of 9% pa for 8 years....then 8% in the last year.....thats not bad...its not worth shouting about....just good steady growth year in year out,
the other one I measured started from a higher cost base, and its showing 9%
all years for the past 5 years....
so I am using the 9% as the basis for the estimated growth for the next 5 years on all properties....
its nothing like the higher estimated returns from superfunds or the stockmarket, but it should cover my retirement years.....on a conservative basis


----------



## Buckeroo (26 August 2009)

kincella said:


> Buckaroo, I would take the opposite approach and stay put...the article is written as a warning, not to jump in.....
> as for asbestos....fine if you know where it is, so as not to touch or move it, or do anything else with it....*but how many of us know where it is, in the first place....???*
> 
> did some calculations on a couple of my houses today....one has returned capital growth of 9% pa for 8 years....then 8% in the last year.....thats not bad...its not worth shouting about....just good steady growth year in year out,
> ...




I've been involved in heavy industry for years and back in 1999 I remember getting a survey conducted to identify asbestos around a plant. There are a number of companies that do this - not sure on the cost though these days.

And believe it or not, I have been a property investor off & on since the early 1980's. But like the stock market there are periods that housing just isn't a good bet. And my gauge for this is based on average *household* income compared to house prices. 

I believe the reason for the housing boom from 2000 on, is because of the majority of families now having 2 income earners. This boosted the household income to be able to afford more expensive housing & because of this, the banks were more comfortable with high levels of lending to the point of being reckless. 

Now, we have again reached saturation point as we did in the early 90's. So unless we can get our kids out to work or our average household income rises sharply, I can't see house prices rising.

And couple this with massive tax hikes including carbon tax, housing as an investment will probably get a right ol pizzling

Cheers


----------



## mythos (26 August 2009)

If you are worried about asbestos. Don't renovate a new house either. All Fibro sold today from James Hardie contains Crystalline Silica. All the sheets have a big warning printed on them that inhaling the dust may have serious long term health effects.

Reading the JH Material Safety Data Sheet at http://jh.hardiebase.com/products/download/file/MSDS+20+07+2009+Issue+19.pdf

Says that breathing dust from their new Fibro products may give you lung cancer.

Not sure why JH use Silica in their Fibro, as the Fibro sold in Europe that is mainly made in Germany doesn't contain any Silica in it.


----------



## Buckeroo (26 August 2009)

mythos said:


> Not sure why JH use Silica in their Fibro, as the Fibro sold in Europe that is mainly made in Germany doesn't contain any Silica in it.




They may be getting paid to seal up a waste product?

Cheers


----------



## Mc Gusto (27 August 2009)

Hi guys

I have come across a forum for the aussie residential house market.

Not sure if we can post links to other forums but i have found it a good additional resource for my research into australian property.

let me know if i can post it / alternatively pm me if you'd like the link.


thanks

Gusto


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## satanoperca (27 August 2009)

Hi Kincella,

Those are excellent returns on your investment especially if you hold for 10 years, essential your investment should double in that time.



kincella said:


> so I am using the 9% as the basis for the estimated growth for the next 5 years on all properties....




You must believe in the saying, property doubles every 7 years, as 9% growth takes 8 years for your investment to double, I hope in this case that past performance is a basis for future performance, but with this growth rate is not sustainable unless we see a massive growth in wages.

Cheers


----------



## kincella (27 August 2009)

pretty certain the latest figures that came out on wages showed a 6.5% growth for the quarter......and housing was under 3%..less than half

have you consider that the double wages (two income family) is the normal for the average family now....so why the emphasis on wages growth...
both  seem to rise in line with inflation

the last time I did the projected figures on my housing I used different scenarios...5% 7.5% 10% pa.....and was very happy with the expected goals, then within about 2 years, the houses were selling for triple the cost,
so it was one of the few times I followed the herd, and sold half my portfolio....
of course I dont really want or need that scenario again, ie the temptation to sell at huge profits.....
I want to build my portfolio up again, acquire more houses at the bottom of the cycle....
apart from a short period July to Oct last year, when I did see some real bargains, I do not believe I could have purchased any of my properties or similar ones cheaper than what they sold for.....
I will remind you I have 30 + years of retirement, that I need to fund, so I am more into adding houses to fund retirement....rather than selling for a short term gain....
they are currently positively geared, on a cash flow basis, so its all sweet
cheers


----------



## satanoperca (28 August 2009)

kincella said:


> have you consider that the double wages (two income family) is the normal for the average family now....so why the emphasis on wages growth...
> both  seem to rise in line with inflation




This is the norm now, so how is household income growth going to increase, cannot see wages increasing a huge amount over the next coming years.

Unless we start sending our kids out young to earn a wage and thus increase household income.

Cheers


----------



## Mofra (28 August 2009)

AWOTE has been increasing at approximately double the underlying inflation rate for years now - remembering even inflation-matched returns combined with inflation-reduced debt will increase equity without taking into account rental growth, the figures _in strong areas_ still appear to be making sense.


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## kincella (28 August 2009)

actually the two income families started during world war 2, they enticed the women into the workforce to run the factories and do everything while their men were away at war......so thats been the norm for (war  1939-1945)
roughly 70 years.......
there is a recent trend, some women are unhappy with all the responsiblities of career and family, and are opting for either one or the other , but not combining both....


----------



## trainspotter (28 August 2009)

*Resource towns back on the investment radar 
*
Recent deals in the resources sector have once again shone the spotlight on the investment potential of mining town property markets. 

Investors flocked into mining towns during the mining boom, but in recent times investors have shied away from these resource driven investments. The GFC caused demand for Australian resources to abate and commodity prices fell significantly during 2008.

Investing in resource driven markets has always held a higher level of risk than conventional metropolitan property investments. Timing is crucial – buying into a resource driven market early is the key to strong capital gains. Getting out at the right time is also critical.

Perhaps the most pertinent example of mining town risk became evident in the Western Australian town of Ravensthorpe where the BHP operated nickel mine was mothballed and 6,000 jobs were shed. The shutdown virtually eliminated the local economy and only three properties have recorded a sale so far in 2009.

But for those investors who get it right there are some spectacular gains to be had by investing in resource driven areas. Over the five years to the end of 2009 property prices on the Central Pilbara Coast have risen by 230% and rental yields are generally above 9%.

Recently Australia’s largest ever trade deal was struck between the West Australian Gorgon liquefied natural gas (LNG) project and PetroChina. The deal was worth $50b over twenty years – or around $83b if you include the previous deal with PetroChina which was signed in 2007. A week earlier Gorgon signed India up for $20b over 20 years.

These latest agreements may be the sparks that reignite investor interest in Australia’s resource driven property markets. The Gorgon project alone is likely to cost $50b to build and create jobs for 6,000 workers during the peak construction phase of the project. 

Thank you RP DATA for the info. Sunshine and Lollipops to rain down from the heavens again.


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## Buckeroo (28 August 2009)

kincella said:


> actually the two income families started during world war 2, they enticed the women into the workforce to run the factories and do everything while their men were away at war......so thats been the norm for (war  1939-1945)
> roughly 70 years.......
> *there is a recent trend, some women are unhappy with all the responsiblities of career and family, and are opting for either one or the other , but not combining both....*




Interesting point Kincella - I've seen this somewhere as well. I wonder though for the average woman, is this an option with the financial commitments couples now have? I think many may want to give up their career, but can't. 

I think we may have to wait for the next generation before a more tradition family appears if it ever does. And with a single income, they will be able to afford very little in terms of an abode

Cheers


----------



## kincella (29 August 2009)

Buckaroo said...."I think we may have to wait for the next generation before a more tradition family appears if it ever does. And with a single income, they will be able to afford very little in terms of an abode"

you meant 'traditional' family appears....
what ...you dont think after 70 years, that 70 years is not normal or now traditional ?
give me a break....the next generation is not suddenly going to learn to live on one income, after being raised as spoilt kids with everything at their disposal........

the women who are now giving up careers, can afford to....not everyone is a basket case....

all I say is get over it....western society is not going to revert to a single income family....just because some say house prices are too high...
there are houses for sale at prices that a one income family can afford, but those houses are in areas that lack jobs and other services and facilities, that most of us take for granted....
everyone has choices and options in life....they should just do what they have to, stop complaining, and get on with their life


----------



## satanoperca (29 August 2009)

kincella said:


> the women who are now giving up careers, can afford to....not everyone is a basket case....




That's a big statement, do you have any evidence to support such a claim and why the defamatory comment "basket case". 

I have a young family and many of my friends do, those mothers/fathers that have chosen to stay home and look after their children have done so not due to a financial decision but from a nurturing perspective and also with two children you need to have a decent income to pay for child care.

This notion that both parents should work full time is not beneficial to rearing of children.

Kincella, while I agree that double income families may have started after WW11 it was not the case in the 70's when I was growing up. It was a rarity for a family to have to full time incomes.

I do not believe that it is possible to ever revert back to a single income family however has is the next boom in property prices going to be supported.

Credit cannot get any cheaper
Households are already on dual incomes

This leaves only wage growth and population increase.


----------



## kincella (29 August 2009)

most families work due to financial reasons, not by choice, especially when the children are young....so it was interesting to see these 'career' women, in high powered jobs, opt out of their careers to stay home with their young children...on a tv segment, some were having a go at germain greer, they said it was impossible to juggle all their tasks required....with working, career and raising a family....others opted not to have children, a career was more important.....
I used the word basket case because thats what most women are, forced into the workforce for money reasons...to support their families....
the majority cannot afford the choice to stay at home....the women earn less pay then the men, and usually can only work part time whilst children at school or day care
on the other hand there are reasonably wealthy young women who can afford to stay at home, give up careers...
just google it, seen several articles in the past 6 months or so...
oh and I too have friends with young children, with some a stay at home parent, and others juggling the spouse working nights.....its all about choices
at the back of my mind is the notion put forward by many, that house prices will have to come down to meet their targets......lifestyles incomes etc....
well apart from a few minor blips on the charts....house prices have been rising for 70 odd years....whats going to change now ????? and why should it


----------



## satanoperca (29 August 2009)

To clarify, I am not questioning whether house prices will rise over the long term but rather at what rate they will rise over the next decade and whether this will be the same rate as the past decade.


----------



## kincella (30 August 2009)

geez, almost gobsmacked...I (hate that ugly word) but just sifted through some blogs following Chris Joyce's response to the CFD trader on business spectator...the debate rages on...the pro's and con's brigade...but some seriously good blogs in there...even an ABS demographer....
just interesting to read blogs from different sites...must have something to do with good moderation imo.....

and I see we have even another property forum site....I am deliberately not adding the link here....
since this site and its sister site are the best available.....
but I would like to encourage some of those bloggers over to these two sites...
unless there is another here who has a bit more time availabe than I

for satanopera.... a history of house prices from 1986 to 2006...two decades and you still have questions ? what don't you believe about those prices, what is going to change those figures for the next 2 decades..... those graphs cover enough political and financial crisis to cover most events..... 
oh and barely a blip after this GFC.....
and I have posted that article many times before...surely you read it

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


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## Buckeroo (30 August 2009)

kincella said:


> for satanopera.... a history of house prices from 1986 to 2006...two decades and you still have questions ? what don't you believe about those prices, what is going to change those figures for the next 2 decades..... those graphs cover enough political and financial crisis to cover most events.....
> oh and barely a blip after this GFC.....
> and I have posted that article many times before...surely you read it
> 
> http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf




Gosh Kincella, there is always more than one point of view and history usually proves who is right, so in the end its a waiting game. But the best part of a dinner party with friends is the cut & thrust of 2 opposing arguments.

Now with house prices, bubbles do form & they do burst. Sometimes house prices plummet (as in the US) & sometimes they stagnate for years (as it did here in the 90's) after the bubble bursts.

In my opinion only, which is similar to satanoperca, is that because a lot of people in this country are leveraged in debt, its going to make it ever harder to afford higher priced housing unless they can secure additional income. Remember too, this will also be on the back of increasing interested rates & rising taxes.

If someone could provide me with a viable answer to this enigma (which I can't easily tear down), I would then move to the affirmative side.



> and I see we have even another property forum site....I am deliberately not adding the link here....
> since this site and its sister site are the best available.....
> but I would like to encourage some of those bloggers over to these two sites...
> unless there is another here who has a bit more time availabe than I




More brainwashing - I'll leave that to the Government

Cheers


----------



## knocker (30 August 2009)

satanoperca said:


> To clarify, I am not questioning whether house prices will rise over the long term but rather at what rate they will rise over the next decade and whether this will be the same rate as the past decade.




They will not rise in line with inflation. Full stop. So don't listen to the BS spun by robots et al.


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## bowseruni (30 August 2009)

looking at a house going to auction this wednesday but worried the FHBG fuelled bubble is about to hemorrhage.

happy renting at the moment, but really like this house, unlike the many other polished turds people are trying to offload at the moment.

jump in or save and wait another 6 months?


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## kincella (30 August 2009)

knocker saying the opposite camp talks bs.....and prices wont rise above inflation.....thats so funny...I guess you dont like the facts for house prices over the last 20 years either....
think there was a part in that report...that said prices rose far higher than inflation...or words to that affect

guesssing you dont have a back up plan, or a plan B.....happy for you to stick to your ideas....I know of people who sold out before 2000, they bragged they had picked the top, and  would get back in at the bottom.....they are still waiting...


----------



## satanoperca (30 August 2009)

kincella said:


> guesssing you dont have a back up plan, or a plan B.....happy for you to stick to your ideas....I know of people who sold out before 2000, they bragged they had picked the top, and  would get back in at the bottom.....they are still waiting...




Sorry only a Plan C, D & E. Like to spread my risk. Plan B completed and Plan A actively at work.

Cheers


----------



## kincella (30 August 2009)

Robots...I just noticed your signature....wow so you stopped short of Warren Buffett...he is Charlie Mungers best mate....why is that...?
.......................................................................................................
Professor Robots: the George Soros and Charlie Munger of the Aussie Property Scene  

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


----------



## knocker (30 August 2009)

kincella said:


> knocker saying the opposite camp talks bs.....and prices wont rise above inflation.....thats so funny...I guess you dont like the facts for house prices over the last 20 years either....
> think there was a part in that report...that said prices rose far higher than inflation...or words to that affect
> 
> guesssing you dont have a back up plan, or a plan B.....happy for you to stick to your ideas....I know of people who sold out before 2000, they bragged they had picked the top, and  would get back in at the bottom.....they are still waiting...




really we will see champ lol


----------



## knocker (30 August 2009)

kincella said:


> Robots...I just noticed your signature....wow so you stopped short of Warren Buffett...he is Charlie Mungers best mate....why is that...?
> .......................................................................................................
> Professor Robots: the George Soros and Charlie Munger of the Aussie Property Scene
> 
> .......................................................................................................




Should add BS extraordinaire to his long line of accolades ROFLMAO


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## So_Cynical (30 August 2009)

kincella said:


> for satanopera.... a history of house prices from 1986 to 2006...two decades and you still have questions ? what don't you believe about those prices, what is going to change those figures for the next 2 decades.....
> 
> http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf




The opening paragraph of the linked document says it all

"House prices in Australia have risen substantially over the past 20 years, far 
outpacing the growth in inflation, average earnings and household income."

kincella what don't u understand about that.....for me it clearly says bubble.


----------



## knocker (30 August 2009)

kincella said:


> knocker saying the opposite camp talks bs.....and prices wont rise above inflation.....thats so funny...I guess you dont like the facts for house prices over the last 20 years either....
> think there was a part in that report...that said prices rose far higher than inflation...or words to that affect
> 
> guesssing you dont have a back up plan, or a plan B.....happy for you to stick to your ideas....I know of people who sold out before 2000, they bragged they had picked the top, and  would get back in at the bottom.....they are still waiting...




Just following up on your spelling champ:

Here's one for you:

Hypocrite 
    * Main Entry: hyp·o·crite
    * Pronunciation: \ˈhi-pə-ˌkrit\
    * Function: noun
    * Etymology: Middle English ypocrite, from Anglo-French, from Late Latin hypocrita, from Greek hypokritēs actor, hypocrite, from hypokrinesthai
    * Date: 13th century

1 : a person who puts on a false appearance of virtue or religion
2 : a person who acts in contradiction to his or her stated beliefs or feelings

Learn to spell. ROFLMAO. 

Quote from Kincella: "guesssing you dont"

ROFLMAO


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## kincella (30 August 2009)

so cynical...that charts over 3 years old...median price now about 450-470k so its added more from the 384k it was then....
surely if it was a bubble it should have burst....so I look beyond the obvious to see what other factors have influenced the prices....
everyone cramming into our biggest cities, vacating the regional areas in droves.....state govts holding up land parcels, not releasing them....thats just for starters.....


----------



## satanoperca (30 August 2009)

kincella said:


> surely if it was a bubble it should have burst.....




That is a big assumption, lets take a look :

Low unemployment
Easy Credit 
Government Handouts
Lowest Interest Rates in 46 years
We are not in a recession
High population growth

Everything above would only help to form a bigger bubble.

Change any two of the above and bubble will start to deflate.
Change any two of the above rapidly and the bubble will pop.

Cheers


----------



## kincella (31 August 2009)

*Immigration numbers are out of Control*

almost 900,000 immigrants in Australia last year..................
well only 889,722 to be exact....
I wonder if they had any impact whatsoever on the housing market......

so permanent residents to OZ of 232598, and a whopping 657124 temporary residents.....with more than half the temps seeking permanent residence here....so thats roughly half a million looking to stay permanently and about the same here as temps....
guess they play no part in the housing market, or a shortage of rental properties...or competition at sales

and changes to the laws in Mar 09, mean most of the temps can buy houses, if they choose to.....
so there is  and has been competition in the housing market...and I wonder how many of those FHB's were the new temp residents (who are seeking permanent status anyway) 

http://www.theage.com.au/national/migration-rules-set-for-revamp-20090830-f3ya.html

ps I note the personal attacks, as usual, and the low life type language used by some.....its too hard to debate the subject, so just go for a personal jibe....


----------



## MACCA350 (31 August 2009)

kincella said:


> *Immigration numbers are out of Control*
> 
> almost 900,000 immigrants in Australia last year..................
> well only 889,722 to be exact....



That's just insane
How much land does the government free up each year?
Check this out:


> The total number of dwelling units approved in 2008-09 was 132,073, a decrease of 18.8% from the previous year. Nationally, the number of house approvals fell 14.2% from the previous year while other dwellings fell 28.3%. The estimate for the total of number dwelling units approved rose in Tasmania (+7.2%) and the Australian Capital Territory (+19.7%) while New South Wales (-25.1%), Victoria (-3.0%), Queensland (-36.2%), South Australia (-10.2%), Western Australia (-18.2%) and the Northern Territory (-15.9%) fell.





Hmm, 132k building approvals last year............232k permanent and 657k temporary immigrants............not to mention the number of FHB Aussies.....................is the government really that stupid

cheers


----------



## MACCA350 (31 August 2009)

Silly 20min edit limit
I forgot to add the link to my quote, here it is, link

cheers


----------



## trainspotter (31 August 2009)

*Hey Hey Hey WA to lead the way !*

Perth house prices are continuing their march back with new figures showing they have risen 2.5 per cent so far this year to hit an average $481,493.

Figures released this morning by RP Data and Rismark showed national housing values climbed 0.9 per cent in July to be up 5.9 per cent through the first seven months of 2009.

Darwin continues to lead the way with house values there up 10.8 per cent so far this year to $466,903.

But it is the turnaround in Perth, which had been moribund for more than 12 months until only recently, that suggests home owners are swarming over low interest rates to buy their dream home.

Perth has now overtaken Adelaide, where prices are up 1.9 per cent so far this year, as the capital city with the most sluggish property value growth and is quickly catching up to Brisbane (3.8 per cent).

Perth prices are still about $25,000 lower than their 2007 peak, however there are plenty of encouraging signs.

Over the June quarter the average house remained on the market for 32 days, compared to 59 days last year.

Units are taking on average just 25 days to sell, the fastest turnaround in the quarter. A year ago units averaged 46 days on the market.

*RP Data's Tim Lawless said the Australian property market continued to be one of the world's strongest.*

"Not only has Australia's residential property market outperformed the other major western markets, it has also provided superior returns compared to shares, commercial property, superannuation, hedge funds and private equities," he said.

*"Australia's residential market has been further supported by low mortgage default rates, at just 0.6 percent, compared with 5 percent in the US and 3 percent in the UK."*

Thank you to all those home owners out there !


----------



## trainspotter (31 August 2009)

*RP DATA SAVES THE DAY !*

Over the first seven months of the year Australian home values increased across every capital city, rising by* 5.9 percent* nationally.

Based on Australia’s largest property database, owned by rpdata.com which includes roughly 145,000 sales for the first seven months of 2009, Australia’s housing recovery has continued in the month of July with solid across-the-board capital gains. 

According to the market respected RP Data-Rismark Home Value Index, Australian home values rose by +0.9 percent in the month of July 2009. This brings total capital growth in the first seven months of 2009 to 5.9 percent. 

Underpinned by historically low mortgage rates and only small rises in unemployment, Australian home values have now risen 1.8 percent past their February 2008 peak


----------



## So_Cynical (31 August 2009)

kincella said:


> *Immigration numbers are out of Control*
> 
> almost 900,000 immigrants in Australia last year..................
> well only 889,722 to be exact....
> ...




OK first off can we stick to the facts, holders of temporary visas are not immigrants...so our intake was 232598 now i would think that has to have an impact on the rental market in the big city's...As for house prices lets look at what happened in England over the last few years, England had a net intake of 240000 immigrants (2008), and in 2008/9 there housing bubble burst with valuations and sales falling over 30%...so what can we conclude about the impact of immigration on house prices.

http://www.telegraph.co.uk/news/uknews/1567068/Record-immigration-sees-UK-population-soar.html
http://www.statistics.gov.uk/CCI/nugget.asp?id=260

Also keep in mind that immigration is a 2 ways street...76 923 people left Australia permanently in 2007–08.

http://www.immi.gov.au/media/fact-sheets/05emigration.htm


----------



## Buckeroo (31 August 2009)

kincella said:


> *Immigration numbers are out of Control*
> almost 900,000 immigrants in Australia last year..................
> well only 889,722 to be exact....
> I wonder if they had any impact whatsoever on the housing market......
> ...




Interesting facts Kincella - have to admit its a lot higher that I would have guessed & yes could have an impact on housing depending on the wealth of the immigrants.

Would be of interest to know what their average wealth is and what part of the world is the average immigrant from. I know a number of South Africans are now coming to Australia & many of them are quite wealthy who can afford to buy medium priced houses.

But in enough numbers to make a difference.......don't know

Cheers


----------



## satanoperca (1 September 2009)

So_Cynical said:


> Also keep in mind that immigration is a 2 ways street...76 923 people left Australia permanently in 2007–08.
> 
> http://www.immi.gov.au/media/fact-sheets/05emigration.htm




That's fair and balanced reporting.


----------



## kincella (1 September 2009)

Robots, Beej and other positive property people...or PPP's...
you will like this article, all predictions now vindicated......
and read Rory Robertsons report for the next few months...

The hike to Kosiosko begins........

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

and here is what the Chinese have been doing with their houses, and incentives for the buyers....
whoops their house prices have gone up too...higher than ours....

http://www.businessspectator.com.au...ument&src=is&is=Property&blog=Concrete Detail


----------



## Beej (1 September 2009)

Kincella - I wonder if a few of the doomsayers from this forum are thinking about donning the hiking boots and joining Steve Keen on his long walk!  Seems only fair seeing as their understanding/predictions of the housing market have turned out to be as hopelessly wrong....

Cheers,

Beej


----------



## Mofra (1 September 2009)

Beej said:


> Kincella - I wonder if a few of the doomsayers from this forum are thinking about donning the hiking boots and joining Steve Keen on his long walk!  Seems only fair seeing as their understanding/predictions of the housing market have turned out to be as hopelessly wrong....



Beej, what would be the point? They'd just stand at the foot of the mountain waiting for the peak to come down


----------



## kincella (1 September 2009)

Beej, and Mofra....they are both excellent responses....and of a high standard...as expected....
waiting for the peak to come down, is probably not out of the question.....for some, since some of the excuses from the anti brigade were similar...out of this world scenarios.....armageddon type predictions....

anyway we have some good reporting coming out of the likes of RP data, the business spectator and morrell and koren sites now....

I also note the similar low % of positive people on other property sites....its like 10% are positive and 90% negative....
similar to the top wealthy % of the total populations

I do wonder if the rates will go up the .25% in October....since its usually a lousy month on the stock market...unless you are buying....they reminisce about that crash in 87...


----------



## satanoperca (1 September 2009)

While I am not a doomsayer, interesting how anyone who does not believe that the world is flat, no, thats RE will keep rising for years is a doomsayer, I would be willing to do some of the walk with anyone who has the intellect for free thought and is willing to go against popular belief such as Prof Keen with well research and thought out arguments.

His blog has contributed much to the discussion about debt and it burden on society and is an interesting read.

I love this country, anyone with a different opinion must be labeled so that the masses feel comfortable with their own belief. 

Interest how, SK came out in the media that it would be disastrous if IR are increased, if he was so intent on RE dropping you would have thought he would encourage the RBA to lift rates.

Just to add to a previous comment on mine about increasing household income so property prices can continue increasing :

First there was a single income family, then came along was a dual income family, with no more adults to go to work along come the government with government grants to bolster the family income.

Ah but you say, it was only the FHBG. An additional 7K which lead to extra $35k to borrowings (80% LVR), which in turn pushed up the prices, the FHB then gives the Second HB an extra $35k which the SHB borrows an extra $175 and push up the prices of the next tier and so on and so.
I will give it to Government, a brilliant concept to get money flowing in the economy but unfortunately is was not savings but rather just more debt.

What goes one way can work in reverse when the FHBG is partially reduced.

But we must not discount the fact that the government could intervene again and again and again until they run out of money.

Cheers


----------



## Early Bird (1 September 2009)

kincella said:


> can some of you guys go over to the property forum, take a look now and again....there are some new posters over there with questions...am sure some on here can provide the answers for them...I would if I could, but I dont have the answers for them
> cheers




hi does anyone have a link to this property forum please? can't seem to find it on the forum list on the homepage... is it a seperate site?

Also, thanks for a highly educational thread... although i cant say i'm any closer to deciding whether the market is about to crash or keep steadily rising...

i've been in australia 2 years (from the uk) and in that time prices in my own area (queenscliff, sydney) certainly seem to have fallen, although i cant seem to see any official data to support this. i do get the impression though that house price data comes mainly from those with vested interests?? i dont know whether anyone could point me towards an independent source of information?

i am also struggling to understand why the common opinion seems to be that interest rates are due to rise in the near future. to my mind, ocne the stimulus has washed through the system, if the economy stutters lowering IRs will be the main tool left to stimulate the economy?? and how lucky australia is that it has still got some lowering left to be done, not like the UK on 0.5%!


----------



## Beej (1 September 2009)

satanoperca said:


> While I am not a doomsayer, interesting how anyone who does not believe that the world is flat, no, thats RE will keep rising for years is a doomsayer, I would be willing to do some of the walk with anyone who has the intellect for free thought and is willing to go against popular belief such as Prof Keen with well research and thought out arguments.
> 
> His blog has contributed much to the discussion about debt and it burden on society and is an interesting read.
> 
> ........




S-opera - I don't rate you as a doomsayer either, and of course it's healthy to have a range of views and arguments on any topic of interest presented! You don't have to be a big time bull to be rated a non-doomsayer! One of the problems with this whole argument is how polarised it has become - "house prices must either boom or crash - there can be no in between" etc. Of course there are actually a range of views out there; my primary goal here has always been to explain why I think the AU market was never headed for a Prof Keen style crash as so many seem to have pinned their hopes on. But that's not to say that I believe prices "must double every 7 years" or whatever other tripe I am supposed to believe because I've been labeled a "property bull".

As for Prof Keen - I think if he had not been such a media-tramp and gone all over the mainstream media (60 minutes, 7:30 report, ACA etc etc) frightening people with his 40% fall prediction, then he would not be getting so much blow-back now. What he did was just plain irresponsible and was really acting against the financial interests of the majority of people in the country - undermining confidence at the worse possible time etc. 

Housing affordability is an issue yes - a serious one. We all want housing to be affordable for all (well at least most) and our kids etc, but the answer is not to wish for a cataclysm that would financially ruin a large proportion of the population who have worked/saved/paid off mortgages etc over many many years. Affordability can only be addressed through increased building and de-centralising industry and population. Ie the development of more economically viable and vibrant centres away from the current major cities. 

The US has done this, that's why they have cheaper houses (in many area's anyway) than us. I note though that in the big US cities like NYC, Chicago, good area' of LA, San Francisco etc, that houses are NOT cheaper than here - even now after their big GFC/subprime housing market collapse. Funny that isn't it?



			
				Kincella said:
			
		

> I also note the similar low % of positive people on other property sites....its like 10% are positive and 90% negative....
> similar to the top wealthy % of the total populations




I think this is because the age groups that frequent internet forums tend to be biased towards the younger/GenY sort of ages, which a smattering of "older" folks. Young people are less likely to already own property, and therefore think it is very expensive/over-priced, vs older people who are more likely to own property and have figured out what you need to do to get ahead financially in this world etc!

Cheers,

Beej


----------



## nomore4s (1 September 2009)

Early Bird said:


> hi does anyone have a link to this property forum please? can't seem to find it on the forum list on the homepage... is it a seperate site?




Here you go.
Aussie Property Forums


----------



## satanoperca (1 September 2009)

Beej, 



Beej said:


> As for Prof Keen - I think if he had not been such a media-tramp and gone all over the mainstream media (60 minutes, 7:30 report, ACA etc etc) frightening people with his 40% fall prediction, then he would not be getting so much blow-back now. What he did was just plain irresponsible and was really acting against the financial interests of the majority of people in the country - undermining confidence at the worse possible time etc.




Couldn't agree more, it was irresponsible, one bite of the apple at a time might have been more appropriate but that may not have given him air time.

However, I do feel it was against the best interest of the national to increase the FHBG, only time will tell if this increase is going to have any negative effects in the next 5 years.

It is hard to see the bottom end of the market growing much more after the FHBG is reduced, but we should starting seeing growth in the middle of the market as an effect of the FHBG.

Cheers


----------



## samt75 (1 September 2009)

Hi 

We're in WA and as much as they think house prices have come down it's not really as much as analysts have been predicting and with this Gorgon Project going ahead soon it's only going to drive prices up more because the people working on these projects like the previous mining boom have got the buying power because they are on the higher incomes unlike the people that work in the metropolitan and surrounding areas. 
I may be wrong but i think house prices will continue to keep rising maybe not as sharp as the 2005 -2007 years but they will climb slowly.


----------



## moXJO (1 September 2009)

Beej said:


> As for Prof Keen - I think if he had not been such a media-tramp and gone all over the mainstream media (60 minutes, 7:30 report, ACA etc etc) frightening people with his 40% fall prediction, then he would not be getting so much blow-back now. What he did was just plain irresponsible and was really acting against the financial interests of the majority of people in the country - undermining confidence at the worse possible time etc.
> 
> 
> Beej




He is actually pretty well versed on how credit bubbles build and deflate. I think he shot the gun a bit early though. And will now be famously be remembered for being a media ho, and being hated by property forum users. I think stimulus package, second wind in both commods, and spending might have delayed the inevitable. I suppose the next few months will sort out if that is true or not. 

Some houses in my area have come off 40% since the boom. Considering how overpriced they were its no surprise. Good houses are still hard to come by though (I'm still looking).

Interesting to see they didn't raise interest rates again.


----------



## Mofra (1 September 2009)

satanoperca said:


> While I am not a doomsayer, interesting how anyone who does not believe that the world is flat, no, thats RE will keep rising for years is a doomsayer, I would be willing to do some of the walk with anyone who has the intellect for free thought and is willing to go against popular belief such as Prof Keen with well research and thought out arguments.



saatnoperca, stating that RE will fall/trend sideways etc. and adding reasons why you believe it to be so doesn't put someone in the category of doomsayer. 
Reading some of the comments in the other thread about 40%+ falls, stockpiling food, is gold a defensive enough asset and so on, there are definately some here who made cataclismic predictions that seemed perfectly apt to attact the title of doomsayer.
Even predicting rises to match inflation as the fallout of the GFC continues I wouldn't be buying in "leg up" areas because I don't now (and never have) believed that all areas recover at the same time or same rate.


----------



## Beej (1 September 2009)

Mofra said:


> Beej, what would be the point? They'd just stand at the foot of the mountain waiting for the peak to come down




BTW: Love your work 

Beej


----------



## gfresh (1 September 2009)

FHOG should have never been introduced on older properties.. New home starts are still faltering, which is just stupid, when the effect of the stimulus on older properties could have been re-directed towards construction to create new homes and ease any shortages. 

Unfortunately, with current government policy (doesn't matter which party), not owning any property is disadvantageous as well. So in some ways, the reason why I bought a house recently is to hedge the idiocracy of government. This I don't expect to change anytime soon.


----------



## satanoperca (1 September 2009)

gfresh said:


> FHOG should have never been introduced on older properties.. New home starts are still faltering, which is just stupid, when the effect of the stimulus on older properties could have been re-directed towards construction to create new homes and ease any shortages.




It was as simple as that and why not go one step further and offer better tax rebates for investors of new homes and reduce tax incentives for older homes. 

Ease shortages while increasing workforce. I must be missing something, it cannot be that simple, I will ask the genius of the family my 3 year old son.

Cheers


----------



## Early Bird (1 September 2009)

thanks for the link no more 4s.


----------



## robots (2 September 2009)

hello,

good evening everybody, another great spring day, Sun Shining bright for us in Melbourne, this is fanatastic, cant believe it

gee how's the economy going brothers? nothing new in today's figures

we Australia, we on the ride

another month of rises for property, this is great

thankyou
professor robots


----------



## bowseruni (2 September 2009)

Just got back from the auction i was looking at bidding at, the house is 1940's vintage, untouched from then so needing a heap of work on a flat 600sqm block. 
Comm bank valued it at 420k, i was prepared to go to 400k.......bidding started at 400k and ended at 515k...what a joke. House is either knock down or spend 150k plus to get any good.

the bubble keeps inflating........still saving for the time being

on a good note, the local bottle shop had Corona slabs on special, not all that bad of a night


----------



## robots (2 September 2009)

hello,

yes, and people like Schiller spout out houses return 0.1% p/a, just amazing

the media outlets want to get a mic down to Robots joint, Kincella's, Beej's or Shadow's for an expert account

thankyou
professor robots


----------



## kincella (3 September 2009)

Robots,
or the media could talk to all those people sitting pretty in their own homes, or the people upgrading to bigger better homes....no good talking to the banks...they would play down the numbers, in order to fattern their pockets and profits...

oh, when I heard those numbers yesterday I smelt a rat....and there was Swany preening his feathers saying look how good am I....and the other Rudd, playing it down....
I reckon all those public servants have been doing too much overtime and stuffed up the numbers...to make the govt look good....and play up to the banks to raise interest rates....

here is a snippet from the article................

The GDP numbers don't add up
TIM COLEBATCH
September 3, 2009 
YESTERDAY'S GDP figures are certainly wrong. But for now, we don't know which of its figures are wrong - and so we don't know Australia's real rate of economic growth.

Sorry, but that's the truth.

The figures released yesterday do not add up. They will be heavily revised. Their bottom line could be flipped upside down, turning growth negative.

http://business.theage.com.au/business/the-gdp-numbers-dont-add-up-20090902-f8fc.html


----------



## Mr J (3 September 2009)

Buckeroo said:


> Would be of interest to know what their average wealth is and what part of the world is the average immigrant from. I know a number of South Africans are now coming to Australia & many of them are quite wealthy who can afford to buy medium priced houses.




South Africans have been coming to Australia in large numbers for a couple of decades (at least) now.

It's silly for anyone to suggest that property doesn't increase in value over time. If the population of a city grows, land value will increase. Is it as much as most think? Probably not, but that's no different to any other asset.



			
				kincella said:
			
		

> I reckon all those public servants have been doing too much overtime and stuffed up the numbers




They've been working 4 days a week?


----------



## finnsk (3 September 2009)

I dont know if it has been covered in this thread, but if interest is on the rise what % will the banks give you, if you lock it in for the next say 5 years 7-8-9-10% or more?
What will happen to house prices if interest goes to 10%?


----------



## robots (3 September 2009)

hello,

yes long term fixed rates are around 8%,

interest rates went to 9-10% just last year and the prop market was knocked up about 5-10%

some segments went a lot more, but good ole run of the mill well located RE  hanged in well just like the previous time around 1990

thankyou and have a great evening

professor robots


----------



## wayneL (3 September 2009)

FYI - UK,s most loathed landlords selling up.

The cynics here are wondering whether it is their decision or the bank's. Their valuation is always above market value and could possibly be in deep doo-doo.

That's speculation though. But if it were me (and genuinely had £70mil in equity), I'd keep 50 or 100 houses and live the life of Reilly on the unencumbered rent.

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6819301.ece



> Fergus and Judith Wilson, 793rd on The Sunday Times Rich List this year with a combined *value of £70 million*, have decided to call it a day after almost 20 years of property investing.
> 
> At their peak they owned about 900 houses but their portfolio has been badly hit by the downturn, *falling from an estimated value of £180 million* early last year.
> 
> ...


----------



## Knobby22 (3 September 2009)

He said: “The time is right for us to go. It is much easier to offload them now than I think it will be in 18 months.

Very,very interesting quote from a professional investor.


----------



## gfresh (3 September 2009)

20 years takes them back to the late 80's.. one recession and one of the best periods of credit and housing growth in the last century, hardly "experienced".. All it took was an actual serious recession and it was enough to finish them. Kincella on here would have more experience than that here I would say. 



> Mr Wilson said that they had already received a number of approaches from investors wanting to buy the whole portfolio, including a consortium of professional footballers and funds from Russia and the Far East.




Why are these guys buying then?


----------



## wayneL (3 September 2009)

gfresh said:


> Why are these guys buying then?



It's BS.

They were *allegedly* approached at the height of the bubble. Those offers are no longer current however.

These people are well known for embellishing the truth.


----------



## kincella (5 September 2009)

and across Australia...in fact 1225 suburbs with houses below 500k's....... and of course its written by property industry people....not goat breeders ........this has been part of my theme...there is affordable property out there for everyone.....seek and ye shall find......

extract only ...read the full article...
*Emerald City the country's most affordable*
IT has been dubbed the country's most expensive place to live but Sydney is in fact Australia's most affordable city.

A report on property in the country's capital cities names Sydney as the place with the most suburbs where the average property price falls under half a million dollars. 

Of 1225 suburbs across Australia where the median house price is below $500,000, Sydney has 298, almost half of the city's total suburbs, according to the report commissioned by the National Australia Bank. 

"This result is a little surprising, given that Sydney is the nation's most expensive housing market," said the report's author, Cameron Kusher of research firm RP Data. 

"It does show that many suburbs still exist where affordable property is available." 

General sales manager at McGrath Real Estate Matt Lahood said many of Sydney's first-home buyers trying to get their foot on the property ladder had unrealistic expectations. 

"A lot of the buyers coming into the market want to kick off into the parkside and beachside areas," Mr Lahood said. "The perception of their dream area ends up not being the end reality." 

Raine & Horne chief executive Angus Raine said the city was made up of a "series of tribes", some of which carried greater "snob value" than others. 

http://www.theaustralian.news.com.au/business/story/0,28124,26028999-25658,00.html


----------



## Buckeroo (5 September 2009)

Raine & Horne chief executive Angus Raine
General sales manager at McGrath Real Estate Matt Lahood

And from extremely reliable sources as well

Cheers


----------



## gav (5 September 2009)

*Call for reforms of tax lurks as negative gearing frenzy hits*

http://www.news.com.au/business/money/story/0,28323,26029676-5017313,00.html
*
LANDLORDS are claiming $11 billion in tax deductions a year as a negative gearing frenzy grips the property market.*

The tax grab from property "losses" - the richest potential deduction for individuals - is about four times the amount claimed 10 years ago.

As the Henry Review examines how to reform our tax system, the Herald Sun also revealed more than half of Australian companies pay less than 5 per cent tax.

Treasury figures reveal only a quarter of companies, or about 92,000 businesses, pay more than 15 per cent tax on their total earnings.

Property investors whose interest bills exceed the rent on their investment can use the losses to reduce their tax.

Deductions by individual property investors hit $11.7 billion in 2007-08, up from $3.1 billion in 1999-2000.

*That's more than double the $5.2 billion in taxable capital gains reported by the same group.
*
The Brotherhood of St Laurence said the system inflated housing prices while rewarding higher income earners. 

The new tax figures, provided to a Senate committee, paint a staggering picture of top-end tax lurks used by individuals and companies.

The corporate tax rate is 30 per cent, yet 182,000 companies pay less than five cents in the dollar on their total earnings. And thousands pay no tax at all.

Taxwatch spokesman Julian Disney said the figures, published for the first time, showed the opportunities available for corporate Australia to minimise tax liability.

"It shows the importance of closing off unjustifiable tax concessions and loopholes, which enable companies to avoid paying their fair share of tax," Prof Disney said.

Greens leader Bob Brown said there was a clear case for change.

"Everyday taxpayers I know would be delighted to pay less than 5 per cent tax on their gross income," Senator Brown said.

"The Government must publish a full and open exposition of the tax deductions available to the business sector to explain these figures."

Treasury Secretary Ken Henry is conducting a "root-and-branch" review of the tax system on the orders of the Rudd Government.

In its submission to the review, the Business Council of Australia argued for the business tax rate to be slashed.

A spokesman for Treasurer Wayne Swan said the Government was awaiting the results of the Henry Review before considering changes to the system.

The tax take in 2007-08 was about $286 billion.

Individuals paid $129 billion and companies paid about $78 billion, with GST and sales taxes making up the difference.
---------------------------------------------------

So individual property investors are claiming $11.7 billion, yet only make $5.2 billion in taxable capital gains.  How long can this keep going?  And more than half of Australian businesses are paying less than 5% tax?  WTF?!


----------



## Tysonboss1 (5 September 2009)

Now is not that best time to be considering entering the property market,

Why rush in to buy now, when you will probally be able to buy at the same prices in 5 years,

Property makes up about 1/2 of my investment assets, While I am not selling any (due to them being positive cashflow and part of my longterm stratergy), I am certainly not adding to my portfolio unless it was a private residence of a business premises.

Most of my property is based in brisbane, and I am certain brisbane is entering a period of stagnation, It's been a good run over the past few years but as with anything I believe it is over, it's time for things to settle for a few years.


----------



## satanoperca (5 September 2009)

kincella said:


> and across Australia...in fact 1225 suburbs with houses below 500k's.......




Ah, what 450-500K is affordable for the average nuclear family? One income, 2 kids and a full time care giver on an average income of 60K, this still equates to X7 the average income. But wait, affordability means sending the kids of to day care 5 days a week, might as well have them born in a test tube and reared in a pen or laboratory then which could have affordability at X10 or more.

Or another way,  borrow 400K, 28K in interest plus insurance, up keep and rates make it 33K. Average income clears 47K a year. Seems reasonable if all you want to live on is rice and be the bitch to the overlord banks for the next 25 years.

How about the government grows some balls and puts in place legislation to encourage people to invest their money in businesses that employee people instead of the masses being in debt servitude to the banks for 25 years. 

Having affordability at x7 the average income provides no long term benefit to the community and the inhabitants of this great country. It seems that the indigenous people of Australia had the right approach to land usage, they had survived over 60K years, white man will be lucky to leave this land inhabitable in 1K years.


----------



## robots (6 September 2009)

Buckeroo said:


> Raine & Horne chief executive Angus Raine
> General sales manager at McGrath Real Estate Matt Lahood
> 
> And from extremely reliable sources as well
> ...




hello,

a bit like all the rubbish from this site:

http://www.debtdeflation.com/blogs/

least the RE's get it right, got the numbers on the board

thankyou
professor robots


----------



## robots (6 September 2009)

hello,

good morning, another top performance on the auction scene yesterday

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

84% clearance, this is just amazing

sorry sorry, i know i know, i have to wait a few more months apparently

paradise, anyone heard from Numbercruncher?

oh well

thankyou
professor robots


----------



## cutz (6 September 2009)

gav said:


> So individual property investors are claiming $11.7 billion, yet only make $5.2 billion in taxable capital gains.  How long can this keep going?  And more than half of Australian businesses are paying less than 5% tax?  WTF?!




Yeah Gav,

What a great system, load up on debt, get on the ponzi bandwagon and hope for the best, in the meantime average wage earners buying their first homes cop it up the 

Personally i can't see the point of negative gearing but i'm no guru, maybe the government just don't have the balls to fix the system cos every man and his dog is a property tycoon.


----------



## knocker (6 September 2009)

*:::::::::::::::: :::*



robots said:


> hello,
> 
> good morning, another top performance on the auction scene yesterday
> 
> ...




Um no because he has been shafted by you and your cronnies..


your time is fast approaching


----------



## robots (6 September 2009)

hello,

and a couple of the Western Australia crew havent been around for a while either:

chops a must or kimosabi

anyone heard from them?

thankyou
professor robots


----------



## Beej (6 September 2009)

robots said:


> hello,
> 
> good morning, another top performance on the auction scene yesterday
> 
> ...




Yep! Sydney weekend clearance 71%, 150/211 sold - volume is on the up as we hit the first weekend in spring, but with a median auction sale price of ~$650k+ for yesterday and for the last few months it seems the up-graders and out in force!



Tysonboss1 said:


> Now is not that best time to be considering entering the property market,
> 
> Why rush in to buy now, when you will probally be able to buy at the same prices in 5 years,
> 
> ...




Tysonboss - your outlook for Brisvegas may well be right - there was a pretty good run up in prices there between 04 and 08 when some other cities/regions (especially Sydney) saw little growth in prices. I think the story in Sydney/Melbourne is currently a little different though.



cutz said:


> Personally i can't see the point of negative gearing but i'm no guru, maybe the government just don't have the balls to fix the system cos every man and his dog is a property tycoon.




Well if it was removed and you found that your rent doubled, or you were forced to pay for (through higher taxes) more public housing, or maybe even had to live in public housing, then you would probably "suddenly" get the point of negative gearing......

Cheers,

Beej


----------



## satanoperca (6 September 2009)

Robots,

The next few weeks will give a better picture of the demand supply situation with a dramatic increase in volume of properties offered at auction.

The next few months will be interesting with the FHBG being reduced and a more than likely increase in IR rates. Just a small increase will get people thinking.

I personally are looking forward to heavily loading up on debt in the new year for property purchases, just waiting for interest rates to go up.

Cheers

For those that we up early in Melbourne this morning, it was one of the most stunning sun rises I have seen in a long time.


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## Uncle Festivus (6 September 2009)

Beej said:


> Well if it was removed and you found that your rent doubled, or you were forced to pay for (through higher taxes) more public housing, or maybe even had to live in public housing, then you would probably "suddenly" get the point of negative gearing......
> 
> Cheers,
> 
> Beej







> Deductions by individual property investors hit $11.7 billion in 2007-08, up from $3.1 billion in 1999-2000.




I had to have a laugh out loud at that lot  or at least explain yourself a bit better. 

The point of NG is pure & simple a tax payer funded rort!

So the 'point' of negative gearing is so that we don't have high rents, increased taxes and don't have to all live in public housing? We should be so grateful then! A pity we still have the some of the highest rents & housing unaffordabilty in the world! 

The fact is that NG for existing housing is simply a tax payer subsidy for the investor to hide the true costs of owning a dwelling, & does not promote the creation of new housing, & does not keep cost's & prices down, in fact, it actively promotes even more unaffordable property prices. 

If the government scrapped the NG rort then from the above figures it would have aprox $12B to spend on public housing or whatever, not that it probably would though?

The Gov should cut out the rorts and only have rebates for new housing, and migrants should only be allowed to migrate if they don't contribute to housing cost pressures ie build their own. Simple stuff, it only needs a leader with some true backbone to clean up the corrupted system, from the top down.


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## Beej (6 September 2009)

Uncle Festivus said:


> I had to have a laugh out loud at that lot  or at least explain yourself a bit better.
> 
> The point of NG is pure & simple a tax payer funded rort!
> 
> ...




In the 80s the Hawke/Keating government tried removing negative gearing for a couple of years - it was an un-mitigated disaster and sparked a rental accommodation crisis and spiralling rents. So past facts/history supports my view.

You need to work through the maths a bit better and try to remove your emotion from the situation, and maybe you would not laugh so much at statements like mine, which actually represent pretty mainstream thinking on the issue around treasury and the political arena etc. $12B a year in tax deductions/refunds for property investors - sounds like a lot? But it is really? Especially given that in 07/08 (the tear being used) interest rates increased to their highest levels since the mid-90s?

There are between 2.5M and 3M renting households in Australia. So $12B/year means that on average landlord costs are subsidised by $4k-$5k per year per rental (ie $75-$100/week). That's really not very much at all, and FAR LESS than it would cost the government to attempt to provide that housing itself if negative gearing were scrapped and 90% of private property investors exited the market.

Also, rents in Australia are CHEAP compared to other countries by any measure - especially the US, UK etc. Part of the reason for that is NG - so postulate and pontificate all you like about the removal of NG and pretend all you like that it has nothing to do with the availability of relatively low cost rental housing in Australia, but it is not going to be going away any time soon.

Cheers,

Beej


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## Tysonboss1 (6 September 2009)

The department of housing already has waiting lists of over 5years for people that want houses.

Can They really handle increased demand if investment into property slows.

I can't see a smart government lowering benefits to property investors, as it would be far more expensive for them to have to start funding more state owned housing to take up the slack.


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## Mofra (6 September 2009)

satanoperca said:


> Ah, what 450-500K is affordable for the average nuclear family? One income, 2 kids and a full time care giver on an average income of 60K, this still equates to X7 the average income. But wait, affordability means sending the kids of to day care 5 days a week, might as well have them born in a test tube and reared in a pen or laboratory then which could have affordability at X10 or more.
> 
> Or another way,  borrow 400K, 28K in interest plus insurance, up keep and rates make it 33K. Average income clears 47K a year. Seems reasonable if all you want to live on is rice and be the bitch to the overlord banks for the next 25 years.
> 
> ...



Just a couple of points to consider:

a.  A single income family would be very unlikely to enter in the middle range market

b.  Single income families aren't as common as expected - average household income differs to average salary

c.  Family Benefits for a 2 child family equate to $186.20 per fn for Part B (unless they're younger, in which it's higher). The lowest rate for Part A on ave salary is $313.88 per fn.  That's $26,000 pa extra income not factored into your scenario, which makes quite a difference. If either child is under 5, the amount of Part B increases and if either child is over 13, the amount of Part A increases.

I'm certainly not arguing in favour of middle class welfare (I don't get any myself) but it can make a substantial difference.


----------



## robots (6 September 2009)

hello,

might be some tweaking of those supply numbers over the next few weeks (ie. some reductions, people accepting offers)

yes who knows what may happen in the future hopefully the gains are locked in so we can keep the economy rollin on (equity mate)

thankyou
professor robots





satanoperca said:


> Robots,
> 
> The next few weeks will give a better picture of the demand supply situation with a dramatic increase in volume of properties offered at auction.
> 
> ...


----------



## satanoperca (6 September 2009)

Mofra,

I am not aware of the full details of government assistance to families, I have a single child and our family does not recieve anything from the goverment except childcare rebate. I accept that the scenerio I painted it is necessary to add further income from the government to the family.

But I find it a bit had to believe that a family on 60K with 2 kids could recieve 26K from the goverment. Had a look at the government website, to much to absorb but a mate is a single father with a child in day care full time, earns 65K a year and recieves about 14-16K back on his take.

If anyone knows what a 60K family income with two kids under 18 years old receive from the goverment in benefits each year?

Cheers


----------



## MACCA350 (6 September 2009)

If investment incentives were reduced, wouldn't that reduce demand by the investment crowed and in effect reduce prices which will allow many of those current renters who have been locked out due to price to free up rentals and buy their own property.

It just seems that the pricing over the last 10 years has been pushed up by those investors with deeper pockets than the average household..........if they kept their hands in their pockets due to lower investment incentives, surely this would reduce prices allowing lower earning groups to leave the rental market and purchase their own home(and if the govt wiped the FHBG on existing properties completely and only had a reasonable(not excessive) FHBG on new builds much of those buyers would build........and in doing so increase available properties)


Step back and have a look for a minute on a large scale. Over the last 10 years or so the prices have increased exceptionally and pushed ownership further up the earnings ladder. Now what happens to those who now cannot afford to purchase, they must rent of course which puts pressure on rents.

Now put this in reverse, take some of the investment incentives away and demand drops, prices drop...........low and behold those who were locked out of the market are now able to purchase and free up rental properties.

Ask yourself, where are the majority of Australians on the income ladder?
Push prices up high enough and they cannot buy and must rent, which pushes up rental prices and makes housing "investment" look attractive for investors (who are higher up the earnings ladder) who can afford more for properties and are gagging to buy more due to the incentives.

I saw something on TV where this lady mentioned she had purchased 70 IP's in a short period of time IIRC.........mind you the bank probably owned 99% of them...........I mean seriously the balance seems wrong, there seems to be too much investment incentive.

Have a look at the past 6 months or so and you'll see there is a large FHB group that would jump at the chance for affordable new housing...........surely no one could ignore the flood of FHB due to the lower rates and FHBG boost..............reduce the investment incentives, allow housing to become more affordable and I'd bet this "property shortage" would be sorted pretty quick.

cheers


----------



## Tysonboss1 (6 September 2009)

MACCA350 said:


> If investment incentives were reduced, wouldn't that reduce demand by the investment crowed and in effect reduce prices which will allow many of those current renters who have been locked out due to price to free up rentals and buy their own property.




The only thing that will lower prices and rents is increased supply, Renter simply buying his own home doesn't really free up a rental property because the one he is buying is probally an ex rental.

Increase supply and you are going to put downward pressure on rents, reduce supply of dwellings and you are going to put upward pressure on rents.

Developers build dwellings, Investors then buy these dwellings freeing up the developers cashflow to build his next poject. without investors buying the dwellings less dwellings will be built, less dwelling being built = less available rentals and increased rents.

simply turning renters into property owners doesn't increase supply so you are still stuck with higher rents.


----------



## Tysonboss1 (6 September 2009)

MACCA350 said:


> Step back and have a look for a minute on a large scale. Over the last 10 years or so the prices have increased exceptionally and pushed ownership further up the earnings ladder. Now what happens to those who now cannot afford to purchase, they must rent of course which puts pressure on rents.




If someone can't afford to buy a place to live it is because of their failure to save and invest, or their standards are to high.

I am sick hearing people who go through their late teens and twenties living the life of hyper consumers and arrive at age 30 and complain they can't afford their dream home.

I am also sick of low and middle income people looking at the price of 3 bedroom house and land within 15 kms of sydney and complaining that they could never afford to own one. Get with the programme people your not supposed to be able to afford a 3bedroom home on a decent block of land 15kms from sydney.

Our big capital cities are getting over crowded and there is simply not enough land for every family to own a house and land near the city, So someone has to miss out, and it's not going to be the high incomes.

If you can't settle for what your budjet provides for then you must live the life of a renter.


----------



## Tysonboss1 (6 September 2009)

MACCA350 said:


> Have a look at the past 6 months or so and you'll see there is a large FHB group that would jump at the chance for affordable new housing...........surely no one could ignore the flood of FHB due to the lower rates and FHBG boost..............reduce the investment incentives, allow housing to become more affordable and I'd bet this "property shortage" would be sorted pretty quick.
> 
> cheers




The fHBG is one of the key factors that has caused price increases, It does nothing to increase supply of housing it just gives people more money in which to pay for it.

Picture a table with 5 people at it and in the centre is 4 banana's, The supply is not enough for everybody, but all 5 people want a banana so the person with the least to spend is going to miss out because the bidding will increase till the poorest person drops out. However giving the poor guy more money will just increase the price higher, someone still must miss out.

The only thing that will reduce the price is increasing the supply of the banana's.


----------



## explod (6 September 2009)

> The only thing that will reduce the price is increasing the supply of the banana's.




Good analogy, but if they borrowed to buy the banana's and the interest rates were to rise and they cant afford to pay it then they will want to unload those banana's and the price will drop.  Or if costs of food, school fees go up and jobs start to be lost, again not able to afford to support the holding of banana's price will drop


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## gooner (6 September 2009)

Mofra said:


> c.  Family Benefits for a 2 child family equate to $186.20 per fn for Part B (unless they're younger, in which it's higher). The lowest rate for Part A on ave salary is $313.88 per fn.  That's $26,000 pa extra income not factored into your scenario, which makes quite a difference. If either child is under 5, the amount of Part B increases and if either child is over 13, the amount of Part A increases.
> .




These numbers are grossly overstated.

Firstly the fortnightly amounts have been multiplied by 52 - last time I looked there were only 26 fortnights in a year. So that halves the amount straight away.

Secondly, the amount of $313 per fortnight only applies up to family income of $45,000. On the average income quoted of $60k, you would lose 20% of the difference, so that is another $3,000 off the total.

Thirdly Family Tax benefit B is paid by family, not per child, so this number is also overstated by a factor of 2.

Overall, you would get about $7,500 a year in these circumstances, not $26,000

I get the maximum amount of A and B due to estimated family income below $45k. I have THREE kids. Total assistance from FTB A and FTB B is about $18k a year


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## Tysonboss1 (6 September 2009)

explod said:


> Good analogy, but if they borrowed to buy the banana's and the interest rates were to rise and they cant afford to pay it then they will want to unload those banana's and the price will drop.  Or if costs of food, school fees go up and jobs start to be lost, again not able to afford to support the holding of banana's price will drop




Yes, But people have to live some where, In such situations you can see some crazy things happening.

The first thing you notice is both rents and prices of top end homes fall as people try and save by trading down, the property classes at the lower end have increasing demand as these people start trading down which supports both rents and prices.

So in a recession rents of lower end properties can rise and prices hold firm. 

Thats why I always invest in property that suits people at the bottom of the middle class bracket and the top of the low income bracket. this style of property delivers a higher rental yeild and is always in demand regardless of the economic cycle.

I do own one topend home, however it has not performed as well ( as far as rental yeild is concerned) and I only keep it because I wish to move into it one day.


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## MACCA350 (7 September 2009)

Tysonboss1 said:


> simply turning renters into property owners doesn't increase supply so you are still stuck with higher rents.



It will if there is incentive to build instead of buying existing.

I think you missed my point though........Hypothetically do you think there would be a supply shortage if the median price was $250k instead of nearly $450k? 



> Picture a table with 5 people at it and in the centre is 4 banana's, The supply is not enough for everybody, but all 5 people want a banana so the person with the least to spend is going to miss out because the bidding will increase till the poorest person drops out. However giving the poor guy more money will just increase the price higher, someone still must miss out.
> 
> The only thing that will reduce the price is increasing the supply of the banana's.



............And what if that poorest guy was only given the money to build his own banana tree.........I do understand that the FHBG have upward effect on prices, but they can be used to direct FHB to a particular sector, that's why I said:
"if the govt wiped the FHBG on existing properties completely and only had a reasonable(not excessive) FHBG on new builds much of those buyers would build"

I think you may have missed my point........prices have become too high for the average punter..........they cannot buy so they have to rent..........lower prices and they can build a new home which adds one more house to the supply.

cheers


----------



## satanoperca (7 September 2009)

gooner said:


> These numbers are grossly overstated.
> 
> I get the maximum amount of A and B due to estimated family income below $45k. I have THREE kids. Total assistance from FTB A and FTB B is about $18k a year




Thanks Gooner. It would seem quite difficult to manage a morgage of x7 average income and raise three children on these figures. This was all I was trying to show, that affordability is out the door in this country due to excessive credit and NG.

Cheers


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## gooner (7 September 2009)

satanoperca said:


> Thanks Gooner. It would seem quite difficult to manage a morgage of x7 average income and raise three children on these figures. This was all I was trying to show, that affordability is out the door in this country due to excessive credit and NG.
> 
> Cheers




Satanoperca

Completely agree with you. I own my house but this is because I was previously earning good money.  Earning $60k a year with three kids, and a mortgage of $430k,  pffffffft.

I was nervous about taking on a mortgage of that much when I was earning over $200k a year.


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## Mc Gusto (7 September 2009)

Melbourne's property market is out of control and i wonder what it means for the long term.

Went to two auctions on the weekend. Caulfield north, semi detached, renovated. Quoted 700 - 800. On the market at 780. sold for 916k

St Kilda East, semi detatched, semi-renovated. Quoted 680 - 740. On the market at 730k sold for 925k.

Both would have struggled to get past 700 in december i kid you not...are people really that confident in this countries economic outlook? it seems so...

I am not going to argue or 'fight' the market but i am not going to participate either.

thanks

Gusto


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## Mc Gusto (7 September 2009)

ONE-THIRD of the country -- including battlers' suburbs and some of the wealthiest urban areas -- has entered the danger zone for financial distress, despite signs that economic conditions are improving.

Dunn & Bradstreet found that 33 per cent of postcodes had fallen into the "high-risk" category of financial distress, with Victorian suburbs facing the highest risk of defaulting on debts. This is up 30per cent on the same time last year. 

http://www.theaustralian.news.com.au/story/0,25197,26036211-2702,00.html


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## Beej (7 September 2009)

Tysonboss1 said:


> If someone can't afford to buy a place to live it is because of their failure to save and invest, or their standards are to high.
> 
> I am sick hearing people who go through their late teens and twenties living the life of hyper consumers and arrive at age 30 and complain they can't afford their dream home.
> 
> ...




+1 - Well stated Tysonboss! 

When I was in my early twenties I saved money, deferred travel, drove a second hand car etc (self maintained) etc, and bought a house in 1992. At this time, although prices were cheaper in income/price ratio terms (although Sydney median house price was 7x average full time wage), interest rates were way higher at over 10% - so affordability was actually about the same as today, possibly even lower actually. Many of my friends/colleagues/peers at the same age were spending nearly every cent and traveling the world, buying new cars (on credit) etc having a ball, but with no eye to the future. Having just seen the great Sydney house price boom of 1988-1989, they should have been as aware as I was that securing home ownership as soon as possible was going to be a life defining decision (financially at least). 

By the time we were all nearly 30, I had paid off that first house and owned it outright - all my friends were complaining that they could not afford to buy a house, they were too expensive etc etc! I started doing my traveling etc then in my late 20s, and had the time of my life, but when I got back - I still owned a house! In fact the rent I got paid while I was traveling funded my travels 

So some words of wisdom: Save, invest, buy property etc when you are young - as soon as you start earning full time income. Defer long travels, consumption etc until just that little bit later in life (you may only have to wait 5 years, it's not that long). This approach can set you up for life, irrespective of easy credit, FHB grants etc etc etc. Maybe not everyone's cup of tea, but if you choose a different path, don't complain when you can't afford an inner city Sydney house at age 30, or even 40. And remember that whatever path you choose, when the time comes to buy your first house some of the people you will be competing with will have chosen a path like the one I describe. 

Cheers,

Beej


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## Tysonboss1 (7 September 2009)

MACCA350 said:


> I think you missed my point though........Hypothetically do you think there would be a supply shortage if the median price was $250k instead of nearly $450k?




Yes there would still be a shortage if you are talking about a house and land package.

Because lowering the price doesn't create more land.

There are properties avaiable even in sydney for $250,000. Offcourse alot of people set their sights on properites that are way above their means, and then complain when they can't afford it.


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## Tysonboss1 (7 September 2009)

Beej said:


> When I was in my early twenties I saved money, deferred travel, drove a second hand car etc (self maintained) etc, and bought a house in 1992. At this time, although prices were cheaper in income/price ratio terms (although Sydney median house price was 7x average full time wage), interest rates were way higher at over 10% - so affordability was actually about the same as today, possibly even higher actually. Many of my friends/colleagues/peers at the same age were spending nearly every cent and traveling the world, buying new cars (on credit) etc having a ball, but with no eye to the future. Having just seen the great Sydney house price boom of 1988-1989, they should have been as aware as I was that securing home ownership as soon as possible was going to be a life defining decision (financially at least).




Me to, was investing in shares from the age of 14, By 20 I bought my first property, and by 24 I was running my own business. Now I am 27 and My business is firing on all cylinders I have a decent property portfolio and a healthy share portfolio. 

It's easy to blame the world but at the end of the day it's your choices that affect the outcome.


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## Tysonboss1 (7 September 2009)

MACCA350 said:


> I think you may have missed my point........prices have become too high for the average punter..........they cannot buy so they have to rent..........lower prices and they can build a new home which adds one more house to the supply.
> 
> cheers




Do you believe that it is possible for every Australian to live in a 4 bedroom home on a 1/4 acre block, with 20 kms of the major cities.

No, it is simply impossible due to phyisical constraints on land, unfortunatly average joe still clings to this dream of living in a house and land close to amenaties, when really the average sydney sider on low to medium income should be livng in an apartment,

If you don't want to live in an apartment, move outside the capital cities. there is plenty of regional areas where you can afford a house on a big block.

As time goes by, The population's of our cities are growing and total number of houses is decreasing as they bulldoze houses to build back apartments, So an ever increasing number of people will be fighting over an ever smaller amout of houses.


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## kincella (7 September 2009)

Jan Sommers books on realestate investing, cites the main excuses, as to why some are not buyers....10 main excuses....waiting for a lower price etc, and its all been covered here...a thousand times over....

I keep on saying there are plenty of affordable properties out there for everyone to choose from....and they are not $500 k for a first home buyer either....

have a look at this...super savers will take over from FHB's...and Sydney prices rising over 28% pa............... for the ones who took a stand years ago.....and  for the ones still waiting for the big falls, and  who just prefer property to other investments, but who hold other types, but on a lesser scale...
and notice we have so many different views about rates atm....tanner says no rises, nab says yes, blah blah blah...back to 6.5-7 at some stage....not 8-10% though
extract..............

AUSTRALIA could be heading for another rampant house-price boom, fuelled by cashed-up superannuation investors exploiting generous government concessions. 
While the Treasury is trying to dampen demand by winding back the First Home Owner Grant at the end of this month, a little-known rule change made before the financial crisis began is enabling thousands of super savers to use funds as a deposit on an investment property. 

Finance firms say inquiries about using their super in this way are soaring, while the amount of super savings used for property investment rose by 25 per cent in 2008 to $44 billion - a record high. 

Economists say it would only take a fraction of the $300 billion sitting in the country's 400,000 self-managed super funds to boost house prices. 

Steve Keen, Professor of Economics at the University of NSW, says just $5 billion of new money entering the market each month would pick up the slack left by the withdrawal of the First Home Owner Grant. 

"Given that these funds can borrow up to 80 per cent of the property's value, and they currently contain more than $300 billion, an extra $5 billion a month into the property market would be no sweat,'' he said. 

"The capacity for the super industry to boost property prices is enormous.'' 

Shane Oliver, chief economist at AMP Capital, says the new confidence in the economic recovery could "open the floodgates" for super investors who have been sitting on their hands during the financial crisis. 

He says a rush of new investment could force the Reserve Bank to raise interest rates much faster than previously thought. 

"The Reserve Bank is already worried about a house-price bubble and this will be the last thing it wants to hear,'' he said. 

Property analysts Residex reported last month that Sydney prices were rising at an annualised rate of 28.9 per cent, fuelled by government grants and low interest rates and, if prices continue rising at such a rate, aggressive rate hikes are inevitable. 

http://www.news.com.au/business/money/story/0,28323,26032980-5013951,00.html


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## Uncle Festivus (7 September 2009)

Beej said:


> In the 80s the Hawke/Keating government tried removing negative gearing for a couple of years - it was an un-mitigated disaster and sparked a rental accommodation crisis and spiralling rents. So past facts/history supports my view.
> 
> You need to work through the maths a bit better and try to remove your emotion from the situation, and maybe you would not laugh so much at statements like mine, which actually represent pretty mainstream thinking on the issue around treasury and the political arena etc. $12B a year in tax deductions/refunds for property investors - sounds like a lot? But it is really? Especially given that in 07/08 (the tear being used) interest rates increased to their highest levels since the mid-90s?
> 
> ...




That would be the indoctrinated attitude of the population brought up to assume that property (human living buildings) _should_ be an _investment_, a retirement nest egg etc. and something that makes us wealthy, when we as a community should be viewing it as a fundamental requirement for everyone.

I would even go so far as to suggest that there should be disincentives for any non new residential property investment other than the house you own, as well as abolishing negative gearing. But it should also go hand in hand with generous tax incentives to those who build new dwellings, including substantially more concessions such as claiming interest costs ie neg gear for the new house you live in, and equally generous concessions for developers so they won't have to corrupt local & state government departments. The emphasise being on creating new & affordable housing for all. 

There has to be a shift in our collective attitudes about housing from viewing it as a wealth creator, at the expense of those who can't afford it simply because prices have been bid to levels due to the collusion of government (policies), banks and property developers. Our ethical duties should be to make housing as cheap & affordable as possible, and in so doing we would all have far more disposable income.

There simply isn't a case which substantiates the generous tax concessions granted to people who purchase _existing_ dwellings as an _investment_ - it simply does not benefit society at all, in fact makes us all generally much worse off, as Macca350 states clearly below.

What we are seeing right now is the creation of our very own 'sub prime' bubble from the first home owners subsidy & record low interest rates. The banks interest margins are at the lowest in many years, possibly ever, so they are making up the revenue shortfall though government assisted volume - lower margins but higher volumes of home loans. All at a time when the interest rate cycle has bottomed! 

It's plain to see the end game here - the population has believed the  usual spin fed out from the vested interest RE propaganda machine to buy now or miss out, it has very little to do with demand. If demand was the issue then why wasn't there the same auction clearance rates when house prices were lower? It's the classic RE agent tactic of creating fear of missing out, only on a national level, and will eventually be shown to be unsustainable. The RBA faces the dilemma of a  runaway housing bubble with interest rates as their only weapon, and they are already behind the curve.



MACCA350 said:


> If investment incentives were reduced, wouldn't that reduce demand by the investment crowed and in effect reduce prices which will allow many of those current renters who have been locked out due to price to free up rentals and buy their own property.
> 
> ..............................>
> 
> cheers


----------



## satanoperca (7 September 2009)

> Property analysts Residex reported last month that Sydney prices were rising at an annualised rate of 28.9 per cent, fuelled by government grants and low interest rates and, if prices continue rising at such a rate, aggressive rate hikes are inevitable.




What a joke, annualised figures based on one quarters growth. We have discussed Sydney before, it has hardly shown any growth over the last 6 years. 

Anyone up for a sizable bet that Sydney median prices will not increase more than 20% in the next year.

Kincella, where is all this super money current held, if it is in the banks don't you think a run into property would greatly effect the banks capital if this new super property boom was to proceed.

Don't you think investors may get concerned with the crappy returns they would recieve if the market increased anymore. Current what around 4.0% gross return. Cannot see rents going up to meet this burst of property price increases.


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## kincella (7 September 2009)

instead of looking at crappy 4% annual returns, some of us just focus on the non crappy 20% plus capital growth returns....a return is the same....regardless if its on an annual basis, or on pay day a few years down the track...
I say there are enough houses at reasonable prices for everyone....seems to be the low income earners expect to live in the most expensive suburbs, with no competition from high income earners.....hence the constant talk of 600 ks cost for a fhb...
I am an active investor, in a passive investment....I put in a large amount of time, research, and active time and expense in looking after my investments.....its not as simple as some make out.....sometimes its really hard work, but then I am expecting a big reward in the end....

oh and on another forum...Karrutha in WA is going skywards, due to the big gas ??? or whatever deal is going on over there....massive rents and returns, due to all the big companies involved in the deal...and not enough houses to support the increased population of workers....

and todays news Vic govt reducing the number of houses they planned to build for public housing by about 700 houses....another broken promise...another reason for the shortage....

building committments at an 18 year low....and no reduction in the immigration...
maybe we will become more like Europe, where its predominately renters...not owners...


----------



## Mofra (7 September 2009)

gooner said:


> I get the maximum amount of A and B due to estimated family income below $45k. I have THREE kids. Total assistance from FTB A and FTB B is about $18k a year



You're right, my bad. I had the fortightly calculations wrong.

In any case, $13k makes a definate difference to a single-income family on $60k pa and does change the original scenario satanoperca described.


----------



## gooner (7 September 2009)

Mofra said:


> You're right, my bad. I had the fortightly calculations wrong.
> 
> In any case, $13k makes a definate difference to a single-income family on $60k pa and does change the original scenario satanoperca described.




$13k does but they only get $7.5k  if 2 kids, not sure where you get the $13k from


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## Mofra (7 September 2009)

gooner said:


> $13k does but they only get $7.5k  if 2 kids, not sure where you get the $13k from



I'll have another crack from the website.

According to:
http://www.centrelink.gov.au/internet/internet.nsf/payments/ftb_a.htm

Assuming lowest rates of pay per age for each child.

Part A:   $3,167 is the penalty, total ($4803 X 2) - $3167 = $6,439
Part B:   $2,774 x 2 =  $5,548

Total $11,987 if the children are aged between 5 & 13 (total increases if one or more are outside this range).


----------



## gfresh (7 September 2009)

kincella said:


> instead of looking at crappy 4% annual returns, some of us just focus on the non crappy 20% plus capital growth returns....




Ask yourself why there has been 20% capital growth returns.. It's not rocket science.. It is DISTORTIONS caused by inept government policy and politicians protecting their own little nest eggs for short-term gain, at the long-term detriment of the entire country and it's future prosperity. Just as distortions in credit supply caused the pre-sub prime bubble in the US and UK and it's eventual bust, we have many distortions in our market (in different forms) which should be a concern to anybody with a truly objective viewpoint on what is the best for everybody over the longer term. Without major reform, we're going to run straight into a brick wall at some point, it's just a matter of when.


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## gooner (7 September 2009)

Mofra said:


> I'll have another crack from the website.
> 
> According to:
> http://www.centrelink.gov.au/internet/internet.nsf/payments/ftb_a.htm
> ...




Still too high by $2,774 - the FTB B is payable per family not per child, whilst FTB A is payable per child


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## MACCA350 (7 September 2009)

Tysonboss1 said:


> Yes there would still be a shortage if you are talking about a house and land package.
> 
> Because lowering the price doesn't create more land.



I'm not saying the govt don't have something to answer for in all this due to their lack of planning and release of land. Though it's the developers who lock up what is released and release it in dribs and drabs to try and keep prices creeping higher and higher. But really there is land around and it's not that hard to find a decent block.



> There are properties avaiable even in sydney for $250,000. Offcourse alot of people set their sights on properites that are way above their means, and then complain when they can't afford it.



You make me laugh..........I was talking about median price(ie a reduced overall market pricing)...........not the cheapest you can possibly find

$250k would have to he about the minimum in most city outskirts for new homes. 
The cheapest blocks of land in Melb N and W outskirts start around $170k.............
Houses start at $100k for most modest 14sqm........add in stamp duties, site costs, carpets/tiles and other costs not included, and you'll get bugger all change for $300k.

cheers


----------



## satanoperca (7 September 2009)

Gfresh, I totally agree with what you have stated but 



gfresh said:


> which should be a concern to anybody with a truly objective viewpoint on what is the best for everybody over the longer term. QUOTE]
> 
> There would be very few people who meet this criteria. The vast majority of people are only concerned with what is best for them, both short term and long term. Unfortunate as this is, this is the society will live in.


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## Tysonboss1 (7 September 2009)

satanoperca said:


> Don't you think investors may get concerned with the crappy returns they would recieve if the market increased anymore. Current what around 4.0% gross return. Cannot see rents going up to meet this burst of property price increases.




a 4% Income paid weekly that will rise with inflation year by year, While your capital also rises with inflation sounds ok to me.

Compare it to a term deposit where neither your cashflow or capital increases with inflation, it doesn't take to many years for the property to start smashing the term deposit.

when my Grandfather died in 1975, my grandmother sold his investment property for $4000 and put the money in a term deposit thinking it was an alright cashflow.

30 years later she still has that $4000 termdeposit paying 4.5% interest. mean while the house would have grown in value to $300,000 paying 4% based on the $300,000 rather than the piddly some of $4000.00.

Property is a great inflation hedge.


----------



## Beej (7 September 2009)

Uncle Festivus said:


> The point of NG is pure & simple a tax payer funded rort!
> 
> ....
> 
> If the government scrapped the NG rort then from the above figures it would have aprox $12B to spend on public housing or whatever, not that it probably would though?






Beej said:


> There are between 2.5M and 3M renting households in Australia. So $12B/year means that on average landlord costs are subsidised by $4k-$5k per year per rental (ie $75-$100/week). That's really not very much at all, and FAR LESS than it would cost the government to attempt to provide that housing itself if negative gearing were scrapped and 90% of private property investors exited the market.




Further to looking at these NG figures, after reading this articel: http://www.news.com.au/business/money/story/0,28323,26029676-5017313,00.html I realised the the "subsidy" is even less than worked out in my post above. 

Firstly, the $11.7B figure is for the DEDUCTIONS claimed, not the tax refund provided, to property investors. So the government only misses out on the tax that would have other-wise been paid on that income. Let's call that half the figure, (it's probably less as few would be on the highest marginal rate), = $5.8B.

Now in addition, the referenced article states that in the same year $5.2B in capital gains were declared related to residential property investment. Again, let's say half of that get's paid in tax = $2.6B in REVENUE in for the government.

So the net result = an effective "subsidy" of $3.2B, = $25/week ($1300/year) per rental property in the country (based on 2.5M rentals). Peanuts! And in return the government get's to pretty much divest itself of 90% of the responsibility for the provision of public housing. 

And, now that interest rates have halved (in FY 08/09) I bet that the IP deduction numbers for this year will be more like $6B-$7B, and that the capital gains tax take would just about fund that cost in full.

QED.

Cheers,

Beej


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## Tysonboss1 (7 September 2009)

MACCA350 said:


> $250k would have to he about the minimum in most city outskirts for new homes.
> The cheapest blocks of land in Melb N and W outskirts start around $170k.............
> Houses start at $100k for most modest 14sqm........add in stamp duties, site costs, carpets/tiles and other costs not included, and you'll get bugger all change for $300k.




Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.


http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695

The above is a nice little 2 bed unit for $235,000, easily affordable for a young couple,

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105892423&f=40&p=10&t=res&ty=&fmt=& header=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695


----------



## kincella (7 September 2009)

know someone who just bought a run down little house for about  one third of the costs for comparable houses in the area......why was it so cheap....for a start its not zoned residential.....its not surrounded by houses....it has a semi commercial zoning....which suits them, they intend to turn it into a B & B, after they have done the reno's.....
its not everyones cup of tea, nor suitable....lots of hard yakka to get this one going.....but I just know they will turn this ugly duckling into something beautiful, and should make a motza if they want to...
in the meantime its cheap living....but they will have their hands full with all the work required...


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## Beej (7 September 2009)

Tysonboss1 said:


> Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.
> 
> http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695
> 
> The above is a nice little 2 bed unit for $235,000, easily affordable for a young couple.




That's actually a fairly decent looking place - close to the station/shops etc, Merrylands is a fairly decent area as well, with Parramatta only just down the road. Good example of an affordable starter in Sydney. Plus with similar places renting there for $260-$300/week, owning costs almost the same as renting at the moment.....

Cheers,

Beej


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## MACCA350 (7 September 2009)

Tysonboss1 said:


> Again you keep quoting this house and land garbage as if it should be possible for everyone to afford a large house on a block of land.
> 
> 
> http://www.realestate.com.au/cgi-bi...r=&cc=&c=76500627&s=nsw&snf=rbs&tm=1252300695
> ...



Once again............I'm talking about median prices and affordable new home for the average Aussie family.............not the cheapest POS unit you can find

Average included 2 kids last I checked, and those prices I quoted are about the CHEAPEST you can build on the OUTSKIRTS of Melb North and West...........how on earth can you come to the conclusion that should not be possible for an average family

Cheapest house and land packages I've seen around are in the region of $250k..........add in stamp duty(and other costs) site costs, tiling and carpets, and any other not included costs and even these packages will be pushing $300k...........And once again these are the CHEAP end of the market..........for an average package you'd be looking in the $400k region

cheers


----------



## Tysonboss1 (7 September 2009)

MACCA350 said:


> Once again............I'm talking about median prices and affordable new home for the average Aussie family.............not the cheapest POS unit you can find
> 
> Average included 2 kids last I checked, and those prices I quoted are about the CHEAPEST you can build on the OUTSKIRTS of Melb North and West...........how on earth can you come to the conclusion that should not be possible for an average family
> 
> ...




That wasn't the cheapest POS I could find, It's a good qualty starter home Ideal for a young couple, If you want more bedrooms there are larger units for a bit more.

What I am saying is that it is not logical these days to expect a family should automatically be able to afford a house and land close to the city. on a single wage.

There is just not enough land, So regardless of what happens a certain % of the population in the capital cities will have to live in higher density (town houses and flats). so the demand for the house and land style homes, is going to grow and yes Average Joe probally can't buy one without a few years of planning.

I recommend starting early on somthing small and trading up as you go through life, 

Trouble is most people want to start where their parents have finished and rather than save and plan to get into somthing small, They rent over their budject and complain about the market.


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## Tysonboss1 (7 September 2009)

MACCA350 said:


> how on earth can you come to the conclusion that should not be possible for an average family




Homes in some form will always be affordable for the average family,

It's just that as cities grow these homes are not going to be 3 bedroom houses,.. more likly 3 bedroom Units.

Offcourse there will still be 3 bedroom houses, however the number of houses will be steadily reducing as they are bulldozed. So the suburbs that remain intact will have increasing prices that are out of reach for the average joe.

As I said earlier though, you want land, move out of the city,.. Australia is huge plenty of land out there.


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## satanoperca (7 September 2009)

Tysonboss1 said:


> Homes in some form will always be affordable for the average family,




You must be referring to a tent or even better a caravan.


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## kincella (7 September 2009)

you are kidding macca.....here is just one example with about 20 or more homes...house and land packages...no added stamp duty for fHB's...everything is included....
this ones at Wallan, just north of Melbourne, stacks at Craigeburn, etc
249 k's....about 40 mins to the middle of the city
I have  seen them at Melton for 209 k's....
and would probably find better deals if I knew which suburbs to look for....
pffft to 300k's...
I picked Wallan as it was close to the Freeway, but there's stacks of them, each builder shows the suburbs they will build them on...
there are suburbs closer to Melb in that price range......

an article I posted at the weekend suggested ....there might be suburb snobbery......behind some of the choices people make....
ps most of us have tried to show you, how to be smart with a property, and not pay top dollar....

and I use this site as a guide to travel times....its usually spot on...
here...Melb to Epping 31 minutes
http://www.nowwhereroute.com/tourismvic/RoutePlanner/default.aspx

have a look at this one 229 k's and a big choice of suburbs....

http://www.arbgroup.com.au/form/?ref=4

http://www.realestate.com.au/cgi-bin/rsearch?a=
d&t=hnl&ty=&f=10&p=10&rs=0&fmt=&header=&c=70294873&s=vic&tm=1252309098


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## Tysonboss1 (7 September 2009)

satanoperca said:


> You must be referring to a tent or even better a caravan.






Tysonboss1 said:


> Homes in some form will always be affordable for the average family,
> 
> It's just that as cities grow these homes are not going to be 3 bedroom houses,.. more likly 3 bedroom Units.




No I am refering to higher density dwellings as I mentioned above.

Town Houses and units etc.


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## MACCA350 (7 September 2009)

Tysonboss1 said:


> That wasn't the cheapest POS I could find, It's a good qualty starter home Ideal for a young couple




"Average included 2 kids last I checked"



> What I am saying is that it is not logical these days to expect a family should automatically be able to afford a house and land close to the city



"build on the OUTSKIRTS of Melb North and West"



> Trouble is most people want to start where their parents have finished and rather than save and plan to get into somthing small, They rent over their budject and complain about the market.



You're tarring every FHB with a wide brush there, not everyone thinks that way............and besides were not talking about the big end of town here.....
"once again these are the CHEAP end of the market"



> As I said earlier though, you want land, move out of the city,.. Australia is huge plenty of land out there.



Do you only skim posts?
"build on the *OUTSKIRTS* of Melb North and West"

cheers


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## MACCA350 (7 September 2009)

kincella said:


> you are kidding macca.....here is just one example with about 20 or more homes...house and land packages...no added stamp duty for fHB's



FHB still have to pay stamp duty in Melb..........and you only get a slight discount if you will be moved in within 12 months........and I mean slight.........you should know that.



> ...everything is included....



Like fun



> ps most of us have tried to show you, how to be smart with a property, and not pay top dollar....



Is that what you call it



> have a look at this one 229 k's and a big choice of suburbs....
> 
> http://www.arbgroup.com.au/form/?ref=4



See that little star after the price..........that means there's more to the story.........in this case at bare minimum "FHB price AFTER grant" and notice the FROM...........give them a call and get the real pricing.

We've been out to many displays and listening to all the sales pitches........bottom line is always higher than all the glossy large print marketing nonsense

Come on Kincella, you know better than to fall for that marketing nonsense.......

OOH........did I see that right?........"Up to 100% finance available".........chant with me, sub-prime........... sub-prime......... sub-prime......... sub-prime.........



cheers


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## gfresh (7 September 2009)

Tysonboss1 said:


> I recommend starting early on somthing small and trading up as you go through life,
> 
> Trouble is most people want to start where their parents have finished and rather than save and plan to get into somthing small, They rent over their budject and complain about the market.




Maybe some can do this throughout life.. or in my parent's case, they bought their 3br house 40km from the  city, as it was all they could afford at the time to raise a family. Then got divorced, and split the wealth. 35 years later they never/still were never able to afford anything closer to the city  This may well become the common scenario for many families, not through lack of trying. It's very hard to "trade up" and more further in, unless you are quite career driven, and wish to make sacrifices, sometimes the expense of your family life. 

But anyhow, that is them.. From that I learned a lot about what I *didn't* want..


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## Tysonboss1 (7 September 2009)

MACCA350 said:


> "Average included 2 kids last I checked"
> 
> 
> "build on the OUTSKIRTS of Melb North and West"
> ...




They do build 3 bedroom units as well.

Yep eventually the urban sprawl will make the out skirts unaffordable.

In a large over populated city a 3 bedroom house is the big end of town, Try and find a 3 bedroom house on a decent block in londan or new york. even after their recent price crashes, a house and land is only in the realm of the elite.

What you have to realise is that over the years in a growing city what the average family can afford changes.


----------



## wayneL (7 September 2009)

Tysonboss1 said:


> They do build 3 bedroom units as well.
> 
> Yep eventually the urban sprawl will make the out skirts unaffordable.
> 
> ...



London has 2 1/2 times the population of Sydney and covers 1/4 of the area.

Apples and oranges.

<edit to add> Wages are *much* higher too ('cept for the low end).


----------



## Tysonboss1 (7 September 2009)

gfresh said:


> Maybe some can do this throughout life.. or in my parent's case, they bought their 3br house 40km from the  city, as it was all they could afford at the time to raise a family. Then got divorced, and split the wealth. 35 years later they never/still were never able to afford anything closer to the city  This may well become the common scenario for many families, not through lack of trying. It's very hard to "trade up" and more further in, unless you are quite career driven, and wish to make sacrifices, sometimes the expense of your family life.
> 
> But anyhow, that is them.. From that I learned a lot about what I *didn't* want..




I hear what your saying, It's probally best to buy somthing small not to far from where you want to end up, buying a house in broken hill with the hope up trading up into a house at bondi beach probally won't work.

For example if you want to eventually own a 4 bedroom luxary apartment, in bondi. maybe start with an older 1 bed flat or studio in a slightly cheaper neighboring suburb. 

This property then acts like an anchor, in the market and prices should move inline with the other suburb making it easier to trade up.

But the biggest factor is starting your investment plan early, and avoiding a hyper consumption life style.


----------



## Tysonboss1 (7 September 2009)

wayneL said:


> London has 2 1/2 times the population of Sydney and covers 1/4 of the area.
> 
> Apples and oranges.
> 
> <edit to add> Wages are *much* higher too ('cept for the low end).




my point is just that as cities grow things change. My great grandad could have bought a 1/4 acre block at bondi beach on an average income.

Obviously it would be crazy to expect this to be considered affordable now, I can protest and complain how unfair it is that no one will sell me a house at bondi for a price I can afford, but the fact is people are lining up to pay millions of dollars for homes there

This is what I mean land becomes more expensive as you try and cram more people into the same space.


----------



## tech/a (7 September 2009)

Decided to sell a couple of properties just reciently.(Espy Apartments)
Think they have peaked for the time being.

Great opportunity to clear some holding debt and Freehold another with the profit.Reduction of 2 debts (apartments and the one I'm freeholding) and positive cashflow increased dramatically.


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## wayneL (7 September 2009)

Tysonboss1 said:


> my point is just that as cities grow things change. My great grandad could have bought a 1/4 acre block at bondi beach on an average income.
> 
> Obviously it would be crazy to expect this to be considered affordable now.
> 
> This is what I mean land becomes more expensive as you try and cram more people into the same space.



It is a factor, but not the only one.

My point is that Sydney should not be compared to London or NY city. There are a multitude of reasons of which I mentioned only a couple.

eg, There are dozens of large cities where inner city land is not worth Jack Sh`t.


----------



## Tysonboss1 (7 September 2009)

wayneL said:


> It is a factor, but not the only one.
> 
> My point is that Sydney should not be compared to London or NY city. There are a multitude of reasons of which I mentioned only a couple.
> 
> eg, There are dozens of large cities where inner city land is not worth Jack Sh`t.




I wasn't comparinf sydney as it stands today to londan, I was just pointing out that what seems affordable in the past, May not be afforable in the future.

as every decade passes there will be less houses in sydney, but more people. So the style of property the average can expect to buy will change.


----------



## satanoperca (7 September 2009)

Tysonboss1 said:


> They do build 3 bedroom units as well.
> 
> Yep eventually the urban sprawl will make the out skirts unaffordable.
> 
> In a large over populated city a 3 bedroom house is the big end of town, Try and find a 3 bedroom house on a decent block in londan or new york. even after their recent price crashes, a house and land is only in the realm of the elite.




Is this what you are wishing for Australia to become. No more cricket in the backyard and accommodation only for the elite, so that property is a commodity rather than a necessity for all.

Quality of life is what is important.


----------



## Beej (7 September 2009)

wayneL said:


> It is a factor, but not the only one.
> 
> My point is that Sydney should not be compared to London or NY city. There are a multitude of reasons of which I mentioned only a couple.
> 
> eg, There are dozens of large cities where inner city land is not worth Jack Sh`t.




You *absolutely* can and should compare Sydney to London when it comes to property prices -especially if you want to understand where prices in Sydney are headed.

For a start - see this Wikipedia article about global cities: http://en.wikipedia.org/wiki/Global_city



> Global City or world city status is seen as beneficial, and because of this many groups have tried to classify and rank which cities are seen as 'world cities' or 'non-world cities'.[3] Although there is a consensus upon leading world cities,[4] the criteria upon which a classification is made can affect which other cities are included.[3] The criteria for identification tend either to be based on a "yardstick value" ("e.g. if the producer-service sector is the largest sector, then city X is a world city")[3] or on an "imminent determination" ("if the producer-service sector of city X is greater than the producer-service sector of N other cities, then city X is a world city").[3]
> 
> ......
> 
> ...




As you can see Sydney is ranks as an "Alpha World City+" placing it in the top 10 of global cities in the whole world. Yes London/NY are the 2 "Alpha++" cities, but as far as Australia and even the Asia-Pac region is concerned, Sydney is economically a lot like London. Sydney has very high salaries in many professions compared to the rest of the country, and a LOT of very wealthy families/people live there as well.


PS: Care to name the cities with low inner city property values and show where they sit in the global city rankings?



satanoperca said:


> Is this what you are wishing for Australia to become. No more cricket in the backyard and accommodation only for the elite, so that property is a commodity rather than a necessity for all.
> 
> Quality of life is what is important.




It;s not about what you *wish* for - it's about understanding the economics behind things in order to forsee what is going to happen whether you like it or not. Anyway, back yard cricket will remain alive and well - it just might get played more (by average income earning families anyway) in new smaller cities/towns and further flung centres that get built outside the 20km radius around the centre of the existing major cities. For those in the inner city there should still be plenty of parks/common area's etc where the cricket will get played  It's not all that horrible an idea really you know!

Cheers,

Beej


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## Tysonboss1 (7 September 2009)

satanoperca said:


> Is this what you are wishing for Australia to become. No more cricket in the backyard and accommodation only for the elite, so that property is a commodity rather than a necessity for all.
> 
> Quality of life is what is important.




It's not a concept that I invented, whether I like it or not it is happening,

I would love to see Australia's population spread out into the regional areas, however this is just not happening, a slow but steady natural population growth combined with immigration,and a reluctance for people to move away from capital cities will ensure increased densities continue to happen.

Property has always been a commodity, somthing being a necessity of life does not stop it being a commodity, think oil, coal, grain, beef cattle etc,etc.

All I am saying is that if populations contiune to grow, It is not possible for the density of dwellings to increase, and it is a simple fact that the low density homes will be sought after by the rich, there for putting them out of reach of the average.

But it's simple, If you want a life style that involves a large home on a decent patch of land. Move out of the rat race of the capital cities and live your dream, 

But don't stay in the rat race complaining about somthing that will never change.

Even if laws are changed and property drops a bit, It is only going to reset the price of land to a point where it will then continue to grow from. 

There will always be affordable housing, as I said earlier it is impossible from that housing to always include a big chunk of land.


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## Tysonboss1 (7 September 2009)

satanoperca said:


> Quality of life is what is important.




It sure is,

If you find your self struggling to make ends meet in the city and want a better life style, get out of the city.

Plenty of fantasic spots in oz where you can have a great quality of life away from the rat race.

I plan on exiting sydney soon, I know it will be very hard bringing kids up the way I want to in this rat race. It's not what I want But hey it must be what millions of others want otherwise they wouldn't be here doing it.


----------



## wayneL (7 September 2009)

Beej said:


> You *absolutely* can and should compare Sydney to London when it comes to property prices -especially if you want to understand where prices in Sydney are headed.




Sydney has its attributes, but you are deluding yourself to compare it to London.

I'd pay up to live in London... in fact I do. But would I pay what I'm paying here to live in Sydney? No way. Laughable. It's all yours mate. 

Just my opinion.


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## wayneL (8 September 2009)

So this is where you reckon Sydney prices are going eh?

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION^85242&sortByPriceDescending=true&radius=5.0&primaryDisplayPropertyType=houses


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## Knobby22 (8 September 2009)

wayneL said:


> So this is where you reckon Sydney prices are going eh?
> 
> http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION^85242&sortByPriceDescending=true&radius=5.0&primaryDisplayPropertyType=houses




Wow! 
I am presently reading a SF book called "Flood" by Steven Baxter and excellent English author.  It is about London being flooded due to global warming. Large swathes of London has housing in land that was swamps or is very low lying. There are large gates across the Thames to stop a flood occurring as has happened in the past but in the book the sea rise combined with a storm and accompaning water surge is enough to flood parts of London. I wouldn't buy any of those houses if they were in low lying land.

Sydney gets flooded also by the way. Lets face it, the whole city is in an alluvial plane. Wouldn't take much to do!!


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## Beej (8 September 2009)

wayneL said:


> Sydney has its attributes, but you are deluding yourself to compare it to London.
> 
> I'd pay up to live in London... in fact I do. But would I pay what I'm paying here to live in Sydney? No way. Laughable. It's all yours mate.
> 
> Just my opinion.




Excatly - your *opinion* (a preference really). And you only pay up to *rent* there if I recall??  

Have you actually ever lived in Sydney by the way? I've spent a lot of time in London, but never lived there though, but have close friends and family who have/do and have since come back to Sydney - not backpacker living either but professionals earning good money and living well in both cities. Personally based on my experiences there and their anecdotes, + because of the lifestyle I like to live, I would never be likely to settle in London *permanently* over Sydney.  My lifestyle requires nice weather and summers so I can enjoy nice days with my family in my own backyard, a 10 minute drive to the beach, sailing on the harbour, being surrounded by bushland/reserves, etc etc, + still have broad and diverse economic opportunity available within close commuting distance. Sydney is pretty unique in that it provides all of these and more in one place. I don't have to fly 1000km's to the south of Spain just to get some sun!!!  Anyway, that's my, and many others, preference and opinion! And I "pay up" to live here in Sydney.



wayneL said:


> So this is where you reckon Sydney prices are going eh?
> 
> http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION^85242&sortByPriceDescending=true&radius=5.0&primaryDisplayPropertyType=houses




For the very top end, why not? There are a swag of sales each year of luxury harbour front places that sell for $20M-$50M each year. In a few years they could easily change hands for those top end London prices?

Wayne I think you are suffering from a classic case of ex-pat-itis. You need to get back to the homeland and remember why all those people leave the UK permanently each year! 



Knobby22 said:


> Wow!
> I am presently reading a SF book called "Flood" by Steven Baxter and excellent English author.  It is about London being flooded due to global warming. Large swathes of London has housing in land that was swamps or is very low lying. There are large gates across the Thames to stop a flood occurring as has happened in the past but in the book the sea rise combined with a storm and accompaning water surge is enough to flood parts of London. I wouldn't buy any of those houses if they were in low lying land.




There's another book with this theme that shows one likely future for London-town - Ben Elton's "Blind Faith" - a good read! It's about a future community who live on and around the "Archipelago of London" 



> Sydney gets flooded also by the way. Lets face it, the whole city is in an alluvial plane. Wouldn't take much to do!!




Not the North Shore or Eastern Suburbs..... it's out west and south-west that is the alluvial plane  However having said that, the whole region is still well above sea-level, so sea level rises will not flood western Sydney - it's excessive rainfall run-off from this side of the Great Divide that has the potential to occasionally flood particular parts of those area's, but the dams plus reduced rainfall do a lot to make that a pretty rare event nowadays!

Cheers,

Beej


----------



## gfresh (8 September 2009)

http://flood.firetree.net/


----------



## kincella (8 September 2009)

again, I am with Beej...he has nailed it exactly, why some places are more popular than others, and more expensive when all of the boxes are ticked.
Melbourne has similar attributes, but its not as warm, or as wet as Sydney, as a rule.....last year was an exception with Black Saturday and 45 degree heat....
now look at this CBA and its sub Bank West starting a rate war...variable rate at now 5.4% and capped at 7.5% until 2012....personally I dont believe our rates will rise that fast to be higher than 7.5% within 3 years.....

oh, and am wondering, how many posters here, took Keens advice and sold, and now waiting to get back into the market .....which really has not fallen....ps dont tell me about the 10 million plus price tags either, as I doubt we would have anyone here in that market....

oh and reviewed a share portfolio yesterday....it had gained $100,000 in less than 3 months...the investor is a buy and hold type, and has been actively buying shares in the last 6 months since Mar 09....holds 1/3rd of each of the 3 main asset classes, ie; cash, property and shares...and intending to top up with more property in both Melb and Sydney by the end of the year....and probably gear it to 50% with the low rates


----------



## pedrod (8 September 2009)

gfresh said:


> http://flood.firetree.net/




I beleive, 7m is the max level at which sea level could rise to if ALL ice melted at both north & sout poles. Not something I would be worried about if I were a property owner in UK. :


----------



## Mofra (8 September 2009)

pedrod said:


> I beleive, 7m is the max level at which sea level could rise to if ALL ice melted at both north & sout poles. Not something I would be worried about if I were a property owner in UK. :



Ice melting in the North Pole wont effect sea-levels; it's land-ice that will cause a sea level rise


----------



## gfresh (8 September 2009)

pedrod said:


> I beleive, 7m is the max level at which sea level could rise to if ALL ice melted at both north & sout poles. Not something I would be worried about if I were a property owner in UK. :




Adjust the slider at the top to see different levels. Wouldn't want to be in Amsterdam or most of coastal europe even if sea levels were to rise 1M. 

Parts of the Goldcoast for that matter would also be in trouble. 

But if it's all a load of bollocks maybe it's not something to worry about.


----------



## wayneL (8 September 2009)

Beej said:


> And you only pay up to *rent* there if I recall??




Is renting somehow not paying up to live somewhere? Or is your intention to imply that my choice to rent where I live has some bearing on the argument? Only someone with status anxiety would bring that up as relevent. Seek help for that.

If I had bought where I live since being here I would have dropped at least £80,000, plus transaction and carrying costs that work out much higher than rent.

I buy value and happy to rent when it suits me. 

As for Sydney, I've been there often enough to know I never want to live there. Nice harbour and some lovely areas, but overall... no thanks. I'd live in Bowral/Moss Vale etc though. That's more my cup of tea.


----------



## wayneL (8 September 2009)

gfresh said:


> But if it's all a load of bollocks maybe it's not something to worry about.




There is more to fear from carbon taxes than sea level rises.


----------



## mazzatelli (8 September 2009)

wayneL said:


> I'd live in Bowral/Moss Vale etc though. That's more my cup of tea.




IOW, you're a true Kath and Kim  joke


----------



## satanoperca (8 September 2009)

We will all get to look forward to increases in taxes due to the actions of this government, got to pay for the spending some how.

Got to love Labor, old Ruddy come out today saying the Liberals were irresponsible during their rain and should have saved more, what, so that they could have increased the FHBG to $50K and keep the dream alive.

Go Labor, banana republic here we come again.


----------



## Glen48 (8 September 2009)

Today we won't even mention Dun & Bradstreet's claim that 62.5% of Melbourne suburbs have a high statistical risk of people defaulting on their mortgage.
From Money Markets


----------



## wayneL (8 September 2009)

mazzatelli said:


> IOW, you're a true Kath and Kim  joke




Nah, I'd buy near Fountain Gate if so. :


----------



## Mc Gusto (10 September 2009)

http://business.theage.com.au/busin...-out-even-at-the-lower-end-20090909-fhlu.html

THE surge in demand from first home buyers that has underpinned Melbourne's residential market for almost a year is drying up as prices in lower-end suburbs hit record highs.

With government grants to be scaled back from the end of this month, real estate pundits have been predicting a spike in first home buyer activity.

But figures yesterday showed the frenzy of first home buyers has already cooled, with the number of loans down 6.7 per cent in July, the second consecutive month of decline.

First home buyers accounted for 25.7 per cent of all lending in July, down from 27.1 per cent in June and 29.5 per cent in May, the highest level since records began in 1991.


----------



## Beej (10 September 2009)

Mc Gusto said:


> http://business.theage.com.au/busin...-out-even-at-the-lower-end-20090909-fhlu.html
> 
> THE surge in demand from first home buyers that has underpinned Melbourne's residential market for almost a year is drying up as prices in lower-end suburbs hit record highs.
> 
> ...




Makes sense though - FHB numbers have been increasing rapidly since Oct last year, and as a proportion of all buyers lept from 15% to just under 30% a couple of months ago. 25% is still high, the long term average is around 20%, so expect to see FHB numbers steadily fall back to that sort of level over the next 6-12 months I would say.

The thing is that all the money pumped into the market by the FHB surge will continue to work it's way through the whole market for the next 18-24 months, so I don't think we are near the end of the current rising trend for house prices in general as yet. Interest rates will be the key for the medium term I think.

Cheers,

Beej


----------



## gfresh (10 September 2009)

If that is the case, then the removal of the FHB will have little effect on the market.. wasn't that one of the reasons the market was meant to crash early next year? so count that one out.


----------



## kincella (10 September 2009)

Beej and Sydney siders will relate to this, Melbourne to follow the Sydney market...
some will not like this ...its the wealthiest investors views on  property....research conducted by an international property group...on their clients views...of the property market...
investors surveyed had portfolio's ranging in size from the smallest of 10 mill to over 1 billion dollars worth...
42% of investors surveyed held over 1 billion dollars worth of property each
36% thought we are at 5.00 o'clock of the cycle...with 6.00 o'clock at the bottom...
64% surveyed believed the upswing would occur by 2010, with the majority thinking the latter part of 2010...
a stack would sell in the next 12 months, to buy more property in better or different locations....
not getting out of property, but using the window of opportunity to upgrade...
this group I believe is more involved with commercial property...the emphasis is not on residential....
however investors will already know the situation, which has a flow on affect in resi...
ps I note there is not one mention of interest rates....funny about that....
I guess its because the rates don't affect the wealthier people, as much as it does the others....and two, the bigger gains are made anyway, regardless of interest rates....
http://www.colliers.com.au/site/page.cfm?u=589


----------



## Lancelot (11 September 2009)

Hi all, I've been away for a while
Anyone heard when that numptie steve keen is going to do his walk to Mt Kosciusko? 
I have some more holidays coming up and wanted to go and laugh, point and take unflattering pictures of him.
Maybe he'll have some of his ghpc mates with him


----------



## Uncle Festivus (11 September 2009)

kincella said:


> 36% thought we are at 5.00 o'clock of the cycle...with 6.00 o'clock at the bottom...
> 
> a stack would sell in the next 12 months, to buy more property in better or different locations....




Um, can't be that smart selling at the bottom of the 'cycle'?


----------



## kincella (12 September 2009)

ps I took a short cut during the week, drove up a street in Toorak I had not been that way in 5 years.....I was stunned to see all these beautiful new units and houses had replaced the old 3-4 bedroom single story houses, that had dotted that street before. Imagine I will find similar makeovers in some more streets.....although I note several demolishions going on in Williams rd, it.. Williams Rd has not been made over like the other street....more old 1970's units clutter that road....hence it takes time to acquire each unit and then makeover the whole set....versus the ease of acquiring one house for a make over...
anyway, I have seen this activity earlier in the year in a big way....due to low interest rates...and reluctance to sell.......its fun watching what the smart money does....

Renovators, investors drive property market
By Vikki Campion
The Daily Telegraph
September 12, 2009 12:01am
Text size 
+ - Print Email Share Add to MySpace Add to Digg Add to del.icio.us Add to Fark Post to Facebook Add to Kwoff What are these?  Builders Travis Eichorn, Richard Tanner and Brad Turner work on a house renovation project at Westleigh. 
Investors and home upgraders drive recovery 
Dubbed inv-aders by economists 
Renovations are at "historical highs" 
Realestate.com.au: Find a home 
THEY are the invaders from another property boom. 

First, there were the first home buyers, flush with government incentives driving NSW's property market recovery. 

Now, it's investors and home upgraders, who economists have christened "inv-aders", who are expected to drive the 2010 housing cycle. 

In its September Building Industry Prospects, BIS Shrapnel forecast a 7 per cent rebound in renovations - making it a bigger home makeover frenzy than that of the early 2000s - helping the broader property market recover. 

BIS Shrapnel's senior manager for building Jason Anderson said inv-aders had been shut out of the market for the past four years as interest rates skyrocketed and confidence fell. 

Despite inv-aders relieving the state's pressure-cooker housing market to a degree, the housing stock shortfall is forecast to double to 78,000 properties in the next 12 months. 


Related Coverage 
Realestate.com.au: Find a home

Upgraders are targeting houses more than 30-years-old across Sydney, from the inner city to the outer commuter belt, to renovate. 

Adding to the boom, confident investors who buy apartments and houses off-the-plan will drive demand for new properties. 

Loan approvals have already picked up in May and June. 

"Living space will be the No. 1 factor," Mr Anderson said. 

Addbuild Additions managing director Chris Books said the renovations market died last year but now inquiries were at "historical highs". 

"There is a pent-up demand," he said. "We service wants and needs in this business. In good times it's all about flash decks and pool rooms. At the moment we are in a needs market - people need another couple of bedrooms and a bathroom." 

Invader Chris Horspool is adding another storey, three bedrooms and remodelling the ground floor of his 1960s Petit and Sevitt project home at Westleigh. 

"We wanted more space and to achieve that we considered if we would move, renovate or knockdown," he said. 

"We decided on renovation for minimal disruption to our lives."


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## nulla nulla (12 September 2009)

Glen48 said:


> Today we won't even mention Dun & Bradstreet's claim that 62.5% of Melbourne suburbs have a high statistical risk of people defaulting on their mortgage.
> From Money Markets




You would expect that every suburb would have an element of people defaulting on their mortgages. I note that they don't define what is a "high statistical risk". What is it? 1% or 2%, 15% - 20%?
Sounds like Winston Churchills "lies, damn lies and statistics".


----------



## aleckara (12 September 2009)

Lancelot said:


> Hi all, I've been away for a while
> Anyone heard when that numptie steve keen is going to do his walk to Mt Kosciusko?
> I have some more holidays coming up and wanted to go and laugh, point and take unflattering pictures of him.
> Maybe he'll have some of his ghpc mates with him




Isn't that just a tad unsporting of you? Seriously everyone is entitled to their opinion. I do think that Australians still have the capacity (unlike the US and UK) to push property higher (i.e the whole economy isn't tied to real estate yet). It's not good or bad news though - there are winners and losers in everything. A lot of people think their success is theirs but a lot of it is being at the right place at the right time. The poor young people with average wages in our capital cities I would argue have lost out greatly even if they get into the market now - poor people weren't born earlier. Until wages catch up and there is pressure on this front prices will stagnate at the level of affordability the marginal buyer can afford. If immigration and foreign money props prices higher and locals can't afford housing in their own country I don't see this as a good thing.


----------



## robots (13 September 2009)

hello,

oh yeah, its on:

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

another above 80 result, more equity mate, this is fantastic, well done to those holding property in there portfolio, kings of the market

thankyou
professor robots


----------



## robots (13 September 2009)

hello,

equity mate

thankyou
professor robots


----------



## kincella (13 September 2009)

aleckara wrote 
"The poor young people with average wages in our capital cities I would argue have lost out greatly even if they get into the market now - poor people weren't born earlier. Until wages catch up and there is pressure on this front prices will stagnate at the level of affordability the marginal buyer can afford. If immigration and foreign money props prices higher and locals can't afford housing in their own country I don't see this as a good thing."

but there are heaps of affordable housing even in the cities.....its just not right smack in the middle of the city....although there is a stack of cheap houses for the uni students....

and prices will not stagnate at all....because there are plenty of average people who can afford the houses....and then there are the wealthy people, who can afford a lot more...

people immigrate to australia because its just so much more of a comfortable style of living then where they came from

people are migrating from regional and country areas to the cities....the govts do not provide incentives for people to move away from the city....
the situation will only get worse...with everyone wanting to live in the bigger cities...no one wants to move to a suburb, or country area...where housing is cheaper....


----------



## aleckara (13 September 2009)

kincella said:


> but there are heaps of affordable housing even in the cities.....its just not right smack in the middle of the city....although there is a stack of cheap houses for the uni students....
> 
> and prices will not stagnate at all....because there are plenty of average people who can afford the houses....and then there are the wealthy people, who can afford a lot more...
> 
> ...




It probably is more affordable out there. The question is of course is about where the jobs are. For a lot of people the jobs are not in country areas, just more people needing to come in. Many country towns run on mining, tourism or manufacturing which are not stable industries.

As a country we haven't planned our cities to allow for more people - a good thing for people that have property in these areas already and bad from a city planning argument.

Student accomodation is great and all if your a student. But Australians in the past almost had a right to land, not just a unit at the same price as a house in real terms in a previous generation. I do think house prices will go up, just like everything else and I think wages will lag behind for some time. While I agree with you that houses will probably go up no one has managed to convince me that's a good thing. If all we have is an economy based on building more and more homes that seems wrong to me. Homes use up land resources, what's happens when the land runs out, water degrades in our major cities, more resoruces are used (inc land) all for the sake of keeping up with increasing immigration to prop prices further? it seems silly to me and a sure fire way for the average Australian's living standard to decrease over time.

Btw try Sydney. Out west unless you are willing to put up with a fear of your life or a lot of crime even way out west you expect to pay over $400000 for a decent house.


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## kincella (14 September 2009)

just a reminder, with our on going debates....although substantially  reduced in light of the real facts...
ps I think some of those crystal balls which have been used by some, should be thrown out and replaced, they are obviously broken, flawed....gave the wrong readings....maybe they should use tea leaves for future readings....

have a look at what the market above 1 mill is doing in Melb....and this is just one group of buyers advocates views....
this week they were looking at the price per square foot...for land sales...

an extract...................
By moko | September 7, 2009 


The top end is another country. In some places, it’s another planet.

$722/sq ft in Toorak? Would you like a Brooklyn Bridge with that?

But it happened.

10 Irving Road sold for $3,575,000 – and it’s on the wrong side of the street.

When this year left harbour, no-one would have expected to see even $600/sq ft.

Hitch a ride down the road to Armadale. Two land-value sales:

15 Adelaide Street, $370/sq ft. 
60 Adelaide Street (wrong side again), $345/sq ft. 
(All of which makes a purchase we made not long ago in Toorak – $300/ft – look remarkably sound.)

Why is this so? Why the stratospheric numbers?

Lack of choice. This week, for example, with some exceptions in Bayside, there’s nowhere you would want to call home up for auction at the top end.

Off-market? Yes. But at prices intended to make you reel and that we are not advising people to pay. At the top end, fear has left the field and the greed is rampant.

Step down a rung and there’s a little more sense:


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


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## wayneL (14 September 2009)

Kincella,

It's raining cash. Under the circumstances there is no surprise.

We just don't know the ultimate cost yet. But you'll probably be dead when it's time to pay the piper.


----------



## Knobby22 (14 September 2009)

wayneL said:


> Kincella,
> 
> It's raining cash. Under the circumstances there is no surprise.
> 
> We just don't know the ultimate cost yet. But you'll probably be dead when it's time to pay the piper.




Wayne didn't explain Kincella, but that's because you have been nominated first up against the wall when the revolution comes!:nunchux:


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## kincella (14 September 2009)

first up against the wall...when the revolution comes......ok..bring it on....

I will have made a stack of money by then, provided homes for several families...ie community service....and funded my own retirement...saving you  taxpayers from having to pay me a pension....
unlike the thousands who twist their incomes around, so they can get a slice of the measerly old pension pie....
I have a good consience about what I have been doing....I have not been fleecing anyone etc....
oh and the kids are looking forward to taking it all off my hands at some stage...and will probably destroy it all, waste it within a short time..

plenty left for everyone....if they  could only think  outside the square...they live in
cheers


----------



## wayneL (14 September 2009)

Community service? ROTFLMAO!

Supplying a service/product for reward is not community service my friend. Not when you will willingly charge the maximum the market will bear. That's capitalism.

Nothing wrong with it either, just don't kid yourself.


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## kincella (14 September 2009)

wayne...you have no idea...who said I charge the maximum the market will bear ???? in fact the rents have not been raised for several years...good tenants etc...
and when selling a house...its the buyers that make the offers....up to me to accept or decline...would you sell a house for 100k if the market was 180k with several willing buyers prepared to pay 180K ????
what would you do in the same circumstances ???


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## MrBurns (14 September 2009)

Geez kincella, are you a director at Australand or something ???, this thread would be half the size if you weren't in here 24/7

The stage is set for a pull back, FHBG boost will go, interest rates on the way up, the only thing that will inflate this bubble further is if Rudd can smell an election, he will mortgage this country to the hilt to get back in.

Wish people here had the same attitude as those in the US - we're just a lazy bunch of bludgers compared to this lot.

It's not just the health care reform it's the spending they're protesting about.

http://www.mailonsunday.co.uk/news/...-Obamas-spending-tea-party-demonstration.html


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## wayneL (14 September 2009)

kincella said:


> ...
> and when selling a house...its the buyers that make the offers....up to me to accept or decline...would you sell a house for 100k if the market was 180k with several willing buyers prepared to pay 180K ????
> what would you do in the same circumstances ???



LOL.... AHAHAHA....(gasp)AHAHHAHAHAHAHAHA!

Of course I would! Didn't I say:



> That's capitalism.
> 
> *Nothing wrong with it either*, just don't kid yourself.




I don't know what you don't think I have an idea about, but I might just have more of one than you think. 

But for you it's more about cheerleading it seems.  Example - the puerile Steve Keen post above.


----------



## nunthewiser (14 September 2009)

> The Australian dream of home ownership is slipping away, leaving a threat of a US-style collapse in house prices, according to a team of university researchers.
> 
> Analysis by researchers from South Australia's Flinders University has revealed home ownership in the 10 years from 1996 rose only 0.8 per cent despite strong economic growth and low interest rates in that period.
> 
> ...




http://au.news.yahoo.com/thewest/bu...31789/home-ownership-dream-ebbing-away-study/

sunshine and lollipops ?


----------



## gfresh (15 September 2009)

> "As long as the government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.[/b]
> 
> "The only ways that this would happen are through a US-style price collapse or a complete re-evaluation of the situation and a coordinated effort by governments, planning and financial institutions to restore the balance between housing supply and demand - or tax away the imbalance - so that all Australians may benefit."




Don't you hate these annoying professor types, researching things, coming up with independent conclusions and things, putting forward a contrasting opinion.. damn them, damn them to hell! 

I think there could be a risk when the baby boomers start rolling over, that the money that has been coming into the market as they have been reaching their peak earning age taper off.. at the moment the latest craze is the SMSF into property investment, but that is more prevalent amongst those who are approaching retirement soon. When they want their nest egg as cash they have to sell, unless they are positively geared for passive rental income. With our ****ty yields here in Aus, that's not so likely.


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## Mofra (15 September 2009)

gfresh said:


> *When they want their nest egg as cash they have to sell*, unless they are positively geared for passive rental income. With our ****ty yields here in Aus, that's not so likely.



Nup, they don't want to move out of the principal residence either so they take out a reverse equity loan so they can enjoy a cash boost without having to move.

Only downside is the lack on inheritance left, but I don't think baby boomers have a problem with looking after numero uno first anyway.


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## Taltan (15 September 2009)

Mofra I think Gfresh is reffering to their rental properties. Once the boomers retire and their marginal tax rate goes to 15% they will no longer have the tax need to be property speculators. Hence they will sell. It is the investment properties that are leveraged not the PPRs


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## Beej (15 September 2009)

Taltan said:


> Mofra I think Gfresh is reffering to their rental properties. Once the boomers retire and their marginal tax rate goes to 15% they will no longer have the tax need to be property speculators. Hence they will sell. It is the investment properties that are leveraged not the PPRs




BUT, if they own these properties through their SMSFs, then there will be no leverage (you are not allowed to borrow money to buy property through the super fund), so therefore the lower tax rate becomes an advantage, not a problem. A nice steady and growing yield of 5%+ from an IP or 2 is a nice thing to have in your SMSF when you retire - you use the income to live, the income goes up over time (without further capital investment), and the asset appreciates over time as well. 

So in this scenario, I see no reason why all the SMSF owning BB retiree's would exit the property market - maybe the opposite will be the case? When you need to rely on your investment income to live, property provides more stability/certainty year to year than equities, but probably in the current context has less capital growth potential (with some exceptions for those very good at buying in the right location at the right time). Personally if I was in this situation (I'm not as still 20-25 years away from official retirement age) I'd be looking for a bit of both?

Cheers,

Beej


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## moXJO (15 September 2009)

Hey Beej
What’s your opinion on the possibility of a construction boom heading our way?


----------



## trainspotter (15 September 2009)

Western Australia is looking good due to Gorgon Gas.

http://au.news.yahoo.com/thewest/business/a/-/wa/6033854/gorgon-to-trigger-new-boom/

Western Australia is looking good due to Oajagee.

http://www.mwdc.wa.gov.au/News.aspx?NewsID=22

Western Australia is looking good due to Perth to Bunbury Freeway nearing completion.

http://en.wikipedia.org/wiki/Kwinana_Freeway

Yeppers I think there might be a smal construction boom on the way ? IN CERTAIN AREAS


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## kincella (15 September 2009)

watched a show last night... Boddington in WA....intended to look up on the net today....huge growth...huge potential....

as for the boomers, I have a portfolio of props, I have no intention of selling any...in fact I will be adding more...the props are the cash cows for my retirement....and the SMFS can get stuffed...too much red tape and harrassment from the ato there...just as easy to neg gear them now...not in a smfs...and pay the higher tax....leave it all there in retirement....pffftt to the lower tax
..............
I have cash and stocks...but most is in the property.....I know property, and can buy and locate good properties...all for my retirement....oh its not just the return...capital growth is excellent....
my boomer friends have the same attitude....oh and the other important thing is....we are the managers, have total control....which is better than other forms..where one is reliant on other managers....who can stuff up.
cheers
**for growth...in the near future....have a look at Euroa in Vic....a famous Racehorse Breeder and Racing group are relocating to there from the Barossa Valley in SA....soon...kidding that move will not invigorate that small town.....it will bring huge numbers of racing people and tourists up there....about 1.5 hours from Melbourne...on the main Sydney to Melb route...
oh and more jobs in town...and the drought breaking.....buy for under 300k


----------



## gav (15 September 2009)

kincella, just a quick question...

Let's say the govt decided to get rid of negative gearing as it is costing almost $12 billion per year (when the ppl claiming it aren't even earning half that figure).  The govt decides that the money would be better spent reducing our nations debt.  How would this affect your property portfolio?


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## Beej (15 September 2009)

moXJO said:


> Hey Beej
> What’s your opinion on the possibility of a construction boom heading our way?




Hard to say? Alan Kohler had a graph on ABC news tonight showing that across Australia residential construction is currently way down in historical terms, and in NSW we haven't built fewer new homes as this year since 1954?????  

It seems that logically we should be building far more, but somehow the crap state government policies (which push up base costs for developers) + the perceived risk (ie not enough upside reward/profit potential currently in the eyes of many developers, plus difficulty securing funding etc), seems to be keeping activity subdued. I tend agree with many here that the FHB grant boost should have been for new houses/flats only - perhaps something like that is on the horizon when the boost ends?

Cheers,

Beej


----------



## moXJO (15 September 2009)

Beej said:


> Hard to say? Alan Kohler had a graph on ABC news tonight showing that across Australia residential construction is currently way down in historical terms, and in NSW we haven't built fewer new homes as this year since 1954?????
> 
> It seems that logically we should be building far more, but somehow the crap state government policies (which push up base costs for developers) + the perceived risk (ie not enough upside reward/profit potential currently in the eyes of many developers, plus difficulty securing funding etc), seems to be keeping activity subdued. I tend agree with many here that the FHB grant boost should have been for new houses/flats only - perhaps something like that is on the horizon when the boost ends?
> 
> ...




Yeah, it's a bit hard to see it happening just yet. Seems a few prop investors feel it's coming soon though. I sure hope they are right


----------



## kincella (16 September 2009)

Gav...the govt would have to spend a similar amount itself in building public housing....and the govt knows the private sector is more efficient in providing this service, than any govt programs....just think of it this way...in the past the govt spent millions providing public housing....still using our taxpayers money...then they found a more efficient way...let the public spend the mopney and give them a tax deduction....
you should know Keating stopped neg gearing back in the 70's...but reinstated it very quickly when investors fled....and then the subsequent shortage of housing for renters suddenly dried up....the govt had not thought to replace the housing stock with its own stock....
the immigrants are a ready market for most of the public housing that is still out there today...believe almost no new public housing built since the 1970's...
so to answer your question...if I were not allowed to claim deductions...I would have to rethink my investments.....but the same non allowance would be applied to any investment, including shares.......
and a question for you...what if they turned it around and home owners were allowed to claim a tax deduction for the interest expense...like they do in the US ??? would that change your mind about owning a home....there were rumours of this approach....
in that case..maybe more people would become home owners rather than renters.....its doubtful that would turn people around....we have moved down from the 70% owners ratio of the past, and moving into the lower 60% and heading for a 50% mix
anyway, I would find a way to keep my properties as the bulk of my investments...or I might move further into commercial properties...which are the best of the best anyway


----------



## Glen48 (16 September 2009)

When houses only rise by .73% on long term average why bother buying any house, and there is no evidence any where that migrants homeless people will buy a house soon. Buy Gold instead.


----------



## satanoperca (16 September 2009)

Kincella, I agree with you that removing NG would lead to a reduction in rental properties, however, as NG was designed to increase the supply of rental properties then it should only be available on new properties not existing. Then it would be used only for good and not evil, increasing building construction and jobs.

It seems a little bit of a joke, that Australia the land of plenty is slowly seeing a reduction in home ownership as it is unfordable for the masses

People like yourselves would have to alter your investment strategy to include commercial and retail real estate, which NG would be applicable to both new and existing properties. Focus more attention on investment for innovation and the creation of jobs.

The next 12 months will be interesting if IR rates return to normal. The RBA increased and deceased them over a 12month period by more than 300 basis points, it can happen again catching all those FHB.

It seems summer has arrived, a stunning morning in Melbourne today.

Cheers


----------



## kincella (16 September 2009)

try to direct some angst against the state govt's..in all states....they are the ones not releasing land for new homes...in fact Vic had that 2030 policy that no new land would be released for development.....until recently an ad hoc release due to the backlash on shortages...
in your scenario of only ng on new homes.....that would compete with the kids out on the fhb suburbs.....I think it would also close the inner market on houses....
ok so say the ng is allowed on units in the inner suburbs....but not established homes....that would also fire up the prices of established houses, as developers demolish same to build more units.....
there goes the dream of the  quarter acre block for the kids....
some suburbs require a limit on the number of units allowed....to retain the beauty of some of the loveliest streets in the world.....
have you been out to ...Malvern East lately.....1000 times more beautiful than Malvern....all the period homes, large leafy streets....
Malvern itself is like a very poor cousin now....destroyed by all the ugly units
I doubt if Justin Madden cares enough....they want to put massive high rises along all the public transport routes and  streets.....and not pay for new infrastructure out in the suburbs.....nor look at very fast trains for people to stay in rural areas and commute to the city for work....which is my favoured idea
I prefer period homes....am looking at extensions for them...but would not replace them with units....and therefore destroy the street appeal....plenty of non period areas where units are more appropriate.....oh and that ugly set of units has destroyed the value of the beautiful period houses nearby.....I have seen that happen several times....


----------



## stocksontheblock (16 September 2009)

Well there are 310 pages and some 6000+ posts, so forgive me for not reading them all to see if what I have to say has already been said - which I guess it has.

Is there really a shortage? Yes, I agree there is a shortage of $300k homes within 10 mins of the city with 5 bedrooms, a pool, DLG, brand new and the like - just like mum and dad had (so they all want), so is it not a matter of expectations rather than supply?

I don’t know the figures for every State, yet from what I see in Brisbane, its somewhat of a joke when I see people complain "I cant find a place to live".

I know of a number of people who over the past couple of yrs (including now) who have found the money, or a long-term partner, or simply decided it was time to buy and guess what, nearly every single one of them bit*hed and moaned about not being able to find a house, ohhh and at a price they could afford.

Many a time I searched the big real estate sites and found thousands of places for them to buy - and often way less than what they had to spend.

What much if it came down to was they wanted something they couldn’t afford. Somewhere they thought would be 'good enough', and more to the point something they felt comfortable in.

I am not going to debate the lack of infrastructure etc in some parts of town where there is new housing, yet the fact remains there is plenty of: townhouses, flats, apartments, units, houses, tents, swags etc for sale and at prices 'everyone' can afford.

I think if attitudes changed to realise you can’t have the house you want right now with all the trimmings etc - you might actually have to work for it, then I think the supply question could possibly become a little more muted. IMO of course.


----------



## kincella (16 September 2009)

stockonthe block....I have been saying the same thing for years....plenty of affordable houses out there for everyone....
there might be suburb snobbery behind some of it....ie I am not going to live in the Western suburbs...because etc....


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## wayneL (16 September 2009)

$225,000 asking. Whadaya think?


----------



## nunthewiser (16 September 2009)

wayneL said:


> $225,000 asking. Whadaya think?




where is it ?


----------



## stocksontheblock (16 September 2009)

wayneL said:


> $225,000 asking. Whadaya think?




Where is it? I'll take it now!


----------



## wayneL (16 September 2009)

Here's another, $185k asking.




Patience Nun.


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## Beej (16 September 2009)

Glen48 said:


> When houses only rise by .73% on long term average why bother buying any house, and there is no evidence any where that migrants homeless people will buy a house soon. Buy Gold instead.




ROFLMAO!!! Glen where do you get this rubbish from???? 

Beej


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## wayneL (16 September 2009)

Without a word of a lie, this one is asking $100k


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## stocksontheblock (16 September 2009)

wayneL said:


> Here's another, $185k asking.
> 
> 
> 
> ...




Right, I got here before nun this time, this one is mine!


----------



## wayneL (16 September 2009)

Would you believe $75k?


----------



## moXJO (16 September 2009)

Are they US?


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## wayneL (16 September 2009)

$499k - about what people are paying on average in Oz


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## stocksontheblock (16 September 2009)

moXJO said:


> Are they US?




Yes, I was wondering that as they do have a US style feel about them, dont they?

Can an Aussie buy US homes, ha!? Christ, at these prices I'll buy a hundred homes.


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## kincella (16 September 2009)

I just know they are all in the US....the style tells me everything.....
and they come with annual state taxes of about $8000-$10,000 per annum.....
I would love you to go there and buy them.......
but I can show you australian style modern houses around Melb for 200k's...
check out realestate site...see for yourselves....
but they are out in the suburbs....which may as well be overseas for some people....


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## Beej (16 September 2009)

stocksontheblock said:


> Where is it? I'll take it now!




Yea what he said! Where is it?? For $150k I could buy a nice 3 bedroom house easy in Dubbo? So what? Also is WayneL quoting $AU or $US prices???

Cheers,

Beej


----------



## nunthewiser (16 September 2009)

lol dubbo ........ melbournes suburbs ......lol some here just donr get the point do they ?

as you were wayne


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## moXJO (16 September 2009)

stocksontheblock said:


> Can an Aussie buy US homes, ha!? Christ, at these prices I'll buy a hundred homes.




Yeah but something with their tax system, and also location of the homes. No use buying something in a ghost burb.


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## wayneL (16 September 2009)

Beej said:


> Yea what he said! Where is it?? For $150k I could buy a nice 3 bedroom house easy in Dubbo? So what?
> 
> Cheers,
> 
> Beej




HAha. Not like those.

And it ain't in no hick town like Dubbo.

It's in a metro area the size of Sydney... Not Detroit either.


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## wayneL (16 September 2009)

Houston (pronounced /ˈhjuːstən/) *is the fourth-largest city in the United States*, the largest city within the state of Texas, and *"the energy capital of the world."* As of the 2008 U.S. Census estimate, the city has a population of 2.2 million within an area of 600 square miles (1,600 km ²). Houston is the seat of Harris County and the economic center of the Houston–Sugar Land–Baytown metropolitan area””*the sixth-largest metropolitan area in the U.S. with a population over 5.7 million*.

Draw your own conclusions.


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## kincella (16 September 2009)

if you gave me a house for free in the US ....I would not accept it.....and it comes with a big tax liability each year anyway...
no way would I live in the US....
Australia was the best place on earth until......xofixxx.. but I won't go there....but its heaps better than anywhere else...


----------



## moXJO (16 September 2009)

kincella said:


> Australia was the best place on earth until......xofixxx.. but I won't go there....but its heaps better than anywhere else...




Does that say Rudd


----------



## Beej (16 September 2009)

wayneL said:


> Houston (pronounced /ˈhjuːstən/) *is the fourth-largest city in the United States*, the largest city within the state of Texas, and *"the energy capital of the world."* As of the 2008 U.S. Census estimate, the city has a population of 2.2 million within an area of 600 square miles (1,600 km ²). Houston is the seat of Harris County and the economic center of the Houston–Sugar Land–Baytown metropolitan area—*the sixth-largest metropolitan area in the U.S. with a population over 5.7 million*.
> 
> Draw your own conclusions.




Send us a domain.com.au type link - I bet they are in the OUTER suburbs of Houston........ similar prices to outer suburbs of Melbourne and Sydney. Plus as Kincella says, they come with big land tax liabilities... and they are in the US (house crash, sub-prime central, economic meltdown central etc any jobs in Houston at the moment??), been there done that, never living there again thanks..... but if the gun toting Texans are your thing, and you like those houses, go for it!! 

Cheers,

Beej


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## nunthewiser (16 September 2009)

thanks for that wayne  but i suspect the point may have flown over a few heads here .......

canada worth a look also


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## Beej (16 September 2009)

nunthewiser said:


> thanks for that wayne  but i suspect the point may have flown over a few heads here .......
> 
> canada worth a look also




Methink you guys miss the point, but anyway..... As for Canada - nice country, a bit cold though? I would only ever live in Vancouver over there (close to Whistler plus the industries I need to earn a good living are based there), and prices there are about the same as Sydney - funny that??? Or maybe not??

Even the US, area's where I would need to live to earn a good living would be NYC, San Francisco + surrounding bay area, maybe LA, Seattle, Chicago, and strangely (or maybe not so) houses in ALL those places cost the same or in most cases MORE than Sydney for a comparable house/apartment in a comparable locality??

Cheers,

Beej


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## wayneL (16 September 2009)

Beej said:


> Send us a domain.com.au type link - I bet they are in the OUTER suburbs of Houston........ similar prices to outer suburbs of Melbourne and Sydney. Plus as Kincella says, they come with big land tax liabilities... and they are in the US (house crash, sub-prime central, economic meltdown central etc any jobs in Houston at the moment??), been there done that, never living there again thanks..... but if the gun toting Texans are your thing, and you like those houses, go for it!!
> 
> Cheers,
> 
> Beej




Of course they're outer suburbs, but if you think those prices are comparable to Melbourne and Sydney outer suburbs; like for like, seek help... quickly.

Nun... indeed.


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## moXJO (16 September 2009)

I think the way they built their houses in the US, is a lot different to how we slap them up cost wise. A lot of the houses were part built in factories then craned on the slab in parts, like Lego. Add to that cheap labor from Mexico. Very hard to build under a certain price over here with all the red tape, services and codes. Can be done cheap to a degree of course


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## kincella (16 September 2009)

moxjo...no its not a political party....
Beej...good points as usual....
oh and just a few other points about living in the US.....the pension system is not like ours, and the health system is stuffed..

I can make a lot of money on property in australia....so many aspects of it are reliable....no ifs or buts or such like to mar...impinge on the asset in the future....I am very familiar with this asset class.....but only in Australia..
I am not interested in any other country...
so I guess I will just butt out of the current debate.....
its been the easiest couple of million bucks I ever made....so I will just keep duplicating that model for the future wealth creation...retirement scheme of mine
cheers all


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## wayneL (16 September 2009)

moXJO said:


> I think the way they built their houses in the US, is a lot different to how we slap them up cost wise. A lot of the houses were part built in factories then craned on the slab in parts, like Lego. Add to that cheap labor from Mexico. Very hard to build under a certain price over here with all the red tape, services and codes. Can be done cheap to a degree of course



Bear in mind the US in not a 3rd world country.... yet. They also have red tape and building code, even if some of the construction can be prefab. Houston is a hurricane area so homes are wind rated also.

You can buy estate building blocks (with nice entrance etc) for ~$50k.


----------



## wayneL (16 September 2009)

Beej said:


> Methink you guys miss the point, but anyway..... As for Canada - nice country, a bit cold though? I would only ever live in Vancouver over there (close to Whistler plus the industries I need to earn a good living are based there), and prices there are about the same as Sydney - funny that??? Or maybe not??




That is true for close to CBD areas. But outer suburbs drop off in price much more quickly than Oz.

Sydney should be compared to Toronto really, not Vancouver.


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## nunthewiser (16 September 2009)

wayneL said:


> $499k - about what people are paying on average in Oz




dear beej and kincella 

can you please point me to ANY australian city /town / boondock where one is able to purchase this quality house for the same price 

last time i looked even in an outer mortgage belt area like even werribee one would be looking in the high 700,s /800/s(probably more ) for this size pad 

but hey ........ never let the facts stand in the way of a good story


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## wayneL (16 September 2009)

New York City... cosy, but check out the price.


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## moXJO (16 September 2009)

nunthewiser said:


> dear beej and kincella
> 
> can you please point me to ANY australian city /town / boondock where one is able to purchase this quality house for the same price
> 
> ...




How many m2 is it?


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## wayneL (16 September 2009)

NY City suburbs, New Joisey side... commutable to Manhatten


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## wayneL (16 September 2009)

moXJO said:


> How many m2 is it?




It's 50 squares and about 45 minutes drive to Houston CBD according to google maps


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## Beej (16 September 2009)

wayneL said:


> NY City suburbs, New Joisey side... commutable to Manhatten




Hah!! New Jersey suburbs is NOT New York City!!! It's in a different STATE!!!! No-one in NYC wants to live in New Jersey......  

You either are having us on big time and/or you have never been to NYC!

Cheers,

Beej


----------



## nunthewiser (16 September 2009)

Beej said:


> Hah!! New Jersey suburbs is NOT New York City!!! It's in a different STATE!!!! No-one in NYC wants to live in New Jersey......
> 
> You either are having us on big time and/or you have never been to NYC!
> 
> ...




lol you missed the point AGAIN beej 

COMMUTABLE to MANHATTAN . manhattan not a big enough business district ?

oh i suppose not when you compare it to sydney hey 

i think i might go get a deckchair now and watch home and away for more up to date real estate news


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## Beej (16 September 2009)

nunthewiser said:


> dear beej and kincella
> 
> can you please point me to ANY australian city /town / boondock where one is able to purchase this quality house for the same price
> 
> ...




OK so that house was $499k US?? = $600k AU. Too easy - how about this one (attached, from http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007930624). It;s got 4 bedrooms, 2 bathrooms, DLUG. Cranebrook (western SYDNEY - not some second rate town in the boonies either, 45 mins on freeway to CBD), asking price $580k, could probably get for $550k. Took me 2 mins to find this - there are dozens more...... You have no idea about the market here.

Cheers,

Beej


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## moXJO (16 September 2009)

wayneL said:


> It's 50 squares and about 45 minutes drive to Houston CBD according to google maps




 around 450 m2 I think

I know a lot around and under that price, 45 min to major city and next to beach, but don't want everyone cutting my grass:


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## nunthewiser (16 September 2009)

lol . oh we talking about negotiatians now .ok that one for 499 i,d prolly get for 400 or maybe less seeing as times are hard in the US .... lol 

have a great day guys , as always a great thread 

better get back to nursing my wounds on 2 shorts i misjudged


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## moXJO (16 September 2009)

nunthewiser said:


> lol . oh we talking about negotiatians now .ok that one for 499 i,d prolly get for 400 or maybe less seeing as times are hard in the US .... lol




The downside is you’re surrounded by Americans


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## MACCA350 (16 September 2009)

Beej said:


> asking price $580k, could probably get for $550k.



Not likely: "*Offers Over* $580,000"

Whenever I've enquired on properties advertised as such, they wont even take what is advertised..........when they say over they normally mean it.........at least until they get desperate

cheers


----------



## MACCA350 (16 September 2009)

moXJO said:


> The downside is you’re surrounded by Americans



Big downside

cheers


----------



## wayneL (16 September 2009)

Beej said:


> OK so that house was $499k US?? = $600k AU. Too easy - how about this one (attached, from http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007930624). It;s got 4 bedrooms, 2 bathrooms, DLUG. Cranebrook (western SYDNEY - not some second rate town in the boonies either, 45 mins on freeway to CBD), asking price $580k, could probably get for $550k. Took me 2 mins to find this - there are dozens more...... You have no idea about the market here.
> 
> Cheers,
> 
> Beej



Not too bad actually, if you could get it for 550.

That compares very favourably to the dross selling for around 450-500k in Perth when I left in '07.


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## Beej (16 September 2009)

MACCA350 said:


> Not likely: "*Offers Over* $580,000"
> 
> Whenever I've enquired on properties advertised as such, they wont even take what is advertised..........when they say over they normally mean it.........at least until they get desperate
> 
> cheers




Maybe - but regardless it's still the same price in $AU as the one posted by WayneL/Nun. Which was the point.... QED!  Ie, a nice big house about 45mins from the CBD via freeway costs about the same in Houston (4th largest city in the US) as it does in Sydney (Australia's largest city). And they had a house price crash!  Kind of smashes the whole relative affordability BS doesn't it when you compare like with like?

Cheers,

Beej


----------



## wayneL (16 September 2009)

Beej said:


> Hah!! New Jersey suburbs is NOT New York City!!! It's in a different STATE!!!! No-one in NYC wants to live in New Jersey......
> 
> You either are having us on big time and/or you have never been to NYC!
> 
> ...




Beej,

You'd better have another look at the border between NYC and Joisey. Most of NYC suburbs are in New Jersey. "West New York City" is in New Jersey State.

Take a look at Washington DC, it has suburbs in Virginia and Maryland. There are several US cities with suburbs in the next state! 

Now tell me again about Jersey?


----------



## wayneL (16 September 2009)

Beej said:


> Kind of smashes the whole relative affordability BS doesn't it when you compare like with like?




No

What about the other examples.


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## Beej (16 September 2009)

wayneL said:


> Beej,
> 
> You'd better have another look at the border between NYC and Joisey. Most of NYC suburbs are in New Jersey. "West New York City" is in New Jersey State.
> 
> ...




I'm not saying it's not near NYC, I'm just stating the following facts:

1) the 5 boroughs that comprise NYC do NOT include any in New Jersey state - NYC is in New York state only.

2) No-one who lives in NYC considers NJ suburbs a part of the city - they would go way out into Brooklyn or Queens first! Most New Yorkers don't even consider anything off Manhattan to be NYC. Hence you cannot use NJ suburbs as realistic examples of NYC real estate prices! It's like using Woolongong to say Sydney houses are cheap! 

Cheers,

Beej


----------



## wayneL (16 September 2009)

Beej said:


> I'm not saying it's not near NYC, I'm just stating the following facts:
> 
> 1) the 5 boroughs that comprise NYC do NOT include any in New Jersey state - NYC is in New York state only.
> 
> ...




Nonsense.

Wollongong is much further from Sydney than Jersey.


----------



## kincella (16 September 2009)

here is just one reason the US are 'out of this world'....

Tears as Romell Broom's executioners fail to find vein
By staff writers
NEWS.com.au
September 16, 2009 09:14am
Text size 

 Romell Broom's execution has been put off for a week / AP  
Executioners unable to find vein 
Try for two hours before giving up 
Killer now faces death next week instead 
EXECUTIONERS spent more than two hours trying to find a vein in which to inject a lethal dose to a convicted US killer before giving up.

Romell Broom was sentenced to death in an Ohio jail for the rape and murder of 14-year-old girl Tryna Middleton in Cleveland in 1984. 

The state of Ohio reintroduced the death penalty in 1999, and Broom today became the first inmate since that date to have his execution stayed by the governor. 

Another attempt to take Broom’s life will be made in a week. 

Onlookers claim Broom appeared to be sobbing after one of many attempts by the execution team to access his veins. 

http://www.news.com.au/story/0,27574,26080906-401,00.html


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## Beej (16 September 2009)

wayneL said:


> Nonsense.
> 
> Wollongong is much further from Sydney than Jersey.




Last word on this specific topic from me; it's not about the exact physical distances, it's about how the people that reside/work/rent/buy property perceive the market. NYC is extremely high density - Manhattan burrough itself has a population of 1.6M-1.7M people living in ~60 square kms. If you look at the whole actual "island" (which includes The Bronx) the population is over 3M in 170 square kms (wikipedia: http://en.wikipedia.org/wiki/Manhattan). Manhattan is actually the most densely populated area of the US, but also one of the wealthiest (if not the wealthiest). A further 4.5M+ people live in the other official NYC Burroughs (Brooklyn, Staten Island, Queens). In this sort of environment, living in the suburbs of New Jersey for a New Yorker IS like living in Wollongong is to a Sydney-sider. That's how they - the people that actually buy/sell this property rather than just talk about it - perceive things.

That's the market. When looking at property prices anywhere you need to at least have a cursory understanding of factors that drive that local market.

Cheers,

Beej


----------



## Mofra (16 September 2009)

Taltan said:


> Mofra I think Gfresh is reffering to their rental properties. Once the boomers retire and their marginal tax rate goes to 15% they will no longer have the tax need to be property speculators. Hence they will sell. It is the investment properties that are leveraged not the PPRs



Perhaps he/she was, however reverse equity loans are for PPOR only and the majority of retiress currently are not self-funding and own only their own home (at least, this was the scenario 12 months ago). It will become a growing phenomenon.


----------



## gav (16 September 2009)

kincella said:


> Gav...the govt would have to spend a similar amount itself in building public housing....and the govt knows the private sector is more efficient in providing this service, than any govt programs....just think of it this way...in the past the govt spent millions providing public housing....still using our taxpayers money...then they found a more efficient way...let the public spend the mopney and give them a tax deduction....
> you should know Keating stopped neg gearing back in the 70's...but reinstated it very quickly when investors fled....and then the subsequent shortage of housing for renters suddenly dried up....the govt had not thought to replace the housing stock with its own stock....
> the immigrants are a ready market for most of the public housing that is still out there today...believe almost no new public housing built since the 1970's...
> so to answer your question...if I were not allowed to claim deductions...I would have to rethink my investments.....but the same non allowance would be applied to any investment, including shares.......
> ...




Hi kincella,

I wasnt having a go at you, I was just wanting to know if you had considered how it would affect you if negative gearing were abolished. 

To answer your question, I purchased my first house earlier this year.  First Home Owners Grant had nothing to do with why I bought, I bought because I believed it was a good price and because I had saved enough for a decent deposit (20%).  My mortgage repayments are about the same as renting, but when you include stamp duty, rates and body corporate fees, it works out a fair bit more expensive.  Have I done the right thing by buying earlier this year?  Only time will tell.  Similar properties in my area are selling for $30K more than I paid, so maybe I did the right thing.  One thing I can say for now though: lifestyle wise, living in your own place sure beats the hell out of renting.

I have a friend in Shanghai, over there they can claim a tax deduction on their primary place of residence too.  I would love for that to occur here, but I won't hold my breath waiting for it to happen.


----------



## kincella (16 September 2009)

GAV...I did not read your post as having a go at me at all....I recall you being a fhb....so just interested in how you feel about it now.... 
and you have found the 'wow' factor of living in your own home...
the stamp duty is a one off, its not a recurring expense....
just enjoy living in your own home....dont worry about the prices around you at such an early stage.....do a check in a couple of years time...
you have done the right thing.....
as for your question to me....I will always find a way to profitably invest in properties....I have 30 or more years of self funded retirement to look forward to....both annual income and capital growth.....
its a very serious matter...I dont take it lightly.....but I do sleep easy at night...in fact I only work part time....now...due to a very lucky investment...took me 5 years to find it....a very specific project....
how lucky can I be......and I expect to be able to find another little gem again, similar to that one...
cheers


----------



## Knobby22 (16 September 2009)

Congrats Gav.

Just remember that once your rates and interest are less than renting, then you are winning every year! 

And that is without considering any capital gains, which are tax free!


----------



## Taltan (16 September 2009)

If one of the property experts could help me out. 

When buying a place off the plan in VIC is the stamp duty payable after the contract is signed (Sep 2009) or after settlement date (Expected Sep 2010). Also I know the developer and not me works out the stamp duty amount but does anyone know how it is calculated?

Any help would be appreciated


----------



## stocksontheblock (16 September 2009)

Knobby22 said:


> And that is without considering any capital gains, which are tax free!




For now!


----------



## Beej (16 September 2009)

Taltan said:


> If one of the property experts could help me out.
> 
> When buying a place off the plan in VIC is the stamp duty payable after the contract is signed (Sep 2009) or after settlement date (Expected Sep 2010). Also I know the developer and not me works out the stamp duty amount but does anyone know how it is calculated?
> 
> Any help would be appreciated




In NSW stamp duty is payable AT settlement (not before, not after). It should be the same in VIC? It's calculated based on the government published rate - a quick google search should lead you to a VIC stamp duty calculator 

Cheers,

Beej


----------



## Taltan (16 September 2009)

Thanks Beej

Regarding the calculation I know what the stamp duty rates for a normal house in VIC is.
http://www.sro.vic.gov.au/sro/SROna...575D20020D1C6E11F281E47194875CA2575D10080ECCE

With off the plan you don't pay duty on the contract price but somehow on the value at contract date (e.g. before the building is completed). I wanted to know how the developer or SRO calculate this


----------



## gooner (16 September 2009)

Beej said:


> In NSW stamp duty is payable AT settlement (not before, not after). It should be the same in VIC? It's calculated based on the government published rate - a quick google search should lead you to a VIC stamp duty calculator
> 
> Cheers,
> 
> Beej




I had to pay before settlement (I'm in NSW) or perhaps my conveyancer was just being lazy.........

I just know stamp duty is too much. Have been doing numbers on moving vs renovating. By the time, I pay stamp duty, real estates, legals, removalist, new utilitiies etc, I'd be looking at $100k. That's about one third of a decent renovation.


----------



## Beej (16 September 2009)

gooner said:


> I had to pay before settlement (I'm in NSW) or perhaps my conveyancer was just being lazy.........
> 
> I just know stamp duty is too much. Have been doing numbers on moving vs renovating. By the time, I pay stamp duty, real estates, legals, removalist, new utilitiies etc, I'd be looking at $100k. That's about one third of a decent renovation.




Some solicitors insist on having the cheque for stamp duty before settlement so they know they have it. I have always arranged for it to be paid at settlement.

Re cost of moving - yes, it can cost that much, and if you have the location/land you want already, renovating can be a better value option! Stamp duty sucks big-time when trading up, and when you add all the other costs as well selling/buying can be an expensive exercise....... but, at the moment at least, it's there and unavoidable  On the bright side if your house goes up in value by 5% (like they have on average this year) there's your stamp duty covered already right there.

PS: To Taltan, sorry, I don't know how the developer calculates the stamp duty in VIC in your example?

Cheers,

Beej


----------



## kincella (16 September 2009)

House hunters' bargain hot spot expandsCHRIS ZAPPONE
September 16, 2009 - 1:26PM 
Eleven-and-a-half kilometres from the CBD is proving to be the right distance for value seeking home buyers, according to a report that lists the 24 most attractive suburbs in Australia for investment opportunities.

The Melbourne suburbs of Chadstone, Brunswick and Flemington made the list, compiled by St George Bank, because they offered the best mix of location, amenities and demographic mix for investors.

The definitive list of bargain-hunters' hotspots


In Sydney, Rockdale, Riverwood and Lidcombe were seen offering the best value. Of the ten suburbs from Melbourne and Sydney, the average distance from the cities respective CBDs was 11.5 kilometres. 

"Savvy home buyers and investors should look outside the square and consider the areas which have not attracted the same level of attention as traditional blue-ribbon locations," said St.George Bank's chief economist Besa Deda said in a statement.

"For example, some of the suburbs identified in the National Hotspot research include light industrial areas which are expected to eventually transform into residential areas with amenities," she said.

The chronic shortage of available homes, tipped to be 56,600 homes in 2009, as well as Australia's resilient economy have helped push Australian home prices up after having lost only 4 per cent during in the course of 2008, while the financial crisis unfolded worldwide. The economy expanded by 0.6 per cent in the second quarter, defying the global recession.

"Since December 2008, Australian median dwelling values have rebounded and, as at the end of June, they sit at their highest ever level of $471,818," said Ms Deda. 

"The Australian property market is certainly not homogeneous and across capital cities individual performances have shown significant variations," she said. 

"In each city there are areas that have been overlooked by property buyers, despite positive factors that actually make these locations attractive spots for home owner-occupiers or investors."


http://www.theage.com.au/business/house-hunters-bargain-hot-spot-expands-20090916-fqvl.html


----------



## MrBurns (16 September 2009)

Search houses in Tasmania, it's a dream come true , see how far your money goes there.


----------



## gfresh (16 September 2009)

Beej said:


> BUT, if they own these properties through their SMSFs, then there will be no leverage (you are not allowed to borrow money to buy property through the super fund), so therefore the lower tax rate becomes an advantage, not a problem. A nice steady and growing yield of 5%+ from an IP or 2 is a nice thing to have in your SMSF when you retire - you use the income to live, the income goes up over time (without further capital investment), and the asset appreciates over time as well.




I am pretty sure you can now borrow for property through a SMSF? I guess if you have a good cash base, you can go in closely to positive cash flow from day dot, as opposed to younger buyers. Still would think if you were getting older, the ongoing costs for maintenance of a property could be disadvantageous. 

Like Taltan said, the tax advantages are poor without the income to offset. If we had positive cash flow properties freely available, they indeed could be a decent cash flow for invesment, but as it stands, the system is all geared towards capital gain (at the expensive of positive rental income). To realise your gain/cash to live off you have to sell, although reverse mortgages could be another angle I didn't really think of. 



			
				BeeJ said:
			
		

> It seems that logically we should be building far more, but somehow the crap state government policies (which push up base costs for developers) + the perceived risk (ie not enough upside reward/profit potential currently in the eyes of many developers, plus difficulty securing funding etc), seems to be keeping activity subdued. I tend agree with many here that the FHB grant boost should have been for new houses/flats only - perhaps something like that is on the horizon when the boost ends?




Agree there! I don't really know what the government is doing with the FHOG for existing properties. It served it's purpose I guess to stave off a crash, but 2010+ will need some serious policies to address construction. Maybe then we'll have a construction boom so mentioned. We almost need one!


----------



## wayneL (16 September 2009)

Beej said:


> Last word on this specific topic from me; it's not about the exact physical distances, it's about how the people that reside/work/rent/buy property perceive the market. NYC is extremely high density - Manhattan burrough itself has a population of 1.6M-1.7M people living in ~60 square kms. If you look at the whole actual "island" (which includes The Bronx) the population is over 3M in 170 square kms (wikipedia: http://en.wikipedia.org/wiki/Manhattan). Manhattan is actually the most densely populated area of the US, but also one of the wealthiest (if not the wealthiest). A further 4.5M+ people live in the other official NYC Burroughs (Brooklyn, Staten Island, Queens). In this sort of environment, living in the suburbs of New Jersey for a New Yorker IS like living in Wollongong is to a Sydney-sider. That's how they - the people that actually buy/sell this property rather than just talk about it - perceive things.
> 
> That's the market. When looking at property prices anywhere you need to at least have a cursory understanding of factors that drive that local market.
> 
> ...




Beej,

Bullsh!t

We were speaking about affordable housing in metro areas and suddenly you're talking snob value FFS. If you were a young couple with jobs in Manhattan, you're saying they will snub the Jersey side because it not NY?

Utter utter nonsense. its a 10 -30 minute commute FFS. It affordable and many many do it. Yet you'll happily advise people in Oz to buy some dump in the boonies because it'a affordable... puleeeeeze.

Sorry, you're talking rubbish as some sort of bizarre justification for Oz prices.

BTW, you cannot use exchange rates to compare directly. You have to use local earnings.

Just for fun, here's one in Brooklyn:


----------



## nunthewiser (16 September 2009)

MrBurns said:


> Search houses in Tasmania, it's a dream come true , see how far your money goes there.




owns property in tasmania as stated in amongst these threads ......

tasmania been very kind to me 


lol i own half  a river (yes thats right NO riverfront reserve and own to the midway point) gotta love it

even got trout , native hens ( evil things ) and a cupla platypus not to mention my very own 5ft high waterfall

nirvana some say

p.s i currently have a priick of a tenant also and about to undergo some painful manouvering because  of said tenant .... not all sunshine and lollipops but at least i can shoot ppl for fishing in my side of the river


----------



## MrBurns (16 September 2009)

nunthewiser said:


> owns property in tasmania as stated in amongst these threads ......
> tasmania been very kind to me
> lol i own half  a river (yes thats right NO riverfront reserve and own to the midway point) gotta love it
> even got trout , native hens ( evil things ) and a cupla platypus nit to mention my very own 5ft high waterfall
> nirvana some say




Not a lot of capital gain from what I can gather but the prices and the standard of living over there seems to be faultless, no water restrictions, Hobart has 250k people. you can park anywhere in the city.
There must be drawback but I cant think what.

Look at this in Sandy Bay - unbelievable - 

http://www.realestate.com.au/cgi-bi...r=&cc=&c=11400062&s=tas&snf=rbs&tm=1253100008


----------



## nunthewiser (16 September 2009)

MrBurns said:


> Not a lot of capital gain from what I can gather but the prices and the standard of living over there seems to be faultless, no water restrictions, Hobart has 250k people. you can park anywhere in the city.
> There must be drawback but I cant think what.
> 
> Look at this in Sandy Bay - unbelievable -
> ...





Hobarts an awesome place , friendly , beutiful and got everything one needs .

depends when one bought re capital gain ... i did well hence my comment about being kind . BUT i had a subdivision potential i took advantage off 

the pace is a LOT slower there . not suited for some ppl 

i have intrests in the Huon valley i will return there to retire ,   circumstances dictate otherwisefor me to live there currently


----------



## MrBurns (16 September 2009)

nunthewiser said:


> Hobarts an awesome place , friendly , beutiful and got everything one needs .
> 
> depends when one bought re capital gain ... i did well hence my comment about being kind . BUT i had a subdivision potential i took advantage off
> 
> ...




I've got a mate who lives at Sandy Bay I'll go visit him one day, it's not possible for me to live there at the moment either but in the future who knows.


----------



## nunthewiser (16 September 2009)

MrBurns said:


> I've got a mate who lives at Sandy Bay I'll go visit him one day, it's not possible for me to live there at the moment either but in the future who knows.





sandy bay an awesome spot to live . waLKing distance to salamanca /city centre . sandy bay a buzz with bewtiful women and good food also . what more can one want


----------



## MrBurns (16 September 2009)

nunthewiser said:


> sandy bay an awesome spot to live . waLKing distance to salamanca /city centre . sandy bay a buzz with bewtiful women and good food also . what more can one want




I think I'll pay a visit very soon


----------



## So_Cynical (16 September 2009)

nunthewiser said:


> sandy bay an awesome spot to live . waLKing distance to salamanca /city centre . sandy bay a buzz with bewtiful women and good food also . what more can one want




What more?....how about another month or 2 with average daily maximum temperatures above 20 degrees Celsius...4 lousy months per yer just don't seem enough, oh and id like just 1 month with a daily max temp above 22 degrees celsius. 

http://www.tchange.com.au/climate/climate.html


----------



## nunthewiser (16 September 2009)

So_Cynical said:


> What more?....how about another month or 2 with average daily maximum temperatures above 20 degrees Celsius...4 lousy months per yer just don't seem enough, oh and id like just 1 month with a daily max temp above 22 degrees celsius.
> 
> http://www.tchange.com.au/climate/climate.html




um . dont live there then 

simple really


----------



## wayneL (16 September 2009)

So_Cynical said:


> What more?....how about another month or 2 with average daily maximum temperatures above 20 degrees Celsius...4 lousy months per yer just don't seem enough, oh and id like just 1 month with a daily max temp above 22 degrees celsius.
> 
> http://www.tchange.com.au/climate/climate.html




Bonus!!

Not everyone likes the heat. Tassie sounds good to me.


----------



## nunthewiser (17 September 2009)

wayneL said:


> Bonus!!
> 
> Not everyone likes the heat. Tassie sounds good to me.




there is hot days in summer ....often over 30 ......not many , but the climate there in summer is actually very nice .......

in fact remember with a twinkle in my eye floating in a blow up dingy from judbury all the way to huonville on the mighty HUON RIVER with an esky and getting majorly sunburnt one fine summers day 

i like the cold also , loved winter there .nothing like a sunny morning and frost to invigorate those lungs 

tassie a most underated place 

gods country


----------



## kincella (17 September 2009)

I wonder is anyone at all surprised about who ran the boarding house in Brisbane with 37 kids in a 3 bedder ???? did anyone think it would have been a greedy Aussie property investor ???? I guess its a similar situation where the Indian agents were ripping off the Indian students...with dodgy Uni certificates, and similar dodgy accommodation deals..................
no one is being racist.....or are they ??? ripping off the kids of the same nationality.........

 Guy Healy and Kim Wilkinson | September 17, 2009 
Article from:  The Australian 
A KOREAN education agent has been implicated in the running of a two-storey Brisbane suburban home that was housing up to 37 foreign students.

A raid by Brisbane City Council inspectors uncovered the operation under which a near record number of students were being used to service a $6000-a-month lease to cover the education agents' upstairs home-office. 

It is believed that when council raided the quiet suburban property in leafy Sunnybank Hills, in Brisbane's south, they discovered 27 students in the remodelled building, including three Asian girls asleep in a double bed, with beds for a further 10 people. 

The latest revelation of extreme overcrowding in overseas student accommodation comes in the wake of similar incidences in Sydney and Melbourne, where one house had 38 students setting a dubious national record. 

Cash-strapped foreign students, studying in Australia as part of the $15 billion industry, have complained of being exploited by industry-linked operators - leading to calls for universities and colleges to massively ramp up campus accommodation. 

When The Australian visited the Brisbane property yesterday, the Lebanese and Korean university student residents expressed shock the house had a notorious accommodation history. 

At the time of the raid in March - revealed yesterday as part of the council's crackdown on illegal accommodation - it is believed most of the residents were students of Asian origin. All of the then residents have since moved. 

Griffith University human resources masters student Adel Kassem, 25, of Lebanon, said there was 
http://www.theaustralian.news.com.au/story/0,25197,26084753-601,00.html


----------



## gfresh (17 September 2009)

> The raid followed complaints to the local Neighbourhood Watch about other crowded houses in the area, with one neighbour of the Sunnybank property saying that despite the overcrowding she had never found them to be a problem.






> A council spokesperson said *council had no powers to prosecute the perpetrators of the overcrowding, and action had been limited to raiding the property and working with the agent to enforce lease terms.*




 But if you own the place no such problem.. Griffith Uni is closer to my place than Sunnybank.. I can fit in a good 10 at least .. in the shed, they might get a bit hot in summer, some might pass out, or die or some such but hey, they can't expect everything  :



> Milton Dick, ALP planning spokesman on the council, said a further crackdown by state and council authorities was needed to prevent student overcrowding.
> 
> "I would hope people aren't profiteering, preying on vulnerable students to cram them into illegal accommodation to make a quick buck," he said.




profiteering? never! good one Mr Dick! How about the council actually allowing dorm style accommodation for students, would be a good business opportunity for some. At least it could be regulated somewhat.


----------



## kincella (19 September 2009)

this article will not affect all those FHB's or parents of FHB's on these forums....its all about the top end market.......

seems very slack that the new foreign investment board has allowed the flood gates to open....without the requirement to actually live in the houses....what concerns me is the land banking.....eg one buyer bought 4 houses to sit there vacant as an investment and hedge.....

but then the housing shortage is at the bottom of the market...not the top end....

whew just when you thought we had covered everything there is to know about the housing market.....something comes from left of field.....

anyone forgotten all those students and temp visa holders are allowed to purchase...and do the same....ie land bank if they want to ....

here are some extracts.....
What is certain is that in the past financial year before the change, foreign investment in Australian residential property increased by a third to $20.4 billion from the year before. Victoria attracted 21 per cent of that investment, according to the Foreign Investment Review Board's annual report released last month

NICK Johnstone is a man on a mission. Next week, the Brighton estate agent will fly to Shanghai with the aim of selling 30 of Melbourne's most expensive homes to Chinese buyers.

It will be the first time a Melbourne agency has attended the China International Luxury Property Show, but it is just one example of a phenomenon that has transformed Australia's residential market.

''Australia is the flavour of the month amongst the Chinese investors,'' Mr Johnstone, 41, said yesterday. ''They love property and there's plenty of money over there so they're good clients to have.''

While Chinese buyers have fuelled the top-end real estate revival, they are also courting controversy, with some local house hunters complaining they are being priced out by foreigners who have no intention of living in their new properties.

A few critics go further, arguing Chinese money is now putting upwards pressure on interest rates.

But you will not catch Mr Johnstone of J. P. Dixon complaining. He has made at least 40 per cent of sales this year to the Chinese. Other agents in the east and south-eastern suburbs have reported the same level of demand.

http://www.theage.com.au/business/chinese-buyers-fuel-topend-property-boom-20090918-fvga.html


----------



## wayneL (19 September 2009)

kincella said:


> NICK Johnstone is a man on a mission. Next week, the Brighton estate agent will fly to Shanghai with the aim of selling 30 of Melbourne's most expensive homes to Chinese buyers.
> 
> It will be the first time a Melbourne agency has attended the China International Luxury Property Show, but it is just one example of a phenomenon that has transformed Australia's residential market.
> 
> ...




Deja Vu?


----------



## MACCA350 (19 September 2009)

Found this interesting, I've been browsing an Aussie home building forum. Everyone I've found who mentioned their buy/loan price or their LVR has shown that their LVR is between 93-97%...........and most(if not all) are FHB.

Some who have had valuations done by the banks have found the valuation lower than expected and have had to either up their LVR(one went from 93% to 97%) or find cash(mostly via credit card or personal loan) to cover the shortfall.

So much for the banks lowering LVR's.........even if they did, people will get around it with credit cards and personal loans(which is still debt, and worse they have higher rates) which means effective LVR's are still high.

LVR's still high, 93-97% is in the sub-prime range
Interest rates at record lows with people borrowing larger amounts(remember the average loan increased by about $40k when rates dropped)
Bank valuations lower than build costs

Dunno, but it all smells like trouble, especially when banks are saying they can't hold rates this low as their international costs are rising, so even if the RBA want to keep rates on hold, the banks may have no choice but to begin raising them due to their bottom line.

cheers


----------



## Glen48 (19 September 2009)

Considering you can buy a house with no money down and the only cost is driving to the RE agent and your bank all this can't keep going on . wonder how many KPA the bubble is at now?


----------



## MrBurns (19 September 2009)

wayneL said:


> Deja Vu?




How ?

This hasnt happened before.

I swear Rudd is boating in Chinese by the millions over night, I've never seen so many around and the Auctions would be nearly empty without them.


----------



## Mofra (19 September 2009)

MACCA350 said:


> LVR's still high, 93-97% is in the sub-prime range



So none of these borrowers have gainful employment, which is what you're implying by the term sub-prime?

You do realise that LMI LVRs have reduced in the past two years right?


----------



## robots (19 September 2009)

hello,

more excuses (chinese buyers, fhg, low int's), 

its just fantastic, keep holding brothers as this is goin' to be one great ride 

and well done to Kincella helping out the family, doing the right thing and getting a bit in his travels, great community spirit, top effort Landlords

thankyou
robots


----------



## MACCA350 (19 September 2009)

Mofra said:


> So none of these borrowers have gainful employment, which is what you're implying by the term sub-prime?



You don't agree that 93-97% LVR is sub-prime?
Someone posted a US chart that indicated that anything above 80 or 85% LVR was classed as sub-prime, not sure where is is now.



> You do realise that LMI LVRs have reduced in the past two years right?



Yes, I do realise that. LMI would not be needed if LVR were capped at 80%..........100-110% LVR's were just stupid..........LMI is mostly to allow people to borrow more on less deposit...........Now why would most need to do that if house prices were affordable.

Is it like the chicken and the egg? Did increased LMI and LVR from the 90's cause an inflationary effect on prices? or were they a result of increased prices?

Seems simple to me, if people can borrow more on the same income and deposit, they will........if buyers have more to spend, they'll push prices up. Mind you I'm no expert on bank lending

What would happen if LVR was capped at 80%?

cheers


----------



## robots (19 September 2009)

hello,

oh yeah, this is getting so exciting:

http://www.heraldsun.com.au/news/deadline-nears-for-first-time-buyers/story-e6frf7jo-1225776817827

the figures out later on from REIV, Enzo will package them up real nice

what a day in Melbourne, cant believe it, paradise, well done brothers

its a bit like the guy in the Uk saving money by renting, some are making $ by owning and just putting the key in the door, amazing

thankyou
professor robots


----------



## joeyr46 (19 September 2009)

MrBurns said:


> How ?
> 
> This hasnt happened before.
> 
> I swear Rudd is boating in Chinese by the millions over night, I've never seen so many around and the Auctions would be nearly empty without them.




Happened in the eighties with the Japanese on the Gold Coast just as the market topped if I remember correctly and before the Nikkei went down hard, in fact I think the Japanese were late buyers so sounds like deja vu to me too.


----------



## robots (19 September 2009)

hello,

oh yeah, oh yeah, oh yeah:

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

Massive 82%, huge numbers, great result again

throw anything at it brothers, no boards, no options, cfds, puts, butterfly spreads, sell a call or buy a put, go short go long

just plain old vanilla real estate, equity mate

thankyou
professor robots


----------



## robots (19 September 2009)

hello,

oh yeah massive test over the past few weeks, anyone left?

special thanks and appreciation to:

numbercruncher
chops a must
pepperoni
kimosabi
explod
dowdy
the guys who pops in every 6mths and carrys on about having units

thankyou
professor robots


----------



## kincella (19 September 2009)

Evening Robots,
Guess some of us are blessed....we have a positive attitude, and a passive nature, coupled with a passive income...and voila....life is easy most of the time.....
if times get tough, then we get tough.....find answers to overcome any perceived problems....and work through the tough times to achieve our dreams, goals and life committments.....

oh and I have a really good working relationship with God.....we work together...I lean on him sometimes, seeking help and answers....and the rest of the time....he leans on me....to come up with the goods, and help the others, the less fortunate people....its a two way street......

I guess I just cannot help having a positive attitude to life....anyway life is just too short to be bogged down in negativity.......
cheers all


----------



## wayneL (19 September 2009)

kincella said:


> Evening Robots,
> Guess some of us are blessed....we have a positive attitude, and a passive nature, coupled with a passive income...and voila....life is easy most of the time.....
> if times get tough, then we get tough.....find answers to overcome any perceived problems....and work through the tough times to achieve our dreams, goals and life committments.....
> 
> ...




Thanks for this window into your psychology kinc', it explains a lot.

But as a point of order, you are praising God when you should really be praising The Fed and the RB........

......maybe The Fed is God! 

Praise Uncle Ben! :bowdown:


----------



## MrBurns (19 September 2009)

wayneL said:


> Thanks for this window into your psychology kinc', it explains a lot.
> 
> But as a point of order, you are praising God when you should really be praising The Fed and the RB........
> 
> ...




I'm pretty sure God isn't a property bull.


----------



## Glen48 (19 September 2009)

Not to sure on that MR B. God has a few church's in Her name and has her own Ponzi scheme collecting money every Sunday and the Vatican is the rich's square mile on Earth.


----------



## robots (19 September 2009)

hello,

yes Kincella, its all been debunked as well

people just spreading doom to get on TV

just to recap:

the greatest financial event the world has seen after 1929 and Australian property prices are booming, amazing

well done to those who called it

pretty simple though brothers, we walking in paradise every day and have plenty of room for others to join us in this happy commune

thankyou
professor robots


----------



## MrBurns (19 September 2009)

Glen48 said:


> Not to sure on that MR B. God has a few church's in Her name and has her own Ponzi scheme collecting money every Sunday and the Vatican is the rich's square mile on Earth.




Thats the Church not God.


----------



## MrBurns (19 September 2009)

robots said:


> hello,
> yes Kincella, its all been debunked as well
> people just spreading doom to get on TV
> just to recap:
> ...




How can booming property prices locking many people out of the market be paradise?

Sounds more like selfish bull**** to me and I own several properties, with no debt.


----------



## robots (19 September 2009)

hello,

yes spot on. 

thats right, remembr that one last year, those with debt were going to perish in the flames of hell

hahahaha, and debt got cheaper and cheaper and cheaper

thankyou
professor robots


----------



## wayneL (19 September 2009)

Glen48 said:


> Not to sure on that MR B. God has a few church's in Her name and has her own Ponzi scheme collecting money every Sunday and the Vatican is the rich's square mile on Earth.


----------



## nunthewiser (19 September 2009)

yes god is great 

i can now charge an extra $150/week  because its his will for me to do so

i am blessed


----------



## So_Cynical (19 September 2009)

MrBurns said:


> I'm pretty sure God isn't a property bull.




LOL that's comedy gold :grinsking


----------



## wayneL (19 September 2009)

MrBurns said:


> How can booming property prices locking many people out of the market be paradise?
> 
> Sounds more like selfish bull**** to me and I own several properties, with no debt.




The bot is just trolling Burnsie. Treat with ignore.


----------



## AzzaB80 (19 September 2009)

wayneL said:


> The bot is just trolling Burnsie. Treat with ignore.




What is it that causes trolls to troll, not enough balance in their lives? Lonely? Beaten up at high school?

I'm thinking the latter


----------



## MrBurns (19 September 2009)

wayneL said:


> The bot is just trolling Burnsie. Treat with ignore.



For months I've done just that but enough brandy and I start saying what I feel......foolish me.


----------



## robots (20 September 2009)

hello,

its tough accepting the facts, me and other legends didnt disappear when figures didnt go our way

just putting up the results, you dont like it tough, WOW call me a name

the ASF membership would of dropped a 1000 i reckon with the current status of the property market, they have all disappeared from GPHC, Somersoft etc etc etc as well

paradise

thankyou
robots


----------



## wayneL (20 September 2009)

robots said:


> hello,
> 
> its tough accepting the facts, me and other legends didnt disappear when figures didnt go our way
> 
> ...



I don't see anyone with a problem about the facts. It's raining cash. It's going into assets.

No surprise there. The debate is whether it is healthy long term.

Review how you are posting... it's trolling. It's not a name, it's a fact.


----------



## robots (20 September 2009)

hello,

in your opinion

catch 22 maybe

thankyou
professor robots


----------



## robots (20 September 2009)

hello,

"Homes Bonanza"

http://www.heraldsun.com.au/news/victorias-homes-bonanza/story-e6frf7jo-1225777055655

BONANZA

gee i see what you mean Kincella, these voices are real, kicking the little guy, the minority 

thankyou
professor robots


----------



## kincella (20 September 2009)

geez, some of you are sooo negative.....and so far over the other side of the fence....
there are tonnes of, or  plenty of affordable properties anywhere you care to look.....but dont look in Toorak and the best streets or locations in the inner city in any of the capital cities....
Robots....that article is as expected of the media today.....scaremongering...
how about we factor in some other points....
has anyone stopped to consider with all the immigration and enticements to foreign investors...that we would have far more people wanting to invest in housing in Australia, that is far above the normal levels....
its not just the average FHB or mum and dad investor competing with each other....they are competing with big money, sophisticated investors, who actually acknowledge the australian housing market has merits.....specifically the inner city pads of our main cities...

oh and regarding the reference to God, its all about a chrisitan belief and approach to life, it has nothing to do with being greedy, in fact I am all about helping the less fortunate, and I do that on a daily basis in some form or another.....


----------



## kincella (20 September 2009)

oh and btw, some of us just came onto these forums to offer some sensible advice, to counteract the numerous 'pigs might fly' scenarios being offered by all and sundry, and some with other than good motives...
versus the doomsday theories of worse than the great depression, house prices crashing, leaving millions of people with negative equity, and then allowing thousands of others to just walk in and take anothers home, at half the price...so they could be heros....and buy at the bottom of the market, in the best locations in town....
they would be the winners at the expense of their fellow neighbours.....who would be kicked out onto the streets, or forced to live with their elderly parents....
hundreds of thousands to become unemployed and lose their family homes, and those statements were made with a certain amount of hand rubbing and glee, at the thought of such unfortunate situations.....for other people....

so my job here has been done ... the truth is, there is nothing at all like the doomsdayers predictions regarding housing and the economy......
and I can rightly just use the 100 year old charts as a reference for the next 30 or more years.....expect some little hiccups on the way....nothing else.....


----------



## wayneL (20 September 2009)

kincella said:


> geez, some of you are sooo negative..




No.

Just pursuing other opportunities.



> oh and regarding the reference to God, its all about a chrisitan belief and approach to life, it has nothing to do with being greedy, in fact I am all about helping the less fortunate, and I do that on a daily basis in some form or another.....




Ahhhhh the good Christian. 



			
				Jesus Christ as reported in the Gospel of Matthew said:
			
		

> 1 “Take heed that you do not do your charitable deeds before men, to be seen by them. Otherwise you have no reward from your Father in heaven. 2 Therefore, when you do a charitable deed, do not sound a trumpet before you as the hypocrites do in the synagogues and in the streets, that they may have glory from men. Assuredly, I say to you, they have their reward. 3 But when you do a charitable deed, do not let your left hand know what your right hand is doing, 4 that your charitable deed may be in secret


----------



## MrBurns (20 September 2009)

No one said property prices dont go up eventually, any idiot knows that, as demonstrated in here but there are bubbles are they are corrected, we have one now and the correction will come.


----------



## MrBurns (20 September 2009)

Furthermore booming property prices dont help anyone except the greedy fat bastards who trade in those conditions at the expense of the young. 

I've seen it I was a real estate agent for 20 years remember.

Those greedy selfish pigs more often than not go bust then raid mum and dads equity to do it all over again.

I despise them with a passion.

Share trading hurts no one, residential property booms hurt people and those who revell in it are vultures in my opinion.

Instead of sitting on your worthless backside waiting for a boom to make money for you why dont you just work like everyone else.


----------



## kincella (20 September 2009)

yeah Wayne....I do not sound a trumpet, its only been  mentioned  a couple of times, to put my case into the correct context...and only after others accuse me of being greedy or having an alternative reason.....

anyway, why attack the poster...when the forum is for debating the subects and voicing a view on the subject in question ????


----------



## kincella (20 September 2009)

yeah burns....are you directing the question to me about work ????

I have worked my butt off for many years.....and now I work part time...because I am semi retired.....ran my own business for many years, worked 16-18 hours a day 7 days a week....and it has nothing to do with houses or real estate....hence the hard work early means I can retire earlier

you have no idea who you are talking to....you just shoot with a barrage of nastiness against anyone who differs with your point of view...


----------



## MrBurns (20 September 2009)

kincella said:


> yeah burns....are you directing the question to me about work ????
> 
> I have worked my butt off for many years.....and now I work part time...because I am semi retired.....ran my own business for many years, worked 16-18 hours a day 7 days a week....and it has nothing to do with houses or real estate....hence the hard work early means I can retire earlier
> 
> you have no idea who you are talking to....you just shoot with a barrage of nastiness against anyone who differs with your point of view...




My post was 100% on the money as we can see by your oh so defensive response. I dont give a rats how hard you worked, those who revell in a residential property boom are a-holes in my opinion, it locks the young out or forces them to take crushing mortgages.
I'd be quite happy if my residential properties halved in price tomorrow.
Less rates and the kids would be able to get in.

Those who call it paradise are selfish morons.


----------



## MrBurns (20 September 2009)

kincella said:


> you have no idea who you are talking to....you just shoot with a barrage of nastiness against anyone who differs with your point of view...




My barrage was against residential property dealers who revell in residential property booms and forget who's left behind, feeling guilty ? If that hat fits you then it is directed at you.


----------



## wayneL (20 September 2009)

kincella said:


> yeah Wayne....I do not sound a trumpet, its only been  mentioned  a couple of times, to put my case into the correct context...and only after others accuse me of being greedy or having an alternative reason.....
> 
> anyway, why attack the poster...when the forum is for debating the subects and voicing a view on the subject in question ????




You consider that an attack? You ain't seen nuttin' LOL

If I was going to attack you I would start on your appalling sentence structure and diabolical punctuation, while really going to town on the monumental hypocrisy. But I haven't gone there have I. 

I am in fact merely debating points raised by YOU.


----------



## cutz (20 September 2009)

Contrary to what i used to believe i don't think the property boom will end, governments don't have the courage to put an end to the propping up and the routs nor is it in their best interests.

A collapse in values would be a detriment to the economy with so many relying on their homes as a source of collateral for non productive proposes, you gotta ask yourself how the the BMW tractor has become the new Commodore. 

I feel sorry for the gen Y's who are destined to be straddled with a lifetime of bad debt breaking in to the national ponzi scheme.

Go figure, when i purchased my home in inner city Melbourne back in the latter part of the nineties i paid around 5 times the average wage of the day, now similar properties are going for 11 times or more todays average wage depending on the emotions running at auction, what the hell is going on, something doesn't quite add up.

Anyway enough ranting for now, good luck to you property gurus, hopefully one day a bit of normality will be restored.

BTW, kincella post up one of your charts so we can check it out.


----------



## wayneL (20 September 2009)

MrBurns said:


> My post was 100% on the money as we can see by your oh so defensive response. I dont give a rats how hard you worked, those who revell in a residential property boom are a-holes in my opinion, it locks the young out or forces them to take crushing mortgages.
> I'd be quite happy if my residential ptoprties halved in price tomorrow.
> Less rates and the kids would be able to get in.
> 
> Those who call it paradise are selfish morons.




I'm sort of on the same page Burnsie. We've got a couple of piles in SW England pretty close to being paid off. The actual value is academic as I don't ever envisage selling. Technically I've dropped about £100k or more from the 2007 between them. Who cares? It's the long term inflation hedged income that interests me.

The bubblicious values made the capitalist in me happy, but at the same time knew it was illusory. I also don't like the overall sociological effect of house price overvaluation. It's not the society I want to live in.


----------



## MrBurns (20 September 2009)

wayneL said:


> . I also don't like the overall sociological effect of house price overvaluation. It's not the society I want to live in.




Correct, not too many people think of that.

Commercial and industrial property is different, let those dogs eat each other, and they do, been there done that, but residential property is prmarily a place to live, and that should be affordable.


----------



## wayneL (20 September 2009)

cutz said:


> Contrary to what i used to believe i don't think the property boom will end, governments don't have the courage to put an end to the propping up and the routs nor is it in their best interests.




And it will be disaster for their generation... the boomers (as it has been already for many boomers in US and UK).

The whole structural premise of the economy currently is predicated on house price growth. 

The Keynesians believe they've saved the day. Most Austrians aren't convinced. I'm on the fence for now, but 100% sure that we will revisit this problem at some point in the future. When? No idea. 

We live in interesting times.


----------



## BradK (20 September 2009)

MrBurns said:


> Furthermore booming property prices dont help anyone except the greedy fat bastards who trade in those conditions at the expense of the young.
> 
> I've seen it I was a real estate agent for 20 years remember.
> 
> ...




This is the angriest post I have ever seen! But, funnily enough, I agree with most of it. I bought properties in Sydney and Perth and did really well. Went to England and European holidays on the profit with my family. And paid off a chunk of my mortgage. 

However, I came to similar conclusions. Property bubbles will eventually hurt EVERYONE. 

Sorry to sound all socialist on you - but, isn't owning a house a right that we have given up? 

Brad


----------



## BradK (20 September 2009)

wayneL said:


> The bubblicious values made the capitalist in me happy, but at the same time knew it was illusory. I also don't like the overall sociological effect of house price overvaluation. It's not the society I want to live in.




Here here. And this is coming from someone who did VERY well out of property in 2000-2003 thank you very much! The blindness of some of these selfish ba$tards is astonishing. 

Brad


----------



## robots (20 September 2009)

wayneL said:


> And it will be disaster for their generation... the boomers (as it has been already for many boomers in US and UK).
> 
> The whole structural premise of the economy currently is predicated on house price growth.
> 
> ...




hello,

is that the same problem that happened last year? which smashed resi property values by a whopping 5%

the biggest financial disaster since 1929, smashed resi property by 5%

the society we live in is fine for those who want to put in, the bludgers, hand out crew, slackers can get stu$$ed

technically, i have picked up those $ figures and it is awesome, equity mate

thankyou
professor robots


----------



## Beej (20 September 2009)

MrBurns said:


> My post was 100% on the money as we can see by your oh so defensive response. I dont give a rats how hard you worked, those who revell in a residential property boom are a-holes in my opinion, it locks the young out or forces them to take crushing mortgages.
> I'd be quite happy if my residential properties halved in price tomorrow.
> Less rates and the kids would be able to get in.
> 
> Those who call it paradise are selfish morons.




Why do you own multiple properties then?

PS: You could always sell your extra properties to some young-uns for half their correct market value if you really cared.....



BradK said:


> Sorry to sound all socialist on you - but, isn't owning a house a right that we have given up?




Since when, anywhere, and especially in Australia, has land/property ownership been a RIGHT??

Cheers,

Beej


----------



## BradK (20 September 2009)

There is a difference between paying off properties (or even buying them with capital) and relying on the RENTAL INCOME as an inflation hedging income until kingdom come, and using Other People's Money to leverage up to the neck and wait until CAPITAL GAINS and BOOMS skyrocket the price of the atmosphere and cash in on someone OVERPAYING for a house. 

So frustrating that property bulls can't see that! 

Property bulls MUST BE THE DUMBEST individuals I have seen. 

Talk about twisted logic from every angle! 

Someone shoot me! 

Brad


----------



## BradK (20 September 2009)

Beej said:


> Since when, anywhere, and especially in Australia, has land/property ownership been a RIGHT??




Well, ownership hasn't been a right, but having a roof free from exploitation must surely qualify. 

This thread makes me so frustrated. 

Im off it! hahahaah

Brad


----------



## wayneL (20 September 2009)

robots said:


> hello,
> 
> is that the same problem that happened last year? which smashed resi property values by a whopping 5%
> 
> ...




Can't speak for Oz cause I'm not there. But UK got swatted about 20% on average. America worse.

I suspect WA copped more than 5%, but again don't know for sure. Don't really care, don't have any financial interest.

The Australian gu'mint is directly supporting the house market however. Your taxes are supporting housing. Young couples struggling to save a deposit and facing massive mortgages are paying taxes to make it harder for themselves to buy.

It's another form of middle class welfare. You're actually on the take equity-mate, either directly or indirectly. That's morally hazardous in my opinion.


The self-centred may be happy about that, the more community minded not so much.


----------



## robots (20 September 2009)

hello,

thanks for everyone's opinions today, great posting as usual at ASF

such a cross section of the community, fantastic

thankyou
professor robots


----------



## wayneL (20 September 2009)

Beej said:


> Since when, anywhere, and especially in Australia, has land/property ownership been a RIGHT??
> 
> Cheers,
> 
> Beej




Housing is a basic need, like food. 

If food rises and becomes too expensive it is considered very bad, but if housing does that, a different logic is applied. Funny that. 

Premium housing is a different matter, but basic suburban housing has become expensive for no other reason than speculation fuelled by loose money. That cannot be a good thing for a society.


----------



## Glen48 (20 September 2009)

If inflation is to push up house prices and they only go up on average by the cost of construction, how much is house in Mug Arbie's country were inflation is 1,000,000,000, % and if inflation gets that high here why not own Gold in stead?
How much longer can the you pay for propping up our housing and hoping some un-employed homeless migrant will keep buying ?


----------



## MrBurns (20 September 2009)

Beej said:


> Why do you own multiple properties then?
> 
> PS: You could always sell your extra properties to some young-uns for half their correct market value if you really cared.....
> 
> ...




My sister lives in one and the ex Mrs Burns in the other, both rent free, non of them give me any income. A concept foreign to some in here.

To own your own home in Australia is something everyone should be able to achieve, to make residential property a great investment through tax breaks is wrong, it should be limited the commercial property where the greedy element belong, not wading in and stuffing it up for our kids.


----------



## MrBurns (20 September 2009)

BradK said:


> Well, ownership hasn't been a right, but having a roof *free from exploitation* must surely qualify.
> Brad




Yes , agree, that sums it up quite well.


----------



## robots (20 September 2009)

MrBurns said:


> My sister lives in one and the ex Mrs Burns in the other, both rent free, non of them give me any income. A concept foreign to some in here.
> 
> To own your own home in Australia is something everyone should be able to achieve, to make residential property a great investment through tax breaks is wrong, it should be limited the commercial property where the greedy element belong, not wading in and stuffing it up for our kids.




hello,

handing out the capital growth as well Mr Burns, or keep that HUGE bit for yourself?

its all about the capital

thankyou
professor robots


----------



## MrBurns (20 September 2009)

robots said:


> hello,
> 
> handing out the capital growth as well Mr Burns, or keep that HUGE bit for yourself?
> 
> ...




I dont give a root about the capital growth, this is housing people, unselfish, you know what unselfish means Robots ???? Look it up, you could do with a good dose of it.

Capital growth means nothing if every other house in the street has gone up as well, you havent woken up to that have you ?

I bet you get a kick out of watching young people walk away from Auctions broken hearted.


----------



## Beej (20 September 2009)

wayneL said:


> Housing is a basic need, like food.
> 
> If food rises and becomes too expensive it is considered very bad, but if housing does that, a different logic is applied. Funny that.




But people (including yourself) seem to be getting this idea mixed up with the idea of land/property ownership. Shelter/housing can be provided without every individual owning property. Last time I checked there aren't any western countries with communist dictators, so I don't think that is going to be changing anytime soon in Australia, UK, US etc.

The provision of shelter for all is a government policy issue. Governments may provide housing directly (publically owned), they may subsidise the private sector to provide it (negative grearing PIs), or they may regulate/control rents etc with no compensation (eg New York City historical rent controls - complete disaster, but can happen). They may put policies/schemes in place to *encourage* people to own their own homes (FHBG, stamp duty exemption for FHBs in NSW etc). They may as a matter of policy release greater amounts of land on the city fringes and sell them or service them at below market value/cost, or they might encourage industry (jobs) to move to regional towns etc to take the pressure of the big cities.

All of these things play a part in ensuring that everyone in our society has "shelter", but none of them imply any sort of right to land ownership.



> Premium housing is a different matter, but basic suburban housing has become expensive for no other reason than speculation fuelled by loose money. That cannot be a good thing for a society.




So where is the line drawn?? Besides, in Sydney and most of Australia "basic" suburban housing is actually not that expensive (as has been demonstrated here numerous times by myself, Kincella and others). 3 bedroom houses on reasonable size blocks all over western and south-western Sydney can be had for < $300k easily = 3-4 times a very average household income. It's only when you start getting closer to the CBDs etc that prices start to get higher, and even there 2 bedroom units can be had from $400k up. It's all about trade-offs, compromise, supply/demand, and having a long term plan. 

Life wasn't meant to be easy.....

Cheers,

Beej


----------



## robots (20 September 2009)

hello,

oh yeah, top effort Mr Burns, hand the title out then if you not interested

yes i wouldnt handout 5 cents

thankyou
professor robots


----------



## MrBurns (20 September 2009)

robots said:


> hello,
> 
> oh yeah, top effort Mr Burns, hand the title out then if you not interested
> 
> ...




Thats childish, if my properties trippled in value tomorrow it wouldnt make a lot of difference because I would have to pay that extra to get back in if I sold, plus higher stamp duty, higher rates.


----------



## robots (20 September 2009)

hello,

but you not interested in income or capital growth but providing for others,

so transfer the title to their names, no big deal

didnt mention selling them

perhaps you are interested in the capital growth after all

thankyou
professor robots


----------



## MrBurns (20 September 2009)

robots said:


> hello,
> 
> but you not interested in income or capital growth but providing for others,
> 
> ...




Robots you dont make a lot of sense when you're drawn into an actual discussion.

Just because I'm not sweating on *capital growth* doesnt mean I would *give valuable assets away* now does it.


----------



## robots (20 September 2009)

hello,

thanks, put you down with me brother, on the selfish tip

long way around

thankyou
professor robots


----------



## robots (20 September 2009)

hello,

at least we stay true to the cause, lots of pretenders around

thankyou
professor robots


----------



## robots (20 September 2009)

hello,

gee, what happened here to day, it was going off its nut

commies, socialists, capitalists, all in 

just amazing, but we all still walk out as friends, what a place

thankyou
professor robots


----------



## MrBurns (20 September 2009)

robots said:


> hello,
> 
> gee, what happened here to day, it was going off its nut
> 
> ...




Thats the main thing Robbie


----------



## MACCA350 (20 September 2009)

Gee, I have a break from the laptop for a day and see what happens I missed all the fun

Nice to see I'm not the only one who has been disheartened by recent trends.

One thing my brother in-law mentioned, he feels there will be some turbulence in property as the baby-boomer generation(IIRC being the starters of the 'property investment portfolio' mentality) begin to sell out...........does make ones thoughts drift

cheers


----------



## wayneL (20 September 2009)

Beej said:


> But people (including yourself) seem to be getting this idea mixed up with the idea of land/property ownership.




Not at all. You are leaping to conclusions based on some sort of cognitive bias.

I don't think there is any "right" to home/land ownership whatsoever. Where did you get that idea? I have no problem with people renting. I choose to rent myself as it suits me right now.

However overpriced *basic* accommodation filters down to rent levels. People are entitled to a fair return on the value of their asset, so rent should reflect the asset value. Ergo, high prices equals high rents.

Witness - what has happened to rents in Oz over the last few years? Rents have totally outstripped inflation. What you could rent in Perth for $250 4 years ago is now circa $450 or more.

Perth as a society functioned perfectly well with some of the most inexpensive real estate and therefore rents in the country. Now it is among the most expensive. Why? (Yes I know the economics etc)

Fantastic if you own property. But if you're starting out, it is much more difficult than previous generations endured. There is something wrong with an economic policy that actually encourages this in my opinion.

You can still get rich in property without massive speculative price inflation, just might take a bit longer.

What I do object to very strongly is government actions in propping up house prices.

If we are to be Keynesian style interventionists, house prices should never have been allowed to get out of control. Policy would have tried to prevent it.

However if we are to be Austrian style laissez faire capitalists, then let them rip, but let people deal with the consequences of an Austrian style bust. Let housing, as a market, find its level without gu'mint support. Let the market do its job of price discovery.

But gu'mint policy flip flops from laissez faire to interventionism in order to perpetuate the house price boom.

I and others don't believe this is healthy or fair to all in the long run. 

Personally, I'm in favour of Austrian style economics. I have no problems with a price boom, but am prepared to deal with the consequences of a bust, both in the sense of protecting assets and as an opportunity.

Current day investors are used to the nanny state nipple of middle class welfare and go whining to the government to bail them out of trouble. pffft.

Ultimately this type of economics cannot survive without unintended consequences.


----------



## MACCA350 (20 September 2009)

I should mention that our intention for any future property purchases are for a holiday house and homes for our children which they can use once they decide to move out, title will be willed to them on our passing. 

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> I should mention that our intention for any future property purchases are for a holiday house and homes for our children which they can use once they decide to move out, title will be willed to them on our passing.
> 
> cheers




Do they pay stamp duty on that ?


----------



## MACCA350 (20 September 2009)

MrBurns said:


> Do they pay stamp duty on that ?



As far as I know inherited property is exempt from stamp duty, although laws can change.

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> As far as I know inherited property is exempt from stamp duty, although laws can change.
> 
> cheers




Depends n the State too I guess.


----------



## MACCA350 (20 September 2009)

MrBurns said:


> Depends n the State too I guess.



Yep. We'd definitely get advice on the best ways to go about it all when we get to that point. Though we plan to leave them more than a house each, so any unforeseen expenses should be covered.

At least that is our goal, we didn't bring our kids into this life just to leave them high an dry when we leave. The 'spend the kids inheritance' attitude really makes me sick, especially if they were the recipient of such an inheritance. 

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> The 'spend the kids inheritance' attitude really makes me sick.
> cheers




I agree there, those ads really annoyed me.


----------



## MrBurns (20 September 2009)

I think if you were lucky enough to make it then to pass it onto your kids is a great thing to do and just hope they keep it and dont lose it through a bad marriage.


----------



## MACCA350 (20 September 2009)

MrBurns said:


> I think if you were lucky enough to make it then to pass it onto your kids is a great thing to do and *just hope they keep it and dont lose it through a bad marriage.*



Amen to that. Our layer mentioned we could stipulate in our will that they don't get title until they are a certain age, ie 25 or so, to at least make sure they don't go an blow it all just because they're 'young dumb and full of c..'  But I hope we will be able to instil some good sense into them before then


...........not that we're planning to cark it before they're 25 

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> Amen to that. Our layer mentioned we could stipulate in our will that they don't get title until they are a certain age, ie 25 or so, to at least make sure they don't go an blow it all just because they're 'young dumb and full of c..'  But I hope we will be able to instil some good sense into them before then
> 
> cheers




They should get whatever they need for education and travel and the lot when they're about 40, 25 is too young for most.

This money is for security not to take away their will to do it on their own, it's hard to set it up that way though, I've got a Trust that will be administered by a lawyer, but it's all complicated and I'm not really happy with it yet.


----------



## MrBurns (20 September 2009)

The hardest thing is to set it up so it's for their future without them thinking, I dont have to work because I've already got a house and they bludge, that could actually ruin someones life by taking away thier incentive.


----------



## MACCA350 (20 September 2009)

MrBurns said:


> They should get whatever they need for education and travel and the lot when they're about 40, 25 is too young for most.
> 
> This money is for security not to take away their will to do it on their own, it's hard to set it up that way though, I've got a Trust that will be administered by a lawyer, but it's all complicated and I'm not really happy with it yet.



Good point, we also have set up a trust, though that's about as far as I've got so far.

cheers


----------



## nunthewiser (20 September 2009)

lawyers are too complicated and costly to set this kind of deal up guys 

just donate all assets and monies to my convent and attach a note with all future instructions in it 

happy to do my bit for mankind 


a.nun


----------



## MrBurns (20 September 2009)

MACCA350 said:


> Good point, we also have set up a trust, though that's about as far as I've got so far.
> 
> cheers




I drove myself nuts trying to cover all the bases, but you just cant .


----------



## MACCA350 (20 September 2009)

MrBurns said:


> The hardest thing is to set it up so it's for their future without them thinking, I dont have to work because I've already got a house and they bludge, that could actually ruin someones life by taking away thier incentive.



True too, though if they have no access to it, to some degree it would defeat the purpose. 

My hope is that it would give them enough security to be able to pursue the kind of work they love

cheers


----------



## MACCA350 (20 September 2009)

nunthewiser said:


> lawyers are too complicated and costly to set this kind of deal up guys
> 
> just donate all assets and monies to my convent and attach a note with all future instructions in it
> 
> ...



Fat chance Nun: I trust religion even less

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> My hope is that it would give them enough security to be able to pursue the kind of work they love
> cheers




Thats exactly my thoughts.


----------



## MACCA350 (20 September 2009)

MrBurns said:


> I drove myself nuts trying to cover all the bases, but you just cant .



Yeah, at some point you just have to let go and trust them to make their own decisions. Sometimes too much restriction can be more harmful than good.


..........Boy have we gone way off topic

cheers


----------



## MrBurns (20 September 2009)

MACCA350 said:


> Yeah, at some point you just have to let go and trust them to make their own decisions. Sometimes too much restriction can be more harmful than good.
> 
> 
> ..........Boy have we gone way off topic
> ...




Right on both counts - worthwhile though.


----------



## MACCA350 (20 September 2009)

MrBurns said:


> Right on both counts - worthwhile though.



Worthwhile that we scared off all the property bulls it's been quite peaceful in here since

cheers


----------



## Beej (21 September 2009)

wayneL said:


> Not at all. You are leaping to conclusions based on some sort of cognitive bias.
> 
> I don't think there is any "right" to home/land ownership whatsoever. Where did you get that idea? I have no problem with people renting. I choose to rent myself as it suits me right now.
> 
> However overpriced *basic* accommodation filters down to rent levels. People are entitled to a fair return on the value of their asset, so rent should reflect the asset value. Ergo, high prices equals high rents.




Hmmm - true to some extent, but not always? In Sydney for example when prices rocketed both during the late 80s and then 98-03/04, rents barely shifted. When capital growth is roaring, investors tend to focus on that rather than the yield (which of course is part of your point). So in effect anyone priced out by a price spike still has access to basic, affordable housing at rent rates that usually have not changed much. Over more time of course the rents do rise, but they tend to rise more slowly, or at least rises lag property price increases, and from what I have seen often occur while prices are stagnating more often than not.



> Witness - what has happened to rents in Oz over the last few years? Rents have totally outstripped inflation. What you could rent in Perth for $250 4 years ago is now circa $450 or more.




This has varied from area to area, but in Sydney certainly did occur, however this was after a period in which rents were basically flat for 5+ years, so over the whole period from late 90s to present, rents in Sydney have only increased by a little more than inflation (in high demand area's) and probably less than inflation in more ordinary locations.



> Perth as a society functioned perfectly well with some of the most inexpensive real estate and therefore rents in the country. Now it is among the most expensive. Why? (Yes I know the economics etc)
> 
> Fantastic if you own property. But if you're starting out, it is much more difficult than previous generations endured. There is something wrong with an economic policy that actually encourages this in my opinion.




And the same goes for Sydney/Melbourne where property was relatively cheap in the 60s/70s as well - I'm sure London had cheap housing widely available at some point in it's long history as well? The point is cities grow, demographics shift with the economic winds (eg resource super cycle and the high incomes that generates for a large number of people clearly has been a major driver of Perth prices). As the prosperity on average of a particular city increases over time, unless there is some major economic shift, those changes tend to be permanent. For example if the Australian financial services industry ever went into true long term decline, then Sydney property prices *would* take a beating - as there would be a fundamental shift in the drivers of the market here. Likewise Perth prices I'm sure would fall fundamentally over the long term if the developed world stopped buying our resources.

Are either of these changes likely to occur? (As examples - obviously there are more factors than just mining/finance sectors in each case). Will people who choose to live and own in Perth likely get richer or poorer over the next decade or 2? These are the questions I ask myself when considering how the long term demand for property might pan out.



> You can still get rich in property without massive speculative price inflation, just might take a bit longer.




Sure you can, and in fact most PIs I know are long term investors (as was I, 10 year + time horizon with some specific goals for investing) and this is how they look at things - periodic strong capital gains are just icing on the cake. Of course these periods do attract *some* pure speculative investors, however the same can be said for *any* market from time to time. 

I mean people should really buy/trade shares only for long term earnings growth and dividend flows shouldn't they? But instead you get periods of manic speculation driving prices north - this is bad as it effects the behaviour/decisions of the management of many enterprises to too much of a short term focus, but it happens, that's life, we all deal with it?



> What I do object to very strongly is government actions in propping up house prices.
> 
> If we are to be Keynesian style interventionists, house prices should never have been allowed to get out of control. Policy would have tried to prevent it.
> 
> ...




I don't think I would disagree with much of what you wrote there - however I don't happen to agree with many of the Austrian economics based ideals. I think in a more "normal" downturn you would not have seen government intervention in the housing market like we did this time around. But nor do I think even in this situation that there would have been the type of asset prices falls predicted/hoped for by so many here.  

In fact if anything I think that a "policy on the run" decision may have been sparked by the likes of Steve Keen running around the mainstream media scaring the **** out of everyone who owned property! There was a 7:30 Report where Kerry O' Brien kept hammering Rudd about what he thought of Keen's predictions - 3 days later the FHBG boost scheme was announced......

But I still think the intervention over-all was good, simply so that we could avoid the type of meltdown seen in the US. That would not have been good for *anyone*.

Cheers,

Beej


----------



## kincella (21 September 2009)

just some more views .....the world but mainly China has caught onto Australia's resources, which have contributed to the wealth in this country, which in turn contributes to a rise in house prices.....but not every house, 
thousands of homes ,not in the inner city area...that are very affordable for everyone......and even more so in regional areas.....
some extracts..........

CRAIG JAMES: I wonder where the 30 per cent view comes from. I suppose in Australia we look at overseas and look at what’s happened in the US and the UK, but we tend to forget our own backyard is completely different. We’ve got the fastest population growth of any advanced country in the world, and really up there with some of the developing economies, faster than a lot of the Asian economies. Population is increasing, we’re not building enough houses, so we’ve got a housing shortage. And then it’s a case of demand and supply. Australians love their homes, love to put money into their homes, so that demand is out there. And it’s also a decision of choice in terms of your household spending. Food and clothing and transport are taking up much smaller proportions of our income, and as a result we can put more into housing. And through the magic of real wage gains we’re also getting ahead. So maybe it’s the case that we’ve got high house prices relative to income, but it’s a case that we’ve made the decision that we allocate money to housing. I would say in terms of the average person out there, their budgets aren’t overly stretched and house prices might be relatively high but it’s something that people are comfortable with. 

Generation Y want to live close to the city, migrants want to live close to the city, so it’s demand for apartments rather than demand for four or five bedroom houses. If you’re living way out from the capital city centres and you’ve got a four or five bedroom house perhaps you’ll be a little bit worried about the degree of house price accumulation that you’re going to get over a long period of time. 
http://www.news.com.au/business/money/story/0,25479,26090822-5013951,00.html


----------



## Mofra (21 September 2009)

MACCA350 said:


> You don't agree that 93-97% LVR is sub-prime?
> Someone posted a US chart that indicated that anything above 80 or 85% LVR was classed as sub-prime, not sure where is is now.



Sub-prime within the industry is regarded as any exposure where the borrower has limited or no capacity to repay - capacity to repay is a seperate issue to LVR. 



MACCA350 said:


> Yes, I do realise that. LMI would not be needed if LVR were capped at 80%..........100-110% LVR's were just stupid..........LMI is mostly to allow people to borrow more on less deposit...........Now why would most need to do that if house prices were affordable.



You've missed the point - LMIs have reduced their LVR exposures already, and in _Australia_ we did not promote NGS > 95% LVR loans in the first place, unlike the US.

In short, the five "C"s of lending were adhered to in all but the 4% of non-conforming lender sin Australia, and even the non-conformers never appraoched the stupid lending principles of thos ehanding out NINJA loans, ARMS, etc.



MACCA350 said:


> Is it like the chicken and the egg? Did increased LMI and LVR from the 90's cause an inflationary effect on prices? or were they a result of increased prices?
> 
> Seems simple to me, if people can borrow more on the same income and deposit, they will........if buyers have more to spend, they'll push prices up. Mind you I'm no expert on bank lending



Given that tightened lending practices have still allowed for growth in prices thus far this year, the point is rather moot.


----------



## Mofra (21 September 2009)

MrBurns said:


> Do they pay stamp duty on that ?



In Victoria they wouldn't if the TOL is noted as "for natural love and affection"

What a caring, sharing lot the Gov are


----------



## Taltan (21 September 2009)

Kincella, for those true believers in the China & India phenomenon I wouldnt waste my money on housing. Go Buy BHP, RIO, BSL, OST etc. What they produce is in a lot shorter supply than Australian housing. If China does boom for the next 30 years I guarantee you'll make a better return with those stocks.


----------



## kincella (21 September 2009)

I already have some of the stocks you mentioned.....its like having money on an each way bet ...both are winners....
oh and I doubt  India will ever match China....its way too far down the ladder IMO
the money is on China alone


----------



## nunthewiser (21 September 2009)

kincella said:


> the money is on China alone




and there lies the problem


----------



## MrBurns (21 September 2009)

nunthewiser said:


> and there lies the problem




True, anything could blow up there at any time.


----------



## robots (21 September 2009)

Taltan said:


> Kincella, for those true believers in the China & India phenomenon I wouldnt waste my money on housing. Go Buy BHP, RIO, BSL, OST etc. What they produce is in a lot shorter supply than Australian housing. If China does boom for the next 30 years I guarantee you'll make a better return with those stocks.




hello,

and bang 500k on BHP or RIO, no brainer in the mind thats about it

you might get a good return on 10k, chicken feed though

and the fund crew dont care if they loose it as its not theirs

thankyou
professor robots


----------



## robots (21 September 2009)

MrBurns said:


> My post was 100% on the money as we can see by your oh so defensive response. I dont give a rats how hard you worked, those who revell in a residential property boom are a-holes in my opinion, it locks the young out or forces them to take crushing mortgages.
> *I'd be quite happy if my residential properties halved in price tomorrow.*
> Less rates and the kids would be able to get in.
> 
> Those who call it paradise are selfish morons.




hello,

i'm with you Kincella, going to put these trolls on ignore the contradictions are outrageous

i reckon the thread would have far more substance and helpful discussion/ideas about property investing if some of these trolls were silenced

how we looking brothers, the biggest financial event since 1929, are prices still 8x average income, paradise

thankyou
professor robots


----------



## MrBurns (21 September 2009)

robots said:


> hello,
> 
> i'm with you Kincella, going to put these trolls on ignore the contradictions are outrageous
> 
> ...




Helpful discussion ???????? ROFL you've done nothing but troll and repeat ad nauseum the mantra of the dysfunctional, self centered property bull, or bull**** I should say....for this entire thread.

Those who call it paradise are selfish morons.


----------



## satanoperca (21 September 2009)

robots said:


> how we looking brothers, the biggest financial event since 1929, are prices still 8x average income, paradise




The event has not finished yet, we are just warming up, don't count your chickens before they hatch.

Your comment that it is paradise with high prices (x8) is a little childish and does make you look like a troll.

May start a new thread, How much will house prices fall <$500,000 in the next year after the government stimulus and grants are finished or reduced.

Seems the media are slowly starting to wake up and see the FHBG was just a donation to PI's and has done very little to make housing affordable for first home buyers.

Anyway, who cares about property at the moment when all the action is shares.

Cheers


----------



## robots (21 September 2009)

hello,

its like the everlasting gobstopper from Willie Wonka

the everlasting prediction of DOOM

thankyou
professor robots


----------



## satanoperca (21 September 2009)

robots said:


> hello,
> 
> its like the everlasting gobstopper from Willie Wonka
> 
> ...




 Or 

its like the everlasting gobstopper from Willie Wonka

the everlasting prediction of house prices keep rising for years.


----------



## Dowdy (21 September 2009)

robots said:


> hello,
> 
> and bang 500k on BHP or RIO, no brainer in the mind thats about it
> 
> ...





You do know that if you do the sums and work out the *percentage of profit* then the stock market *always* comes infront.

They say property doubles every 10 years (which is total BS anyways but lets say it's true) but when you break it down, that only 10% a year, then take inflation into account (i bet alot of you forget to do that, don't you) and it's around 5-8% increase a year.

Now if you ask me, that sounds like chicken feed.


On the other hand if you bought BHP 10 years ago....







I haven't taken into account Capital Gains Tax but it's negated from housing council rates, power/water rates, stamp duty, maintenance, time of labour etc

People always forget the _PERCENTAGE_ of profit. A $30k profit on a $500K home is pretty pathetic, percentage wise 


MrBurns said 







> Those who call it paradise are selfish morons.




I'll take it from another angle - Those who call it paradise are deluded morons


----------



## wayneL (21 September 2009)

satanoperca said:


> Or
> 
> its like the everlasting gobstopper from Willie Wonka
> 
> the everlasting prediction of house prices keep rising for years.




Long term the bulls win. The bear argument here is for a return to traditional vectors of value, either by price correction, or a period of stagnation. Once that happens, I'm a bull too.

Right at this moment, you have to be a bull, because of the cash stimulus that is being shoved in everyone's face. The tricky bit is what happens when stimulus is exhausted. That's why I'm still a bear medium term... unless inflation runs out of control.


----------



## robots (21 September 2009)

Dowdy said:


> You do know that if you do the sums and work out the *percentage of profit* then the stock market *always* comes infront.
> 
> They say property doubles every 10 years (which is total BS anyways but lets say it's true) but when you break it down, that only 10% a year, then take inflation into account (i bet alot of you forget to do that, don't you) and it's around 5-8% increase a year.
> 
> ...




hello,

buy today Dowdy, go and buy 500k, get a loan and bang it on

well done if you make it large, and I mean well done, no issue from me, you have made the $

just dont whinge to me if people making money from property also

thankyou
professor robots


----------



## MrBurns (21 September 2009)

robots said:


> hello,
> buy today Dowdy, go and buy 500k, get a loan and bang it on
> well done if you make it large, and I mean well done, no issue from me, you have made the $
> just dont whinge to me if people making money from property also
> ...




Gee Robots you're logic continues to astound, I have a message for you but I daren't assume the position with Smithers around so I'll let a little buddy of mine deliver it, but dont get any ideas now, I know all you over in St Kilda are famous for your sexual preferences (shudder) so make one move toward him and I'll be dialing 000 -


----------



## Dowdy (21 September 2009)

robots said:


> hello,
> 
> buy today Dowdy, go and buy 500k, get a loan and bang it on
> 
> ...




I haven't made that much money yet, i'm still young though so time is on my side.

I never whinge to anyone, i just state my case why housing is a bad investment and you keep calling it the shonk market, hence your delusion on housing



> *On the other hand if you bought BHP 10 years ago....*




Fine just pick another stock and look at a chart over a 10 year period...

RIO, CSL, FMG (FORTESCUE), LEI (LEIGHTON), STO (SANTOS), WES (WESFARMER), WOW (WOOLWORTHS).

Some stock will win and some will lose but the bottom line is a _diverse_ stock portfolio will *ALWAYS* outperform real estate, even in a crash. Some stock will win and some will lose.

How is your portfolio going to be when the real estate market crashes but they will _never_ happen won't it. I guess higher prices justify higher prices


----------



## robots (21 September 2009)

hello,

yes still waiting for it to happen

thankyou
professor robots


----------



## MrBurns (21 September 2009)

robots said:


> hello,
> 
> yes still waiting for it to happen
> 
> ...




Look at 4 Corners NOW, thats your paradise.


----------



## Mofra (22 September 2009)

Dowdy said:


> You do know that if you do the sums and work out the *percentage of profit* then the stock market *always* comes infront.



I totally agree - although most sums tend to ignore holding costs, which are much higher for residential property than for equities. Don't mind the rental vs dividend argument too, considering frankingcredits tend to come in hady at tax time.

The only real major advantage of property is the gearing levels allowed.


----------



## satanoperca (22 September 2009)

MrBurns said:


> Look at 4 Corners NOW, thats your paradise.




Interesting doco, really quite sad given we live in a wealthy country, full of natural resources to sell to the world. We have a pile of vacant houses yet 100K of people are homeless each night. 

For those that don't give a s??t, you never know which way the wind blows and your wealth could disappear and you find yourself on a park bench. 

Gee, the landlord was a lovely sort of fella  including his sister come bulldog.

Have a happy day and smile at the next person you meet, it is free and could make their day.


----------



## MrBurns (22 September 2009)

satanoperca said:


> Interest doco, really quite sad given we live in a wealthy country, full of natural resources to sell to the world. We have a pile of vacant houses yet 100K of people are homeless each night.
> 
> For those that don't give a s??t, you never know which way the wind blows and your wealth could disappear and you find yourself on a park bench.
> 
> ...




I guess there's no votes in helping kids in homeless famlies, beyond moving them from motel to motel. 

Makes me sick.


----------



## cutz (22 September 2009)

MrBurns said:


> I guess there's no votes in helping kids in homeless famlies, beyond moving them from motel to motel.
> 
> Makes me sick.




Yeah it makes me puke too,

If the the government had any balls they'll pull the routs and handouts and let the property market go to hell.

As for the stimulus what a joke, just to stop a period of negative growth, what clowns.


----------



## MrBurns (22 September 2009)

cutz said:


> Yeah it makes me puke too,
> 
> If the the government had any balls.




They dont, Rudds only interested in votes while _*appearing*_ to be caring, he's good at it too


----------



## Early Bird (22 September 2009)

hi all, 

for what its worth, i think mofra is the only one tackling the real issues in this comparison between property and shares. they will both achieve similar long term capital growth and income on average (and both contain some exceptional and some poor returns within that average) but one has much lower holding/start up costs and the other allows much higher leveraging. 

the relative merits of these are what should be being debated, in my humble opinion, not the relative % rates of price increase. 

even tax i cant see much difference between them, both can avoid capital gains if you don't sell, but can offset the cost of investing against income.


----------



## MrBurns (22 September 2009)

Property is best.

1/ It cant disappear.

2/ It has a use in itself.

If you stick to the blue chips you may be ok but property is something you can see and work with.


----------



## Early Bird (22 September 2009)

cutz said:


> Yeah it makes me puke too,
> 
> If the the government had any balls they'll pull the routs and handouts and let the property market go to hell.
> 
> As for the stimulus what a joke, just to stop a period of negative growth, what clowns.




i think there would be a lot more homeless people if the government let the property market go to hell. most people's main asset is their home and if they go into negative equity it can cause them major problems, esp if they are forced to sell for some reason such as losing their job. 

i also dont see how it would help those people on 4 corners who coudlnt get a rental property due to a shortage of properties and also a lack of regular income for most of them. how is a crash in prices going to improve the supply of rental properties or the likelihood of landlords to take on tennants without jobs?


----------



## Early Bird (22 September 2009)

MrBurns said:


> Property is best.
> 
> 1/ It cant disappear.
> 
> ...




how about an index fund or etf?

also, what about subsidance/concrete cancer etc? not all houses are as safe as houses!


----------



## MrBurns (22 September 2009)

Early Bird said:


> i think there would be a lot more homeless people if the government let the property market go to hell. most people's main asset is their home and if they go into negative equity it can cause them major problems, esp if they are forced to sell for some reason such as losing their job.
> 
> i also dont see how it would help those people on 4 corners who coudlnt get a rental property due to a shortage of properties and also a lack of regular income for most of them. how is a crash in prices going to improve the supply of rental properties or the likelihood of landlords to take on tennants without jobs?




Property prices are high so rentals are high.

There's a shortage of properties to rent because you cant get a return on the prices being paid at the moment.


----------



## MrBurns (22 September 2009)

Early Bird said:


> how about an index fund or etf?
> 
> also, what about subsidance/concrete cancer etc? not all houses are as safe as houses!




What about paper cuts on your **** when you use the worhless script as toilet paper ?


----------



## Early Bird (22 September 2009)

MrBurns said:


> What about paper cuts on your **** when you use the worhless script as toilet paper ?




you think the entore asx200 index will become worthless?

besides, i'm not really trying to advocate one or the other, just playing devils advocate.

i'm taking a balanced approach myself, but i do think its an interesting question as to which is ultimately more beneficial, the leveraging of property or the low cost/hassle of share investing...?


----------



## Early Bird (22 September 2009)

MrBurns said:


> Property prices are high so rentals are high.
> 
> There's a shortage of properties to rent because you cant get a return on the prices being paid at the moment.




do you disagree that a property crash (a proper one!) would create more homelessness overall?

i think a supply side solution would be a better way to solve the issue of a lack of rental property, and if its people without jobs then this probably shdoulnt be left to the private sector anyway


----------



## satanoperca (22 September 2009)

Early Bird said:


> do you disagree that a property crash (a proper one!) would create more homelessness overall?




Having houses at unaffordable levels for average Australians is not resulting in an increase in homelessness. 

I agree adding to the supply side would reduce numbers but the government is more interested in keeping prices high to keep votes, not what is good for the country and its people in the long term.


----------



## Early Bird (22 September 2009)

satanoperca said:


> Having houses at unaffordable levels for average Australians is not resulting in an increase in homelessness.
> 
> I agree adding to the supply side would reduce numbers but the government is more interested in keeping prices high to keep votes, not what is good for the country and its people in the long term.




i think any action that results in either boom or bust should be discouraged by government as it will enevitably have a human cost.

perhaps if the government introduced new housing but kept it outside of the private sector, it would not affect the value of voters houses, but at the same time would ease shortages for those unable to pay rent or a mortgage.


----------



## Early Bird (22 September 2009)

anyway, more importantly... i _really_ need to know whether prices <500k are going to slide in my area in the near future or just keep going up... and every time i come in this thread I jsut end up more undecided!!!

so, anyone got any ideas as to whether the end of the FHB boost and possible increase in interest rates will have a negative impact on 2 bed units in lower northern beaches in sydney!!!???

i can't decide whether its best to take advantage of the extra cash myself, or wait for the drop and take advantage of that instead (albeit with less up front cash)

confused!!


----------



## Glen48 (22 September 2009)

If you want to see how the crash is going look at "Onthehouse.com.au"
 then pick a suburb and count the blue markers.


----------



## gfresh (22 September 2009)

satanoperca said:


> For those that don't give a s??t, you never know which way the wind blows and your wealth could disappear and you find yourself on a park bench.




Unfortunately that is the sort of culture we have helped foster in Australia these days, unless it effects you directly, then who gives a **** right?  It is disappointing sometimes..

Nobody really stands up these days on providing a proper solution to these problems. It's all worthless panels, empty rheortoric and cheap vote scoring. Remember the housing affordability fund, the housing deposit scheme, xxx thousand new homes, what a crock! Slowly disappearing without a trace.



Early Bird said:


> i can't decide whether its best to take advantage of the extra cash myself, or wait for the drop and take advantage of that instead (albeit with less up front cash). Confused!!




Only you can decide that.. don't listen to too many others, more likely to confuse than make it clearer! With time and observation comes clarity. Took me 24 months or so to work out whether it was the time to buy... still don't know whether it was, but signs are good so far the area I bought and what is selling now. I had to make a decision though, structure things around that, and now running with it.


----------



## Mofra (22 September 2009)

satanoperca said:


> I agree adding to the supply side would reduce numbers *but the government is more interested in keeping prices high to keep votes*, not what is good for the country and its people in the long term.



Votes only? 

You don't think that perhaps State (not the Federal) governments are also contributing to the price with the costs associated with setting up new estates & their stinginess in releasing land? Plenty of money to be had in stamp duties.

Nah, I'm sure they all govern for the people :


----------



## Beej (22 September 2009)

Glen48 said:


> If you want to see how the crash is going look at "Onthehouse.com.au"
> then pick a suburb and count the blue markers.




Yep huge crash Glen48! In my suburb a whole 9 auctions currently scheduled  (blue markers) out of an area with some 4,000 houses????? Maybe you just live a sh!thouse area for property values?

Cheers,

Beej


----------



## satanoperca (22 September 2009)

Have to agree with Beej, looking on Google RE, Port Melbourne, Vic, the last few weeks there has been an increase in volume but most has been sold within weeks. Average asking price has also increased significantly.

This would seem to be in tune with FHB's leaving the market and those that sold to them, upgrading to the next level.

The FHBG was effective in stimulating the lower end and some of that stimulation seems to be moving up the chain to $800K-1.2M in the area mentioned above.

Seeing prices return to 2007 levels after quite a dip in 2008.


----------



## So_Cynical (22 September 2009)

Early Bird said:


> anyone got any ideas as to whether the end of the FHB boost and possible increase in interest rates will have a negative impact on 2 bed units in lower northern beaches in sydney!!!???




Ya have to ask your self just how much of an impact the FHB boost is having in 
that market...not exactly the mortgage belt.


----------



## kincella (23 September 2009)

todays news, this is really scarey stuff......anyone still wonder why houses are in so much demand.....still waiting for that big break, when house prices will fall over ???...waiting for the fhb's grants to reduce, so you can find a b argain....I dont like your chances, and  you will probably be waiting forever, if you have your sights set on the inner suburbs...of any city.....
go into the outer suburbs for that affordable place...there are plenty out there
population growth is out of control....frightening , considering our transport is choking...but its all about buying new voters, at the expense of the existing population.....
extract follows.................

*Melbourne's population hits 4 million*
TIM COLEBATCH AND KATE LAHEY
September 23, 2009 
MELBOURNE'S population has reached 4 million and Australia's is surging towards 22 million, according to new figures that have sparked fresh debate about the impact of record migration.

The Bureau of Statistics says Australia's annual net migration soared in the first three months of this year to 278,000 - up from just 100,000 five years ago.

Annual population growth was estimated at 439,000, almost double the level of five years ago. When the bureau's conservative methodology is taken into account, real annual population growth could be closer to 500,000.

At that rate, the nation may be only days away from reaching 22 million people - and Melbourne has probably passed 4 million already.

http://www.theage.com.au/national/melbournes-population-hits-4-million-20090922-g0j7.html


----------



## MrBurns (23 September 2009)

kincella said:


> todays news, this is really scarey stuff......anyone still wonder why houses are in so much demand.....still waiting for that big break, when house prices will fall over ???...waiting for the fhb's grants to reduce, so you can find a b argain....I dont like your chances, and  you will probably be waiting forever, if you have your sights set on the inner suburbs...of any city.....
> go into the outer suburbs for that affordable place...there are plenty out there
> population growth is out of control....frightening , considering our transport is choking...but its all about buying new voters, at the expense of the existing population.....
> extract follows.................
> ...




I saw that, no wonder the roads are grid locked in Melbourne, there's no infrastructure changes to going on to cope with this increase, the State Govt is an impotent useless waste of space.

That is also one of the reasons for the house price surge, but I wonder what will happen in the next few months as the FHBG comes off and interest rates rise.


----------



## Mofra (23 September 2009)

MrBurns said:


> I saw that, no wonder the roads are grid locked in Melbourne, there's no infrastructure changes to going on to cope with this increase, the State Govt is an impotent useless waste of space.
> 
> That is also one of the reasons for the house price surge, but I wonder what will happen in the next few months as the FHBG comes off and interest rates rise.



I think your post alludes to the answer itself. Stagnation (at least after inflation) in the mortgage belt suburbs with poorer infrastructure. Melbourne is already way bigger than LA with 1/3 of the population, which means public transport will always be poor because of our lack of population density.


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## MrBurns (23 September 2009)

Mofra said:


> I think your post alludes to the answer itself. Stagnation (at least after inflation) in the mortgage belt suburbs with poorer infrastructure. Melbourne is already way bigger than LA with 1/3 of the population, which means public transport will always be poor because of our lack of population density.




I'm finding it particularly nasty on the roads lately, seems to be peak hour all day, not like a year or 18 months ago.


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## Dowdy (23 September 2009)

MrBurns said:


> I'm finding it particularly nasty on the roads lately, seems to be peak hour all day, not like a year or 18 months ago.




Well, they are doing alot of roadworks over the west gate so hopefully when they finish, it'll make traffic flow better and i know the trains will be better soon too since they're using the Honk Kong company


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## kincella (23 September 2009)

For those posters who like to follow Neil Jennmans advice.....
guess what, how does 10 million sound for making money out of a con...
extract...........
Desperate Property Spruiker Neil Jenman planning to "stitch up" more consumers in last ditch effort for a grab for cash and credibility. 

Our investigations reveal that Property Spruiker Neil Jenman is close to releasing his latest book called "Stitched", which is apparently about 150 property spruikers that he thinks you should avoid.

As expected, Neil Jenman himself isn't featured in the book despite himself being renowned as one of the most unethical property spruikers in the industry for the last 15 years
http://www.consumer-warning.com/index2.htm


----------



## satanoperca (23 September 2009)

A spruiker outing other spruikers who are inturn outing him.

That funny.:


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## wayneL (23 September 2009)

kincella said:


> For those posters who like to follow Neil Jennmans advice.....
> guess what, how does 10 million sound for making money out of a con...
> extract...........
> Desperate Property Spruiker Neil Jenman planning to "stitch up" more consumers in last ditch effort for a grab for cash and credibility.
> ...




But who is consumer-warning.com?

WHOIS data is private and there is not a hint of who is running that site. It could be Enzo Raimondo for all we know.

Credibility = ZERO!

There is a bit of yin and yang about Jenman, but the industry is better for having him in it IMO. That the conceited REIs hate him is a positive. Jenman stands behind his site with his own name.


----------



## moXJO (23 September 2009)

It is hard seeing interest rates going up with the current height of our dollar. I was very bearish on housing this time last year. But the rba has its hands tied at the moment concerning interest rates. There also seems to be another rush on property (offshore investment as well) and unemployment is still low when all things are considered. The fact that property only came down a little was also concerning. We may be paving the way for another boom before a bust?


----------



## Taltan (23 September 2009)

There could very well be a mini-boom especially with the govt/RBA pumping liquidity into our economy and many people scared off the stock market. 

I say mimi-boom only because prices are high to begin so with net rental yields at 3-4% there is a limit to how low they can go. After the 1987 ASX crash property boomed for another 18 months before the bust. I believe we have the same sort of property optimism at the moment.


----------



## cutz (23 September 2009)

Taltan said:


> many people scared off the stock market.




I dunno about that, haven't you heard the latest.

The bull(s***) market is back, stronger than ever.


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## MrBurns (23 September 2009)

kincella said:


> For those posters who like to follow Neil Jennmans advice.....
> guess what, how does 10 million sound for making money out of a con...
> extract...........
> Desperate Property Spruiker Neil Jenman planning to "stitch up" more consumers in last ditch effort for a grab for cash and credibility.
> ...




You risk your own credibility by quoting that dodgy web site, they don't identify themselves and the owner of the domain name is hidden, what a bunch of wankers.

Jenman has made a name for himself exposing agents rorts and there's plenty of them, he is hated by the industry but much of what he says is probably true and there's a lot worse he doesn't say.

If I told you what I know you'd be gobsmacked and it would be on the evening news ........no doubt.

That's not to say all agents are bad but there are some bad apples out there, where's there's money at stake you see people at their worst, and there's big money in real estate be it commissions or just turning a property over.


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## Taltan (23 September 2009)

cutz said:


> I dunno about that, haven't you heard the latest.
> 
> The bull(s***) market is back, stronger than ever.




We're back to bullish compared to Feb/Mar but still 50% down on Nov 2007. Our big 4 banks are paying p/e (especially after imputation) much higher than rental yields and yet there are a lot of people right now who prefer property at the moment due to the perception of safety.


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## kincella (23 September 2009)

maybe some are a bit too gullible about Jenman.....Jenman calls other agents all sorts of names and accuses them of all sorts of things.....then yells at them, if you dont like it sue me....now to sue him will cost an agent up to 300k plus...
so rather than sue him, he encourages them to sign up as Jenman agent....which costs them on average 1500 a month...silence money, so he will not call them anything.....a lot of innocent agents went along with this idea.....too much potential damage   to their business.....

apparently there are a load of cases waiting to take him to court....

so how about that ....easy money for a con man....so far he has made over 12 million dollars.....only a couple of people have actually been saved by him...its all about the publicity to believe he is looking after their interests,
when in fact he is just as big a con artist or bigger and jealous of said Henry Kaye
oh, and Jenmans agents have to learn his tricks of the trade.....which are at best are the worst tricks any RE agent will get up to.....
how to suck innocent people into paying the highest commissions etc...

apparently the ploy of naming another agent as a con man, knowing full well it will cost them too much money to fight him in court, is his greatest con....

maybe a little bit of research would not go astray....rather than be fooled by another con man


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## MrBurns (23 September 2009)

kincella said:


> maybe some are a bit too gullible about Jenman.....Jenman calls other agents all sorts of names and accuses them of all sorts of things.....then yells at them, if you dont like it sue me....now to sue him will cost an agent up to 300k plus...
> so rather than sue him, he encourages them to sign up as Jenman agent....which costs them on average 1500 a month...silence money, so he will not call them anything.....a lot of innocent agents went along with this idea.....too much potential damage   to their business.....
> 
> apparently there are a load of cases waiting to take him to court....
> ...




Jenman might be all you say but I dont see any research on this piece of rubbish you're quoting from - 

http://www.consumer-warning.com/index2.htm

They dont even identify themselves


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## nunthewiser (23 September 2009)

LOL what a great thread :bonk:


----------



## wayneL (23 September 2009)

kincella said:


> maybe some are a bit too gullible about Jenman.....Jenman calls other agents all sorts of names and accuses them of all sorts of things.....then yells at them, if you dont like it sue me....now to sue him will cost an agent up to 300k plus...
> so rather than sue him, he encourages them to sign up as Jenman agent....which costs them on average 1500 a month...silence money, so he will not call them anything.....a lot of innocent agents went along with this idea.....too much potential damage   to their business.....
> 
> apparently there are a load of cases waiting to take him to court....
> ...



Total nonsense.

I have a family friend in Melbourne who is using the Jenman system. I happen to possess the entire Jenman literature for agents... as a matter of fact I'm putting it all in boxes right at this very moment (packing up to move house).

Not withstanding a minority of firms who may have some dispute with jenman, you are talking total bollocks.


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## robots (23 September 2009)

hello,

spot on Kincella, just another Keen wanting to get all over the tv

has saved people nothing and made nothing for anybody also, unlike us brother who have guided many through the money making process 

and for us its only about upholding the community spirit, offering people a hand, helping out fellow man and woman achieve and have a most enjoyable life

the troll crew just dont understand, amazing

anyway, what happened to the huge reduction in Immigration? another false prophecy

thankyou
professor robots


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## kincella (23 September 2009)

Robots,...halleluja...
what a beautiful song that is..
oh, and for what its worth....................
halleluga...................

*** spot on from you about Keen............yes another con artist...ponzi scheme..............
and for the gullible....they just lap it up....its like a bible to them

follow a ponzi scheme...aka  steve keen, neil jenman,, storm financial, lehmann brothers, you name it.......
there are a million poinzi schemes out there for the others to follow....

aka lambs to the slaughter......??? ever visited an abbatoirs ????
its not for the faint ahearted


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## nunthewiser (23 September 2009)

Did someone spike the water cooler again ?


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## Mr J (24 September 2009)

I'd be worried if house prices didn't keep rising for years, given that it is what most Australians rely on to battle inflation.


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## wayneL (24 September 2009)

Mr J said:


> I'd be worried if house prices didn't keep rising for years, given that it is what most Australians rely on to battle inflation.




I think we dealt with that about 10,000 pages back


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## Mr J (24 September 2009)

Fine, but I don't see how it hurts to bring it up again. Most aussies rely on property performance to keep their head above water, but even reasonable inflation, current interest rates and a modest mortgage may only be a breakeven proposition. It may be a significant loser to many, as many borrow to their limit. Many aussies look at property prices go up and think they're winning .


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## Beej (24 September 2009)

nunthewiser said:


> Did someone spike the water cooler again ?




 I don't think I drank from *that* water cooler???


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## nunthewiser (24 September 2009)

Beej said:


> I don't think I drank from *that* water cooler???





i dont thinkso either beej 

i find the majoroity of your posts well researched , intelligent and well written , they may be slightly biased : because of those "rose coloured glasses" but well worth reading nonetheless 

however 

there are some posts here that make we wonder at times .


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## wayneL (24 September 2009)

nunthewiser said:


> i dont thinkso either beej
> 
> i find the majoroity of your posts well researched , intelligent and well written , they may be slightly biased : because of those "rose coloured glasses" but well worth reading nonetheless
> 
> ...




Agreed


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## Mofra (24 September 2009)

Mr J said:


> I'd be worried if house prices didn't keep rising for years, given that it is what most Australians rely on to battle inflation.



*ducks in*

AWOTE tends to outpace inflation by a couple of % annually

*slinks away*


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## wayneL (24 September 2009)

Michael Shedlock's latest post on houses prices.

http://globaleconomicanalysis.blogspot.com/2009/09/mish-mailbag-how-does-one-tell-if.html



> ....Here is the video in question: Mish Videos - On the Edge with Max Keiser.
> 
> Dear CC
> 
> ...


----------



## gfresh (24 September 2009)

How are things going in the UK Wayne? Any turn at all, or is everything still sinking?


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## Beej (24 September 2009)

wayneL said:


> Michael Shedlock's latest post on houses prices.
> 
> http://globaleconomicanalysis.blogspot.com/2009/09/mish-mailbag-how-does-one-tell-if.html




So what do you reckon the "fair value" net rental yield vs property value should be? Clearly there will always be some ownership premium, both due to the extra "value" most owners perceive, plus the potential for capital gain.

Personally, I think this "fair yield" probably moves with long term "risk free" cash return/inflation yields. Currently, a net rental yield of 4-5% to me represents a pretty fair valuation for most property in my market of primary interest (Sydney), which is not far off where the market is: Ie, if we take 1% off for costs (it's actually less than this IMO for more expensive property as house maintenance is pretty constant and it is the land that provides the increase in relative value, but anyhoo....), that gives 3.5% net yield for Sydney houses on average and 4.5% for units at the moment. A few years ago it was as low as 2% - to me this seemed out of whack, but rents eventually rose while values didn't and that seems to have brought things back in line (for now based on current inflation/rick-free rate conditions etc).

So for me the above (for Sydney) does not paint a picture of a big bubble ready to burst based on that criteria, especially as there is great demand for rental property at those yields and they may continue to rise strongly into the future as well (dependent on many other factors panning out of course).

Cheers,

Beej


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## Taltan (24 September 2009)

Good post Beej. Apply it to inner Melbourne and your lucky to get 3% at the moment.

Add in interest rates heading north, Dr Henry suggesting to cut the CGT discount and the imminent ending of some Govt grants (32k for new homes in Melbourne) and that is why I'm bearish as the above takes us back to the 4-5% range.

You may well be right about Sydney and its a good point that not everyone on this forum is looking at the same markets


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## Mr J (24 September 2009)

Mofra said:


> *ducks in*
> 
> AWOTE tends to outpace inflation by a couple of % annually
> 
> *slinks away*




That depends on whether you consider the government's inflation figure to be accurate.


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## satanoperca (24 September 2009)

Taltan, I would agree that inner city returns are about 3%.

Over the last siz months I have looked at many properties that have sold to investors and returned back on the market as rental. In most cases the returning approx 3% gross on their investment. 

Example, the apartment I am leasing at the moment. 24th, on the Yarra River with City views. As prime as I think it gets. Returns 4% gross based on sale price 1 year ago. Take out body corporate, rates, agents fees etc net return of 2%. 

Beej, you might be right, Syndey prices might start to increase after being relatively stagnate for six years. Have rentals increased over this time period?

Cheers


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## wayneL (24 September 2009)

gfresh said:


> How are things going in the UK Wayne? Any turn at all, or is everything still sinking?




Estate agents are definitely much busier and prices have bounced a little. The bulls are happier, but apparently new mortgages are still way down. Mainly those cashed up who are buying.

But lots more starting to come on the market now and the general economy is still in the crapper, so we'll see. It is raining cash through QE, so interesting to see what happens once that stops.


----------



## wayneL (24 September 2009)

Beej said:


> So what do you reckon the "fair value" net rental yield vs property value should be? Clearly there will always be some ownership premium, both due to the extra "value" most owners perceive, plus the potential for capital gain.
> 
> Personally, I think this "fair yield" probably moves with long term "risk free" cash return/inflation yields. Currently, a net rental yield of 4-5% to me represents a pretty fair valuation for most property in my market of primary interest (Sydney), which is not far off where the market is: Ie, if we take 1% off for costs (it's actually less than this IMO for more expensive property as house maintenance is pretty constant and it is the land that provides the increase in relative value, but anyhoo....), that gives 3.5% net yield for Sydney houses on average and 4.5% for units at the moment. A few years ago it was as low as 2% - to me this seemed out of whack, but rents eventually rose while values didn't and that seems to have brought things back in line (for now based on current inflation/rick-free rate conditions etc).
> 
> ...




Before the boom gross yields were 6 - 10% pretty much all around the country, with 7% fairly typical for a normal suburban home. Maybe 5% for premium properties.

If yields are tied to risk free rates it implies that prices should dump if interest rates go up. That is no necessarily the case.

There is a mix of vectors to determine fair value; Mish mentions them also.


Interest rates/net return
Rent/reasonable mortgage payments
Wages/Price


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## Mc Gusto (25 September 2009)

Never fear. This is Australia. We are different...wood ducks

http://www.theage.com.au/business/new-home-owners-spend-big-20090924-g4r6.html

NOT only have first home buyers been swamping banks with mortgage applications, they have been taking out bigger loans over the past year, spurred by the Government's cash incentives and record low interest rates.

In some months, the size of the average loan taken out by new home owners has exceeded new loans to other home owners, prompting renewed fears of a bad-debt time bomb for banks.

The Reserve Bank warned yesterday the super-sized loans were an ''unusual outcome'' given that loans to first home buyers were normally smaller than loans to other home buyers.


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## Beej (25 September 2009)

wayneL said:


> Before the boom gross yields were 6 - 10% pretty much all around the country, with 7% fairly typical for a normal suburban home. Maybe 5% for premium properties.
> 
> If yields are tied to risk free rates it implies that prices should dump if interest rates go up. That is no necessarily the case.
> 
> ...




Re your "pre-boom" gross yield figures, (7% typical so let's say 6% net), that time of course was also a period of higher inflation, higher interest rates, and therefore a higher risk-free rate than what we have seen in the past 10-15 years. So it makes sense that the yields were higher then, and that fact does not IMO necessarily point to any great over-valuation now (as long as you are looking at area's where current net yield is around or just a bit under the risk-free rate).

As for what happens when rates go up? Well this theory might mean that rates up = prices fall, and in fact that is exactly what we normally see, although there is a lag. I believe the falls last year were due mostly to increased interest rates. But also, the yields may rise will prices stay flat in the rising rate situation - and that is what happened in Sydney between 2004 and 2007. So from what I see this whole theory actually fit's quite well with what you can actually observe in the price behaviour of the market.



Mc Gusto said:


> Never fear. This is Australia. We are different...wood ducks
> 
> http://www.theage.com.au/business/new-home-owners-spend-big-20090924-g4r6.html
> 
> ...




Yes - but average first loan was still only $266k. $250/week interest at current rates, $375 @ 7.5%. Nothing to panic about IMO and easily serviceable for average wage earners . It will be interesting to see how things play out for the next 6-12 months now in the absence of the FHBG boost.

Cheers,

Beej


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## Taltan (25 September 2009)

The huge loans are a natural response from a generation bought up seeing the too big to fail doctrine. We now live in a world where we expect that govts and reserve banks will forever prop up banks and house prices as much as neccessary to avoid financial collapse or even an election loss


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## Mc Gusto (25 September 2009)

Taltan said:


> The huge loans are a natural response from a generation bought up seeing the too big to fail doctrine. We now live in a world where we expect that govts and reserve banks will forever prop up banks and house prices as much as neccessary to avoid financial collapse or even an election loss




certainly seems that way.

thanks

gusto


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## robots (25 September 2009)

hello,

what a load of rubbish, the government hasnt propped up anything

they are just negating the ridiculous stamp duty the states charge, 

oh yeah man, i am so anti government, anti establishment, anti Fed, anti RBA

they all out to get us

thankyou
professor robots


----------



## Gordon Gekko (25 September 2009)

robots said:


> hello,
> 
> what a load of rubbish, the government hasnt propped up anything
> 
> ...





There is no way I can read every post here but I'm curious Robots? How many properties do you own? ( if you have mentioned it)Is that rude to ask?
You are so pro property it would be interesting to know?

Best


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## robots (26 September 2009)

hello,

sorry, i didnt know there was a qualification requirement to discuss property and that I have to disclose this

just for any new comers, a summary of all the belief's that where put up over the past 12-18mths:

interest rates to go to zero like Japan, didnt occur

property prices to decrease 40%, didnt occur and infact have BOOMed

unemployment to hit 10%, didnt occur

credit tightening, didnt occur

immigration to be SLASHED, hahahaha didnt occur (that was always Numbercruncher's favorite one)

Doom, Doom ,Doom, didnt occur

five of us called it and made mega $ dollars on it, well done to those brothers, top effort

others still have plenty of opportunity

thankyou
professor robots


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## kincella (26 September 2009)

Morning Robots,
just wondering are you a St Kilda supporter....or not....
I dont follow the football....but for today, I am hoping that STK gets up...its been so long apparently since they won a grand final....
I dont usually follow losers, but I thought it would seem appropriate since we discuss STK as a good location for property, that it would be nice if the name came up...in bragging rights for the footy....

no other reason.....
oh and with 4 million residents in Melbourne now...is it 80,000 will turn up for the footy...miniscule in the greater scheme of things.....but they clog up the roads etc...what do the other 3,920,000 other residents do ???
otherwise its great for shopping, car parks have free  spaces.....etc as the footy fans are missing....well that was the deal last Saturday....couple with the kids on holidays....
I found a couple of stunning horse statues yesterday, at bargain prices...one is a trotter with gig and driver, the other a jockey on the racehorse....
to add to my collection of horse statues.....found them in a little shop that sells trophies....pity no brand or name...but beautiful just the same....

and so back to property.....this thread has become rather boring of late....
as you correctly stated none of the doomsdayers got it right,,,,nor economists or any other advisors.....hehehehe
noticed another huge apartment block to go up in Cromwell Rd, Sth Yarra...
its off Toorak Rd, near the back of the Jam factory....it looks like a huge area, but very close to the train line which runs over head....hmmm
developers must be getting some finance again.....
cheers


----------



## kincella (26 September 2009)

here are a couple of very interesting blogs, in response to another article about how the market will crash when the extra fhb grant is reduced next month...
I particularly like the first one here.....
I can never understand why more and more people jump on the gloomsday bandwagon. Why can we not see that we,"the ordinary Australian" are immune and wont be told by the best analysts, the so called "breakfast show experts" or our public servants what we can and will put up with in the financial arena or any other for that matter. The amount of times that we are ignored and the "experts" talk about a market that is somehow seperate from us, in some text book somewhere is reaching epidemic proportions We decided as "ordinary Australians" to survive (just in this century alone) the asia meltdown, the dotcom bust, the GFC, the swine flu panic and the terror plots we are told will happen Whoever first stops treating us like a year 10 commerce hypothetical will actually take this nation forward, the Australian spirit, our history and our values of "shell be right" do work. We get it done, we play hard, we work hard and whilst others are telling us what will happen, we carve out our own history, second by second So jump on the biggest banwagon of all, Australia INC, run by us who go into batte each day and feeds, clothe and house this great country Geoff McDonnell Posted by: Geoff McDonnell of Melbourne 5:59pm today 
Comment 16 of 34
John Howard introduced the FHOG as compensation for gen X and Y because the cost of new housing increased 10% overnight on June 30 1999. Since then the cost a new home has nearly tripled so it should only be fair that the grant be tripled also. 
Posted by: steve of queensland 5:50pm today 
Comment 15 of 34
Home ownership is a reward for working hard, not something to be dished out by the warm fuzzy brigade. And if you cant afford a home, work harder, or move to a cheaper area. Or pay rent. I was one of the fools who slavishly worked my butt off in the mining and oil&gas industries in remote west australia, paying massive taxes, not having a life, away from all friends and family, just so I could get ahead. I have no sympathy for those who sit in the luxury of inner city burbs or coastal towns, living the cruisy life, because people like me were stupid enough to subsidise their lifestyle via heavy taxes. All you bludgers need to realise, someone somewhere has to pay for these hand-outs. Go to Western Europe and see how many young people expect to own a home.. very few.. and the economy has stabilised around a healthy and fair rental market. My wife and I did it the hard way in the 1980's, 20% deposit required, 17% interest, no help from anyone. The worst thing we could do now is throw more money at those who cant afford, and should never have been allowed, to own a home. It throws the whole housing market out of whack for what gain? Vote buying, thats all. 
Posted by: noel of the Very Wild West 5:38pm 

there some other very good blogs that are worth a read....
http://www.news.com.au/comments/0,23600,26123599-5013951,00.html


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## wayneL (26 September 2009)

robots said:


> the government hasnt propped up anything




Ludicrous denial... laughable.


----------



## kincella (26 September 2009)

and here is another myth, (now blown out of the water as if a stick of gelignite had been thrown in) that some were relying on...that was to contribute to the masses of houses left over by the aged and the boomers....
and all those vacant houses were to become very cheap...(as in the USA in 2008/09)
well the aged care units are not being taken up, in fact they are being shunned.....and the aged and the boomers are staying put....in their homes....and the units are lying vacant.....hehehehe I love myths, and 'pigs might fly' scenarios
btw.....you might actually see some flying pigs at the Melb show.....they are sooo cute....they climb up a ladder, then jump into a pool.....flying through the air....hence flying pigs.....
***now, seems to be there could be a large market, for small complexes, maybe 10 or less in each community....forget the spas and gyms.....keep it simple.....and no retail complexes involved.....purely residential for the oldies

*Elderly shun retirement villages as many go bust*
 Bridget Carter | September 26, 2009 
Article from:  The Australian 
AUSTRALIANS are shunning retirement villages due to limited finances, a deep longing to remain part of their community and the fact that, to many people, they are undesirable.

Industry sources say that about one-third of the land parcels approved for retirement village development and existing complexes that are available for sale are in the hands of insolvency firms. 

Many developments have collapsed because people who had provided finance pulled out after struggling to sell their own homes in the downturn, while many developers and operators have grappled with large levels of debt during the global financial crisis. 

In recent years, large Australian Securities Exchange-listed corporations have raced to consolidate in the retirement village property sector, acquiring assets from smaller providers and developing large complexes to house more than 100 senior citizens. 

But research by Flinders University has revealed that 75 per cent of those who have retired are on government benefits and most people want to be in retirement homes with less than 10 units, which are located close to facilities and in the community where they have spent most of their lives. 

The commercial property industry has had trouble meeting this wishlist -- with the exception of developments at the very top end of the market -- because economies of scale have made small projects unviable. 

Rod Fehring, the chief executive of ASX-listed retirement village owner and operator Lend Lease Primelife, said: "What people say they like and what they are able to do, are fundamentally different things. Australia is a highly differentiated property market." 

Joan Poole, 81, of Sydney's Bondi Junction said she had chosen to remain in her home but would now like to enter a retirement village, if she could find one where she did not have to pay for all the extra facilities that came with it. 

She wanted to be in a complex where she could continue using her regular shops, library and doctor's surgery, but without the worries of maintaining her property. 

"All (of the retirement villages) that I have seen are charming, but there is a failure on the part of most of them, to regard retired persons in a village as members of the community," she said. "The conventional village gives a spa and a gym and other things, but so what? I can get them outside." 

A recent Flinders University study on the aspirations and expectations of older people in South Australia, revealed that, of those living in retirement, only 20 per cent moved into the villages before the age of 65. 

The study said the housing currently being developed for older people often fitted poorly with the needs and aspirations of its would-be residents. "While the romance of a seachange or treechange is attractive to some, a far higher proportion look to build upon their community links and stay engaged with friends, neighbours and family members," the report says. 

The authors say most people don't like the idea of living in accommodation such as that depicted in the 1970s Eagles song Hotel California -- where there are lots of facilities such as a bowling green, a pool and a barbecue area; where people under the age of 45 are neither seen nor heard, unless they are grandchildren; and where you can check in any time you look but you can never leave. 

One of the report's authors, Debbie Faulkner, a research fellow at the Flinders Institute for Housing Urban Regional Environments, said that, despite the industry arguing the sector was booming, "it is not the booming place it's portrayed to be". "Most people want to move into a complex that is modern, but they cannot afford to pay for the large number of services that they may or may not use," Dr Faulkner said. 

Previous attempts to develop rental retirement villages, where properties could be leased for 85 per cent of the pension, had been unsuccessful, as many of the businesses behind the facilities collapsed or had been shrouded in controversy. Among them was Village Life, which threatened to evict hundreds of elderly residents from their rented homes and faced a $30 million class action.

http://www.theaustralian.news.com.au/business/story/0,28124,26126680-25658,00.html


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## robots (26 September 2009)

hello,

morning Kincella, no go for the Hawks but i think the community would be really happy if St Kilda won today

looks as though its only you and me offering up the truth with many in denial and many disappeared, laughable

prices are locked in, fantastic EQUITY MATE

thankyou
professor robots


----------



## robots (26 September 2009)

hello,

well done Kincella, like MythBusters this morning isnt it

read in the Herald this morning about a boutique development out your way Kincella, top end i think 6 apartments with a shared live-in butler

so people can still be close by to Toorak Village, Lillian Frank, Tok H, Chapel St etc and all the other great attractions

nice and simple

thankyou
professor robots


----------



## satanoperca (26 September 2009)

robots said:


> looks as though its only you and me offering up the truth with many in denial and many disappeared, laughable
> 
> thankyou
> professor robots




The truth obviously comes in many guises, like you being a professor of spin.

Kincella, I have read through your posts, what is your position on whether the FHBG has inflated prices or not?

I do agree with your sentiment that home ownership is about hard work and discipline and should not be granted to those that cannot afford it or are unwilling to work for it. But that does not mitigate that homes are rapidly becoming unaffordable due to speculation and cheap credit.

Cheers


----------



## kincella (26 September 2009)

ok, hawkes it is
btw.....seems there are only a few of us.....we are the myth busters when it comes to the housing market, on these forums...

I dont see any govt, state or federal doing anything about the problems anytime soon....in fact allowing temporary residents to buy in, has just exacerbated the problem.....
after 2 years of a *Global Financial Con...job*.....its almost back to normal.....but it left a lot of people confused and upset and lost money.....

oh and the con job is still ongoing....with all leaders flying everywhere every other day....contributing to the other mess....of polluting the earth...
must away, take the dog for her grooming today....and have some fun, contributing to the retailers profits...and helping the economy to grow again
have fun
cheers


----------



## kincella (26 September 2009)

Robots,
 I love the idea of a live in butler....hey Jeeves.....hmmm now that would suit me to a T

Satanopera
.....I have dismissed the increased grant of an extra $7000 as being of any significance.....in the greater scheme of things...
if you were talking about kids buying houses around $200k's the bonus represented less than 5%......
FHB made up about 25% of all purchases in the past year......leaving 75% of purchases that were non FHB's

however there were larger grants available for building new homes and another $3000 in rural or regional areas....in some cases up to $40,000 was available.....but the kids avoided the new home deals.....ps wish I was a FHB I would have taken the new home deal....massive $40,000

I believe the increases in the housing market in the main cities has more to do with the flood gates opened by this govt, to allow from Feb/Mar 2009 temporary residents and visa holders to purchase residential properties....
thereby competing with the locals....and aggravating the shortage of houses

formerly FHB were also very active in the market...upgrading....with prices stagnate or depressed....I saw that coming a long way off.....
I dont expect interest rates to rise soon, nor a slowing down with housing, in the inner cities.....


----------



## kincella (26 September 2009)

look at these pics....they are just the cutest Flying Pigs.....so there you go....pigs can fly...they really can...
http://www.huffingtonpost.com/2009/09/20/when-pigs-fly-at-the-roya_n_291277.html


----------



## trainspotter (26 September 2009)

Interest rates will rise. The central bank will adjust the cash interest rate from its "exceptionally" low level when the time is right, Reserve Bank of Australia Governor Glenn Stevens says "It's an emergency setting." He told the House of Representatives Economics Committee "On the timing of when we might adjust policy, that's an issue about which one keeps an open mind, at this point obviously."


----------



## Dowdy (26 September 2009)

kincella said:


> Robots,
> I love the idea of a live in butler....hey Jeeves.....hmmm now that would suit me to a T
> 
> Satanopera
> ...




You have to also look at it as a physiological incentive.


----------



## trainspotter (26 September 2009)

robots said:


> hello,
> 
> sorry, i didnt know there was a qualification requirement to discuss property and that I have to disclose this
> 
> ...





Ummmmmmmmmmm not wanting to be picky here robots as I believe you are on the right path with property BUT a very BIG tightening of banks lending criteria *did* occur in the housing sector. Debt Serviciablity Ratios were adjusted, Uncommited income levels were increased, LVR's were tweaked and LMI declined approx 50% of home loans that would normally be written as well. I have three associates who run mortgage origination business/finance brokers supplying me the info.

As well as a concern about LVRs on completed homes, some financiers are getting twitchy about loan-to-valuation ratios for development sites - in many cases cutting back from 60-65% to around 50%. First hand experience on this subject.


----------



## MrBurns (26 September 2009)

Exactly, dunno what planet you were on but commercial property prices have dropped 20% and credit was almost non existant.

FHBG boost is over in a few days, interest rates on the way up, yep plenty of equity...............*negative equity*................on the way.


----------



## trainspotter (26 September 2009)

I actually received a REFUND cheque from the State Revenue Department for LAND TAX on some property I own. Apparently they adjusted DOWN the price of the vacant land I own. TRUE it might have been over inflated to begin with but ............ might have been an exception to the rule perhaps?

Commercial venture ?? Pffffffffffffffft !! Had 40% cash deposit to build commercial warehouses 2 x 300m2 each zoned light industrial. NAB requested more green title RESIDENTIAL property for security. Definite credit tightening IMO.


----------



## kincella (26 September 2009)

oh dear, now we have to put up with shouting,yelling and screaming from the other side.....to get their message across.....aka the big and bold over sized fonts 

hey bully boys.....
you have a nice day now......after you calm down
hehehehe


----------



## trainspotter (26 September 2009)

Just pointing out the obvious mistake in the rhetoric kincella. If you note I did write that I believe you (as in robots specifically) are on the right path with property, I am a firm believer in property and if you read some of my previous posts I have made it very clear I have dumped all my stock holdings to go back into property. Even to the point of starting a building company to take advantage of the next wave of construction phase.

I have written the FACTS that have actually occurred to myself. There is no bullying tactics necesarry. The bold is to point out the obvious mistake. Everything else I have concurred with.

You have yourself a nice day now. After you take your hand off it.


----------



## MrBurns (26 September 2009)

I just did mine to stir up robots, I love it when he's angry


----------



## robots (26 September 2009)

hello,

this one's on "houses", yes "houses"

thanks for clarifying that the banks want RESIDENTIAL for security

residential, not developers finance, land bankers, commercial trusts just plain old vanilla residential property

havent all these FHG's been buying with no deposit?

another busted, bully boys

thankyou
professor robots


----------



## kincella (26 September 2009)

Hi Robots....can you send the link for the story this morning about the butler....I did go looking but could not find it....the HS site is a bit all over the place with property or housing articles

for some reason all these people converged on Safeway at toorak today....buying trolley loads of grog,,,,,never seen any of them before....mostly wearing footy gear.....what is it with footy and grog....

too cold to take the dog for grooming.....will go back to safeway after the footy starts...when its a bit more sane.....then there was an accident on Williams Rd....which caused traffic jams elsewhere....
geez wish I had stayed home...


----------



## robots (26 September 2009)

hello,

sorry thought i read it in the herald at the bakery this morning, but it was on the Age page:

http://www.theage.com.au/national/luxury-back-with-boutique-apartment-projects-20090925-g6di.html

about delivery of a product

thankyou
professor robots


----------



## kincella (26 September 2009)

hey Robots....the other one is banging on about commercial.....it is commercial that most of the  'ultra smart finance boys'  grabbed, bundled, and mortgaged to the hilt, into trusts......the guru's of commercial property stuffed it so high,,,,,then some were forced to sell........

it really had nothing to do with the performance of commercial property itself.....it was all about very bad asset management.....and financial disasters....made by a few very stupid people

but back here on earth....the conservative investors, which includes some very large superfunds....and small investors like myself.....are doing very, very well.....in fact the commercial property is proving such a bonanza in terms of yield, I wish I had bought 5 of them....
and with no intention of selling....who cares about a drop in some prices in some types....
its offices that are falling away....due to the smaller businesses down sizing....
it is not affecting retail property.....
commercial property is so much more segmented into different types....
oh and if I could find more retail as cheaply as the last one I would....
I have been looking for more retail.....almost nothing available in my price range.....
oh and no vacant shops in Chapel St....either.....but a few in Toorak (the fat overpriced boutiques reliant on the tourists have gone) but  fav pitza place moved on up into Toorak Rd.....they pounced on it.....
winners are grinners....losers are whiners...or frowners


----------



## kincella (26 September 2009)

ok thank you...out of my price range starting at 5.3 - 14 million....believe they are right on the money, with the idea of small complexes, so people stay in their local community...
I have cleaners and others to help out on a regular basis....dont really need a butler
cheers


----------



## MrBurns (26 September 2009)

I love commercial real estate but it's all about location in that sector.


----------



## kincella (26 September 2009)

I reckon St Kilda will win the afl today....poor kicking...should have been 4 goals instead of points....but Geelong doing nothing...


----------



## MrBurns (26 September 2009)

kincella said:


> I reckon St Kilda will win the afl today....poor kicking...should have been 4 goals instead of points....but Geelong doing nothing...




They were robbed


----------



## robots (26 September 2009)

hello,

oh yeah, oh yeah:

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

MASSIVE 83%, great day, just amazing well done

fantastic job by all involved and keep up the good work

thankyou
professor robots


----------



## MACCA350 (26 September 2009)

robots said:


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



TOTAL AUCTIONS
This week: 106
Last Week: 796


----------



## BradK (27 September 2009)

LOL Macca, 

Keeping the ba$tards honest


----------



## kincella (27 September 2009)

brad and macca....what are you on about ???  the auction clearance rates have been around over 80% consistently for the past few months....whether there are 300 or 900 properties for sale......
AFL grand final weekend, is  almost equivalent to Good Friday or Christmas Day......no one is interested in buying properties on those days.....they are doing something else far more important....
hence the number of properties listed for auction is way down on the weekends near those dates....and way below the norm....
its school holiday time here so again...people take the kids on holiday...
wait and see how many are listed for auction next weekend.....or it may be the weekend after...before things get back to normal
only about 10 weekends before christmas...so lets see what sort of frenzy that brings
oh, and did you know there are as many private sales as there are auctions on any given weekend...


----------



## robots (27 September 2009)

hello,

and the result for last week (19/09/09) on those 796 auctions:

81%

paradise brothers, spot on Kincella, been over 80% for months now and the christmas frenzy coming on strong, awesome

oh sorry, not good for the kids, the community, blah blah blah

thankyou
professor robots


----------



## MrBurns (27 September 2009)

robots said:


> oh sorry, not good for the kids, the community, blah blah blah
> 
> thankyou
> professor robots




Dont you worry about the kids robots as long as you've got equity

Pity this retarded system gives a free house to Denis Ferguson and lets decent families go homeless.

Oh and ............thank you


----------



## trainspotter (27 September 2009)

robots said:


> hello,
> 
> this one's on "houses", yes "houses"
> 
> ...




It appears you are starting to believe your own stuff and nonsense. 

http://www.hotspotting.com.au/index.php?act=viewArticle&productId=232

http://sl.farmonline.com.au/news/na...banks-tighten-home-lending-rules/1421554.aspx

The First Home Owners Grant IS the deposit. Banks have tightened their lending criteria and this is INCLUSIVE of the residential property market. Some banks are also requiring a minimum of 6 months saving history as well. Just keeping it real.


----------



## robots (27 September 2009)

hello,

so a FHG is buying a house for 300k, 400k or 500k and rocking up with a deposit of 14k (as you state the grant is the deposit)?

not to tight there, 

and hasnt all the activity been in this sector over the past 12mths? you know keeping it all going

and loan amounts have increased for fhg's

thankyou 
professor robots


----------



## cutz (27 September 2009)

Here's an interesting article on what's fuelling our bubble, http://www.crikey.com.au/2009/09/21/the-role-of-foreign-buyers-in-the-ever-inflating-housing-bubble/


----------



## trainspotter (27 September 2009)

Banks generally have a lending criteria of 95% LVR with LMI attached. Therefore a $300,000 home will require a 5% or $15,000 deposit up front. PLUS FEES of another ten grand or so. FHG at $14,000 forms part of the deposit but banks are now insisting on some sort of savings history as well. Small part of the equation. There are also debt servicability ratios and uncommitted income requirements to make the loan stand up. ANZ increased their LVR to 90% and decreased commissions to brokers as well. LMI is knocking back a lot of clientelle that would have walked through easily 2 years ago.

FHB's have formed a large portion of the marketplace in the last 12 month's but I notice the people selling (the second and third tier) are not jumping into home ownership as quickly as they used to. This does not mean they are out of the market place completely. Could mean they are just lurking in the background waiting for the right opportunity to come along. 

Have you also noticed that a lot of TV shows about houses (hot property and Burkes backyard etc) have been replaced with "Reality" TV shows. Generally when the airwaves are choking with home improvement shows then property is bubbling along nicely.


----------



## kincella (27 September 2009)

geez ...whats with the attacks.....Robots is correct....

and,  Robots reference was to one of your own posts trainspotter, regarding commercial property, for which the bank wanted further security by way of residential property...as in houses.
here it is...
"Commercial venture ?? Pffffffffffffffft !! Had 40% cash deposit to build commercial warehouses 2 x 300m2 each zoned light industrial. NAB requested more green title RESIDENTIAL property for security. Definite credit tightening IMO. "


 I believe the banks no longer just accept the grant as a deposit....must be further 5% of proven savings over 6 months.....
so if the kids are after a 400k loan...they need savings of 20,000, plus they use the grant....14000 on an established home...and to add a further hurdle....the banks have been giving lower valuations....so the kids have to make up a further deposit,
eg sale price 400 k....bank valuation 360k lvr 342000...5% saving x 360k = 18000...so the kids need 400-360= 40k + 18k saving = 58000 deposit..
grant 14,000, savings 18000= 32000....further 26000 required


----------



## robots (27 September 2009)

hello,

many comment how investors have been away from the market but throw them in the mix for the demand as well,

numerous properties i have watched over the past 6 mths have come back on as rentals, they got out of the shonk market

many probably buying with cash

Satanoperca in his market segment is noticing this as well

no managers, no boards telling them they look after the shareholders, no issue

thankyou
professor robots


----------



## MrBurns (27 September 2009)

trainspotter said:


> Banks generally have a lending criteria of 95% LVR with LMI attached. Therefore a $300,000 home will require a 5% or $15,000 deposit up front. PLUS FEES of another ten grand or so. FHG at $14,000 forms part of the deposit but banks are now insisting on some sort of savings history as well. .




Only $15,000 deposit to buy a $300,000 home ??????????

Why am I thinking "disaster just waiting to happen" ?


----------



## MACCA350 (27 September 2009)

If the housing market was doing so well why would builders be increasing their discounts...........surely if they were doing so well they'd be reducing discounts. 

Effective as of yesterday Henley(VIC) have doubled their discount on many of their homes. Double story discount has gone from $15k to $30k with $50k worth of 'luxury' upgrades for free(previously cost $3k). 

We had been looking at Henley's Empire, our contact called us yesterday and said to take $18k off the quote. Currently looking at the major builders comparing price, size and inclusions Henley are out front. I'd expect the others will be upping their discounts to keep up. We're also looking at the Marriot from Porter Davis and a few other builders(Burbank & Metricon), but they need to up the ante.

That's what we've found in our travels anyway

cheers


----------



## trainspotter (27 September 2009)

No attacks here .... pointing out the facts. Banks have tightend their lending criteria. Plain and simple. Housing and commercial likewise.


----------



## robots (27 September 2009)

hello,

not much tightening there Burns, and the banks SP kicking off

all rosy

thankyou
professor robots


----------



## robots (27 September 2009)

MACCA350 said:


> If the housing market was doing so well why would builders be increasing their discounts...........surely if they were doing so well they'd be reducing discounts.
> 
> Effective as of yesterday Henley(VIC) have doubled their discount on many of their homes. Double story discount has gone from $15k to $30k with $50k worth of 'luxury' upgrades for free(previously cost $3k).
> 
> ...




hello,

the house BUILDING market

thankyou
professor robots


----------



## MrBurns (27 September 2009)

MACCA350 said:


> If the housing market was doing so well why would builders be increasing their discounts...........surely if they were doing so well they'd be reducing discounts.
> 
> Effective as of yesterday Henley(VIC) have doubled their discount on many of their homes. Double story discount has gone from $15k to $30k with $50k worth of 'luxury' upgrades for free(previously cost $3k).
> 
> ...




If I were building a house in this climate I woud be paying as it completes, big payment up front and they go under and you're history.


----------



## trainspotter (27 September 2009)

MrBurns said:


> Only $15,000 deposit to buy a $300,000 home ??????????
> 
> Why am I thinking "disaster just waiting to happen" ?




LOL ... Keystart money will lend 103% of valuation on a 4% deposit with no LMI. Now THAT is a disaster.

http://www.keystart.com.au/key/home.htm


----------



## robots (27 September 2009)

trainspotter said:


> No attacks here .... pointing out the facts.




hello,

yes, just like me Trainspotter

thankyou
professor robots


----------



## robots (27 September 2009)

*


robots said:



			hello,

sorry, i didnt know there was a qualification requirement to discuss property and that I have to disclose this

just for any new comers, a summary of all the belief's that where put up over the past 12-18mths:

interest rates to go to zero like Japan, didnt occur

property prices to decrease 40%, didnt occur and infact have BOOMed

unemployment to hit 10%, didnt occur

credit tightening, didnt occur

immigration to be SLASHED, hahahaha didnt occur (that was always Numbercruncher's favorite one)

Doom, Doom ,Doom, didnt occur

five of us called it and made mega $ dollars on it, well done to those brothers, top effort

others still have plenty of opportunity

thankyou
professor robots
		
Click to expand...


*
hello,

and here they are again

thankyou
professor robots


----------



## MrBurns (27 September 2009)

robots said:


> hello,
> not much tightening there Burns, and the banks SP kicking off
> all rosy
> thankyou
> professor robots





The only thing you should be buying on 5% deposit is a TV, this is crazy, to lend 95% on a house you are betting the market will increase, it might have so far but that will go into reverse in the next few months and there will be plenty out there with negative equity (it seems caps are all the go for those announcements.)

Lose your job or any number of things hapen, forced sale house sells for $250,000 so every other house in the street that sold for $300,000 is now worth $50,000 less.
Banks redo their valuations and if you miss or are late with a payment you're a gonner, if theye suspect you or your parents have any cash or equity in another property they will apply pressure to have that included in the security because you now have negative equity and are in breach of your mortgage conditions, happy days ahead.


----------



## trainspotter (27 September 2009)

I digress professor robots. It seems that the credit tightening didn't occur on your part of the world where as in my part of the world the banks got their panties in a bunch about lending to home owners and altered their lending criteria ... commonly known as "credit tightening".


----------



## MrBurns (27 September 2009)

trainspotter said:


> LOL ... Keystart money will lend 103% of valuation on a 4% deposit with no LMI. Now THAT is a disaster.
> 
> http://www.keystart.com.au/key/home.htm




Keep an eye on their premises, probably up for sale in the next 12 months ..........empty


----------



## robots (27 September 2009)

hello,

yes in My World nothing much happened as I have listed,  

thankyou
professor robots


----------



## trainspotter (27 September 2009)

Funnily enough the Keystart guys have a very low level of mortgagee repossession rate. One of my mates used to run Westland Building Society (Keystart money) and had very few repo's.


----------



## trainspotter (27 September 2009)

robots said:


> hello,
> 
> yes in My World nothing much happened as I have listed,
> 
> ...




So therefore "credit tightening" didn't occur in professor robots world?


----------



## MACCA350 (27 September 2009)

cutz said:


> Here's an interesting article on what's fuelling our bubble, http://www.crikey.com.au/2009/09/21/the-role-of-foreign-buyers-in-the-ever-inflating-housing-bubble/







> Previously, *developers were able to offload no more than half* of the new dwellings in a development to overseas buyers............*Under the new laws, developers could sell 100% of new developments off-the-plan to overseas buyers* who tend to pay a premium for Australian real estate..........
> 
> Another critical change introduced by the federal government was a relaxation on the acquisition of established properties. Under previous legislation, holders of student visas were only able to buy a property that cost less than $300,000, since *late last year that limit was removed*. Further, *foreign-owned corporations are now permitted to purchase properties for Australian staff* while temporary visa holders also face fewer restrictions.
> 
> The effect of the law changes should not be underestimated. The Sunday Age this week reported that Melbourne agent JP Dixon (based in luxurious Brighton in Melbourne’s east) noted that *more than 40% of sales were made to Chinese interests*. An agent told the paper that “[overseas investors] *buy them to land bank, not to rent the, out. The houses just sit vacant* because they are after capital growth.”



WOW

Way to go Krudd...........you've made policy simply to pushed up prices and reduce rental supplies in one fowl swoop.......well done

cheers


----------



## MrBurns (27 September 2009)

MACCA350 said:


> WOW
> 
> Way to go Krudd...........you've made policy simply to pushed up prices and reduce rental supplies in one fowl swoop.......well done
> 
> cheers




Yes at present he has the lead in the "Most destructive Labor PM" contest.


----------



## MrBurns (27 September 2009)

Oh hell I just read that properly, no wonder it's all Asians at the Auctions, this is a double whamy bubble.


----------



## MACCA350 (27 September 2009)

robots said:


> hello,
> 
> the house BUILDING market
> 
> ...



Gee.......Didn't realise that.........luckily you were here to point it out to me




MrBurns said:


> If I were building a house in this climate I woud be paying as it completes, big payment up front and they go under and you're history.



I don't know of any builder who requires full/large payment up front..........and if they asked for it, I'd be out the door

cheers


----------



## MACCA350 (27 September 2009)

MrBurns said:


> Oh hell I just read that properly, no wonder it's all Asians at the Auctions, this is a double whamy bubble.



It's a worry, that's for sure..........it's like Krudd has opened the flood gates to anyone in the world who has money just to keep prices climbing. He seems only concerned with increasing prices no matter what the cost.

cheers


----------



## MrBurns (27 September 2009)

MACCA350 said:


> It's a worry, that's for sure..........it's like Krudd has opened the flood gates to anyone in the world who has money just to keep prices climbing. He seems only concerned with increasing prices no matter what the cost.
> 
> cheers




I've been to a few Auctions where the Asian presence was overwhelming, I asked the agents what it was all about and they just said it's like that all the time now but I never knew why till now.

Be interesting to find out by just how much that increased the pool of buyers, I'm guessing a lot a real lot.....

Funny how no one mentioned that before in the media or perhaps I missed it.


----------



## robots (27 September 2009)

hello,

thats right, all those things listed havent occurred

yes you missed it Burns, too busy going on about negative equity

carry on as those properties are lost for ever, what they can never be resold back to an aussie?

thanyou
professor robots


----------



## trainspotter (27 September 2009)

It appears that the "credit tightening" didn't occur in professor robots part of the world. Completely agree with all the other items listed. 

http://corporate.afgonline.com.au/i.../web_content/mortgageindex-may09-national.pdf

Worth a read for a balanced view IMO. Good stats as well.


----------



## MrBurns (27 September 2009)

robots said:


> hello,
> 
> thats right, all those things listed havent occurred
> 
> ...




Yes I think you missed it too, never saw you mention it.


----------



## Gone Fishin (27 September 2009)

Don't think houses will drop anytime soon. Too many people flocking to australia, will keep prices at current levels for ever


----------



## robots (27 September 2009)

hello,

great post Gone Fishin, superb

and this from earlier:

"Previously, developers were able to offload no more than half of the new dwellings in a development to overseas buyers............Under the new laws, developers could sell 100% of new developments off-the-plan to *overseas buyers who tend to pay a premium for Australian real estate..........*

well well, why not when they want to get a piece of paradise

just look out the windows

thankyou
professor robots


----------



## MrBurns (27 September 2009)

robots said:


> hello,
> great post Gone Fishin, superb
> and this from earlier:
> "Previously, developers were able to offload no more than half of the new dwellings in a development to overseas buyers............Under the new laws, developers could sell 100% of new developments off-the-plan to *overseas buyers who tend to pay a premium"]Australian real estate
> ...



*

Put your money where your mouth is robots, get out there and buy buy buy, borrow 100% 105% even more if you can get into that equity robots quick, it's cheap...........(bet you've bought nothin' since this thread started), run robots run !*


----------



## Gone Fishin (27 September 2009)

robots said:


> hello,
> 
> great post Gone Fishin, superb
> 
> ...




yes right on bro!! You da man robots!!


----------



## robots (27 September 2009)

hello,

i have disclosed my circumstances previously, i am making easy $ just by holding now, real easy

and it is fabulous, the biggest financial event since 1929 and property still killing it

i cant afford to buy another one at the moment, hope to clear out a mortgage in a couple of years and go the build option

equity mate!

thankyou
professor robots


----------



## robots (27 September 2009)

hello,

yeah, no worries

thankyou
professor robots


----------



## Dowdy (27 September 2009)

Talk about trolling.

2 post with no content :headshake


----------



## Glen48 (27 September 2009)

Found out my place has gone up 100K in 12 Mths....thanks FHB


----------



## robots (27 September 2009)

hello,

well done Glen48, top effort

hang onto it, Equity Mate

thankyou
professor robots


----------



## MrBurns (27 September 2009)

Glen48 said:


> Found out my place has gone up 100K in 12 Mths....thanks FHB




Look out for the rise in council rates.


----------



## Glen48 (27 September 2009)

Robots do you have a home or this it?


----------



## MACCA350 (27 September 2009)

robots said:


> hang onto it, Equity Mate



Kind of like open trades.............only one way to 'hold onto' profits:

cheers


----------



## moXJO (27 September 2009)

MrBurns said:


> I've been to a few Auctions where the Asian presence was overwhelming, I asked the agents what it was all about and they just said it's like that all the time now but I never knew why till now.
> 
> Be interesting to find out by just how much that increased the pool of buyers, I'm guessing a lot a real lot.....
> 
> Funny how no one mentioned that before in the media or perhaps I missed it.




This is beginning to cause some big problems for local families looking to buy. Is the govt looking to fuel the next construction boom with overseas money, then pull the rug out from under them?


----------



## MrBurns (27 September 2009)

moXJO said:


> This is beginning to cause some big problems for local families looking to buy. Is the govt looking to fuel the next construction boom with overseas money, then pull the rug out from under them?




I don't think they know what they're doing.

This has put huge pressure on our young, they've overpaid to buggery because of this.


----------



## trainspotter (27 September 2009)

robots said:


> hello,
> 
> i have disclosed my circumstances previously, i am making easy $ just by holding now, real easy
> 
> ...




Would that be the "credit tightening" by the banks that didn't occur?


----------



## moXJO (27 September 2009)

Unions must be sweating over some of labor policies, and the impact on working family’s atm. Surprised they are not coming out of the woodwork


----------



## trainspotter (27 September 2009)

Wont be long now before the unions start throwing their weight around.

http://www.actu.asn.au/Media/Mediar...pportforfamiliesandbetterworkplacerights.aspx


----------



## theasxgorilla (27 September 2009)

Dowdy said:


> Talk about trolling.
> 
> 2 post with no content :headshake




Technically 1 post with no content, and I'll leave it there as an example, as I think if you're going to post, at least post content!

I wouldn't call it trolling though.


----------



## kincella (28 September 2009)

I posted several times about the FIRB and changes, and the impact it was
 having on the housing market...way back in June, and several times since..
this post no. 5333 on 6.6.09.............oh and the media did report it....easy do a google...plenty of hits from April 09

Chinese wealth is boosting our property market.....well in Melbourne anyway..
surely they would be interested in the rest of Australia.....too
oh...btw they are not FHB or buying into the FHB market....

A GROWING number of Chinese people are taking advantage of a relaxation in Australia's foreign investment laws to buy property in Melbourne.

Real estate agents in the eastern suburbs report that up to half the buyers this year have been part-time residents from China, Hong Kong or Taiwan, or Asian companies buying accommodation for their staff.

Auctioneer Robert Ding, of Jellis Craig in Balwyn, started holding auctions in both Mandarin and English in March. A fortnight ago a multilingual auction resulted in the sale of a $1.838 million house in Balwyn.

Agents from Marshall White in Armadale and Hawthorn, are flying to Shanghai this month with plans to establish an office there to draw more Chinese buyers.

"The massive wealth that they've got is quite daunting in some instances," director John Bongiorno said. "What's attracting them is that there's so much space here ”” it's such a safe haven for them to park their money in terms of good real estate. It's a safe lifestyle, great schooling for their children, no pollution and cheap property by their standards."

http://www.theage.com.au/national/ch...0605-bylh.html


----------



## Glen48 (28 September 2009)

A GROWING number of Chinese people are taking advantage of a relaxation in Australia's foreign investment laws to buy property in Melbourne.
_And the First Home owners bribe._
RE crashed in California when the Feds stop their version of FHOB


----------



## prozac (28 September 2009)

I do not think it has been mentioned yet, but I believe that krudd (or Kevin747, kevin rude - loved that one Mr Clinton-, kevin O', etc) will cripple us all when he gets this carbon tax going. The added cost of paying this tax will push up new home construction prices, and this will flow on to existing housing stock. I reckon it will add 15-20% to prices, as there will be a compounding effect. The only person to benefit will be krudd when he goes for a United Nations position.


----------



## moses (29 September 2009)

House prices about to soar, says Reserve Bank official


Samantha Maiden, Online Political Editor | September 29, 2009
Article from:  The Australian

AUSTRALIA'S housing market is about to take off, the RBA says, and rising prices and interest rates could hit affordability hard.
House prices about to soar: RBA

Picture: Cameron Richardson
The RBA’s Tony Richards issued the warning at the Committee for Economic Development of Australia’s housing forum today, and said that the nation was still not building enough houses to keep up with levels of demand that were driven by population growth.

Mr Richards also warned policymakers in Canberra that governments needed to do more to stop “undesirably strong growth” in housing prices as the economy improved.


----------



## satanoperca (29 September 2009)

If the RBA is so concerned with unaffordability of house prices and a possible boom, raising interest rates to dampen it.

This historically low interest rates might benefit those with a mortgage, how about all those retirees trying to live off their life savings with the low term deposit rates at the moment. These people built the country, but who cares.


----------



## moXJO (29 September 2009)

satanoperca said:


> If the RBA is so concerned with unaffordability of house prices and a possible boom, raising interest rates to dampen it.




Our dollar will go to high. Govt needs to slow immigration and release more land.


----------



## Taltan (29 September 2009)

moses said:


> House prices about to soar, says Reserve Bank official




When you read the article at not one quote does Mr Richards actually say that prices will soar. In fact given that he is advocating policies to encourage lower price increases its hard to understand how he declared that prices will soar - as the RE advertising reliant news ltd headline suggests


----------



## Timmy (29 September 2009)

Here is a link to that article:

House prices about to soar, says Reserve Bank official


----------



## BradK (29 September 2009)

I will say it again from someone who has done well out of property in the past. 

High house prices help *NO ONE*

Enough said. 

Brad


----------



## Bronte (29 September 2009)

What if you own a few houses Brad ?


----------



## MrBurns (29 September 2009)

BradK said:


> I will say it again from someone who has done well out of property in the past.
> High house prices help NO ONE[
> Enough said.
> Brad




And on that note - 



> Rising house prices only 'hurt vulnerable'



http://www.abc.net.au/news/stories/2009/09/29/2699622.htm


----------



## BradK (29 September 2009)

Bronte said:


> What if you own a few houses Brad ?




Well, it does. But the kind of society that it generates where some people can ill afford the housing over their heads far outweighs the benefits of a couple of investors who are screaming like a Geelong cats fan for double digit growth year in year out. 

I know some will start singing their songs about 'getting ahead' and having 'aspirations', and playing the game. It is 'smart' they say. But, the twisted logic of capitalism is just that. Twisted. And no, I'm not a socialist!!! I'm a free market advocate who recognises that the logic is twisted. 

So, yeah, it helps those people. I have no problem with property investors who pay down the mortgage or use capital to buy sound investments to generate RENTAL return - no problem whatsoever - it is probably THE best inflation hedge. But the leeches who use no money down type schemes and cheer lead soaring prices are just that - leeches. 

I know, I was one of them, and I did REALLY well. And then I realised what that type of thing was doing to the economy. 

Property investment is a great hedge against inflation. But, as I said - for rental return and not for screaming soaring capital gains. 

Brad


----------



## Bronte (29 September 2009)

We have also just sold a property we bought ten years ago for 'no money down' 
Thanks for clearing that up and the reply Brad.


----------



## BradK (29 September 2009)

Bronte said:


> We have also just sold a property we bought ten years ago for 'no money down'
> Thanks for clearing that up and the reply Brad.




Bronte, you are from Perth? 

I cleaned up in Ellenbrook and I'm from the east coast. Built 4 places for $200k each and sold them mostly for near double that on average. Great for the economy of Ellenbrook isn't it!? 

Im a hypocrite. I answer the charge. Guilty. 
Brad


----------



## MrBurns (29 September 2009)

Bronte said:


> We have also just sold a property we bought ten years ago for 'no money down'
> Thanks for clearing that up and the reply Brad.




Hey Bronte, well done, now why dont you go out and do it now, right now this weekend ?

It wasn't luck was it ????????


----------



## Bronte (29 September 2009)

We had a chance to buy two townhouses new off the plan for $192,000 each,
close to Burswood casino and Perth city.(yes we live in Perth Brad)
The townhouse we sold was positively geared from day one, only two tenants.
The last occupiers, really nice couple stayed with us for nine years.
Hardly saw them or the property.
Nearly tripled in price


----------



## BradK (29 September 2009)

Bronte said:


> We had a chance to buy two townhouses new off the plan for $192,000 each,
> close to Burswood casino and Perth city.(yes we live in Perth Brad)
> The townhouse we sold was positively geared from day one, only two tenants.
> The last occupiers, really nice couple stayed with us for nine years.
> ...




I don't begrudge any of that - long term investment. Fine. 

Call me self-loathing, but dont you think my activities in Ellenbrook were ultimately destructive? 18 months. 

Yes Mr Burns. It was all luck. 

Brad


----------



## cutz (29 September 2009)

MrBurns said:


> And on that note -
> 
> http://www.abc.net.au/news/stories/2009/09/29/2699622.htm




Makes me sick, when will the routs end ? when will the balance be restored. 

The irony is, i generally keep it to myself that i trade stocks and derivatives and pay hefty taxes on the profits for my troubles, some people look at you like some sort of greedy capitalist freak, yet if i had multiple investment units negative geared and depreciating those to the max i'm a working class hero.


----------



## Bronte (29 September 2009)

MrBurns said:


> Hey Bronte, well done, now why dont you go out and do it now, right now this weekend ?
> It wasn't luck was it ????????



Thank you Mr Burns,
Luck to us is when: 'Opportunity meets Preparation' 
At the time we were doing a lot of work/research with different 'Investment Property' companies.
So we knew exactly what we were looking for:
10% areas
Positive gearing
Depreciation of new property etc


----------



## BradK (29 September 2009)

Hello,

Can't wait until Professor Robots read this thread thus far. 

Thank you
Professor Brad


----------



## Green08 (29 September 2009)

If you have a mind, the country is a great investment.  The prices are reasonable but if you have cash and determination, absolute bargins!!  Alot of renters.  Where we are, prices have sky rocketed. 

There are some super people, alot of city professionals relocating for the space and family needs!  There are so many opportunities for business.


----------



## MrBurns (29 September 2009)

Bronte said:


> Thank you Mr Burns,
> Luck to us is when: 'Opportunity meets Preparation'
> At the time we were doing a lot of work/research with different 'Investment Property' companies.
> So we knew exactly what we were looking for:
> ...




I've had a lot of experience in this and from what I've seen it's more like when "Stupidity meets Luck" Usually in the end they do it once too often and go bust and find out it wasnt their smarts after all.


----------



## Bronte (29 September 2009)

"If the numbers work....do it"

Mr Burns,
May I ask you:
If you could buy a new property for no money down.
In an expected high growth / nice popular area
Positively geared from day one.
Would you buy that property ?


----------



## MrBurns (29 September 2009)

Bronte said:


> "If the numbers work....do it"
> 
> Mr Burns,
> May I ask you:
> ...




The numbers worked in a syndicate I was in once, we made millions, I got out and the others worked out that the numbers dont always pay off ni matter how much you THINK they add up, they went broke. Came back eventually I think but only by taking crazy risks.

Your other question, I wouldnt touch it unless the price of it stacked up if it was vacant. Tenants do go broke, I know.


----------



## Bronte (29 September 2009)

Very Interesting.
Thank you Mr Burns


----------



## wayneL (29 September 2009)

Bronte said:


> "If the numbers work....do it"
> 
> Mr Burns,
> May I ask you:
> ...




This is a good marker of value.

This was possible 10 years ago when there was value.

This is nowhere even remotely possible today.

If it is, show me. I'll buy some.


----------



## MrBurns (29 September 2009)

Bronte said:


> Very Interesting.
> Thank you Mr Burns




One of the oldest tricks in the book was to give a tennant free rent up front for a higher figure on the lease, that hiked up the price of the proprty nicely.

Then on review the rent would probably go down or if the tenant went broke the new owner couldn't get that rent level again.


----------



## Bronte (29 September 2009)

That is not very nice though.
I do see your point.


----------



## MrBurns (29 September 2009)

Bronte said:


> That is not very nice though.
> I do see your point.




Owners also lease back their own property at inflated rents to get a high price from inexperienced buyers, goes on all the time.
It's a jungle out there.


----------



## Bronte (29 September 2009)

These townhouses were new off the plan and of course unleased.
We had to take a risk that they would be rented at a certain price to be positively geared.
We managed to rent them for $250 per week from day one.
As posted previously this IP was rented to the same people for nine years.
Today they are rented out for $450 per week.


----------



## MrBurns (29 September 2009)

Bronte said:


> These townhouses were new off the plan and of course unleased.
> We had to take a risk that they would be rented at a certain price to be positively geared.
> We managed to rent them for $250 per week from day one.
> As posted previously this IP was rented to the same people for nine years.
> Today they are rented out for $450 per week.




As long as you bought on the VACANT value and not on any value based on an inflated rental you would be ok.


----------



## wayneL (29 September 2009)

MrBurns said:


> Owners also lease back their own property at inflated rents to get a high price from inexperienced buyers, goes on all the time.
> It's a jungle out there.




I recall it was very common in your neck of the woods Burnsie. I can't recall this ever being done in Perth.

Perth *was* good value in those days.


----------



## MrBurns (29 September 2009)

wayneL said:


> I recall it was very common in your neck of the woods Burnsie. I can't recall this ever being done in Perth.
> 
> Perth *was* good value in those days.




Well I expect Allan Bond would have kept it all on the straight and narrow


----------



## wayneL (29 September 2009)

MrBurns said:


> Well I expect Allan Bond would have kept it all on the straight and narrow



***Bursts out laughing!!

Indeed!


----------



## Beej (30 September 2009)

wayneL said:


> This is a good marker of value.
> 
> This was possible 10 years ago when there was value.
> 
> ...




That's true. In Sydney, last last year in many area's this became possible - no coincidence I think that it turns out that time now marks the bottom of the market here. Perth has little/no value by this measure today from what people here say - so clearly it is expensive. The thing is this does not guarantee by any means a return to "value" any time soon.

Value does not tend to hang around for too long. What keeps it there is a higher level of perceived risk (think of the XAO at 3100 - didn't last long did it? Was real value there as it turned out, but fear/perceived risk created the opportunity). Perth used to have value, because people were unsure what the long term future of the city was in terms of growth (economically, population etc) potential, compared to say Sydney/Melbourne. Now, the outlook for growth in Perth continues to be high, so without that risk, the value goes away..... But that's a market for you! 

Cheers,

Beej


----------



## wayneL (30 September 2009)

Beej said:


> That's true. In Sydney, last last year in many area's this became possible - no coincidence I think that it turns out that time now marks the bottom of the market here. Perth has little/no value by this measure today from what people here say - so clearly it is expensive. The thing is this does not guarantee by any means a return to "value" any time soon.
> 
> Value does not tend to hang around for too long. What keeps it there is a higher level of perceived risk (think of the XAO at 3100 - didn't last long did it? Was real value there as it turned out, but fear/perceived risk created the opportunity). Perth used to have value, because people were unsure what the long term future of the city was in terms of growth (economically, population etc) potential, compared to say Sydney/Melbourne. Now, the outlook for growth in Perth continues to be high, so without that risk, the value goes away..... But that's a market for you!
> 
> ...



I think it's a bit more complicated than that; but the simple bit is that the economy is reliant on high RE values. As such, governments will create policies to support prices.

I think it is... and has been, a grave mistake, but agree value might not return soon. (I'm 70-30 atm)

Eventually it is inevitable by one mechanism or another and unfortunately will negatively alter the social fabric of Oz (as outlined ad nauseum). But Oz is not alone in this.

RE is a "HOLD" for me atm.


----------



## kincella (30 September 2009)

well maybe some should consider we are heading towards a European style of living....??? larger % of renters than owner occupiers.....and Switzerland had only 37% owners......due to constraints in available land etc.....the high cost of avaliable housing.....higher % would like to own a home...but could not afford it.....
and today more modest rises in house prices.....
http://money.ninemsn.com.au/article.aspx?id=869574


----------



## satanoperca (30 September 2009)

from the above link 


> However, Mr Joye said he did not expect the recovery to run at the same pace in the coming months




Gee I wonder why, FHBG reduced today and further reduction in the next few months and the ever growing reality of rising interest rates given retail figures out today showed an increase, giving the RBA a reason to raise them.

The lollipop is almost dissolved, hope there is some more in the cookie jar.


----------



## gfresh (30 September 2009)

How sustainable are these rises? Wonder if the government will take the hint from the RBA..

Satan: unfortunately there is plenty.. Rises just encourage further investors into the market which will only push up prices further.


----------



## satanoperca (30 September 2009)

Gfresh, you are right, but those lollipops may become less if this is any guide of future interest rates. Certainly will effect the FHB that the government want so eagerly to get into the market.

http://www.asx.com.au/sfe/targetratetracker.htm

And then click on the link for implied interest rates for the next 18months. Cannot get it to link directly.

The only way is up, it would seem for interest rates.


----------



## MrBurns (30 September 2009)

Don't forget Rudd changed the rules allowing unprecedented Asian investment in residential property thats why it's all Asians at Auctions lately, so wonder when the effect of that will abate. 
Labor always think up new and inovative ways to **** this country up


----------



## robots (30 September 2009)

hello,

gee the RBA is spot on, rich get richer and the vulnerable get NOTHING

superb, how it should be just like years before, those who put in get rewarded

the improvements to our country as result are very impressive

hang on, just get the violin out for a tune

lock it in eddie, yeah man once the property sold no aussie can ever buy it back

thankyou
professor robots


----------



## robots (30 September 2009)

hello,

good evening, another glorious day across the country

OH YEAH:

http://www.heraldsun.com.au/busines...st-survery-finds/story-e6frfh4f-1225781196624

oh yeah, more $ rollin' in for the title holders, I am a HOLD 

thankyou
professor robots


----------



## satanoperca (30 September 2009)

Go ask the Japanese how they feel about that after their endeavors into Australian real estate a decade or more ago.

http://www.theage.com.au/business/strong-retail-sales-means-rate-rise-looms-20090930-gbtf.html


----------



## mythos (30 September 2009)

kincella said:


> well maybe some should consider we are heading towards a European style of living....??? larger % of renters than owner occupiers.....and Switzerland had only 37% owners......due to constraints in available land etc.....the high cost of avaliable housing.....higher % would like to own a home...but could not afford it.....
> and today more modest rises in house prices.....
> http://money.ninemsn.com.au/article.aspx?id=869574




Having lived in germany. It is better to rent in Europe, as you have a much more secure tenancy. You can paint, put in new kitchen, etc in Germany. And the leases are essentially perpetual. 

Unlike a lot of RE Agents in Brisbane who won't give you more than a 6 month lease, so you have no certainty over how long before you might have to look for a new place.

Much better to own in Australia, however in Europe there is little reason to own, as renters have most of the benefits that owners have here.


----------



## robots (30 September 2009)

hello,

Sunshine & Lollipops

going to be a blast tonite, flick the 30yr old TV onto Ch9, Hey Hey 

thankyou
Professor Robots


----------



## wayneL (30 September 2009)

kincella said:


> well maybe some should consider we are heading towards a European style of living....??? larger % of renters than owner occupiers.....and Switzerland had only 37% owners......due to constraints in available land etc.....the high cost of avaliable housing.....higher % would like to own a home...but could not afford it.....
> and today more modest rises in house prices.....
> http://money.ninemsn.com.au/article.aspx?id=869574






mythos said:


> Having lived in germany. It is better to rent in Europe, as you have a much more secure tenancy. You can paint, put in new kitchen, etc in Germany. And the leases are essentially perpetual.
> 
> Unlike a lot of RE Agents in Brisbane who won't give you more than a 6 month lease, so you have no certainty over how long before you might have to look for a new place.
> 
> Much better to own in Australia, however in Europe there is little reason to own, as renters have most of the benefits that owners have here.




Exactly mythos.

kincella has no idea about the reasons Europeans like to rent. Mainland Europe is cheaper than Oz (wages to price), apart from a few premium areas. It is nothing to do with cost.


----------



## MrBurns (30 September 2009)

robots said:


> hello,
> 
> Sunshine & Lollipops
> 
> ...




At least I agree with you on that.
Knew Daryl in the old days, always very talented, a smart guy.


----------



## kincella (1 October 2009)

aaargh...Satan....the Japanese exercise into the Australian market back in the 90's, or whenever it was..... was into commercial property...not residential...
from memory, after doing  a bit of research last year......I recall the following snippets...........
Japanes investment was predominately in QLD if I recall correctly, although they did buy offices etc in other capital cities ....(Qld had its own unique reputation regarding property.....well property scams actually) however, the Japanese bought up the Islands and resorts and accommodation....then directed the Japanese tourists to take holidays in Australia.....but their own tourists were not allowed to venture away from any Japanese owned business...so the money was not flowing into QLD for tourism......
then the Japanese panicked and sold out of the commerecial property, suffering huge losses....and of course the subsequent buyers gained huge bargains...
bit similar to a couple of years ago....Japanese housewifes spent 2 Trillion buying foreign currency.....
they were desperate and looking for a better return than the zero rates  on offer from Japanese banks....
just because some have a load of money at their disposal....does not mean they are smart or intelligent in financial matters....

now if we are talking about housing (not commercial property) Japan has been unique, virtually doing the opposite to other growing countries.....it has almost zero population growth, zero immigration....and a huge ageing population, low birth rates, and a large burden on the young to support the current population...and it seems they have no idea about how they will support the ageing population into the future....
no wonder the housing has been stagnant for so long...there is almost no competition or demand for housing.....and the bankers have some unique practises,,,so too the companies.....its an interesting read....

I wonder if the new PM will be able to enforce a change in attitude or direction in the future....
there is an enormous amount of information on the web regarding Japan and some of their unique policies


----------



## Beej (1 October 2009)

Well, house prices still rising strongly across the board in August according to RP-Data: (http://www.businessspectator.com.au...n-August-pd20090930-WCVGX?OpenDocument&src=is)



> *House prices strong in August*
> 
> Home values have risen by 1.9 per cent in the month of August. Using the rpdata.com (ASX: RPX) property database, which is Australia’s largest and includes over 170,000 sales during the first eight months of 2009 (and over 129 million data records in total), Australia’s housing recovery solidified during the month of August with robust capital gains registered across the country despite evidence of fading first home buyers.
> 
> ...



*

Charts attached. The big question now is how long can this run continue? I reckon that it will peter out a bit by the end of the year, with the bottom end in particular flattening and maybe falling a little through next year as interest rates start to bump up a bit. The only thing that could push the bottom end further would be a big surge in IP activity, which although it is ticking up slightly, this does not seem enough to make up for the expected drop off in FHB demand. The mid range and top end will I think continue to grow moderately as all the upgraders who sold to FHBs and 3rd time upgraders etc continue to work through the market over the next 12 months. My opinion on this is based on the continued strong auction clearance rates, prices and volume numbers for Sydney and Melbourne in recent weeks as the spring sales have kicked in. 

Also a specific example, a house near mine sold in Feb 08 for $1.425M (co-incidentally it was actually the house owned prior to that sale by the people who bought my previous PPOR last year, which is why I have taken an interest in it!). That same house just sold again 2 weeks ago for $1.66M. No renovations were done as far as I can tell - they may have painted, spruced up the bathrooms/kitchens a bit, but no major work undertaken.....

FYI Kincella, re Japan, they don't just have zero population growth, they have NEGATIVE population growth. The weird thing also is despite a decade of economic stagnation and all the talk of their housing market issues, property is still really expensive in Japan (especially in big cities) by any measure, as is just about everything else....

Cheers,

Beej*


----------



## stocksontheblock (1 October 2009)

kincella said:


> well maybe some should consider we are heading towards a European style of living....??? larger % of renters than owner occupiers.....and Switzerland had only 37% owners......due to constraints in available land etc.....the high cost of avaliable housing.....higher % would like to own a home...but could not afford it.....
> and today more modest rises in house prices.....
> http://money.ninemsn.com.au/article.aspx?id=869574




I think somehow you don’t understand the dynamic of why people rent in Europe – this is a whole discussion in its own right, as it is not for the same reasons as they do here - not being able to afford to buy.

I would also have to disagree with your example. Switzerland is a bad example. Land releases, prices etc have very little to do with the rental market in this country, the figures demonstrate that the country, compared to others such as the US, UK etc has not suffered from significant and outside norm trends in house increases and house prices are achievable considering the broad high level of Swiss incomes.

Switzerland has an incredibly high % of international workers - I understand some 20%+ are foreign workers, as does places like Belgium. If you are not a Swiss national then you cannot own property and so those nationals who do own property have taken - IMO a wise decision - to rent to those who need to live there. It should also be noted that the Swiss also have a very high rate of 2nd property ownership - dwarfing countries like Oz, US, UK etc.

And, as pointed out by mythos - Switzerland is like Germany, tenants have some pretty amazing rights, which further adds to the lack, or no desire to own a home.


----------



## kincella (1 October 2009)

regardless..I came across some articles yesterday that discussed...home pride...which enforced a community pride and attitude....and higher values for living standards.....which might go some way to explaining why Australians have this attitude towards home ownership....ie its a home pride thingy

it also might explain the culture that has developed from building public housing estates to house the poor as renters only, as they did in the 60's and 70's, which  creates its own problems....hence the increased crime rates, lack of education, and increased unemployment in those suburbs.....Meadow Heights  ?? in nsw with gang wars and problems springs to mind.....

 at the same time....a recent article on some of Sydney's western suburbs, that are emerging out from a former rut and past problems, noted above...to emerge as a desirable place to live now...being closer to the city and commuting distance....the theme again was the pride of the mainly immigrants who populated those suburbs....who bought the houses and made it their community..........
its all just food for thought


----------



## wayneL (1 October 2009)

kincella,

Here is an important link for you. Please read this.


----------



## MrBurns (1 October 2009)

wayneL said:


> kincella,
> 
> Here is an important link for you. Please read this.




ROFL - if this web site ever gets near capacity of it's hard disc space delete kincellas posts for immediate relief, whoops just realised my post count is double his, must be that all kincellas posts are novels so it just seems like they go on forever.

NOW - watch what happens this weekend, and the next , then the rates go up are you still watching ?, just wait for it.


----------



## nunthewiser (1 October 2009)

i have removed my last post as waynes link said it all


----------



## stocksontheblock (1 October 2009)

wayneL said:


> kincella,
> 
> Here is an important link for you. Please read this.




LMFAO ... ohhh, well done!


----------



## trainspotter (1 October 2009)

My sides are splitting from laughing too much. I especially liked the part about the use of punctuation.

Anyhooooooooooooooooo .... House prices will continue to rise. Inflationary pressure will soon kick in, unions will be wanting more money for the "workers", interest rates will rise to curb the inflatioary effects, banks will start to lend more money as people drop their cash into interest bearing accounts, Rudd will claim all the credit for the perfect harmony created by his fiscal responsibilites, taxes will go up to cover the huge debt he has run up .... blah yadda blah. Seen it all before.


----------



## MrBurns (1 October 2009)

Reminds me of the story about the bloke who was in bed with his girlfriend and his wife walked in.

She looked aghast and he just calmly got up got dressed and escorted his wife from the room while the girlfriend escaped.
Every time the wife started on him he just says "what" "what girl" sorry darling what are you talking about , this went on till she actually believed she'd imagined it.

Same theory if you continue with the BS over and over sooner or later some will actually think it's true.


----------



## kincella (1 October 2009)

hahahaha.....so I am the really stupid blogger....hahahaha ...just an ignorant property investor.....hahahaha and I am laughing all the way to the bank.....


----------



## MrBurns (1 October 2009)

kincella said:


> hahahaha.....so I am the really stupid blogger....hahahaha ...just an ignorant property investor.....hahahaha and I am laughing all the way to the bank.....




Now you sound like robots


----------



## Taltan (1 October 2009)

They're both from Melbourne too. Kincella are you and Robots one and the same? If not maybe the two of you could meet weekly along with Enzo & Co


----------



## kincella (1 October 2009)

4 million people reside in Melbourne....there might be 6 people I am aware of who follow this thread who live in Melbourne....big deal.....its actually a pretty lousy number considering the large population....


----------



## kincella (1 October 2009)

just did a Financial IQ test...with Coredata
the results.......shows how really very stupid and ignorant I am........

Your Assessment 

Well done!! Your Financial IQ is between 125 and 135. This places you close to two standard deviations above the national average. In basic terms it means your Financial IQ is in the top 7% of the population with regard to understanding financial terms and concepts. Placing you well above the average level of national understanding. You are clearly smarter than most bankers and should possibly consider a new career working for the RBA. However as with all major financial decisions you should still carefully consider all your options before making major financial purchases.


----------



## satanoperca (1 October 2009)

Kincella, what are trying to say


----------



## nunthewiser (1 October 2009)

ROFLMAO!

i love this thread!


----------



## stocksontheblock (1 October 2009)

I think its time I had my little rant. So here goes:



kincella said:


> regardless..I came across some articles yesterday that discussed...home pride...which enforced a community pride and attitude....and higher values for living standards.....which might go some way to explaining why Australians have this attitude towards home ownership....ie its a home pride thingy
> 
> it also might explain the culture that has developed from building public housing estates to house the poor as renters only, as they did in the 60's and 70's, which  creates its own problems....hence the increased crime rates, lack of education, and increased unemployment in those suburbs.....Meadow Heights  ?? in nsw with gang wars and problems springs to mind.....
> 
> ...




I haven’t read all there is in this thread as I came to it late and I’m just not going to read it all. However, with some of the posts you made I though, maybe this guy might know what he is talking about. Please don’t accept that as me agreeing with you, just that you might know what you are talking about.

However, with responses like: "regardless ...". Regardless of what? What you said was just wrong, and irrelevant and had no basis in fact, or even myth. I think this demonstrates that the poking and prodding by the others appears to be fair and justified.



kincella said:


> hahahaha.....so I am the really stupid blogger....hahahaha ...just an ignorant property investor.....hahahaha and I am laughing all the way to the bank.....




Based on the very funny link from wayneL you are guilty of the following:

1. Don't capitalize.
2. Don't punctuate.
3. Apostrophes are fairly easy to deal with.
4. Mispunctuate.
5. Write Like You're on IRC.
6. Don't forget the cute misspellings.
7. Make Personal Attacks.
8. Claim False Credentials - I guess this is a hard one, as I/we truly don’t know if you own any property.
9. Make **** Up - sorry to apply no.6
10. Cite Urban Legends.
11. Ramble - Mr Burns has been on this one for a long time.
12. Post Non Sequiturs
13. Ignore Proper Spelling and Usage.

In identifying this, I do have to seriously question whether you have the ability to be running all the way to the bank - I assume with money, and not pleading for them not to turn the credit tap off.

In presenting a position it helps to be able to back it, or at least explain your view, no matter how right or wrong or silly it may seem. However, to dismiss something simply by saying 'regardless' does nothing for any credibility you may have had.

I know you say you own property, you may, you may not (see no.8), and I know you try to ramp the market more and more yet treating us, as I do take exception whether no one else does or not, at being spoken to like a fool.

Based on the amount of posts you make, and the urgency you respond to anything; particularly in this thread you obviously have a lot of time on your hands, so not being able to at least put together a basic sentence is not a sign of an "ignorant property investor", its the sign of an arrogant ...

You may see this as some sort of personal attack? Not in the least. I actually don’t mind ASF and many of the threads; in fact I find many of them useful. Yet, when a certain thread is treated as one’s own personal thiefdom then it loses any impact it may have once had.

It’s clear you understand very little about property in other countries and the dynamic of those markets, and make references to (see no.8) again: “a recent article on some of Sydney's western suburbs…” and “I came across some articles yesterday that…”

We all know your position, your thoughts and your views. How about handing this thread back to those of us who actually want to ask and give real questions & answers, and not just hijack the thread for their own sense of self gratification.


----------



## stocksontheblock (1 October 2009)

kincella said:


> just did a Financial IQ test...with Coredata
> the results.......shows how really very stupid and ignorant I am........
> 
> Your Assessment
> ...




I think is no.12 on the guilty list.


----------



## satanoperca (1 October 2009)

Stocksontheblock, 

Kincella is laughing all the way to the bank and has an above average IQ, how can you question that? 

Your post was eliquent and somewhat poetic.

Back to the topic. Just of the last week or so I have started to see again properties that I might be interested in and they do not seem to have risen above 2007/8 peak. 

I have also noticed at lot more properties without prices, a trend that I noted late last year.

Will interest rates looming, taxes to increase to pay of KRUDD's debt, KRUDD's sugar hits almost finished, FHBG reduced and reducing further in a few months I cannot see prices growing to new heights in 2010 but I may be wrong.

Cheers


----------



## Taltan (1 October 2009)

Stocksontheblock, Well said I have noticed many of the assme things but I could not have written it so well in the time I allocate to this forum.

Regarding prices I think there is one more sugar hit to come, and that is the many bullish investors who have been waiting for the FHB to be scaled back. As an accountant I see a lot of these investors. I often tell them that they should consider things like equities however they are scared of stocks and believe you cannot go wrong with property. They have been waiting and I wouldn't be surprised if with 3% interest rates they further delayed the inevitable.


----------



## kincella (1 October 2009)

my response to all of you on the attack today is......
tell someone who cares.......cause I dont......
I have a thick hide....its like water off a ducks back.....
some of you sound like a gang of ferals....
the words... bully boys.... springs to mind......
oh, and I say bollocks to you to....
hehehehehehehehe


----------



## satanoperca (1 October 2009)

I hear the sounds of bleating drums and rising IR's.


----------



## robots (1 October 2009)

hello,

kincella, I have reported that offensive post to the moderators. 

Uncalled for, keep your chin up brother

his wife took him to the cleaners

thankyou
professor robots


----------



## robots (1 October 2009)

hello,

kincella, 

they all get around with L on their forehead, looking for someone else to blame for life

just like the scab out the front of Coles asking for a dollar of you hard earned

thankyou
professor robots


----------



## theasxgorilla (1 October 2009)

wayneL said:


> Exactly mythos.
> 
> kincella has no idea about the reasons Europeans like to rent. Mainland Europe is cheaper than Oz (wages to price), apart from a few premium areas. It is nothing to do with cost.




And to expand on the facts even further, Germany, and practically every country bordering it, particularly the Germanic ones (Netherlands, Switzerland, Austria, Denmark, Sweden) have massive state run housing systems.

It tends to work like this, you put your name on the list when you are young (or your parents do), eventually, depending on how long you've been on the list, you start getting offers of accomodation.  This accomodation can and often does include old heritage listed apartments in central locations of some of the most desirable cities on the world.  And you get to rent them *for cents in the dollar* so to speak.

It's not apples and apples either.  The living standards and expectations are often higher in Europe.  The quintessential run-into-the-ground rental properties (shacks) of Australia just wouldn't rent in a lot of European countries.  People demand and tend to get more.


----------



## MrBurns (1 October 2009)

The bulls are getting touchy, they must sence the inevitable - negative equity and lots of it. 

Prices slashed, interest rates through the roof, forced sales everywhere, prices tumbling.

Well there's the next lot of headlines in the daily papers starting soon, paradise for the true believers who will swoop and pick up the bargains.

(do I sound like anyone but in reverse?)


----------



## moXJO (1 October 2009)

satanoperca said:


> I hear the sounds of bleating drums and rising IR's.




I don't think our IR's can go up that much, I'm sure there was a limit mentioned of about 7-8% as the max pain threshold somewhere. Houses are selling like hotcakes down my way. I hope they do go down, as rents are BS atm, Rents at $500 a week for a crappy 3 bedroom house in a bogan town is stupid. I'm backing house prices to rise more though, hopefully I’m wrong.

If my punctuations out in the above, just add the following at your leisure
 .,!""'';()?/-


----------



## theasxgorilla (1 October 2009)

nunthewiser said:


> i have removed my last post as waynes link said it all




Oh the irony!


----------



## Soft Dough (1 October 2009)

I sometimes chuckle to myself at how naive people are to believe that 

1. House prices can continue to show compound growth at a pace higher than wages growth ( gearing has to max out sometime )

2. People weren't stupid with rudd propping up the market and didn't overextend with stupidly low interest rates.

3. Prices will not return to trend ( either the trend line moves or the price does - so this one smacks of stupidity )

4. Housing contributes to the economy ( sure it generates employment etc, but all it does is sinks money that could be used to generate net inflow of money into the country into depreciating assets, which, for all intents and purposes has a one off effect on employment )

5. That banks are evil when it comes to housing.  In fact the true evil lies with the rip off councils and land developers ( who ramped up land prices overnight about 8 years ago where I am approximately 250% ) and builders and tradesmen who continue to demand excessive remuneration, for what is in effect a low skill job, as they do not need to compete as the government is subsidising their jobs at the expense of real competition.

I have said it before : if the FHBG went totally tomorrow, builders would actually need to compete for work, and hence would not pay plumbers, painters, chippies, electricians over what they are worth, land developers would need to cut margins, and housing prices would return to trend. 

I would sell.  I still believe housing is in for a 20% correction, lets see how it goes over the next year, now that the FHB grant ( lining the pockets of builders and developers pockets ) has returned to "normal" ( in fact, can ANYONE give a good reason as to why we should have a FHBG anymore? )


----------



## robots (1 October 2009)

hello,

just to get back on track,

i havent seen the figures recently and hope someone can help me

does anyone know if its still 8x average income to average house price?

thankyou
professor robots


----------



## Wysiwyg (1 October 2009)

Soft Dough said:


> I sometimes chuckle to myself at how naive people are to believe that




Asset prices have always gone too far one way or another. At this rate of increase in house pricing, one could be paying 1/2 million dollars for the fibro. number down the road in 10 years time.
 All good if you own the fibro. number.


----------



## robots (1 October 2009)

Soft Dough said:


> I sometimes chuckle to myself at how naive people are to believe that
> 
> 1. House prices can continue to show compound growth at a pace higher than wages growth ( gearing has to max out sometime )
> 
> ...




hello,

to cover the outrageous Stamp Duty charges from the state government

exactly the reason J.Howard introduced it

dont buy or hold, rent no big deal

this is great we havent had Q & A since Chops A Must was around, anymore questions?

thankyou
professor robots


----------



## cutz (1 October 2009)

satanoperca said:


> I have also noticed at lot more properties without prices, a trend that I noted late last year.




Something else i've been noticing is sales data not being disclosed in the papers.

My misses rang up a real estate agent last week requesting the price on a house that was passed in but later sold via negotiation but the reply was, "sorry can't say". Also those private "in the office" multi auctions are pretty annoying.


----------



## wayneL (1 October 2009)

cutz said:


> Something else i've been noticing is sales data not being disclosed in the papers.
> 
> My misses rang up a real estate agent last week requesting the price on a house that was passed in but later sold via negotiation but the reply was, "sorry can't say". Also those private "in the office" multi auctions are pretty annoying.




Yeah that sucks cutz.

Here in the UK you can get the actual price of any house sold... free.

One such site is www.houseprices.co.uk 

If a partially socialist country can do this, why can't a more economically liberal country like Oz do it?


----------



## nunthewiser (1 October 2009)

theasxgorilla said:


> Oh the irony!





hahahahahahah

now thats funny in a warped kind of way


----------



## Soft Dough (1 October 2009)

robots said:


> hello,
> 
> to cover the outrageous Stamp Duty charges from the state government
> 
> ...




Yeah I guess you must be right, because as we all know, Stamp duty was never ever ever around before FHBG was introduced was it.

I thought FHBG was introduced as a way to "soften" GST introduction, so it should have had an endpoint.  Pity the politician who takes it away from the "needy" masses.


----------



## moXJO (1 October 2009)

Soft Dough said:


> 5. That banks are evil when it comes to housing. In fact the true evil lies with the rip off councils and land developers ( who ramped up land prices overnight about 8 years ago where I am approximately 250% ) and builders and tradesmen who continue to demand excessive remuneration, for what is in effect a low skill job, as they do not need to compete as the government is subsidising their jobs at the expense of real competition.
> 
> I have said it before : if the FHBG went totally tomorrow, builders would actually need to compete for work, and hence would not pay plumbers, painters, chippies, electricians over what they are worth, land developers would need to cut margins, and housing prices would return to trend.
> 
> )



Ummm no there was better pay years ago without the fhbg. I noticed you had an issue with trades previous, and quoted stupidly high rates of pay for plumbers before. I doubt you would know the right end of a hammer, let alone what it takes to run a company. It's pathetic to look down on, and rag about other profesions, when you have no idea. Trades will just run to the mines, or other industrys when work gets quiet. 
And there is a reason why there is a skill shortage and lack of quality builders 
Someone must have burnt you bad.




> I would sell. I still believe housing is in for a 20% correction, lets see how it goes over the next year, now that the FHB grant ( lining the pockets of builders and developers pockets ) has returned to "normal" ( in fact, can ANYONE give a good reason as to why we should have a FHBG anymore? )




Wanna bet robots a case on that.


----------



## Soft Dough (1 October 2009)

moXJO said:


> Ummm no there was better pay years ago without the fhbg. I noticed you had an issue with trades previous, and quoted stupidly high rates of pay for plumbers before. I doubt you would know the right end of a hammer, let alone what it takes to run a company. It's pathetic to look down on, and rag about other profesions, when you have no idea. Trades will just run to the mines, or other industrys when work gets quiet.
> And there is a reason why there is a skill shortage and lack of quality builders
> Someone must have burnt you bad.




Please do tell me how much it costs to get a plumber around for a 1 hour job, a 2 hour job and a 8 hour job. I look forward to comparing this to other jobs.

( gets ready to read about how expensive it is to start and run a plumbing "business" - I'll save you some time - $20000 for a ute + $10000 tools and fittings $5000 advertising.  Costs = fuel, maintenance, phone. PLUS the added benefit of using your personal use of phone, fuel, transport, renovations as a tax deduction!! )

If the pay is so poor at the moment, why are they not at the mines already?

Rubbish, their pay has gone up ridiculously over the past 10 years.  Gone are the days where the plumber drives a beat up old ute, and has overalls with holes in them.  Nowadays the callout fees are atrocious, the hourly rates are horrendous.

PS I have owned businesses before, but that is a different story, and I resist the temptation to bignote myself   .  I sold them to start a career which I will enjoy, even though it means a massive paycut.

Also being a plumber is not a profession, it is a trade.


----------



## robots (2 October 2009)

Soft Dough said:


> Please do tell me how much it costs to get a plumber around for a 1 hour job, a 2 hour job and a 8 hour job. I look forward to comparing this to other jobs.
> 
> ( gets ready to read about how expensive it is to start and run a plumbing "business" - I'll save you some time - $20000 for a ute + $10000 tools and fittings $5000 advertising.  Costs = fuel, maintenance, phone. PLUS the added benefit of using your personal use of phone, fuel, transport, renovations as a tax deduction!! )
> 
> ...




hello,

long live the tradie, they are entitled to earn whatever they like just the same as you in your chosen trade (oops profession)

although perhaps your trade may be strangled by "awards"

nothing to stop you doing your own plumbing at your own house

that UK site does not have every house sold on it, contact the local State Revenue Office

thankyou
professor robots


----------



## wayneL (2 October 2009)

robots said:


> that UK site does not have every house sold on it, contact the local State Revenue Office




Yes it does. It is land registry data.


----------



## moXJO (2 October 2009)

Soft Dough said:


> Please do tell me how much it costs to get a plumber around for a 1 hour job, a 2 hour job and a 8 hour job. I look forward to comparing this to other jobs.
> 
> ( gets ready to read about how expensive it is to start and run a plumbing "business" - I'll save you some time - $20000 for a ute + $10000 tools and fittings $5000 advertising.  Costs = fuel, maintenance, phone. PLUS the added benefit of using your personal use of phone, fuel, transport, renovations as a tax deduction!! )
> 
> ...




Ooops you forgot a few expenses there, and ignored a lot of the risks. As far as how much they earn an hour, it depends what they are doing and who you have got. Employed plumbers are earning $40k - $100k, but roughly $60k-$70k on average. Those that are self-employed will be much higher or lower depending. If they are good and in demand then it will ne higher.
 Here’s an idea, get a few quotes If you have a crappy job and a plumber already has to much work on, they generally quote high so they won't get it. 
Pays have not gone up for a lot of the trades by that much either. 
A lot of trades could not make it work and did go to the mines. For every one plumber you show me that made it I'll show you ten that fell by the wayside.
But please big note yourself and enlighten me. Tell me how money falls from the sky for the average tradie. Just because you took a pay cut does that now mean you forever rag on tradies to do the same? 
If they make so much and it's so easy, please come join us in our bathtub full of easy money and join a trade.
You obviously have a very spiteful axe to grind. Maybe you should concentrate on what you have, instead of b1tching about what you perceive others to be making.


----------



## Soft Dough (2 October 2009)

moXJO said:


> Ooops you forgot a few expenses there, and ignored a lot of the risks. As far as how much they earn an hour, it depends what they are doing and who you have got. Employed plumbers are earning $40k - $100k, but roughly $60k-$70k on average. Those that are self-employed will be much higher or lower depending. If they are good and in demand then it will ne higher.
> Here’s an idea, get a few quotes If you have a crappy job and a plumber already has to much work on, they generally quote high so they won't get it.
> Pays have not gone up for a lot of the trades by that much either.
> A lot of trades could not make it work and did go to the mines. For every one plumber you show me that made it I'll show you ten that fell by the wayside.
> ...




I note that you failed to answer the question.

but that is ok as I am aware of what they charge, as you know I am friends with many people in the industry. Tradies who gloat about how much they charge naive people, and developers who laugh about how much extra they tack onto the price of new developments.

I don't need to join a trade, my new position will make more money, for a better work load.

I have no axe to grind, just pointing out where quite a bit of the excess money in the cost of a house goes to - wages, margins of tradesmen and developers, and councils.  You are the one getting defensive about how much plumbers overcharge not me


----------



## gfresh (2 October 2009)

Being a tradie isn't all dollars and the high life.. Might be fine for a few years, but by the time you're 40 and have a stuffed back, and have skin cancer or any other form of cancer breathing in all sorts of noxious fumes, or working with whatever substances often we still don't know effect they have long term. Working in the direct sun or confined places, bending over things all day, battling through traffic from one job to another. No wonder they drink so much piss each week 

While some of the skills are fairly basic most can do, a lot are pretty specialised, and require quite a few years of knowledge and expertise, just like any other decent profession. I'm usually surprised with just how much they do know when having to call upon their services. 

Sure the pay is quite good, but I'll keep my desk job thanks, in airconditioned comfort


----------



## MACCA350 (2 October 2009)

You make it sound like they are the only ones who do any physical work or work in the elements

cheers


----------



## Soft Dough (2 October 2009)

gfresh said:


> Being a tradie isn't all dollars and the high life.. Might be fine for a few years, but by the time you're 40 and have a stuffed back, and have skin cancer or any other form of cancer breathing in all sorts of noxious fumes, or working with whatever substances often we still don't know effect they have long term. Working in the direct sun or confined places, bending over things all day, battling through traffic from one job to another. No wonder they drink so much piss each week




True, the hidden cost... I'll pay that one.

( resists the temptation to discuss health benefits of sun and exercise as these are truly outweighed by the above concerns )

Like I inferred, I would not be a tradie, just think that the government should not be subsidising building, and hence their wages.


----------



## moXJO (2 October 2009)

Soft Dough said:


> I note that you failed to answer the question.
> 
> but that is ok as I am aware of what they charge, as you know I am friends with many people in the industry. Tradies who gloat about how much they charge naive people, and developers who laugh about how much extra they tack onto the price of new developments.
> 
> ...




I can't give an hourly rate because it depends on too many variables, can be from $20-$200. If you’re dealing with hazardous substances or its 5 stories up and hard to access, you need it done now, etc then you will cop it big. But if you don't like it get other quotes.

Yeah I get a bit defensive because I have seen a lot start up thinking it’s easy to make money and then fail miserably, over one or two mistakes. Or the others that get caught out business wise and make less than normal wages for years on end. On top of that you have to chase work, and go through some real quiet periods with no money.

 You then tell me you will make more money with less work 
c'mon:

PS: Don't worry if I get a bit touchy SourD, nothing personal and I shouldn’t be ranting at you. I'm just going through a "had enough of construction work BS" mood.  Honestly there are easier ways to make money.


----------



## robots (2 October 2009)

wayneL said:


> Yes it does. It is land registry data.




hello,

http://www.houseprices.co.uk/contact-us/missing-information/

sorry, i forgot anything to do with real estate must be open for public scrutiny

moXJO, can always tell the ones earning a low wage as they rip into the tradesperson, man get as much as you can in life

thankyou
professor robots


----------



## satanoperca (2 October 2009)

This thread has got derailed onto whether tradesman/woman get paid to much.

During the last few years it would seem that they have been living the high life however their work is also seasonal. While times are good, they do well, but in a down turn not so well.

I would have thought it is simply a case of supply and demand.

I would rather trades get paid well at least they do something productive than those fat cat bankers who get paid ridiculous amounts and provide very little to society.

Some tradies are professionals and some are not just like any industry.

I would encourage my young son to look at a career in the trades especially a plumber as **** must always go somewhere.

Back onto housing only time will tell whether it is back on it's upward path for now it seems it is.

Just talking to a neighbor who is selling a blue chip apartment, city and water views and has been told to expect a sale price lower than his buy price of several years ago. Just like shares it all depends on your entry and exit points.

Robots, I expect more retort about this, why so subdued.


----------



## doctorj (2 October 2009)

AQR said:


> Why would you state that unless it was ill placed attempt to demean anyone in the trade while trying to elevate yourself.



In any case, this is semantics and has very little do with why house prices will or won't rise for years.  On topic please!


----------



## robots (2 October 2009)

satanoperca said:


> Just talking to a neighbor who is selling a blue chip apartment, city and water views and has been told to expect a sale price lower than his buy price of several years ago. Just like shares it all depends on your entry and exit points.




hello Satanoperca,

just taking it easy brother, its all just as 5 of us predicted

hope all's well, lots of ads on the radio for Docklands at the moment

did he/she buy "off the plan", cant see Docklands doing much for 20yrs and Southbank is booming now

wanna c some Tradesman/Craftsman SBS NOW, religion/cult pays

thankyou
professor robots


----------



## satanoperca (2 October 2009)

Hi Robots,

No purchased 4 years ago. I agree, South bank took a real dive for many years and is now doing well. The docklands will take many more years to develop and mature before prices start to reflect what it truly offers.

I still believe it is underrated, but what I believe and what the market is willing to pay are two different things.

Another example. BR bath 2 Cars off the plan 2001 $680,000 sold 2009 September $720,000. But that is just how it goes.

It doesn't help that the banks require a minimum of 20% deposit to purchase in the Docks.

The one thing it has not got at the moments is the eateries, pubs and cafÃ©s like you see in Carlton, St Gilda, Fitzroy etc.

I hope Kincella has not been scared off by the bar brawl the other day, even though he can waffle a bit, there are some tasty bits in his regular sprawls


----------



## robots (2 October 2009)

hello,

interesting that MAb, the pioneers of Docklands are now going with Low-Rise villages on one of their sites abutting "premium" townhouses

and with this "village" to have approximately 100 units for "low-cost" housing groups, group currently in discussion to buy 100

*must disclose that i have/and do work for MAb

Mirvac also constructing Low-Rise development right now

the bars/restaurants have come and gone pretty much at Docklands, a lot of businesses have set up there, where it goes have to wait and see

what does it offer?

thankyou
professor robots


----------



## MrBurns (2 October 2009)

Had lunch with an old mate today reckons he's now worth about $23M

All through buying and holding commercial property for about 20 years.

Not a bad pay off.


----------



## satanoperca (2 October 2009)

robots said:


> what does it offer?




Water ways, water views, boat habours, city views, next to the city, shops etc.

I think you will find that the low rise developments were part of the planning conditions that the developers took on.

Better than Sydney and much cheaper.


----------



## robots (2 October 2009)

MrBurns said:


> Had lunch with an old mate today reckons he's now worth about $23M
> 
> All through buying and holding commercial property for about 20 years.
> 
> Not a bad pay off.




hello,

hope his wife doesnt take him to the cleaners

thankyou
professor robots


----------



## MrBurns (2 October 2009)

robots said:


> hello,
> 
> hope his wife doesnt take him to the cleaners
> 
> ...




She turned up late, lovely girl no chance of that.

Burns.....


----------



## nunthewiser (2 October 2009)

has removed last post as it was in response to an off topic post and thought it would be more satisfying if i removed it before anyone else did 

as you were with this on topic discussion


----------



## robots (2 October 2009)

hello,

to get back on topic Nun, i asked this question last night and thought one of the guns here would know:

is it still 8x average income to median house prices? (fair question since we been through the BIGGEST financial event since 1929)

have Stapeldon/Schiller updated the graphs yet?

thankyou
professor robots


----------



## doctorj (2 October 2009)

robots said:


> hello,
> 
> to get back on topic Nun, i asked this question last night and thought one of the guns here would know:
> 
> ...



From memory S&P publish the Case-Shiller Indicies - if you tell me what's the most recent data you have, I can log in and have a look for you.


----------



## robots (2 October 2009)

hello,

the last one I saw stopped at 2007, 

thankyou
professor robots


----------



## Soft Dough (2 October 2009)

House prices will continue to rise as long as the government continues to subsidise developer's and tradesman's wages.

Is that too hard to leave?

It is a fact.


----------



## robots (2 October 2009)

hello,

here they are:

http://www.whocrashedtheeconomy.com/?page_id=365

thankyou
associate professor robots


----------



## MrBurns (2 October 2009)

Here's a truism  - 

If you get in early enough and hold for decades you will come out on top.

If you weaken and sell out along the way you may lose.

Buy and don't sell.............. thats the message.

Burns.......


----------



## robots (2 October 2009)

hello,

no worries Grandmaster Flash

thankyou
professor robots


----------



## nunthewiser (2 October 2009)

robots said:


> hello,
> 
> to get back on topic Nun, i asked this question last night and thought one of the guns here would know:
> 
> ...





gday robots 

i am no gun 

i own property , sold properties ......... property has been kind to me and still will be

property has never been this unaffordable in my lifetime , i can afford to buy if i wish ,but can the normal joe bloggs buying his first home on overextended debt/record low rates do it ? .....yes .......seems to be the answer but im a lil concerned about what happens next .......... already seeing the pain and job losses in my neck of the woods ,2/ 3/4 yry old houses queing up by the dozen to try and even break square ..... other houses are moving tho established/ cbd etc etc 

i have no graphs , i am not a speculator nor first home buyer ......... i see a bargain ..i want that bargain ......... usually turns out i got a bargain ......

i havent lost any houses through financial misfortune but i sure gunna pity the young ones i see now that are going too .......

theres booms and busts as you yourself would know ........... every mega run has its fall to reality, the median , the fair spot .............

and thats where this bogan preacher will be waiting once again 

thankyou

an.on. topic.nun


----------



## satanoperca (2 October 2009)

MrBurns said:


> Here's a truism  -
> 
> If you get in early enough and hold for decades you will come out on top.
> 
> ...




Wise advice



Soft Dough said:


> House prices will continue to rise as long as the government continues to subsidise developer's and tradesman's wages.
> 
> Is that too hard to leave?
> 
> It is a fact.




Please back up this fact with some evidence. America, UK and Spain Government have been unable to achieve this, what makes you think that Australia Gov is any different. Ultimately the market will decide.

In regards to the FHBG, look at it as a positive. It has released pent up demand and bought forward demand along with low interest rates. Low risk opportunities to buy could be just around the corner.



nunthewiser said:


> theres booms and busts as you yourself would know ........... every mega run has its fall to reality, the median , the fair spot .............
> 
> and thats where this bogan preacher will be waiting once again
> 
> ...




Nun, please get in the cue, I am first but then again it is a big country.


----------



## Soft Dough (2 October 2009)

satanoperca said:


> Please back up this fact with some evidence. America, UK and Spain Government have been unable to achieve this, what makes you think that Australia Gov is any different. Ultimately the market will decide.
> 
> In regards to the FHBG, look at it as a positive. It has released pent up demand and bought forward demand along with low interest rates. Low risk opportunities to buy could be just around the corner.




You do not really need evidence that it is boosting prices, all you have to do is look at gearing of the handouts.  Now the prices of the houses have been growing at faster than historical values, and this really took off in 2000. So if house quality has not increased at comparable levels, where has the money gone?


Here is some evidence in pictures :
http://www.debtdeflation.com/blogs/

Plus opportunities will come, but, then again you have to believe that prices will fall or stagnate for many years.


----------



## doctorj (2 October 2009)

MrBurns said:


> Buy and don't sell.............. thats the message.





satanoperca said:


> Wise advice



I'm confused.  How is it wise to buy an asset you can't/shouldn't sell?


----------



## satanoperca (2 October 2009)

Soft Dough,

I am a regular reader of Steve Keen's Blog and will be attending his presentation in Melbourne organised by a good friend from Prosper Australia on the 14th, will you be attending? 

I do believe that prices are reaching a resting point. They may stagnate, they may deflate, either way there will be opportunity and I will be ready to pounce. 

All things take time. When I was young, I was vocal, now I am patient and go with the trend as going against it has cost me opportunity.


----------



## robots (3 October 2009)

hello,

how do you get a ticket to that gig? would love to go

is it like a Hillsong show or more like a slide night

thankyou
professor robots


----------



## robots (3 October 2009)

hello,

http://www.heraldsun.com.au/news/me...30000-last-month/story-e6frf7jo-1225782276274

on and on it goes Kincella, paradise brother

thankyou
associate professor robots


----------



## satanoperca (3 October 2009)

robots said:


> hello,
> 
> how do you get a ticket to that gig? would love to go
> 
> ...




Sorry Robots, 

They have a strict door policy, no tradies & no PI's.

Cheers


----------



## MrBurns (3 October 2009)

doctorj said:


> I'm confused.  How is it wise to buy an asset you can't/shouldn't sell?




Over time real estate does just go up, or thats what history tells us. there are slumps along the way but it always ends up ahead.

The idea is to get as much as you can, but the important part is, you must be able to manage the debt under ALL circumstances so in 10 or 20 years you reap the capital gain.

My mate has had a lot of his stuff since before capital gains tax came in.

Just left it there, paid down the debt when he could and forgot about it.

He said to me yesterday. "never sell anything" (real estate that is)

Of course there are exceptions but the general rule is get in early and hold.


----------



## satanoperca (3 October 2009)

robots said:


> hello,
> 
> http://www.heraldsun.com.au/news/me...30000-last-month/story-e6frf7jo-1225782276274
> 
> ...




From above link 







> The average Melbourne house price was $520,000 at the end of September, 6.4 per cent more than in August and a whopping 17.9 per cent - $79,000 - up on the same time last year, Real Estate Institute of Victoria sales figures for September show




The FHBG grant and low interest rates have had no impact!!!

Bubble, bubble troll and trumble.


----------



## satanoperca (3 October 2009)

*Please disregard my above post. *

Should have read the article more indepth. These figures have been provided for REIV, they cannot be trusted as they are supplied by RE's.

Went to REIV website and looked at vacancy rates for inner city 1%. This is a load of rubbish and organisation should be stopped from providing incorrect information to the public.

Cheers.


----------



## Glen48 (3 October 2009)

Mr B you are correct but you can buy other things as well which will appreciate and are not a consumerable like  a house is and every 70 or so years we have a depression so the secret is to pick when to get in and out just like shares. 
Now is the time to get out of R E.


----------



## Knobby22 (3 October 2009)

The latest scary graph is newly posted at Steve Keen's website - When Herds collide on the yellow brick road. 
http://www.debtdeflation.com/blogs/

Much earlier in this thread I said the house rises would flatten but not drop because of Australians love of property and government need to prop it up.

The present government will do anything to keep house prices from falling and inflation is still low and immigration high so we will hold on a bit longer.


----------



## satanoperca (3 October 2009)

Just went to another action on an apartment over a million, it sold but the owner took a hair cut of 18% over a four year period. 

Property is not rising in all segments of the markets.

It will be interesting if the under $700K properties see falls in 2010 with the reduction of FHBG and the real possibility of IR rises.

Glorious day in Melbourne today, bring on summer


----------



## robots (3 October 2009)

satanoperca said:


> Sorry Robots,
> 
> They have a strict door policy, no tradies & no PI's.
> 
> Cheers




hello,

checked the website for Prosper Australia

they seem to be missing a speaker, no-one representing real estate!

amazing, do you think they have someone up their sleeve for a big announcement

thankyou
professor robots


----------



## robots (4 October 2009)

hello,

OH YEAH:

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

83%, just keep holding and holding brothers

well done, have a great day

thankyou
professor robots


----------



## Gone Fishin (4 October 2009)

robots said:


> hello,
> 
> OH YEAH:
> 
> ...




your tha man bro!!! I love houses!!!


----------



## robots (4 October 2009)

robots said:


> hello,
> 
> checked the website for Prosper Australia
> 
> ...




hello,

oops, after reading more of the site I released Prosper Australia are about taxing the Wealthy and letting the poor of scott free

no wonder no-one from the RE industry is represented

wiped from the memory

thankyou
professor robots


----------



## satanoperca (4 October 2009)

Robots, come along, it is always beneficial to see things from another point of view.


----------



## robots (4 October 2009)

hello,

thankyou, yes good for people to get along to all events

i will be in Mornington from Wednesday, will keep an eye out for next venture

thankyou
professor robots


----------



## wayneL (4 October 2009)

robots said:


> hello,
> 
> oops, after reading more of the site I released Prosper Australia are about taxing the Wealthy and letting the poor of scott free
> 
> ...




Land Value Taxers!!

I cannot believe the heathen think it's a viable system of taxation. Here is the UK's version of the evil heretics. http://www.landvaluetax.org/what-is-lvt/

Pure BS. It can't work. It is unjust.


----------



## moXJO (4 October 2009)

Soft Dough said:


> You do not really need evidence that it is boosting prices, all you have to do is look at gearing of the handouts.  Now the prices of the houses have been growing at faster than historical values, and this really took off in 2000. So if house quality has not increased at comparable levels, where has the money gone?
> 
> 
> Here is some evidence in pictures :
> ...




The houses today are up to 3 times the size of houses in the past you could drive an old house into someone’s garage. And how about adjusting for inflation. Material price has not dropped during the crash and it was going up like crazy last year. Loose credit restrictions from banks had a lot to do with the price shooting up. Once it locked up in the US, houses prices arsed it.

The last time the govt took away incentives for IP's didn't the public housing waiting list blow out like never before and policy was quickly reversed. Honestly scrapping fhog for new buildings won't affect the market that much for builder imo. 
Your logic is flawed something horrid imo, the market will eventually revert for other reasons.


----------



## robots (4 October 2009)

hello,

yes. the market may not revert back to "average" 'long term" "4x income"

it could well be on a new path, one never before seen to our eyes, who knows

all i can say is look out for commentary from true visionaries like Grandmaster Robots, Kincella, Beej and a couple of others

thankyou
robots


----------



## joeyr46 (4 October 2009)

robots said:


> hello,
> 
> yes. the market may not revert back to "average" 'long term" "4x income"
> 
> ...




Ah yes Robots This time its different! (were have I heard that before and always just before the crash) How far back to get long term average to 4 it was lower than that when I first came to Oz about 3 (but dont know about Sydney)


----------



## robots (4 October 2009)

hello,

it sure has been different Joeyr46.

different to the US, UK, Spain, Ethiopia, Zimba, Germany, New Zealand, Sweden, Indonesia, Malyasia etc etc

the only country at g8 not in recession, utopia man

thankyou
professor robots


----------



## joeyr46 (4 October 2009)

robots said:


> hello,
> 
> it sure has been different Joeyr46.
> 
> ...




Only one word neede in reply "YET"


----------



## robots (4 October 2009)

hello,

no worries

thankyou
Grandmaster Robots


----------



## Soft Dough (5 October 2009)

robots said:


> the only country at g8 not in recession, utopia man
> 
> thankyou
> professor robots




Well when we are in the G8 then we can make that claim, or has K Rudd convinced you we are more important than we actually are?


----------



## Soft Dough (5 October 2009)

moXJO said:


> The houses today are up to 3 times the size of houses in the past you could drive an old house into someone’s garage. And how about adjusting for inflation. Material price has not dropped during the crash and it was going up like crazy last year. Loose credit restrictions from banks had a lot to do with the price shooting up. Once it locked up in the US, houses prices arsed it.
> 
> The last time the govt took away incentives for IP's didn't the public housing waiting list blow out like never before and policy was quickly reversed. Honestly scrapping fhog for new buildings won't affect the market that much for builder imo.
> Your logic is flawed something horrid imo, the market will eventually revert for other reasons.




Hence why I made the statement about quality. ie like vs like.

why hasn't material cost dropped??? oh that's right K rudd is subsidising it.

So if my logic is flawed, then why did the government increase the FHBG?  or is the government just wasting more money?


----------



## robots (5 October 2009)

hello,

no government doing a great job, not wasting any money at all. 

putting it all to good use

thankyou
Grandmaster Robots


----------



## Soft Dough (5 October 2009)

robots said:


> hello,
> 
> no government doing a great job, not wasting any money at all.
> 
> ...




lol 

sure

cause the generation who has to pay it back 

1. also has to pay the bb for higher house prices
2. won't control the vote
3. will pay higher taxes to pay back your windfall.


----------



## robots (5 October 2009)

hello,

good, because I am sick of my taxes going to the bums in society

so if i am paying for them you can pay for my gain

thankyou
grandmaster robots


----------



## nunthewiser (5 October 2009)

LOL

gday robots 

sunshine and lollipops my good man 

thankyou

Nun and the furious five


----------



## robots (5 October 2009)

hello,

oh yeah, every day every minute nun 

do you put on a bit of Young Mc or Boogie down Productions when you having one of those sessions Nun?

thankyou
grandmaster flash


----------



## satanoperca (5 October 2009)

Soft Dough said:


> why hasn't material cost dropped??? oh that's right K rudd is subsidising it.




Please explain?

Robots, how much in the dollar tax are you paying given the taxpayer is subsidising your mortgage on you IP?

On another note, equity mate, called the  share market?

Cheers


----------



## robots (5 October 2009)

hello,

the normal amount required by law

equity mate!

thankyou
grandmaster robots


----------



## Soft Dough (5 October 2009)

satanoperca said:


> Please explain?
> 
> Robots, how much in the dollar tax are you paying given the taxpayer is subsidising your mortgage on you IP?
> 
> ...




Ok I'll keep it simple so that the property folk have a chance of understanding 

it is called supply and demand.

if there is less demand for porduct the price drops. K Rudd in his stupidity is keeping demand artificially high


----------



## satanoperca (6 October 2009)

Soft Dough,

Don't get angry, just be patient.

In the past 12 months, pent up demand for property has been released with low interest rates, future demand has been bought forward with the FHBG, it is just about waiting now to see how much demand there will be in the coming years.

Whether interest rates stay the same or increase and/or a change in unemployment the property market is as pumped as possible. Returns are getting smaller and smaller for IP's, the only thing they have left to hang onto is the hope of CG, if these do not materialize more properties will start to come onto the market and increase supply while demand decreases. Hence, your issue with materials will also be affected. 

But you must also consider that whether we like it or not there will always be an underlying demand due to our increasing population from immigration.

I do believe that over a long period of time property will always increase, it is just a matter of buying smart and holding, but I also believe that at the time being property is as pumped as it can get and eithe we see significant wage growth or stagnation in property over the next five years or a small correction of between 10-20% in the next couple of years. Either way, if you are hell bent on owning the opportunities will become available soon.

Cheers


----------



## tech/a (6 October 2009)

The debate rolls on.
I come back every few months and nothings changed.
The will never be a better time to buy than EACH time I post,because each time property is at its best rate.

Ive not YET seen posts of BUY NOW PRICES HAVE DROPPED FAR ENOUGH from the dont buy now your crazy mob.

I/we never will.

Those who dont own IP's will always be fearful and those that do know the benifits.
More fortunes have been made with property than any other investment vehical.

Interest rates are a non issue as gearing for mine at least are to 10% and if interest rates rise so will Rents/so will House prices.

Enjoy life everyone its not a dress rehersal we get *ONE* shot.


----------



## satanoperca (6 October 2009)

tech/a said:


> More fortunes have been made with property than any other investment vehical.




Business has been the best investment vehicle.

Top 10 Richest People in Oz & NZ
1. Andrew Forrest - Mining
2. Graeme Hart - Paper Company
3. James Packer - publishing
4. Frank Lowy - retail & property
5. Harry Triguboff - Developer
6. Gina Rinehart - Mining
7. Richard Pratt - paper and recycling
8. John Gandel - retail
9. Kerr Neilson - funds manager
10. Stanley Perron - car dealer

It would seems business made them money and allowed them to increase their wealth with investment in property.

Cheers


----------



## Mc Gusto (6 October 2009)

satanoperca said:


> Soft Dough,
> 
> Don't get angry, just be patient.
> 
> ...





Great post.

Shows a balanced and thought out view. I am in the wait and see category but good luck to all!


----------



## kincella (6 October 2009)

what is the point of using the brw top 10 for 2008 in your list...its obsolete..
and note you used retail for Gandel when in fact its property....
here is the old obsolete list....and forrest has lost 2/3rds of his wealth in a year

Posted by LC TeamcloseAuthor: LC Team Name: LC Team 
Email: jasons@streetadvisor.com
Site: 
About: See Authors Posts (318), *Thursday, May 29, 2008*
Factbox on the top 10 richest people in Australia, according to the 25th BRW magazine Rich 200 list:

RANK WEALTH INDUSTRY
1. Andrew Forrest $9.410bln Mining

2. Frank Lowy $6.300bln Shopping centres

3. James Packer $6.100bln Media, investment

4. Richard Pratt $5.480bln Manufacturing

5. Gina Rinehart $4.390bln Mining

6. Harry Triguboff $3.250bln Property

7. John Gandel $3.210bln Property

8. Kerry Stokes $2.760bln Media, retail

9. Shi Zhengrong $2.330bln Technology

10.David Hains $2.280bln Investment

http://www.lendingcentral.com/2008/05/29/factbox-on-the-top-10-richest-people-in-australia/

now lets see the big difference in 2009

Posted by LC TeamcloseAuthor: LC Team Name: LC Team
Email: scott.spencer@lendingcentral.com.au
Site: http://www.lendingcentral.com
About: See Authors Posts (1716), Thursday, May 28, 2009

Well, it’s another BRW Top 10 list and here they are for all of us to have a quick sticky at!

The List (ranked with Name, Wealth and Industry):

1. Anthony Pratt & family: $4.30 bln - manufacturing

2. Frank Lowy: $4.20 bln - property

3. Harry Triguboff: $3.66 bln - property

4. Gina Rinehart: $3.47 bln - resources

5. Clive Palmer: $3.42 bln - resources

6. James Packer: $3.00 bln - media, investment

7. John Gandel: $2.70 bln - property

8. Andrew Forrest: $2.38 bln - mining

9. David Hains: $2.01 bln - investment

10. Len Buckeridge: $1.95 bln - construction

(Source: BRW Magazine)

http://www.lendingcentral.com/2009/05/28/the-top-10-on-the-brw-magazines-rich-200-list/

now for the young rich list.....
and yes...its property at no 1
Property tycoon tops young rich list
CHRIS ZAPPONE
September 23, 2009 

Adelaide developer Ross Makris has unseated Queensland coal baron Nathan Tinkler as the richest Australian under 40, while the financial crisis lowered the wealth required for inclusion in the list.

Mr Makris, son of Greek immigrant property magnate Con Makris, made $420 million through shopping centres, commercial properties and residential projects, ranking No. 1 in the 2009 BRW Young Rich list, up from fifth spot last year.

Cotton On retailer chain owner Tania Austin from Geelong is Australia’s richest woman, with a $156 million fortune shared with husband and co-owner Nigel.

http://www.watoday.com.au/executive...ycoon-tops-young-rich-list-20090923-g21u.html


----------



## robots (6 October 2009)

hello,

great to see Kincella back in action, legend

here's some commentary from Trigg, No 3. on the BRW rich list 2009:

http://www.theaustralian.news.com.au/business/story/0,28124,26165249-25658,00.html

great reading, more up tick in rent $ maybe, who knows

thankyou
robots


----------



## freebird54 (6 October 2009)

Dyers current newsletter said we are yet to experience our crash - it is coming

my observation - when the average home is a multiple vastly greater than the 2-3 times income it has been in recent history something has to give - and I don't think its wages

Also many potential grandparents are realising they will not see grandchildren in their lifetime - first time in history for that too.

This will have a huge social impact.


----------



## MACCA350 (6 October 2009)

freebird54 said:


> Also many potential grandparents are realising they will not see grandchildren in their lifetime - first time in history for that too.
> 
> This will have a huge social impact.



The Misses was just, this afternoon, reflecting that our three kids are lucky that they were able to have a good relationship with their great-grandfather.

cheers


----------



## Soft Dough (6 October 2009)

freebird54 said:


> Also many potential grandparents are realising they will not see grandchildren in their lifetime - first time in history for that too.
> 
> This will have a huge social impact.




1. Shame on women for looking down on other women who do the hardest job in Australia - raising children, and not just throwing them into daycare for 16 year olds to raise.

2. Shame on the government for promoting the "great australian dream" at the expense of family, and artificially engineering house prices so that it takes dual incomes for ordinary families to make mortgage repayments.

3. Shame on extended hours trading and losing the sanctity of weekends and public holidays to satisfy the retail hungry masses.

Perhaps these potential grandparents are of the baby boomer generation?  the generation who did not reproduce so that there are not enough taxpayers to fund their demands.  I say let them have no grandchildren, they "earned" it.


----------



## robots (6 October 2009)

hello,

good night everybody, going to bed now, re-energize for life's travels tomorrow 

thankyou
professor robots


----------



## Aussiejeff (7 October 2009)

robots said:


> hello,
> 
> good night everybody, going to bed now, re-energize for life's travels tomorrow
> 
> ...




hello,

yes, endless highs ahead prof-rob, keep buying & love the ride

nighty-night
aussiebots


----------



## Beej (7 October 2009)

Soft Dough said:


> 1. Shame on women for looking down on other women who do the hardest job in Australia - raising children, and not just throwing them into daycare for 16 year olds to raise.




What rot! Have you looked after your kids for days/weeks on end? I have - I can tell you it not the "hardest" job in Australia. It's maybe the most monotonous and repetitive/thankless job, and sometimes the "funnest" ,  but far form the hardest! In fact just about anyone can (and does) do it!

In the old days the vast majority of women had no choice but stay home and look after the kids. Personally (and my wife, sisters, mother etc all agree), I think it is fantastic that women have the choice today to pursue other career interests, earn real income etc and have children. I can't believe that anyone can be so derisive of women who make this choice.



> 2. Shame on the government for promoting the "great australian dream" at the expense of family, and artificially engineering house prices so that it takes dual incomes for ordinary families to make mortgage repayments.




How has the government engineered this exactly? Are you sure it's just not what people actually want?? (The "great Australian dream that is). You seem to be full of such bitterness around this issue it seems that in reality you have the same desires but are just upset about what it costs? As has been pointed out so many times on this thread, if you really want to live on one income and have your partner stay at home with the kids, (assuming you don't earn enough to do this and live in Mosman) there are loads of cheap houses in all Australia's cities (sub $300k). Or you can choose to rent of course. It's your CHOICE whether you take this path, or instead want to own/live in a better located house etc and thus pay more.



> 3. Shame on extended hours trading and losing the sanctity of weekends and public holidays to satisfy the retail hungry masses.




Are you a ultra-religious or something? What's this "sanctity" of the weekend business? I don't know about you, but the weekends are when I do my shopping (retail, hardware, groceries, clothes), it's when I go out to restaurants and so on. I remember what things were like when every shop shut at 5pm and was only open on Sat mornings/Thu nights otherwise, it really sucked! Liberalisation of the labour market and the ability of retail businesses to open at hours when most of their customers can actually go to their shops was 100% a good move that has improved the lifestyle of a majority of people!



> Perhaps these potential grandparents are of the baby boomer generation?  the generation who did not reproduce so that there are not enough taxpayers to fund their demands.  I say let them have no grandchildren, they "earned" it.




Actually the boomers had plenty of kids, it's their ultra-selfish Gen-X and Gen-Y offspring, who spent all their money traveling the world when young, partying, living it up etc, and who now complain that they can't afford a 4 bedroom/2 bathroom house 5km's from Sydney CBD, and so use that as one of many excuses to put off having kids! IMO the baby-boomers were a far more financially responsible and conservative generation than either of Gen-X or Gen-Y - the boomers knew how to defer gratification, and understood that to get ahead in life takes time, compromises/sacrifices, patience, saving, long term planning etc etc. These are the traits  large numbers of the newer generations lack.

PS: I am Gen-X by the way, but learned the financial habits of the BBs from my parents. By following their guidance I have ended up in a far stronger financial position than 95% of all the fellow Gen-Xers I grew up with/know etc.

Cheers,

Beej


----------



## MrBurns (7 October 2009)

Beej said:


> What rot! Have you looked after your kids for days/weeks on end? I have - I can tell you it not the "hardest" job in Australia. It's maybe the most monotonous and repetitive/thankless job, and sometimes the "funnest" ,  but far form the hardest! In fact just about anyone can (and does) do it!
> 
> In the old days the vast majority of women had no choice but stay home and look after the kids. Personally (and my wife, sisters, mother etc all agree), I think it is fantastic that women have the choice today to pursue other career interests, earn real income etc and have children. I can't believe that anyone can be so derisive of women who make this choice.
> 
> ...




I agree with much if what Soft Dough said, because it's freeking true.

You've obviously never looked after a few kids Beej , it is the hardest job in the world and a lot of women do just hand them over to 16 year olds and go put their feet up at the office.

You Beej and the most persistant troller for the housing industry I've ever encountered, why dont you come clean and declare who's paying you ?


----------



## satanoperca (7 October 2009)

Beej said:


> What rot! Have you looked after your kids for days/weeks on end? I have - I can tell you it not the "hardest" job in Australia.




Don't pass comment on what you do not know, you are the one speaking rubbish. 

You obviously do not have children so shut up until you do.

I've been a full time father while running a business, working is fair easier than rearing children.

Have a nice day Mr Gen X.


----------



## Beej (7 October 2009)

MrBurns said:


> You've obviously never looked after a few kids Beej , it is the hardest job in the world and a lot of women do just hand them over to 16 year olds and go put their feet up at the office.







satanoperca said:


> Don't pass comment on what you do not know, you are the one speaking rubbish.
> 
> You obviously do not have children so shut up until you do.
> 
> I've been a full time father while running a business, working is fair easier than rearing children.




I do have kids. I look after them all the time. So both of you can shut up thanks and I'll comment on this issue all I want! 

You think running a successful business is "easier" than looking after kids all day?? Seriously?? Maybe day care workers should get paid $200k/year then?? What rot.

PS: To be clear, I'm not saying looking after kids is not valuable and important - of course it is. I'm just saying that it is not rocket science.....

PPS: Mr Burns - You are the only troll around here with your one-eyed capital "L" Liberal party/right wing views! And an ex-real estate agent to boot - how can we possibly lend any credibility to anything you say???  If you can search this or any thread here and post a single quote from me where I have "trolled" then please do. You won't find one.

Beej


----------



## moXJO (7 October 2009)

RBA seems to want to prick the next upcoming housing bubble early. Just hope it doesn't take the economy down with it. Our dollar highs must be starting to hurt trade. I question whether there was a better way to slow housing prices.

Looking after the kids isn't hard, and I have two boys (3 & 7). I was a full time father for a few months when both boys were born. I would give up work in an instant to do it. I agree with beej it is one of the most fun jobs (apart from nappies). It is to easy to get caught up in work and miss out on the early part of their lives.


----------



## MrBurns (7 October 2009)

Beej said:


> I do have kids. So you can shut up thanks and I'll comment on this issue all I want!
> Beej






> Looking after the kids isn't hard, and I have two boys (3 & 7). I was a full time father for a few months when both boys were born. I would give up work in an instant to do it. I agree with beej it is one of the most fun jobs (apart from nappies).




You 2 bludgers obviously left the hard work to someone else and were just around for playtime or didnt do the job right.


----------



## moXJO (7 October 2009)

On SoftDs points I would agree that we are working a hell of a lot more to get ahead. And rising bills across all sectors is starting to really bite.


----------



## moXJO (7 October 2009)

MrBurns said:


> You 2 bludgers obviously left the hard work to someone else and were just around for playtime or didnt do the job right.




LOL I don't think so, I did it on my own with no major drama. Maybe you just found it hard to do?


----------



## Beej (7 October 2009)

MrBurns said:


> You 2 bludgers obviously left the hard work to someone else and were just around for playtime or didnt do the job right.




I never would have picked you as "Mr Mom" staying home with the kids while you sent the wife out to work Mr Burns! But there you go..... or are you really just a big old hypocrite?

Beej


----------



## MrBurns (7 October 2009)

moXJO said:


> LOL I don't think so, I did it on my own with no major drama. Maybe you just found it hard to do?




Not too hard, I just did it right.


----------



## MrBurns (7 October 2009)

Beej said:


> I never would have picked you as "Mr Mom" staying home with the kids while you sent the wife out to work Mr Burns! But there you go..... or are you really just a big old hypocrite?
> 
> Beej




If you ever looked after 2 young kids all day .........properly...........not just let them run wild to play among the traffic while you watched Opra you'd know different.

Anyway that's all off topic.


----------



## Soft Dough (7 October 2009)

Beej said:


> What rot! Have you looked after your kids for days/weeks on end? I have - I can tell you it not the "hardest" job in Australia. It's maybe the most monotonous and repetitive/thankless job, and sometimes the "funnest" ,  but far form the hardest! In fact just about anyone can (and does) do it!
> 
> In the old days the vast majority of women had no choice but stay home and look after the kids. Personally (and my wife, sisters, mother etc all agree), I think it is fantastic that women have the choice today to pursue other career interests, earn real income etc and have children. I can't believe that anyone can be so derisive of women who make this choice.




You actually missed the point of my argument, that there are women who stay at home, and it is OTHER WOMEN who judge them as being inferior.  

The funny thing is, there is a MASSIVE difference between supervising a child and raising one to be well balanced, well behaved, creative and to reach their full potential and when I supervise my children, it is bloody hard work to keep them interested, stimulated and safe. Something I would never entrust a 16 year old daycare worker to do as well as I can.




Beej said:


> How has the government engineered this exactly? Are you sure it's just not what people actually want?? (The "great Australian dream that is). You seem to be full of such bitterness around this issue it seems that in reality you have the same desires but are just upset about what it costs? As has been pointed out so many times on this thread, if you really want to live on one income and have your partner stay at home with the kids, (assuming you don't earn enough to do this and live in Mosman) there are loads of cheap houses in all Australia's cities (sub $300k). Or you can choose to rent of course. It's your CHOICE whether you take this path, or instead want to own/live in a better located house etc and thus pay more.




The government has engineered it by not allowing reasonable competition to let the market feel the ebbs and flows of the economy.  If this happened people would not gear so highly, and hopefully put their money into assets that generate wealth for the country, and not just the individual. Prices for houses would be more affordable, and people would not have to sacrifice their children for their 21st century baby, the Mcmansion.



Beej said:


> Are you a ultra-religious or something? What's this "sanctity" of the weekend business? I don't know about you, but the weekends are when I do my shopping (retail, hardware, groceries, clothes), it's when I go out to restaurants and so on. I remember what things were like when every shop shut at 5pm and was only open on Sat mornings/Thu nights otherwise, it really sucked! Liberalisation of the labour market and the ability of retail businesses to open at hours when most of their customers can actually go to their shops was 100% a good move that has improved the lifestyle of a majority of people!.




not religious, I just recognise that family values have seemed to go out the window with many changes, and this I feel is one of the major causes. Instead of people getting together and communicating, interacting and building families, they are shopping, and/or one of their children/parents etc is not there as they are working.

It is funny, as obviously there were so many people who could never actually ever ever get to the shops when trading hours were reasonable.  Try to pull the other one.



Beej said:


> Actually the boomers had plenty of kids, it's their ultra-selfish Gen-X and Gen-Y offspring, who spent all their money traveling the world when young, partying, living it up etc, and who now complain that they can't afford a 4 bedroom/2 bathroom house 5km's from Sydney CBD, and so use that as one of many excuses to put off having kids! IMO the baby-boomers were a far more financially responsible and conservative generation than either of Gen-X or Gen-Y - the boomers knew how to defer gratification, and understood that to get ahead in life takes time, compromises/sacrifices, patience, saving, long term planning etc etc. These are the traits  large numbers of the newer generations lack.
> 
> PS: I am Gen-X by the way, but learned the financial habits of the BBs from my parents. By following their guidance I have ended up in a far stronger financial position than 95% of all the fellow Gen-Xers I grew up with/know etc.




Rubbish. The baby boomers birth rate was insufficient. That is a fact, and anyone with any common sense will realise this is the cause of the "ageing population", so please, have a think before posting such nonsense.

As you would be well aware, being generation-x, the baby boomers were in the fortunate position of following a generation which were exposed to real financial hardship. They were therefore put in a position where there was little multinational competition, where the entrepreneur had far greater chance of succeeding. Nowadays, with bb controlling most assets, lifespans increasing ( hence transition of assets decreases ), lack of the government to increase the pension to a reasonable age ( anyone saying 70-75??) and massive competition from multinationals then there is less chance for x and y to make it for themselves.

The kids lack the skills due to poor guidance from selfish parents and the enormity of the job ahead ( ie when bb had to pay 3x earnings for a house vs 8x now, is there any wonder why it seems so impossible to some )


----------



## MrBurns (7 October 2009)

Money is more important than people these days, no doubt about it.

Rising house prices mean that the wife has to work to pay the mortgage so the kids have to go to daycare.

People who rejoice in this are short sighted and selfish and never see the big picture only their own wallet - oink !


----------



## moXJO (7 October 2009)

MrBurns said:


> If you ever looked after 2 young kids all day .........properly...........not just let them run wild to play among the traffic while you watched Opra you'd know different.
> 
> Anyway that's all off topic.




What do you think I am
A labor supporter
I try to take as big of an active role in my kid’s upbringing as I can. It's a hell of a lot easier then some construction workers. Who when unsupervised will urinate everywhere, break things, get drunk then punch on, or swear a lot. When I think about it I should be an expert on child raising. You guys have got the wrong line of thinking.
Sorry off topic


----------



## Mofra (7 October 2009)

MrBurns said:


> Money is more important than people these days, no doubt about it.
> 
> Rising house prices mean that the wife has to work to pay the mortgage so the kids have to go to daycare.
> 
> People who rejoice in this are short sighted and selfish and never see the big picture only their own wallet - oink !



I think you've completely jumped the shark now. 

a.   I know of plenty of single income families, some of them started as dual income, some as single.

b.   If people decide to have both partners work so they can afford to live somewhere closer to a metropolitan centre, who are you or I to judge?

You have acknowledged previously that you are the bears' version of Robots; at least Robots appears happy. You sound absolutely miserable.


----------



## MrBurns (7 October 2009)

Mofra said:


> I think you've completely jumped the shark now.
> 
> a.   I know of plenty of single income families, some of them started as dual income, some as single.
> 
> ...




Who's post were you replying to ? not mine I hope because yours makes no sense at all.

Who are YOU to judge my obsevations of how things are these days or did I hit a sore spot with you ?????? more likely.

What on earth would make you think I'm miserable ? or don't you like a dose of realism just happy happy happy.........sorry I dont get those pills.


----------



## Mofra (7 October 2009)

MrBurns said:


> Who's post were you replying to ? not mine I hope because yours makes no sense at all.
> 
> Who are YOU to judge my obsevations of how things are these days or did I hit a sore spot with you ?????? more likely.
> 
> What on earth would make you think I'm miserable ? or don't you like a dose of realism just happy happy happy.........sorry I dont get those pills.




I was replying to your comment "Rising house prices mean that the wife has to work to pay the mortgage so the kids have to go to daycare". You _did_ type that (you may need to read up a little higher). 

I disagree with it, plenty of single income families still exist in Australia. You don't know any or don't believe so?

Secondly, in terms of happiness I can make any observation I like - 99% of your posts are complaints. That's not a healthy way to live. You have every perogative to post whatever you like - as do I.

Sore spot with me? Ha, I've just had one of the best weekends of my life & I have a 0630 flight to Sth America tomorrow. I don't get much happier than right now


----------



## MrBurns (7 October 2009)

Mofra said:


> I was replying to your comment "Rising house prices mean that the wife has to work to pay the mortgage so the kids have to go to daycare". You _did_ type that (you may need to read up a little higher).




Sorry I just couldnt believe your reply, do you live with your head in the sand ?
On of the great tragedies of modern life is that both have to work to pay the mortgage.



> I disagree with it, plenty of single income families still exist in Australia. You don't know any or don't believe so?




You disagree with it ?????????? Attention all you married couples with kids who need 2 incomes to make ends meet, Mofra doesnt agree so one of you must stop working immediately, the mortgage will be ok Mofra says so



> Secondly, in terms of happiness I can make any observation I like - 99% of your posts are complaints. That's not a healthy way to live. You have every perogative to post whatever you like - as do I.




Complaints ? you mean like the ones you posted about me ? Ohhhh I see they arent complaints they're observations Ohhhhhhh 



> Sore spot with me? Ha, I've just had one of the best weekends of my life & I have a 0630 flight to Sth America tomorrow. I don't get much happier than right now




Have a nice time and don't tell any anacondas that they dont have the right to swallow you whole, they just dont listen


----------



## robots (7 October 2009)

hello,

good evening, what another great day

gloomers till kicking on with the usual sour grapes in life

well done Beej, you called it brother, only five of us on the planet do it like no other

we walk a different path and others will always be about trying to bring us down, we miles ahead mentally and physically 

its like people who when drive look only a couple of metres ahead whereas we looking 100 metres ahead man

bully boys, treat the poor how they would treat you, thats fair

thankyou
professor robots


----------



## 888 (7 October 2009)

Price for houses should fall if people stop buying houses for investment and speculation purposes.  If someone has a house and buy another house for investment that's fair enough but hogging more than that is ****ing up people who are trying to get into buying their first house.  People who wrote books like "From 0 to 130 Properties in 3.5 Years" should be shot because not only their hogging 128 houses from people who needs them, they actually teaching others to do it too.


----------



## kincella (8 October 2009)

I believe some of us will need to revert to a plan b, or c.....for both fhb's or investors....if you were thinking about buying in the inner suburbs....due to the increased competition coming from  all sides.....maybe the tree change areas will prove to be the only answer....not an option of choice as it was in the past......
..............
oh and to put some things into perspective......there were 650,000 home sales last year.....roughly 12500 buyers and sellers every week.......
ASF has 10-15 regular commentators on housing.....
.....................................................................
the following is an extract only....regarding increasing immigration , I mean increasing the number of taxpayers....and replacing the boomers as the boomers leave the workforce....
remember the stories about all the houses becoming vacant as the boomers fled to aged care, or their caravans, and house prices would drop accordingly  ???
well in this article there is no mention of where the new housing will come from....to cater for the immigrants...who will replace the boomers, as taxpayers....
............................extract..........

Migrants injected into the 20s segment of the workforce are being offset by boomers exiting from the 60s segment. This situation hasn't applied before, but it will start to apply from 2011 onwards. 

If we want to maintain growth in the tax base, we need to ramp the level of migration. The other options, of course, are to reduce government services and funding; to radically increase the level of workforce participation; or to increase the level of taxation. Or -- and this is, I think, the most likely outcome -- to apply all of these levers, including raising the level of skilled migration. 

Targeted migration aimed at fit young workers is a good deal for Australia, and in many cases for origin nations as well. Migrant workers pay tax and they also send money back to family groups. Total remittances paid from Australia over the last financial year were $816m. Our total foreign aid budget is just $3.8bn. 

In the revised population outlook outlined by the Australian Bureau of Statistics in September last year, and reinforced by the intergenerational report released last month, the migration assumption over next decade jumps to 1.8 million. In this scenario, the productive population increases by 1.427 million or 10 per cent. 

Let's compare the outlook for the next decade based on the two approaches to migration. A modest migration outlook yields net growth in the productive population of 780,000, whereas ramped migration pushes this number to 1.427 million. The difference is 647,000 people who are eligible to enter the workforce and pay tax. 

The other way to look at these figures is to say that this decade we have become addicted to a rising tax base fuelled by 1.8 million extra bodies injected into the pool from which the tax base is drawn. 

http://www.theaustralian.news.com.au/business/story/0,28124,26179529-25658,00.html

pssst....investors go back into the property market
"Investors are flooding back into the housing market," said JP Morgan's economist Helen Kevans in a note to clients. Loans to investors made up 27 per cent of all loans issued in August, up nearly 2 percentage points in July.

http://www.smh.com.au/business/investors-shore-up-housing-market-20091007-gm5y.html

oh and again...those pesky cashed up immigrants are forcing prices up....in the middle end of town.....they usually pay cash...no mortgage worries here...

Million-dollar sales force up property prices
By Peter Familari
Herald Sun
October 08, 2009 12:01am

Mainland Chinese buyers made up more than one-third of buyers, one Victorian agent said / File 
Real Estate agents chasing Chinese buyers 
Hiring Mandarin-speaking salesmen 

FORGET the "for sale" sign, the new catch-cry in Melbourne's leafy suburbs is "duoshao qian".

Victoria's top real estate agents have begun hiring Mandarin-speaking salesmen to cash in on the property boom. 

Translated, "duoshao qian" means "how much"? And it's a question being asked more than ever before, The Herald Sun reports.

Leading agents say more than 30 per cent of their stock is bought by families from mainland China. 

"This calendar year 34 per cent of our sales went to mainly Chinese buyers compared to 15 per cent last year. We're up 125 per cent overall," Jellis Craig director Scott Patterson said.

 "Demand is so strong we've got two native speaker agents starting next week." 
Some agents say the boom grew when the Federal Government eased foreign investment rules on property last year

http://www.news.com.au/business/money/story/0,25197,26181346-14327,00.html


----------



## Gone Fishin (8 October 2009)

888 said:


> Price for houses should fall if people stop buying houses for investment and speculation purposes.  If someone has a house and buy another house for investment that's fair enough but hogging more than that is ****ing up people who are trying to get into buying their first house.  People who wrote books like "From 0 to 130 Properties in 3.5 Years" should be shot because not only their hogging 128 houses from people who needs them, they actually teaching others to do it too.




lol are you for real?


----------



## kincella (8 October 2009)

where do the elderly go now......whoops looks like they stay at home...or some will become homeless....
the housing problem is not just about first home buyers....who can delay, stay at home, or share.......
the housing shortage affects the whole of society....
and from todays news.....there is nothing being done to overcome these problems.....
at least investors are doing their bit to provide rental accommodation for some....at least for those people, who prefer to rent rather than buy....buying is not for everyone.....going by my prior post about immigration...it would seem property as an investment in the inner suburbs in the larger cities, will actually prove to be a much smarter option in the future, than it has ever been in the past.....however, there will be suburbs where the immigrants will go, to be with others from the same country, that may be worth looking at.......  
..............................................
Council rules cause shortage of aged-care housingFont Size: Decrease Increase Print Page: Print Bridget Carter | October 08, 2009 
Article from: The Australian 
AUSTRALIAN suburbs crying out for more affordable, secure complexes to house elderly residents could wait years to find somewhere for them to go.

That's because local councils' restrictive planning rules do not allow construction of retirement villages and aged-care facilities in many areas. 

With the country in the grip of a national housing shortage, among the hardest hit are retirees -- many of whom are seeking affordable aged-care accommodation or do not have the finances to enter a retirement village. 

It is understood there are 400,000 people aged 85 and older and the number is projected to treble over the next 30years to 1.1 million, yet about one third of the retirement villages, aged-care facilities and land parcels earmarked for senior citizen housing are in the hands of receivers. 

Many retirement and aged-care developments have collapsed because people who had provided finance pulled out after struggling to sell their homes in the downturn, while many developers and operators have grappled with large debts during the global financial crisis. 

Moves by not-for-profit groups to provide affordable places for elderly residents are also being thwarted by planning rules and opposition by local residents to construction of complexes in their street. 

http://www.theaustralian.news.com.au/business/story/0,28124,26179527-25658,00.html

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


----------



## moXJO (8 October 2009)

kincella said:


> Some agents say the boom grew when the Federal Government eased foreign investment rules on property last year




Hey kince, do you know why the Govt eased the investment rules?


----------



## MrBurns (8 October 2009)

moXJO said:


> Hey kince, do you know why the Govt eased the investment rules?




Because they are incompetent, reckless dickheads.


----------



## wayneL (8 October 2009)

MrBurns said:


> Because they are incompetent, reckless dickheads.




A very generous assessment Burnsie.


----------



## moXJO (8 October 2009)

MrBurns said:


> Because they are incompetent, reckless dickheads.




That’s what it feels like sometimes. 
I also question raising rates to slow a housing boom if overseas money is paying in cash. Will our economy get a handbrake while overseas money pours into housing anyway?

 Seems we are hell bent on expanding our tax base.


----------



## wayneL (8 October 2009)

moXJO said:


> That’s what it feels like sometimes.
> I also question raising rates to slow a housing boom if overseas money is paying in cash. Will our economy get a handbrake while overseas money pours into housing anyway?
> 
> Seems we are hell bent on expanding our tax base.




Classic Fabianism


----------



## kincella (8 October 2009)

it really is an uphill battle....
I love the so called ...logic...that houses do nothing for the economy except a roof over their heads....whereas with stocks, well they produce a dividend....

its a ridiculous attitude...
for eg BHP produces steel etc etc etc....driven by the demand in housing and infrastucture...

all those builders, tradies, hardware stores,furniture and whitegoods,lawnmowers, barbeques,,,the list is endless, all feed off housing for their survival....
not to mention all the other people that run a business mowing lawns, nannies, cleaning  etc...

hey if we all lived like they do in the 3rd world countries, under a tree....or in a tent....there would be no demand for the big companies shares or stocks....so the bhp's would be out of business....
no need for whitegoods, or the lawnmower....
have they...any idea whatsoever about the wealth that is generated by the thousands of small businesses that are tied to housing....


----------



## gfresh (8 October 2009)

It's like reading Plato..


----------



## Knobby22 (8 October 2009)

gfresh said:


> It's like reading Plato..




Yes, reminds me of Cicero.


----------



## Taltan (8 October 2009)

kincella said:


> it really is an uphill battle....
> I love the so called ...logic...that houses do nothing for the economy except a roof over their heads....whereas with stocks, well they produce a dividend....
> 
> its a ridiculous attitude...
> for eg BHP produces steel etc etc etc....driven by the demand in housing and infrastucture...




I'll explain the logic. The thing with housing is that the house supports jobs but the land doesn't. So e.g. lets say I buy a house in Brighton for $3m. As manager of that home I do absolutely nothing for 20 years. The $3m home is worth say $6m - $3m profit & all I've done is hold a piece of land that someone else needs to buy but the addition to the Australian economy has been $0. Now aternatively if you put $3m into a company, and there is no enterprise used, after 20 years you have $0 profit and $3m. The difference is that BHP, NAB etc pay their dividends through investment in enterprise. 100% of their dividend comes from enterprise. For property the value portion that relates to the land adds no value to the Australian economy and keeps no-one employed. 

I don't expect you to agree and am happy for you to dismiss but please do not respond with more copy and pastes from the News Ltd or Fairfax papers. I'm sure we're all aware of their existence.


----------



## trainspotter (8 October 2009)

Feeling a bit woozy. A financial counsellor in the ACT has predicted higher interest rates will lead to more loan defaults. The Reserve Bank of Australia announced the official cash rate would rise by 25 basis points to 3.25%.

It was the first rise in interest rates on over a year.

Care Inc Financial Counselling Service director Carmel Franklin said first home owners would be hardest hit by the decision.

"I think there is a lot of people in a tight place and that's the problem: that people borrow their maximum capacity," she said.

Small changes in interest, living costs and fuel costs "will tip a whole heap more people over into financial difficulty", she said.


----------



## Soft Dough (8 October 2009)

kincella said:


> it really is an uphill battle....
> I love the so called ...logic...that houses do nothing for the economy except a roof over their heads....whereas with stocks, well they produce a dividend....
> 
> its a ridiculous attitude...
> ...




Please tell me how much money housing contributed to GDP in Australia over the past 5 years
Please tell me where the money to pay for these houses comes from.

the typical rubbish from someone without an understanding of what generates wealth in the country,

inflow of cash into the country and then using that cash to generate an income, which creates jobs exponentially.

Unfortunately, as you know I have already posted this logic, yet since people on these forums prefer to make themselves rich at the expense of others, instead of making us all rich and protected from overseas interests, I think that this is beyond some people to imagine.


----------



## nunthewiser (8 October 2009)

kincella said:


> its a ridiculous attitude...
> for eg BHP produces steel etc etc etc....driven by the demand in housing and infrastucture...




BHP do NOT produce steel


http://www.bhpbilliton.com/bb/home.jsp

do some research


----------



## Vizion (8 October 2009)

Not anymore no, they did up to 2002 As BHP Steel when they where spun off and listed separately as Bluescope


----------



## nunthewiser (8 October 2009)

Vizion said:


> Not anymore no, they did up to 2002 As BHP Steel when they where spun off and listed separately as Bluescope




yep 

kincella posted this today not 2002 

just helping with a few facts as it was a glaring error factually


----------



## wayneL (8 October 2009)

nunthewiser said:


> yep
> 
> kincella posted this today not 2002
> 
> just helping with a few facts as it was a glaring error factually




The whole premise of the post was nonsense, as a couple of posts above point out. But it just isn't worth the effort trying to talk facts with zealots.


----------



## robots (10 October 2009)

hello,

still 8x average income to median house price? oh yeah

thankyou
professor robots


----------



## robots (10 October 2009)

hello,

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

another fantastic day hey WayneL? 81% clearance

well done to those holding Australian property with similar results across other states

just plain old vanilla residential real estate, give yourself a pat on the back you putting in for the economy

OH YEAH!

thankyou
professor robots


----------



## wayneL (10 October 2009)

robots said:


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




Like I said, It's raining cash, ergo, not unexpected.

But the hot shots across the ditch aren't having so much fun, sans government handouts. 

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10602365&pnum=0



> Party's over and debts called in for property kings
> 
> One day, it seems, they have the best clothes and are seen about town with the best-looking models, behind the wheels of the raciest cars.
> 
> ...


----------



## MrBurns (10 October 2009)

Didn't see any Chinese out today, maybe it was just where I was dunno, but there's change in the air.


----------



## Soft Dough (10 October 2009)

robots said:


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




A typical no content post designed to inflame.

But please Robots, give us your prediction for house price increase over the next twelve months.  Give us some indication you actually have some understanding of market forces and not just herd mentality.

And please, give me an answer to the questions I have posted on this site, including : what has housing contributed to GDP.


----------



## cutz (10 October 2009)

Soft Dough said:


> And please, give me an answer to the questions I have posted on this site, including : what has housing contributed to GDP.




I'll give you an answer, SFA.

Just another ponzi scheme that's destined to end up like all ponzi schemes when a greater fool can no longer be found.


----------



## MrBurns (10 October 2009)

cutz said:


> Just another ponzi scheme that's destined to end up like all ponzi schemes when a greater fool can no longer be found.




Ezcellent choice of words.


----------



## Bill M (11 October 2009)

People can say whatever they like but house prices just keep going up and up. My area in the Northern beaches of Sydney is still running hot, a fibro home sold for $806,000, article to follow.

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

INTEREST rates have gone up, the first home buyer’s grant has scaled back yet people are out in droves looking for an affordable family home. 

Bidding opened at $600,000 and kept climbing until the hammer fell at $806,000.

The fibro was bought by a young couple with two children who had been looking for a knock-down. 

Agents report that family homes are in short supply and there are only four other properties currently for sale in Narraweena - affordable suburbs such as Narraweena and Dee Why West are in big demand. 

Full story here


----------



## robots (11 October 2009)

Soft Dough said:


> A typical no content post designed to inflame.
> 
> But please Robots, give us your prediction for house price increase over the next twelve months.  Give us some indication you actually have some understanding of market forces and not just herd mentality.
> 
> And please, give me an answer to the questions I have posted on this site, including : what has housing contributed to GDP.




hello,

you can spend your time worrying about GDP, i wont

*just buy*, have been saying it for many years and they even had to close (and delete) a thread here at ASF to save the bacon of many posters as it was so embarrassing

gee it would be embarrassing to be a holder of international property, especially in the US or UK, poor investment choices, oh yeah

they said dont buy in 2001, 2003, 2005, 2007, value is going to return, 

i know quite a few who sold listening to goons with blogs and they are stuffed know, stuffed

spot on Bill M, 

thankyou
professor robots


----------



## Aussiejeff (11 October 2009)

Hurry, hurry, hurry!

Buy NOW before they're all gone!

http://www.news.com.au/business/money/story/0,28323,26181346-5013951,00.html

HAI!


----------



## robots (11 October 2009)

hello,

http://www.theage.com.au/business/house-prices-hotting-up-20091010-grnf.html

well done to this guy to stand up to all the bully's who clearly have no idea

well done to all the real estate agents who GOT IT RIGHT

and commiserations to all the Financial Advisors, Fund Managers, CFD Experts/promoters, Economists, Futures/Option houses who GOT IT WRONG

this is amazing, things never seen before

thankyou
professor robots


----------



## wayneL (11 October 2009)

You're getting a bit shrill there Robbie.

Not surprising really, considering the VI.


----------



## MrBurns (11 October 2009)

Rudds thrown the whole thing open to foreigners, particularly the Chinese, guess who'll be voting for him next time.

I've heard stories of Chinese waving their cheque books in the middle of auctions shouting "how much do you want" bringing the whole thing undone then walking away and leaving the property vacant as they just want it for the capital appreciation.

They buy over the web on property sight unseen, just to take advantage of Rudd's generosity in letting them invest here unrestricted and stuff the Aussie couples who miss out.

He speaks Chinese, he's pandering to the Chinese, he will get every Chinese vote next time around, cunning little vermin he is


----------



## Vizion (11 October 2009)

From that article Jeff posted, one of the estate agents is a former plastic surgeon and financial adviser!? WTF? there is more money in selling property in Melbourne to Chinese buyers than being a surgeon? That has to say something about realestate agenst fee's...


----------



## satanoperca (11 October 2009)

Mr Burns, there could be even more to it than just votes, maybe Krudd opened the flood gates to RE investment in this country as a trade off for when the government is so indebted that it needs to raise more capital and has run out of buyers so has traded treasury bills for RE in this country with the Chinese.

Whether people like it or not, Australia will and is become another asian country. For those that are unaware we had a huge chinese population during the gold rush era in the 1800's.

Bill M, your one off sale of property in Sydney is fanastic news for all those investors in Sydney that have seen prices stagnate for the last 6 years according to the ABS figures and would have been better of putting their money in the bank.

Cheers

PS the next interest rate rise and further reduction of the FHBG is just around the corner. Who is going to buy properties next year - yes we must all hope and wish the Chinese are our saviour.


----------



## robots (11 October 2009)

wayneL said:


> You're getting a bit shrill there Robbie.
> 
> Not surprising really, considering the VI.




hello,

just the facts 

thankyou
professor robots


----------



## wayneL (11 October 2009)

robots said:


> hello,
> 
> just the facts
> 
> ...




With some trollish embellishments.


----------



## robots (11 October 2009)

hello,

just discussion and debate, truth and honesty

helping out fellow man to achieve financial freedom in life

thankyou
professor robots


----------



## Glen48 (11 October 2009)

This is good we already have the most expensive RE in the World in relation to income and prices are still going up soon, a tent in a back yard with be worth a Mill. Put in a Media room,ree insulation with Down lights to light the place up, 50% Tax rebate to get deeper in to debt,House Insurance going up, car insurance going up, cost of power going up, Un- employment going up, Medical going up , IR going up,Tax's to go up to pay for all this.  How stupid are the other Country doing exactly the same thing yet they are going down the gurgler.
You have to hand it to Rudd if he called an election he would pick up 22 more seats here is a man who will go down in history.  
Unless Rudd calls an early election forget the Drover's dog a Dead Dingo will lead the Libs to power and no one will vote Labor or go near property for a long time.


----------



## Soft Dough (11 October 2009)

Glen48 said:


> This is good we already have the most expensive RE in the World in relation to income and prices are still going up soon




Yeah "cause we are different"

Where is the extra gearing going to come from going forward?

Plus, Robots, I note that you failed to give a prediction of how much property prices are going to rise over the next 12 months - just remember the stupidest goats are the last to turn.


----------



## Beej (11 October 2009)

Soft Dough said:


> But please Robots, give us your prediction for house price increase over the next twelve months.  Give us some indication you actually have some understanding of market forces and not just herd mentality.




I'll give you a 99.99999% certain prediction: there will be no price crash (20%+ plus across the board falls) in the  next 12 months.



> And please, give me an answer to the questions I have posted on this site, including : what has housing contributed to GDP.




Quite a lot actually, for a start, about ~100,000 new dwellings are built each year. At an average cost of let's say $250k, there's $25B in GDP right there which is 2.5% of total GDP. Then there's all the renovations, extensions, maintenance, etc etc that is done. How big is Bunnings? Pretty much 100% of  the revenue of Bunnings flows from the housing sector. I have seen estimates in the range of another $30B-$40B in value for renos/extensions/house maintenance etc. So there's another 3-4% of GDP right there. So just on the back of the envelope we are now at housing directly contributing 5-6+% = $50B-$60B of Australia's GDP.

Now add the that the indirect flow on, ie when someone buys a new house they also tend to buy new furniture, rugs, linen etc etc. Housing also provides shelter, which every worker in the country needs, so without the shelter there would no GDP as there would be nowhere for productive workers (including those who work in export industries) and their families to live! (Whether they own or rent). That's a pretty big indirect contribution to GDP I would say!

So what's your argument? That housing contributes nothing to GDP? That's just nonsense if that's what you are trying to say. I mean how do you think modern economies work? Do you think everyone lives in caves? What do you think increasing living standards are all about? You don't think that just maybe the quality, size, location, amenity etc of the homes we live in are a big factor in our standard of living? Isn't improving standard of living the end goal of all economic growth? You think this can be achieved without expending economic resources (= contributing to GDP by definition)?



cutz said:


> I'll give you an answer, SFA.
> 
> Just another ponzi scheme that's destined to end up like all ponzi schemes when a greater fool can no longer be found.




So Cutz is another one naive enough to believe that housing has no direct or indirect impact on GDP? Really you guys need to get back to school.....

As for the housing market being a ponzi scheme, what a load of crap! A ponzi by definition means that money being drawn out of the scheme must come from new money being put in by the next round of "suckers", and no actual assets are every actually acquired. In the case of property, an ASSET is acquired, a real asset that you can touch and feel, and even live in! Income can be generated at the rate of 4.5-5.5%pa from rent returns (or rent saved), so it's not a ponzi because the invested money going in is actually used to purchase INCOME PRODUCING ASSETS. You can argue all you like about the PRICE vs the VALUE of the property/asset (as I'm sure you will), but an income producing asset being over (or under) priced does NOT a ponzi make!

Now the fact that you can buy a cheaper house, pay it off, and then "shock horror" afford to buy a more expensive house in a better area with the money you get from the sale of your first house, does NOT a ponzi make!!! A MARKET it makes yes - first time buyers on average incomes enter at the bottom end of the market, and higher income earners and people who were previously first time buyers move up into the upper ends of the market. Pretty simple stuff really. I mean what do you expect - that all houses in all area's of the country should sell for the exact same price? Regardless of size, amenity, location, condition etc etc??? I mean really one of the DUMBEST things I read on forums like this is the description of the property market as a ponzi scheme...... By this definition every share market, derivatives market etc on the planet is a ponzi....

PS: From wikipedia.org:

Definition of Ponzi:



> A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned.




Definition of a Market:



> In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services for money is a transaction. Market participants consist of all the buyers and sellers of a good who influence its price




I was going to comment on Mr Burns' post going on about all the Chinese buyers and blaming Rudd for everything that's wrong with the housing market, but I really can't be bothered to go there.

Cheers,

Beej


----------



## robots (11 October 2009)

hello,

well done Beej

yes even the "existing dwelling" purchase provides numerous flow-ons, people soon paint walls, do landscaping, build fences, put a new aerial up etc etc

thankyou
professor robots


----------



## wayneL (11 October 2009)

Beej has good points.

Unfortunately he neglects speculative artefact and diversion of investable funds from other important sectors of the economy. The long term effect should be considered.

A narrow focus unfortunately precludes a balanced view.


----------



## Soft Dough (11 October 2009)

robots said:


> hello,
> 
> well done Beej
> 
> ...




So please explain how this increases wealth.

Can you?

Or do you know the real answer.


----------



## wayneL (11 October 2009)

The Kiwis are recognising the negative impact of property speculation and the drag it causes on "productive" investment.

I like how they are thinking.

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10602457



> ...investors should expect moves against property.
> 
> I don't think policy shifts will be directed against owner-occupied houses - New Zealand's home ownership rate has declined over the past decade and no one wants to see it fall further.
> 
> ...


----------



## Beej (11 October 2009)

wayneL said:


> Beej has good points.
> 
> Unfortunately he neglects speculative artefact and diversion of investable funds from other important sectors of the economy. The long term effect should be considered.
> 
> A narrow focus unfortunately precludes a [un?]balanced view.




Yes but that wasn't the question asked. Like anything in the economy, there is always the potential for too much money to flow into area's that might be considered "less productive" than others due to speculation. However the same argument against house prices on this front could be made against the bulk of share trading that goes on, the speculative side of just about every futures trade, the diversion of consumer spending to imported goods and so and so on.  I mean is people investing in Gold "productive"? No way! Gold does nothing, it can't even generate some income, yet large amounts of capital flow to buy the stuff because people perceive it is a way to protect their wealth. How come everyone isn't banging on about all the wasted money flowing into "unproductive" gold? It's tripled in price in the last 10 years as well right?

No matter what you can not make 100% of your available capital in an economy flow into those things and only those things deamed "correct" or "productive" by whatever authority may deem it so at any particular time. It is a fact that land as a commodity is valued and scarce (in that you can't really create more when you look at particular locations etc). Housing is a utility that is in demand, as it forms a major part of people's standard of living. 

The 2 combined (land + house) makes property valuable, because it is desired and in demand. At the end the day this will result in a situation where prices are set based on the capacity of those generating the demand to pay (derived from wages/incomes - not just average, availability of credit, cost of credit, other sources of capital like the share market etc, savings, stored wealth and so on). 

For these reasons, no dry economic argument anyone makes about the productive use/flow of capital is going to change the behaviour of the housing market, which will always be driven by those fundamentals listed.



Soft Dough said:


> So please explain how this increases wealth.
> 
> Can you?
> 
> Or do you know the real answer.




Well the housing market has certainly increased *my* wealth a lot over the past 20 years!!  Having said that, imagine the country with 1M people, and no houses. Now imagine that all those people work for a year and build 250,000 homes for them all to live in. Are they all now wealthier than they were 1 year earlier? Of course they are! And the wealth was generated by their work in building those houses that they now own. So of course housing generates "wealth". Do you know a "wealthy" person who lives in a mud hut? How about a "wealthy" country where they all live in caves? Now of course a speculation driven rise in ANY asset price (which happens from time to time with just about anything) is not terribly productive economically speaking, but why single the housing market out in this respect? It's a valuable/desired commodity and so will have a market driven price, just live anything else.

Let me ask you another question - how does share trading (short term) increase a countries wealth? How does buying Gold increase a countries wealth? How does me buying a big screen LCD TV or a car increase the countries wealth? Are all these things bad? Do you criticise share traders and the share market in the same manner as you criticise the housing market?

Anyway bottom line it doesn't matter what you make of the economic argument, the housing market is what the housing market is. You are not going to change it, as we don't live in a communist country! Play the game how ever you choose, rent or buy your PPOR, invest in property for long term income, invest purely speculatively hoping only for capital gain, don't invest in property at all, whatever! It's everyone's individual choice. I've tried to provide info on this thread on how the market works over the long term, and how to use it to your long term financial advantage, but everyone can of course do whatever they want! It's a free country! 

Cheers,

Beej


----------



## Soft Dough (11 October 2009)

wayneL said:


> The Kiwis are recognising the negative impact of property speculation and the drag it causes on "productive" investment.
> 
> I like how they are thinking.
> 
> http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10602457




The banks would love a plan as such - deem a return on equity but allow residential property loans as a tax deduction


----------



## kincella (11 October 2009)

I copied this post....it was posted on another forum today....again the rises are in the inner suburbs...you will not see gains like that out in the cheaper areas....there is something for everyone
...............................................................................................

 While the clowns who've been predicting (wishing) for 40% price drops in house prices in Australia over the last 12 months, my 3 IPs have EACH piled on an average of around $90,000 in value in the same time period, according to recent valuations. All are located in the Brunswick/Coburg areas in Melbourne. Being the sceptical person I am, I wanted to see proof for myself. I attended 2 auctions, both in Brunswick. The first (3 weeks ago) had a reserve of $640,000 and sold for $761,000. The second (yesterday) had a reserve of $670,000 and sold for $760,000. So, yep, I'm pretty much convinced my valuations are correct, if not too conservative.

Oh, and I forgot to mention that in the same period (12 months), I've increased my rent on all 3 properties by an average of 9%, which was happily accepted by all tenants.


----------



## wayneL (11 October 2009)

Beej said:


> Yes but that wasn't the question asked. Like anything in the economy, there is always the potential for too much money to flow into area's that might be considered "less productive" than others due to speculation. However the same argument against house prices on this front could be made against the bulk of share trading that goes on, the speculative side of just about every futures trade, the diversion of consumer spending to imported goods and so and so on.  I mean is people investing in Gold "productive"? No way! Gold does nothing, it can't even generate some income, yet large amounts of capital flow to buy the stuff because people perceive it is a way to protect their wealth. How come everyone isn't banging on about all the wasted money flowing into "unproductive" gold? It's tripled in price in the last 10 years as well right?
> 
> No matter what you can not make 100% of your available capital in an economy flow into those things and only those things deamed "correct" or "productive" by whatever authority may deem it so at any particular time. It is a fact that land as a commodity is valued and scarce (in that you can't really create more when you look at particular locations etc). Housing is a utility that is in demand, as it forms a major part of people's standard of living.
> 
> ...




Beej,

Your points are fine, but once again take the exyteme binary line. This is a fine technique for a primary school debate, but it is unintelligent one in a grown up conversation, as it insults the intelligence.

When you've finished with the straw-man building, we can have a reasonable discussion.

Cheers


----------



## kincella (11 October 2009)

Australian Government invests $8bn in mortgages

AAP
October 11, 2009 10:17am
 THE Federal Government will invest a further $8 billion of taxpayers' money in new residential mortgage-backed securities (RMBS) to support the home lending market, Treasurer Wayne Swan said today. 
The government first stepped in to support the RMBS market last year after it practically shut down due to the global credit crunch. 

"The Government will direct the Australian Office of Financial Management to provide up to a further $8 billion of support to new issuances of high-quality RMBS, depending on market conditions," Mr Swan said today

"This investment will provide a major boost to smaller lenders and promote competition in the mortgage market, helping to put downward pressure on borrowing rates over time." 

Mr Swan said the additional investment wouldn't add to net debt "as the Government will be investing in, and become the holder of, high quality AAA-rated assets". 

The Federal Government invested an initial $4 billion to boost competition in the mortgage market in September 2008.

http://www.news.com.au/story/0,27574,26194502-29277,00.html


----------



## Soft Dough (11 October 2009)

kincella said:


> Australian Government invests $8bn in mortgages
> 
> AAP
> October 11, 2009 10:17am
> ...




What a fool.

Going to war with the reserve bank.

Imo property investors would be best served havng a competent, rational treasurer who allows prices to moderate / show no growth over the next 5 or so years, instead of building up pressure in the most expensive housing market in the world.

Why not put that 8 billion into business loans and protect/create jobs and revenue into the future.

Is there an election soonish... methinks so.


----------



## gfresh (11 October 2009)

People don't quite spend the same proportion of their income on LCD TV's or other trinkets as they do housing BeeJ, but some of your other points valid. 

It's a shame a lot of the revenue from the housing obsession does flow overseas to China. It wasn't that long ago you bought a hammer from Bunnings (or the equivalent 15 years ago) that was actually made in Australia. Mr hammer producer employed a lot more people than simply a handful of unskilled sales monkeys at your local Bunnings today. Then again, our mining industry maybe employs a lot more people than it did in the past too, which supplies the Chinese materials to make our goods.



Soft Dough said:


> What a fool.
> 
> Going to war with the reserve bank.
> 
> Imo property investors would be best served havng a competent, rational treasurer who allows prices to moderate / show no growth over the next 5 or so years, instead of building up pressure in the most expensive housing market in the world.




Agreed.. I fail to see how providing further credit to smaller lenders actually drives interest rates down! In fact it's probably the exact opposite! Increase the supply, and you increase the boom, as we saw in 2000-2007.

As said many times, we need proper political action on this to encourage new building, and higher density inner city living, better public transport, and piss off dead end industries such as our uncompetitive vehicle industry, and probably cars themselves.. both sides of parliament are just as bad however on this issue.


----------



## wayneL (11 October 2009)

Soft Dough said:


> Is there an election soonish... methinks so.




Can we somehow resurrect Sir John Kerr? We will need a GG with balls when the time comes.


----------



## satanoperca (11 October 2009)

Interesting points from all sides, however ...
Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
What would this mean to Oz?

A major mindset change.
Freeing up huge amounts of current and future capital that is currently locked up in mortgages benefiting the 4 pillars of society.
A pursuit to create wealth and prosperity through innovation and efficiency funded by not having to support massive indebtness via mortgages which drag on the economy and reduce GDP.
More displosable income for people to spend, increasing quality of life and generating jobs for the country instead of fat cat bankers. Eg holidays, eating out, clothes, furniture, interiors, cars, time off with the childrens @ the zoo or down the beach.....
Taxes could be increased, as people would have more disposable income to provide better healthcare, education, looking after the elderly, all increasing again quality of life.

Will the above ever eventuate, who knows but I do not think that having some of the highest property prices in the world is good for society or having the highest quality of life?


----------



## gav (11 October 2009)

kincella said:


> I copied this post....it was posted on another forum today....again the rises are in the inner suburbs...you will not see gains like that out in the cheaper areas....




Actually some cheaper outer suburbs have seen considerable gains as well.  Even though I only purchased my first PPOR earlier this year, I like to keep an eye on the sales in my suburb - particularly my street.

On my street in the past 2 months, 2 places a lot smaller than mine (with houses roughly same age as mine) sold for $30K more than I paid..  Another place the same size as mine (also with house same age) sold for $65K more than what I paid!  There are also 3 small townhouses being built about 50m from my place, asking price off the plan is $50K more than I paid, and they are all WAY smaller than my place! 

If I decided to wait and save a little longer, I would have been priced out - unless of course I broke my rule of having a 20% deposit, and that includes the money I would have saved in the mean time...  

I don't know if this is sustainable, but I really feel for people trying to save for their first home.


----------



## MrBurns (11 October 2009)

Beej said:


> I was going to comment on Mr Burns' post going on about all the Chinese buyers and blaming Rudd for everything that's wrong with the housing market, but I really can't be bothered to go there.
> Cheers,
> Beej




It's all true.


----------



## MrBurns (11 October 2009)

kincella said:


> Mr Swan said the additional investment wouldn't add to net debt "as the Government will be investing in, and become the holder of, high quality AAA-rated assets".




ROFL Swan wouldnt know AAA rated investment if he fell over it.

Prices will only hold as long as he keeps interfering. 

Your taxes at work


----------



## MACCA350 (11 October 2009)

satanoperca said:


> Interesting points from all sides, however ...
> Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
> What would this mean to Oz?
> 
> ...



Teleport me now........sounds like nirvana

cheers


----------



## Macquack (11 October 2009)

satanoperca said:


> Interesting points from all sides, however ...
> Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
> What would this mean to Oz?
> 
> ...




satanoperca, you have my vote.

What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).


----------



## MrBurns (11 October 2009)

Macquack said:


> satanoperca, you have my vote.
> 
> What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).




AND the Council and water rates go through the roof.
AND if you sell and buy something else the commission and stamp duty is much higher AND on it goes....................


----------



## Macquack (11 October 2009)

wayneL said:


> Can we somehow resurrect Sir John Kerr?




NO. Let the prick rot in hell.


----------



## robots (11 October 2009)

Macquack said:


> satanoperca, you have my vote.
> 
> What the property bulls dont appreciate is that after their property has gone up a squillion percent and is worth a zillion dollars, guess what? You can only exchange it for a similiar property in a similar location. (bummer).






MrBurns said:


> AND the Council and water rates go through the roof.
> AND if you sell and buy something else the commission and stamp duty is much higher AND on it goes....................




hello,

hahahahaha

move one suburb out 40k in pocket, two suburbs back 80k in pocket, 10 suburbs out 200k in pocket,

sell up and buy trailer for the pushie and a tent, all in pocket, 

rent and hand the keys in ZERO in pocket, goodluck as you can do as you please in this fine country

the longer you CFD salesman and financial advisors keep going on about it the better as the $ keep piling up in my pocket, utopia

the holders of true wealth, and its all TAX FREE

thankyou
professor robots


----------



## Vizion (11 October 2009)

*Banks to outdo RBA rate rise*

*Updated: 11:22, Sunday October 11, 2009*






*The big four banks are set to increase mortgage rates by more than the official Reserve Bank rises in the coming months.
They say they'll be forced to make extra increases as they face higher costs.
The warnings are likely to anger Treasurer Wayne Swan, who has repeatedly called on lenders to pass on only what the RBA adds to the official cash rate.
The main banks have already passed on the full quarter percent increase announced by the Reserve Bank last week.
*


----------



## robots (11 October 2009)

hello,

hahahahaha

go from a 4-bed house to a 3-bed or a 2-bed, BANG in the pocket it goes

2 bed unit to 1 bed unit, BANG in the pocket again

hahahahahahaha

all tax free, paradise brothers

but hey, let the CFD saleman, Futures Brokers, Brokerage Houses, Share Trader Magazine all keep the spin going

thankyou
professor robots


----------



## Vizion (11 October 2009)

This forum needs an ignore function...


----------



## robots (11 October 2009)

satanoperca said:


> Interesting points from all sides, however ...
> Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
> What would this mean to Oz?
> 
> ...




hello,

this already occurs though Satanoperca, 

I notice on the list you dont have spend disposable income on an investment property, (provides work when I replace the carpet, lay new tiles, paint walls, double glaze windows)

but okay to give it to Gerry Harvey, or TPG (Myer), Dick Smith, the local restauranter

amazing

great to see Kincella online today, 

thankyou
professor robots


----------



## explod (11 October 2009)

robots said:


> hello,
> 
> hahahahaha
> 
> ...




Got to hand it to you Professor, still banging away.

Now what has your last post got to do with "house prices to keep rising for years"

Now having old Mont Martha roots you ought to be able to do much better that what you just posted brother

Back on topic, notice the "*for sale* signs popping up faster than rabbit ears, but the sold stickers seem to be dissapating.  Be some great bargains for us in this neck of the woods in a year or two brother.   Rent vacancies going up here too. lots of parents finding the chickens returning to the roost.

Go robots


----------



## robots (11 October 2009)

hello,

actually its quite the opposite down in Mt Martha at the moment Explod, 

i have been down there for over two months now and SOLD stickers have been hitting the boards in record times

i am in the Craigie rd area, beachside of course, not sure whats happening in the slums

thankyou
professor robots


----------



## satanoperca (11 October 2009)

satanoperca said:


> Interesting points from all sides, however ...
> Imagine a world, a simple one at that, where for whatever reasons, market forces resulted in residential property only increasing at +1% over inflation p.a.
> What would this mean to Oz?
> 
> ...






robots said:


> hello,
> 
> this already occurs though Satanoperca,
> 
> ...




Yes, interiors as hightlighted in above text. This would include keeping tradies in work whether it was for a PPOR or IP.

I expected a better retort from you, maybe my expectations are a little high in regards to a self acknowledged Professor of ????



robots said:


> the longer you CFD salesman and financial advisors keep going on about it the better as the $ keep piling up in my pocket, utopia
> 
> the holders of true wealth, and its all TAX FREE
> 
> ...




Who are these people on this forum who contribute to this thread that are CFD salesman and financial advisors? Please identify yourself immediately. 

Your final comment could be contributed as providing financial advise itself.

And finally, always love people who think it is cool and intelligent to avoid or negate the social obligation of paying tax to contribute to society and often promote schemes that do so.


----------



## robots (11 October 2009)

hello,

yes I provide FREE financial advise all the time, to fellow workers mostly

just pointing out that the PPOR is tax free and totally within the rules, 

and probably one of the main reasons for the stability and rise of property as people got out of the shonk exchange, superannuation, online bank accounts and simply upgraded their home

one Massive advantage of being a "contractor" is having the choice to be outside of the superannuation vehicle

thankyou
professor robots


----------



## cutz (11 October 2009)

Hi Beej,

Thanks for the copy and paste on what a ponzi scheme is but in my books anything that is subject to artificial price manipulation is a ponzi, take away government grants,negative gearing, depreciation and all the other tax routs then we'll see the true value of property is worth.

Robots, 

What a beautiful day in downtown Melbourne, the sun and the rain, almost surreal.


----------



## explod (11 October 2009)

robots said:


> hello,
> 
> actually its quite the opposite down in Mt Martha at the moment Explod,
> 
> ...





That's right Professor, has been,  but I watch it every day here which is where I live and I am talking about the change in this last week.  I talk to Agents here every few days and they can feel it, and change when it comes Australia wide will be as fast as a cut with a knife, and many are so leveraged due to the hype it will not be pretty.   

Thats just my view though.  DYOR


----------



## robots (11 October 2009)

hello,

oh yeah Cutz, sensational day, great to be alive kicking back walking the streets and riding the trams

thankyou
professor robots


----------



## robots (11 October 2009)

explod said:


> That's right Professor, has been,  but I watch it every day here which is where I live and I am talking about the change in this last week.  I talk to Agents here every few days and they can feel it, and change when it comes Australia wide will be as fast as a cut with a knife, and many are so leveraged due to the hype it will not be pretty.
> 
> Thats just my view though.  DYOR




hello,

if thats the same thing that was predicted in 2004/05 then people dont have a lot to be concerned about

sure "business people" might be in trouble

yeah, do your own research, ask a friend, read a blog, speak to a professor, buy a Share Magazine, subscribe to a CFD Provider

thankyou
professor robots


----------



## Beej (11 October 2009)

cutz said:


> Hi Beej,
> 
> Thanks for the copy and paste on what a ponzi scheme is but in my books anything that is subject to artificial price manipulation is a ponzi, take away government grants,negative gearing, depreciation and all the other tax routs then we'll see the true value of property is worth.




Sounds like you are redefining what a ponzi is to me if you are going to argue that any market subject to government regulation and intervention is a ponzi!

Should negative gearing, 30% company tax rate, small business tax benefits and rule exemptions and dividend imputation be taken away from share investment and business investment too then to find their true value??

What a crock.

Beej


----------



## robots (11 October 2009)

gav said:


> Actually some cheaper outer suburbs have seen considerable gains as well.  Even though I only purchased my first PPOR earlier this year, I like to keep an eye on the sales in my suburb - particularly my street.
> 
> On my street in the past 2 months, 2 places a lot smaller than mine (with houses roughly same age as mine) sold for $30K more than I paid..  Another place the same size as mine (also with house same age) sold for $65K more than what I paid!  There are also 3 small townhouses being built about 50m from my place, asking price off the plan is $50K more than I paid, and they are all WAY smaller than my place!
> 
> ...




hello, 

well done Gav, many happy years on the cards

i think professor frink got in as well around the same time

building costs have to be underpinning the existing market, but even if you take away the "boss" aspect of a trade service the "man" hours to build homes are still astronomical

how you go with the Stamp Duty issues?

thankyou
professor robots


----------



## Gordon Gekko (11 October 2009)

Conclusion

    * Australian housing is unaffordable compared to similar developed nations.
    * Australian households hold records amount of debt.
    * The Australian Government has been artificially inflating housing prices with grants.
    * Interest rates won’t stay low forever.
    * For the property market to continue to rise, buyers must be secure in their employment, banks must continue to lend at current rates and boomers must find property purchasers who are willing to fund their retirement.

http://agoodhuman.wordpress.com/2009/10/07/economy-2-is-a-housing-bubble-looming-in-australia/

Good reading for those young and feed up with the myth of housing going up forever. A useless piece of info for those older and desperate for growth at all costs to fund there retirements.

No disrespect to those battlers out there, keep you heads up cause there's a storm a comin.

G


----------



## cutz (11 October 2009)

Beej,

Negative gearing whether it's on shares or property is a joke, what's the point, so you gear up to the max, pay more in interest to the banks than what your getting in income, avoid paying you dues to society, then hope a black swan doesn't wipe you and your next generation out. (If are are aware of risk management in the first place)

If the government had the courage to get rid of all the scams maybe we can all enjoy the benefits of a lower tax rate and lower property prices. High property prices is of no benefit to anyone, i purchased my piece of inner city on land when i was a kid and payed it off in 5 years on an average income, now gen Y haven't got a chance.


----------



## explod (11 October 2009)

> hello,
> 
> if thats the same thing that was predicted in 2004/05 then people dont have a lot to be concerned about




In my view of current economics 2004/05 was a walk in the park, this time looks very different.   Forget the popular press, look at the small to medium general business, the real job numbers, hotels, tourist areas and etc etc.,

I love real estate dont' get me wrong and it will provide excellent opportunities for the cashed up.  Anyway time will tell Professor


----------



## robots (11 October 2009)

cutz said:


> Beej,
> 
> *Negative gearing whether it's on shares or property is a joke*, what's the point, so you gear up to the max, pay more in interest to the banks than what your getting in income, avoid paying you dues to society, then hope a black swan doesn't wipe you and your next generation out.
> 
> If the government had the courage to get rid of all the scams maybe we can all enjoy the benefits of a lower tax rate and lower property prices.




hello,

i agree Cutz, this share trading provides no wealth at all, no benefit to GDP, nothing

non-productive and ties up mega-capital which should be used for other purposes,

thankyou
professor robots


----------



## MrBurns (11 October 2009)

Gordon Gekko said:


> Conclusion
> 
> * Australian housing is unaffordable compared to similar developed nations.
> * Australian households hold records amount of debt.
> ...




Don't forget the relaxing of the investment rules, I've been to Auctions around Melboune where if there were no Chinese there there would be no one ......literally no one, expensive suburbs, Balwyn Hawthorn etc.
So thats had a huge effect because they dont care what they pay, whatever it takes ...just top get in before someone wakes up and closes the door again, they cant believe their luck..............nor can the young Aussies that miss out because of it.


----------



## michael_selway (11 October 2009)

robots said:


> hello,
> 
> still 8x average income to median house price? oh yeah
> 
> ...




Hey what's the average income and median house price in Australia?










Thanks

MS


----------



## satanoperca (11 October 2009)

Gordon Gekko said:


> Conclusion
> 
> * Australian housing is unfordable compared to similar developed nations.
> * Australian households hold records amount of debt.
> ...




Well summarized but one must add :
1) Land is a finite resource - even though it is a massive country with a current population larger than being self sufficient off the land and ridiculous planning requirements from local councils. 
2) Governments are inapt of forward thinking, action for votes today not the future of the next generation
3) Our population is increasing and immigration and selling Oz seems to be the answer to all problems because of point 2.

So it would seem that high property prices do lead to a percentage of the population being wealthy but as a result of the well being and quality of life for the rest.

Robots, are we know discussing the merits of share trading or/and share investment? 

One adds little to GDP
One is essential for GDP

I will leave it up to you to work out what matches what as I need to fill my class again.

What the f???k is a good human anyway.

Evening to all.


----------



## Gordon Gekko (11 October 2009)

That spillover effect from foreclosures is one reason why Celia Chen of Moody's Economy.com says nationwide home prices won't regain the peak levels they reached in 2006 until 2020.

Anyone doubting that the recovery in U.S. real estate prices will be long and hard should take a look at Japan, Chen said. Prices there are still off about 50 percent from the peak they hit 15 years ago.


http://www.reuters.com/article/email/idUSTRE59705J20091008?ref=patrick.net

It does seem to be getting better here in Aus but I often wonder about the sentiment in the US with regards to markets/housing/ economy etc.
Just seems to me that they are no were out of the woods yet and if they are the ones to spend and consume and buy from China which will continue to keep us in Aus ahead of the curve, then what happens if the China figures don't support that?
I mean its often been discussed here on other threads but with regard to property in general: If China stumbles and there growth does not meet projections, Aus exports suffer, joblessness or under employment rise, how would this effect the price or sentiment with regards to housing which is already by most standards overvalued?

Would it not follow the US, UK??? Does it really all come down to supply and demand where houses are so rediculouly over valued?

My spelling sucks! deal with it!

G


----------



## MrBurns (11 October 2009)

Gordon Gekko said:


> My spelling sucks! deal with it!
> 
> G




Try this -

http://www.iespell.com/download.php


----------



## Gordon Gekko (11 October 2009)

Oh and lastly I save the response by making another point. So the Aus banks were not as reckless as the US banks. Aussies are in more debt the there US counterparts for smaller houses on smaller blocks with a smaller less diverse economy.

I'm sure I am going to get a serve.

G


----------



## satanoperca (11 October 2009)

Gordon Gekko,

The USA overhang on the global economy is yet to be full realized and will be felt by the world and sundry in time. 

China will continue to emerge as a global powerhouse but like all periods of growth the road with be pathed with potholes that will cause ripples in dependant economies like Oz.

What all this means for Oz RE is for those that have crystal balls but sooner or later the IOU's become worthless.

A tip to happiness.

Always decant a aged bottle of red to discover the pure essence of love


----------



## Gordon Gekko (11 October 2009)

satanoperca said:


> Gordon Gekko,
> 
> The USA overhang on the global economy is yet to be full realised and will be felf by the world and sundry in time.
> 
> ...




Yes I happen to enjoy a good bottle of red every evening
A tip for you which I live by is:

Live modestly, travel extensively 

And the US overhang which you mention above is not at all in IMHO not priced in, if that is what you meant.

G


----------



## satanoperca (11 October 2009)

Gordon Gekko said:


> Live modestly, travel extensively




I couldn't agree more.

As for the US it is all smoke and mirrors for the rest of the world until another Lehman Brothers has a heart attack on debt.


----------



## Nyden (11 October 2009)

Gordon Gekko said:


> Yes I happen to enjoy a good bottle of red every evening
> A tip for you which I live by is:
> 
> Live modestly, travel extensively
> ...




You drink a *bottle* of wine every day? Your liver must be trashed.


----------



## MACCA350 (11 October 2009)

robots said:


> hello,
> 
> i agree Cutz, this share trading provides no wealth at all, no benefit to GDP, nothing
> 
> ...



You're joking aren't you ............other purposes like providing companies with capital to continue to employ people and produce all manner of products and services

cheers


----------



## satanoperca (11 October 2009)

Nyden said:


> You drink a *bottle* of wine every day? Your liver must be trashed.




Only if it is a bad bottle, so my doctor tells me.


----------



## Gordon Gekko (11 October 2009)

Nyden said:


> You drink a *bottle* of wine every day? Your liver must be trashed.





Well actually I enjoy a good bottle of wine with my much younger beautiful wife before retiring on a large pile of money under my mattress in a villa that is paid for by the company.

All the best

G


----------



## Beej (11 October 2009)

MACCA350 said:


> You're joking aren't you ............other purposes like providing companies with capital to continue to employ people and produce all manner of products and services
> 
> cheers




Share TRADING provides exactly zero capital for companies to use to employ people, conduct productive enterprise etc. Who exactly do you think you are trading shares with? Ask company CEO's what they think of traders who short their companies shares on market for example.....Active traders are really profiting by clipping/arbing the capital as it passes through the supposedly "efficient" market, and yet many here (not all) have the audacity to look down on property investors, bankers etc as sort of societal leeches!

The share market can at times provide the ability for companies to raise needed capital, but it is long term investors/funds etc usually providing that rather than active short term traders.

EDIT: To be clear, I am not critising share trading, I use to day trade myself a few years ago for a while. I see nothing wrong with legally profiting from any opportunity that markets of any sort provide for those willing to have a go and take the risk, property included. I'm just trying to point out the hypocritical stance of some when it comes to the property market in particular.

Anyway this thread has gone a bit off topic - the title is "house prices to rise for years" (?) - I think it is clear they will be rising in Australia for the next few years, and after a dip last year have certainly risen strongly across the board this year, as was in fact predicted by several posters going back to early last year on this and the "prices to fall" thread.

With regard to the economic arguments around the allocation (or mis-allocation) of capital that may or may not result from supposedly high house prices (although there are actually lot's of cheap houses/units in all cities as is continuously pointed out here), and the resulting economic cost, perhaps a new thread should be started to discuss the issue of efficiency of capital allocation in general, and the impact of the housing market on this specifically? Then we can discuss that issue away from the context of what we think house prices are going to do, rather than what we think they should do.

PS: A bottle of red a day does keep the doctor away! Well certainly a glass or two does anyway (which is what I usually partake of most evenings!) 

Cheers,

Beej


----------



## wayneL (11 October 2009)

Vizion said:


> This forum needs an ignore function...




You can do it through your User CP.

But then you don't get to see what a fool someone has become.


----------



## wayneL (11 October 2009)

Beej said:


> Share TRADING provides exactly zero capital for companies to use to employ people, conduct productive enterprise etc. Who exactly do you think you are trading shares with? Ask company CEO's what they think of traders who short their companies shares on market for example.....Active traders are really profiting by clipping/arbing the capital as it passes through the supposedly "efficient" market, and yet many here (not all) have the audacity to look down on property investors, bankers etc as sort of societal leeches!




True

But traders don't receive the benefit of electoral bribery and pork barrelling... and it is allowed to correct more naturally.

Australian property investors have their hand in the taxpayers pocket (sometimes directly, sometimes indirectly).


----------



## MACCA350 (11 October 2009)

Beej said:


> Share TRADING provides exactly zero capital for companies to use to employ people, conduct productive enterprise etc.



Ok before I read any more...........without the ability to TRADE shares, who would buy shares in the first place, who would put up their cash to allow companies to RAISE capital(which is used for all those things you and I mentioned) in the first place.

Put it another way, if you could not sell your properties, would you buy an investment property?

cheers


----------



## MACCA350 (11 October 2009)

Beej said:


> I'm just trying to point out the hypocritical stance of some when it comes to the property market in particular.



I believe the point of difference lies in the fact that housing is primarily and directly a means to house people(ie a fundamental and basic need for every human is a roof over their head)........the same cannot be said for shares.

At least that is what I see as the defining difference, many property bulls seem to forget that and see housing as a money making scheme instead of the basic need it was designed to fill...........seems to me like mistaking your veggie patch for the loo, just in this case it's not a mistake, it's being done on purpose

cheers


----------



## robots (12 October 2009)

wayneL said:


> You can do it through your User CP.
> 
> But then you don't get to see what a fool someone has become.




hello,

a fool I am then, i will gladly take being called a name and have the $ piling in my pocket

now what was it:

"st Kilda units to drop 50% 2009"

remember that one up there with the avatar, did that cause the walkabout, throwing in the towel?

thankyou
professor robots


----------



## wayneL (12 October 2009)

robots said:


> wayneL said:
> 
> 
> > You can do it through your User CP.
> ...




I didn't mention any names robots.

It is interesting that you assume that I am referring to you. Is this because you believe you are acting like a fool?


----------



## satanoperca (12 October 2009)

Beej said:


> Anyway this thread has gone a bit off topic - the title is "house prices to rise for years" (?) - I think it is clear they will be rising in Australia for the next few years, and after a dip last year have certainly risen strongly across the board this year, as was in fact predicted by several posters going back to early last year on this and the "prices to fall" thread.




The reason that house prices have come back strong this year is :
1) Unemployment has not reached the predicted rates of 8% - a good thing
2) FHBG - massive stimulation using tax payers money which benefited sellers and the banks
3) Lowest interest rates in 50 years

As was seen in 2008 at the height of IR's, property prices started to retracted. What is stopping this happening in the future given pent up demand has been released with low interest rates and demand bought forward with the FHBG and unaffordability issues about to be put back on the table.

Also, taxes will need to go up to pay for the huge deficit the govnuts have given us.

Oh, crap forget that this dimwit government will do everything it can to artificially kept prices high at the expense of future taxpayers.

Good Morning


----------



## Soft Dough (12 October 2009)

Beej said:


> Share TRADING provides exactly zero capital for companies to use to employ people, conduct productive enterprise etc. Who exactly do you think you are trading shares with? Ask company CEO's what they think of traders who short their companies shares on market for example.....Active traders are really profiting by clipping/arbing the capital as it passes through the supposedly "efficient" market, and yet many here (not all) have the audacity to look down on property investors, bankers etc as sort of societal leeches!
> 
> The share market can at times provide the ability for companies to raise needed capital, but it is long term investors/funds etc usually providing that rather than active short term traders.
> 
> ...




No the leeches are real-estate agents - never ever ever ever trust a real-estate agent, they are the dogs of the earth, with absolutely no moral values.

Actually share trading, and increasing share prices protects companies from predatory takeovers from foreign companies, and in the case of China a country.

We will look back and regret allowing foreign investment in our resources, as this will drive the income generating assets into foreign hands for very cheap prices.

Housing alsoshould have been left alone, but Krudd has sold us out there too.

PS  Good choice of a drop, just make sure you keep going to the doctors for check ups and any elective surgeries, you need to keep some of us employed you know


----------



## kincella (12 October 2009)

Housing shortage may derail state's recovery
Amanda O'Brien | October 10, 2009 
Article from:  The Australian 
A SENIOR West Australian banker has warned the Barnett government the state's rebounding economy will come unstuck if a deepening housing shortage is not urgently addressed.

"There's no question there is going to be a major housing crisis in Western Australia; the only question is when," NAB state business banking chief Andrew Whitechurch told The Weekend Australian. "It is a big issue and it's about to get bigger." 

With a string of major resources projects promising thousands of new jobs from next year, Mr Whitechurch said the lack of land release and a "ridiculous" approvals process were creating roadblocks for developers. 

He said Premier Colin Barnett had shown appropriate concern but it needed to translate into action. 

NAB has been increasing its business presence in WA, adding an extra 37 business bankers last year, and planning up to 30 more this year. While part of the expansion was opportunistic, to try to gain market share from the fallout from last year's CBA-BankWest merger, Mr Whitechurch said the economy was the key factor. 

"We've identified for the next 20 or 30 years there's going to be continued outperformance of the national economy," he said. "The net migration numbers alone are enough to give you a reasonable degree of confidence that this is going to be a great state." 

But he said the projects underpinning growth would be stymied if there was nowhere to live. 

Treasurer Troy Buswell revealed on Tuesday that fewer than 19,000 homes were built in WA in 2008-09, when 24,000 were needed just to cater for population growth of more than 67,000, without touching existing problems. 

Mr Whitechurch said: "The number of people coming in is not stopping, so the problem gets worse every day, and even if you get through the approvals process you can't provide additional supply for 12 to 18 months."

http://www.theaustralian.news.com.au/business/story/0,28124,26189736-25658,00.html


----------



## Macquack (12 October 2009)

robots said:


> move one suburb out 40k in pocket, two suburbs back 80k in pocket, 10 suburbs out 200k in pocket,
> 
> sell up and buy trailer for the pushie and a tent, all in pocket,




Robots, you dont need to have inflating house prices to do what you suggest.


robots said:


> the holders of true wealth, and its all TAX FREE




If you buy a house at a point in time and sell the same house at later point in time, *it still is the same house*. The house does not actually grow for the government to be able to ligitamently tax it. I think that is the philosophy behind no capital gains tax on PPOR.


----------



## robots (12 October 2009)

Macquack said:


> Robots, you dont need to have inflating house prices to do what you suggest.
> 
> 
> If you buy a house at a point in time and sell the same house at later point in time, *it still is the same house*. The house does not actually grow for the government to be able to ligitamently tax it. I think that is the philosophy behind no capital gains tax on PPOR.




hello,

yeah?

if you thinking of throwing in the towel send us a pm i may be able to help, sometimes it doesnt always go your way, thats okay

probably the first thing is dont make embarrassing predictions 

thankyou
professor robots


----------



## MACCA350 (12 October 2009)

robots said:


> hello,
> probably the first thing is dont make embarrassing predictions



Bit of an oxymoron there Robots:

A prediction cannot be known to be embarrassing at the time it is made, so by definition the phrase "don't make embarrassing predictions" is self-contradictory as anyone making a prediction has no conformation it is indeed embarrassing. 

As such it is impossible for anyone to knowingly make an embarrassing prediction, and hence impossible to knowingly refrain from doing so.

cheers


----------



## wayneL (12 October 2009)

MACCA350 said:


> Bit of an oxymoron there Robots:
> 
> A prediction cannot be known to be embarrassing at the time it is made, so by definition the phrase "don't make embarrassing predictions" is self-contradictory as anyone making a prediction has no conformation it is indeed embarrassing.
> 
> ...




The gam eisn't over either


----------



## Vizion (12 October 2009)

I tend to agree that the government will not allow housing to drop


----------



## satanoperca (12 October 2009)

The only way is up maybe.

http://www.smh.com.au/business/price-spike-puts-a-house-beyond-many-20091009-gqrq.html

Some extracts :



> Funding the typical $599,000 house now requires 42.2 per cent of the typical $87,700 gross household income, but a rise of 1 per cent in interest rates will put the requirement at 46.3 per cent




Affordability doesn't seem to be an issue?



> Resale prices at less than the last sale price continue to be recorded across Sydney, including a $1.8 million Newport house that had sold two years earlier at $2.1 million.
> 
> In Mount Druitt a four-bedroom house sold for $389,000 in 2006 fetched $297,000 at its auction last weekend a price drop of 24 per cent.
> 
> An apartment in York Street, Sydney, that sold in 2002 for $500,000 has been sold for $470,000, a 6 per cent price fall.




Sorry wrong thread, property only ever goes up doesn't it.

And there is more, a week or so old but an interesting survery conducted by realestate.com.au

http://au.news.yahoo.com/thewest/a/-/newshome/6138987/home-sellers-prepared-to-accept-less/



> Two-thirds of Australian home sellers would accept a discount of up to 20 per cent on their asking price, a new survey has found.




Surely this cannot be true, housing only goes up in Oz helped along with the lowest interest rates in 50 years and massive sugar hits from the Government.

With another 0.25% rate rise next month a certainty and more to come, it will be interesting how long it takes for the bubble to deflate. If anyone wants to argue about ratio of household income to property why has Sydney prices failed to rise in the last six years over inflation. Can only blow up a balloon so far.


----------



## Gordon Gekko (12 October 2009)

G


----------



## Beej (13 October 2009)

Gordon Gekko said:


> View attachment 33879
> 
> 
> G




I that a picture of what happens to all the people waiting for the great house price crash that never comes??

Beej


----------



## wayneL (13 October 2009)

Beej said:


> I that a picture of what happens to all the people waiting for the great house price crash that never comes??
> 
> Beej



Why would that be Beej?


----------



## satanoperca (13 October 2009)

To all the Sydney Bulls,

Why have Sydney RE prices failed to above the rate of inflation over the last six years if property always keeps going up?

Will Sydney prices show any real growth over the next six years?

Cheers


----------



## kincella (13 October 2009)

you must be talking the median price...where thousands of the lower price houses sold, hence the lower median figure quoted.....however one friend bought in Cremorne 7 years ago and the mv has tripled on that property, no major capital works or anything done....its been an inflation beating investment if ever there was one


----------



## lasty (13 October 2009)

satanoperca said:


> To all the Sydney Bulls,
> 
> Why have Sydney RE prices failed to above the rate of inflation over the last six years if property always keeps going up?
> 
> ...




Interesting to see why you picked 6 years?
Why not one year?

The majority of people actually buy a house to reside in and tailor it to suit their taste and not for capital gain.
However the luxury of home ownership is CGT exempt, so even if you stuck your hard earned in the bank( the bank paid your interest at CPI) and rented you most probably be worse off.

When you have a mortgage you are incharge of your repayments ie whether you fix your interest rates or not.
Renting.. you are at the mercy of the landlord and you can bet your bottom dollar that everytime an interest rate rise occurs and the rental market is tight, your landlord wont be in a generous mood.


----------



## prawn_86 (13 October 2009)

lasty said:


> Renting.. you are at the mercy of the landlord and you can bet your bottom dollar that everytime an interest rate rise occurs and the rental market is tight, your landlord wont be in a generous mood.




This is a common myth imo. When you rent you are usually in 6+ month contracts, so they can only raise it once a year, and by law can only raise it a certain amount (10% i think) per year, so its not like they can raise it with every interest rate rise.

FWIW where we rent the apartment costs 290k. We pay 12kpa. Body corp and insurance are about 3k im guessing. So that leaves them with 9k to service the mortgage, not much really. Even a 200k loan @ 5% is still 10k pa interest. And yet they still only raised the rent once (by 5%) in 3 years


----------



## satanoperca (13 October 2009)

Lasty, thanks for your response but didn't answer the question and I am well aware of the merits of owning.

Why six years as this seems to be the period of stagnation - something that the media and spruikers seem to always negate.

Kincella, yes I am discussion median prices. Bit hard to get an overall picture of a trend when discussing only a couple of properties.
There will always be specific cases of winners and losers. 

As you have pointed out in the past, one must do their own research and know they market.


----------



## wayneL (13 October 2009)

lasty said:


> Interesting to see why you picked 6 years?
> Why not one year?
> 
> The majority of people actually buy a house to reside in and tailor it to suit their taste and not for capital gain.
> ...




There are good reasons to rent, and there are good reasons to buy. Each person's situation is different.


----------



## satanoperca (13 October 2009)

The key to life is being flexible, the ability to change and adapt.

I'm back to renting after selling my PPOR. Essentially renting back my old place. The difference, no debt, money invested in the market that is moving shares and the difference financially between renting and owning is massive, approx 50% less to rent. Something goes wrong, fix it landlord or reduce my rent until it is fixed.

Will I buy again, yes but just waiting and researching for the next investment choice. 

It is all about mindset and living life to the fullest.


----------



## MrBurns (13 October 2009)

If you're smart you rent and use your capital to invest and make more money, more than you'd make by just sitting on you're **** robots errrr everyone......... waiting for inflation to increase the value.

Reality is most people aren't that clever and their best option is to buy, it's fairly failsafe if you can service the mortgage through thick and thin.


----------



## prawn_86 (13 October 2009)

wayneL said:


> There are good reasons to rent, and there are good reasons to buy. Each person's situation is different.






MrBurns said:


> Reality is most people aren't that clever and their best option is to buy, it's fairly failsafe if you can service the mortgage through thick and thin.




2 of the better posts in this thread which just repeats itself over and over...


----------



## MrBurns (13 October 2009)

prawn_86 said:


> 2 of the better posts in this thread which just repeats itself over and over...




It'll start over again tonight when robots logs in and congratuates himself ..........again. And on it goes.

Ground hog day.


----------



## trainspotter (13 October 2009)

hello no punctuation house prices to keep rising for years loving it sunshine and lollipops beautiful country keep up the good work true believers brothers (apologies to professor robots for this cheap shot)


----------



## satanoperca (13 October 2009)

Yes Mr Burns,

Ground Hog Day. Time for me to stop watching.

The best of luck to everyone in regards to RE. I will simply watch and review over the next six months as there is still a lot of unwinding to be done.

Interest rates
FHBG
Unemployment

Swan congratulating himself for getting through the GFC but forgets we are in a crap load of debt, but that is trival. Go debt.

Cheers


----------



## MACCA350 (13 October 2009)

lasty said:


> Renting.. you are at the mercy of the landlord and you can bet your bottom dollar that everytime an interest rate rise occurs and the rental market is tight, your landlord wont be in a generous mood.



Not every landlord has a mortgage on the rental. We've been renting for the last 10 years, 3br house 11km from CBD, in that time we've only had one $10pw increase. Our landlord is happy to keep the price as is(which is extremely cheap for the size and location) to keep us here. 

In fact the only reason they increased it was because the real estate agents changed hands and it was their pressuring for a $20pw increase(not the landlord) I told them we'd leave if they pushed the issue, they came back with a reduced $10pw increase, I decided that was fair enough after 6 years tenancy. Suffice to say they haven't brought it up in the last 4 years

The only reason we are still here is because of the cheap rent. I just checked available equivalent rentals and we are paying half what they are asking

cheers


----------



## kincella (13 October 2009)

psst....anyone want to make 40% return on housing...within one year....
Iraq has a housing shortage of 350,000
low cost 8 square units sell for 65,000 costs estimated 39,022= profit 25978
open to foreigners for investing.......
even in Iraq the prices were trebling during the war and before the global financial con job....
some of you should consider moving there....since prices are sooo cheap compared to the oz market
note the warnings on the site below

http://www.tobb.org.tr/rehber/irak/EIraq Social Housing Project 2009.pdf


----------



## kincella (13 October 2009)

forget the last post....look at this one...make 50% profits.....
it would have only improved since this article of Feb 09....I mean its almost peaceful over there now....compared to earlier periods
extract only.................

House prices have risen by 50 per cent in many parts of central Baghdad during the past year, and rents have almost doubled. Mr Hadithi says that this is explained primarily by the end of the war. “Refugees are returning, but not to the places where they once lived,” he says. “A Shia who owns a new and expensive house in a Sunni area will want to sell it and buy a cheaper one in a Shia-majority district for safety reasons.”

The returning refugees will not find it easy to secure housing. Many never were rich and others have used their savings to wait out the war. A typical middle-class house in Yarmouk costs $340,000 (£240,000), while a similar one in Palestine Street costs $240,000, according to estate agents.

Even before the civil war Iraq was chronically short of housing. Ms Bayan Dezayee, the Minister of Construction and Housing, said last month that by 2015 the population of Iraq would be 39 million and there is a need for 1.9 million extra housing units. Very little has been built over the last six years
http://www.independent.co.uk/news/w...-puts-heat-under-property-prices-1624889.html


----------



## MACCA350 (13 October 2009)

Hindsight's a wonderful thing, I think I've got you topped............BPH 13/8/09 1000% in 3 days

cheers


----------



## kincella (13 October 2009)

but thats the stockmarket for you.....we are talking the housing market...
and some people would have lost 50% of their money on that stock if they bought at the top....
I am just having some fun debating the housing market.....
the stockmarket is more like a gambling den...imo


----------



## MACCA350 (13 October 2009)

kincella said:


> I am just having some fun



As am I

cheers


----------



## kincella (13 October 2009)

the Iraq housing problem is far more interesting....a shortage of 1.9 million houses....population growth to 39 mill by 2015....
they have a bigger problem over there....we only have a shortage of 240000 now...whats the projected deficit with our own population growth ???

extract......
Even before the civil war Iraq was chronically short of housing. Ms Bayan Dezayee, the Minister of Construction and Housing, said last month that by 2015 the population of Iraq would be 39 million and there is a need for 1.9 million extra housing units. Very little has been built over the last six years

http://www.independent.co.uk/news/w...-puts-heat-under-property-prices-1624889.html


----------



## robots (13 October 2009)

hello,

oh yeah, top contributions as usual, superb day, fantastic

great stuff, everyones circumstances are different remember that before you next critique a property owner or the local bludger out the front of coles wanting a coin

all i am looking for is to have a roof over the head and a bit extra as i wander the streets in my later life

he likes to own, she likes to rent, some take G, some have a can its all only debate and discussion

isnt the planet great with this diversification, amazing top place Australia and last I looked the planes still going to the US for those cheapo's

well done brothers

thankyou
professor robots


----------



## Dark1975 (13 October 2009)

kincella said:


> the Iraq housing problem is far more interesting....a shortage of 1.9 million houses....population growth to 39 mill by 2015....
> they have a bigger problem over there....we only have a shortage of 240000 now...whats the projected deficit with our own population growth ???
> 
> extract......
> ...




Well it's logical to understand that infrastructure and domestic housing would need to increase after the U.S had leveled the earth.With oil moving in price everyday,I'm thinking Iran might have a property bubble soon(hence the U.S invading).


----------



## kincella (13 October 2009)

its a total no brainer for me.....there is just so much history available as a guide....
but then again... I am supposed to be...a stupid, ignorant, property bull, who lacks.....( insert whatever you like here)....but who cares what you think...firstly you need to find some one who cares.....and then tell them....see if they care......psst.... I do not care what you think
hehehehehe

and all the arguments by the  opposite crowd...whinge, whine, cringe etc and complain about the problems here in Australia......blah blah blah,,...income to price ratio....etc etc etc..

what the hell do the Iraqi's have to complain about then....they have similar problems, ie shortage and costs of housing,....plus the global financial con, the US and affiliates bombing the **** out of their country, religous infighting, bombing the stuff out of each other.....
I doubt some of you would even survive under those circumstances, let alone consider your housing needs...
lollipops and roses in Iraq...for some....but not for all....


----------



## satanoperca (13 October 2009)

kincella said:


> its a total no brainer for me.....there is just so much history available as a guide....
> but then again... I am supposed to be...a stupid, ignorant, property bull, who lacks.....( insert whatever you like here)....but who cares what you think...firstly you need to find some one who cares.....and then tell them....see if they care......psst.... I do not care what you think
> hehehehehe




I said I would stay out of this thread as it is constantly overrun with childish comments but this takes the cake. I would be ashamed if my four year old spoke like this let alone someone who thinks they are wise and mature and capable of giving insight and advice to others.

I've been sucked into responding, I am no better. 

Off to whip myself one thousand times.

Go PLA.

Looks like reality is setting in for those bulls.


----------



## Beej (14 October 2009)

wayneL said:


> There are good reasons to rent, and there are good reasons to buy. Each person's situation is different.




One of the smartest posts made on this thread really!! 

Cheers,

Beej


----------



## grace (14 October 2009)

This thread has gone to the dogs of late. I rarely post here because of that fact.  Unfortunately, some are unable to listen to others if their point of view is different.

I'll take a risk today though.

Yesterday, I was called by a Real Estate agent (residential property) regional QLD, who said, "we are running some special programs for our old clients".....I last dealt with this agent I'm thinking a little under 10 years ago.  I don't even think I did a transaction with this agent from memory. 

This is an ominous sign for me.


----------



## trainspotter (14 October 2009)

WayneL has hit the nail on the head so to speak or write in this case. Everyones circumstances are different. As part of any balanced portfolio there must be a smattering of each product represented to ensure all bases are covered. Property, Shares, Cash is the general income deriving sources. Some people are more inclined towards property than others. Safe as houses. Bricks and mortar. There's no place like home. A man's home is his castle. Home sweet home. You get my drift. As Grace has pointed out it is the Real Estate Agents job to push their own barrow to earn income. The more they sell the property for, the more comission they receive. FACT. This drives prices up as well. And the greedy owners thinking that they can sell for more than the market dictates is helping their cause to inflate prices.  

http://money.ninemsn.com.au/article.aspx?id=875432 for the rise

http://www.theaustralian.news.com.au/business/story/0,28124,26164175-643,00.html for the fall

The internet is littered with peoples "opinions" as to what may or may not happen. Time will tell. There is still money to be made in "certain areas". I repeat .... "certain areas". Property investing is the same as buying shares IMO. After a lot of due diligence one purchases either income producing product on the "informed decision" and good old father time is the bearer of good news. OR NOT.


----------



## MrBurns (14 October 2009)

grace said:


> This thread has gone to the dogs of late. I rarely post here because of that fact.  Unfortunately, some are unable to listen to others if their point of view is different.
> 
> I'll take a risk today though.
> 
> ...




I can almost feel the market coming off now, didnt see any Chinese at a couple of opens last week.


----------



## Mr J (14 October 2009)

grace said:


> Yesterday, I was called by a Real Estate agent (residential property) regional QLD, who said, "we are running some special programs for our old clients".....I last dealt with this agent I'm thinking a little under 10 years ago.  I don't even think I did a transaction with this agent from memory.
> 
> This is an ominous sign for me.




I watched Glengarry Glen Ross the other night, I didn't realise cold calling existed in real estate. Pretty desperate behaviour.


----------



## Beej (14 October 2009)

satanoperca said:


> To all the Sydney Bulls,
> 
> Why have Sydney RE prices failed to above the rate of inflation over the last six years if property always keeps going up?




Is this question directed at me? If yes it's based on a straw man premise. I've never stated that "property always goes up". I also have never stated values will always increase in real terms either. But I do say well located property will always beat inflation over the long term (10 years+) (EDIT: While moving in cycles within these periods).

In Sydney, even after the 6 years of flat nominal prices and price falls in real terms, most good suburbs still returned 8-10%pa on average over the past 10 years. Some did a lot better than this even over the past 6 years. Looking at the median prices is like looking at the XAO - whatever it does, there are always individual properties/area's (like stocks) that will over or under perform the "index".



> Will Sydney prices show any real growth over the next six years?




IMO it will. If we hit a $700k median price in Sydney after 6 years, and inflation ran at 3%, that would represent real price growth over inflation of 1% pa. I suspect Sydney may hit that sort of median price in less than 6 years, but definitely within 6 years I think.

Cheers,

Beej


----------



## Taltan (14 October 2009)

trainspotter said:


> Property investing is the same as buying shares IMO. After a lot of due diligence one purchases either income producing product on the "informed decision" and good old father time is the bearer of good news. OR NOT.




Well if you bought into the stockmarket in Nov 2007 doesn't matter how informed you are you probably lost, if you bought in Feb this year doesnt matter how uninformed you probably won. Property is similar and we are much closer to Nov 2007 than Feb 2009


----------



## satanoperca (14 October 2009)

Beej said:


> Is this question directed at me?




If you are a sydney property bull then yes. If the question was directed at you only I would have addressed it so.



Beej said:


> most good suburbs still returned 8-10%pa on average over the past 10 years. Some did a lot better than this even over the past 6 years.




And some did a lot worse, on average %6 p.a but still not a bad return by any means.



Beej said:


> IMO it will. If we hit a $700k median price in Sydney after 6 years, and inflation ran at 3%, that would represent real price growth over inflation of 1% pa. I suspect Sydney may hit that sort of median price in less than 6 years, but definitely within 6 years I think.




I agree, after many years of stagnation, this would seem reasonable. Around %4 p.a. Great for the PPOR's but not fantastic for IP's on %80 > LVR's which has been the trend of the last decade.

Cheers


----------



## Mc Gusto (14 October 2009)

MrBurns said:


> I can almost feel the market coming off now, didnt see any Chinese at a couple of opens last week.




agreed. numbers are down at auctions and showings i have visited over the last couple of weeks


----------



## Beej (14 October 2009)

Mc Gusto said:


> agreed. numbers are down at auctions and showings i have visited over the last couple of weeks




Makes sense perhaps - 80%+ auction clearance rates on high sales volumes can only go on for so long! The Melbourne market has had this for most of this year! Might be time for a breather?

Cheers,

Beej


----------



## robots (14 October 2009)

wayneL said:


> There are good reasons to rent, and there are good reasons to buy. Each person's situation is different.




hello,

yeah, one of the best for the thread so far, many can take a lot from this, plenty of options for everyone

top effort

thankyou
professor robots


----------



## Uncle Festivus (15 October 2009)

robots said:


> hello,
> 
> yeah, one of the best for the thread so far, many can take a lot from this, plenty of options for everyone
> 
> ...




ditto??


----------



## Soft Dough (15 October 2009)

"RESERVE Bank governor Glenn Stevens has warned homeowners to brace for the prospect of a rapid rise in interest rates.

In a speech in Perth today, Mr Stevens has warned the RBA cannot continue to keep interest rates at record lows and suggested the *rapid round of reductions announced last year may be followed with rapid increases.* "

http://www.theaustralian.news.com.au/business/story/0,28124,26213424-5018001,00.html


Looks like the cashed up might be able to obtain a few bargains from the FHBG conned over the next 12 months or so.

Might put a bit of pressure on housing with FHBG dropping off too.

Could be interesting.


----------



## Uncle Festivus (15 October 2009)

Let's assume here - he would like it back to at least 5%? Each 0.25% increase adds $50 a month to the average, so that's another $400 a month extra from the low. At 0.25% per month, it will only take 7 more months. And that's assuming he stops at 5%. The great KRudd stimulis sucking machine that lured buyers in is about to have a convulsion perhaps?

I'm starting to like this push me-pull you economics


----------



## gfresh (15 October 2009)

From May 2002 to March 2008 it took 6 years to jump 2.75% from 4.5 to 7.25 .. you'd be hoping you for at least few few pay rises in 6 years, so I don't think it will trouble many unless they really can't spare $100/wk. If they can't they should have never really bought in the first place. 

Raising interest rates now simply seem like a stupid bandaid measure to overcome the inaction/incompetent Government policy on housing. It's almost as if the RBA is simply fighting what the government is *not* doing. 

Get rid of negative gearing on existing properties (or simply scale it right back) and shift the emphasis to new properties, and suddenly there is an investment led construction boom. Investors flood out of established properties.. which are usually poor condition, poorly maintained, a large majority probably should be knocked down and rebuilt anyhow.. and start building new ones. Gives the renters something to live in that isn't a tip. Creates jobs, shareholders can buy in these development companies if they want, we get new properties to house the hoares of migrants flooding in (which the government wants). Surely win win here?


----------



## Soft Dough (15 October 2009)

gfresh said:


> From May 2002 to March 2008 it took 6 years to jump 2.75% from 4.5 to 7.25 .. you'd be hoping you for at least few few pay rises in 6 years, so I don't think it will trouble many unless they really can't spare $100/wk. If they can't they should have never really bought in the first place.
> 
> Raising interest rates now simply seem like a stupid bandaid measure to overcome the inaction/incompetent Government policy on housing. It's almost as if the RBA is simply fighting what the government is *not* doing.
> 
> Get rid of negative gearing on existing properties (or simply scale it right back) and shift the emphasis to new properties, and suddenly there is an investment led construction boom. Investors flood out of established properties.. which are usually poor condition, poorly maintained, a large majority probably should be knocked down and rebuilt anyhow.. and start building new ones. Gives the renters something to live in that isn't a tip. Creates jobs, shareholders can buy in these development companies if they want, we get new properties to house the hoares of migrants flooding in (which the government wants). Surely win win here?




Solutions such as the one above would be a vast improvement over the current strategy which tips bucketloads of equity into unproductive assets.

If only governments were intelligent enough to work off practical starting points as the one above. Then again our current PM is incompetent and useless, with no understanding of how an economy runs ( and even believes that we should sacrifice our economy further as he believes that global warming can be fixed by Australia )


Unfortunately most politicians have never run a business yet are expected to make decisions about running the country.

From what I read, the interest rate rise will be fast, very fast. Not as fast as the decrease, but they dont want to inflate an overinflated balloon too much more, as housing here is more geared as a % GDP than America.

imo there would be dozens of people who could make the prosperity of the nation greater if they made decisions which generated income over the long term.  Unfortunately the personal greed of people ( and at the moment that is property bulls and "investors" ) is stifling the ability of decisions which could make everyone more wealthy, with the inherant improved living standards which could be achieved.


----------



## Soft Dough (15 October 2009)

Uncle Festivus said:


> Let's assume here - he would like it back to at least 5%? Each 0.25% increase adds $50 a month to the average, so that's another $400 a month extra from the low. At 0.25% per month, it will only take 7 more months. And that's assuming he stops at 5%. The great KRudd stimulis sucking machine that lured buyers in is about to have a convulsion perhaps?
> 
> I'm starting to like this push me-pull you economics




There is a difference too.

A few years ago landlords could increase rents charged, and were relying on capital gains.

Wages have pretty much frozen and are likely to remain so for a while, so rent increases are mostly out of the question.

Capital growth will likely be 0 or negative over the next 12 months, which will be interesting for people who negatively gear to go backwards for a change.  I wonder if this will cause them to start to panic out of the market.


----------



## Uncle Festivus (15 October 2009)

gfresh said:


> From May 2002 to March 2008 it took 6 years to jump 2.75% from 4.5 to 7.25 .. you'd be hoping you for at least few few pay rises in 6 years, so I don't think it will trouble many unless they really can't spare $100/wk. If they can't they should have never really bought in the first place.
> 
> Raising interest rates now simply seem like a stupid bandaid measure to overcome the inaction/incompetent Government policy on housing. It's almost as if the RBA is simply fighting what the government is *not* doing.
> 
> Get rid of negative gearing on existing properties (or simply scale it right back) and shift the emphasis to new properties, and suddenly there is an investment led construction boom. Investors flood out of established properties.. which are usually poor condition, poorly maintained, a large majority probably should be knocked down and rebuilt anyhow.. and start building new ones. Gives the renters something to live in that isn't a tip. Creates jobs, shareholders can buy in these development companies if they want, we get new properties to house the hoares of migrants flooding in (which the government wants). Surely win win here?




Well said G. $100 a week may not sound much but there's a heck of a lot of families who require both parents to work to achieve the lifestyle that comes with a large mortgage. 

If you & me and I assume a sizable proportion of the population who think about solutions to this problem can see the bleeding obvious, then why doesn't the government? Yes it is obvious and several have already explained why they don't ie the misguide & short-termist belief  of the 'feeling good' wealth creation factor mostly ie I may have a huge mortgage but my house value is increasing every day, so why worry? 

Have a look at Germany to see how they do it (low prices) for a start? 

Low house prices = more discretionary spending = better lifestyle for all? Oh, and cut immigration.


----------



## TOBAB (15 October 2009)

Uncle Festivus said:


> Well said G. $100 a week may not sound much but there's a heck of a lot of families who require both parents to work to achieve the lifestyle that comes with a large mortgage.
> 
> If you & me and I assume a sizable proportion of the population who think about solutions to this problem can see the bleeding obvious, then why doesn't the government? Yes it is obvious and several have already explained why they don't ie the misguide & short-termist belief  of the 'feeling good' wealth creation factor mostly ie I may have a huge mortgage but my house value is increasing every day, so why worry?
> 
> ...




Germany sounds interesting. Obviously must be more to it. Reason for increasing house prices is Supply and Demand - simple. People are prepared to take on a numerically high mortgage because they are getting paid significantly more than 10 years ago. Our staples have not increased in the same proportion (you may site petrol, however, petrol was at $0.80 a liter in the early 1990's - if it matched the average wage increases it ought to be over $2.00 now). Therfore the things we need are relatively cheaper, people look at the money left over and think "ok I can take on a larger mortgage". The FHBG has merely been a conduit to enable people to get a deposit together.


----------



## robots (15 October 2009)

hello,

Germany, please tell us about Germany or Europe 

do you know someone who lived there, owns there, what in particular is different?

my partner lived in a few european countries for 20yrs, not much difference to Aus

why should people who contribute nothing to society benefit from the hard work of others Uncle, or perhaps you one of those who want the freeride, a step into anothers world

my living conditions perfect thanks to me

thankyou
professor robots


----------



## aleckara (15 October 2009)

Uncle Festivus said:


> Well said G. $100 a week may not sound much but there's a heck of a lot of families who require both parents to work to achieve the lifestyle that comes with a large mortgage.
> 
> If you & me and I assume a sizable proportion of the population who think about solutions to this problem can see the bleeding obvious, then why doesn't the government? Yes it is obvious and several have already explained why they don't ie the misguide & short-termist belief  of the 'feeling good' wealth creation factor mostly ie I may have a huge mortgage but my house value is increasing every day, so why worry?
> 
> ...




I like Germany. For starters they do have current account surpluses despite the higher Euro and they value their land like a lot of European countries and so do not allow mass immigration. I guess Europeans understand the value of land and freedom more so than Australians do as part of their history.

Having an appreciatiating house is not being a productive member of society unless of course you actually 'built' the house not just bought someone else's. 

Immigation and Australia don't mix. Our governments dont have the money to provide the infrastructure for these immigrants. Our cities can't afford to house more people and I doubt Australia has the food or water assets to house the predicted population growth. Our kids will be living with less resources per capita than we did all in the name of immigration. Its sad that people cheer what makes house prices rise but do not realise that the same factors cause instability in other aspects of life. House prices rise because land is scarce, not because in quality of life terms we are getting any richer.


----------



## TOBAB (15 October 2009)

aleckara said:


> I like Germany. For starters they do have current account surpluses despite the higher Euro and they value their land like a lot of European countries and so do not allow mass immigration. I guess Europeans understand the value of land and freedom more so than Australians do as part of their history.
> 
> Having an appreciatiating house is not being a productive member of society unless of course you actually 'built' the house not just bought someone else's.
> 
> Immigation and Australia don't mix. Our governments dont have the money to provide the infrastructure for these immigrants. Our cities can't afford to house more people and I doubt Australia has the food or water assets to house the predicted population growth. Our kids will be living with less resources per capita than we did all in the name of immigration. Its sad that people cheer what makes house prices rise but do not realise that the same factors cause instability in other aspects of life. House prices rise because land is scarce, not because in quality of life terms we are getting any richer.




Not so sure about Europeans and mass immigration? EG France and the UK.
Also not so sure about an appreciating house being unproductive. The more that land increases in value the more we will use it wisely (hopefully!!!). The more wisely we use it the more likely we can get rid of McMansions and have more densely populated cities and reduce the urban sprawl. The potential then becomes available, we just need some decent govt policy, and we are away. Stop listening to NIMBY's and we ought to be able to take in more people that want to work.


----------



## cutz (15 October 2009)

TOBAB said:


> People are prepared to take on a numerically high mortgage because they are getting paid significantly more than 10 years ago.




That's not correct,

Over the past few years people have become comfortable with extremely high debt, in 97 roughly around when i purchased my home my mortgage wasn't nearly what the average is now compared to wages, it was actually between twice and three times my wage at the time.

What are people borrowing now as a ratio to family income ? It doesn't look pretty.

Average wages have only doubled in the meantime ( and that's being generous), house prices in the area similar to mine have  quadrupled, families are taking on a greater amount of debt to fund the purchase of the family home.

Krudd and Co have been throwing money around, the banks are more than happy to issue sub prime debt, the bubble will burst, we will only listen to what we wanna hear.


----------



## TOBAB (15 October 2009)

cutz said:


> That's not correct,
> 
> Over the past few years people have become comfortable with extremely high debt, in 97 roughly around when i purchased my home my mortgage wasn't nearly what the average is now, it was actually between twice and three times my wage at the time.
> 
> ...




Hey i want to hear falling house prices. Anyone who wants to upgrade on their house is in a better position with falling prices. Thats Maths 101. I agree the ratio has increased - no doubt. Where I disagree with is that as a % of income we do not NEED as much to buy the necessities of life hence why people have taken on more debt as a % of income.

By the way our banks are not issuing subprime debt. Subprime was issued to NINJAS (No income, no job/asset). They are ars****** but not stupid.


----------



## grace (15 October 2009)

gfresh said:


> From May 2002 to March 2008 it took 6 years to jump 2.75% from 4.5 to 7.25 .. you'd be hoping you for at least few few pay rises in 6 years, so I don't think it will trouble many unless they really can't spare $100/wk. If they can't they should have never really bought in the first place.




A few months ago, I was at a conference with the major banks represented, as well as APRA, etc etc

They stated that normally, 5% of FHB's loans have personal guarantees by parents.  Only a couple of months back, they were saying that now 45% of FHB's loans are guaranteed by parents. (I will check my notes from this conference and get back to you all - this is from memory - I will check the stats for sure and confirm in a couple of days).

This is very scary indeed.  They could not afford the loan, even at record low interest rates.


----------



## cutz (15 October 2009)

TOBAB said:


> By the way our banks are not issuing subprime debt. Subprime was issued to NINJAS (No income, no job/asset). They are ars****** but not stupid.




I dunno about that,

Question, What do you call a young couple rocking up to the bank with only the first home buyers grant as a deposit taking on 1/2 a mil to purchase a McMansion ?

Answer, Subprime.

EDIT>>Sorry not trying to be smart, i just feel a terrible disservice has been done to our young by the propping up of the housing market, apart from the normal stresses involved raising a family massive debt does not help, it can lead to all sorts of trouble, it has created a new underclass, a working poor childcare generation, mum is forced to work dad needs to take on two jobs, a terrible situation.

BTW, don't listen to the bull regarding housing shortages/immigration/population explosions, it's all just a smokescreen.


----------



## MrBurns (15 October 2009)

TOBAB said:


> Hey i want to hear falling house prices. Anyone who wants to upgrade on their house is in a better position with falling prices. Thats Maths 101. I agree the ratio has increased - no doubt. Where I disagree with is that as a % of income we do not NEED as much to buy the necessities of life hence why people have taken on more debt as a % of income.
> 
> By the way our banks are not issuing subprime debt. Subprime was issued to NINJAS (No income, no job/asset). They are ars****** but not stupid.




No they arent stupid, they're lending as fast as they can and factoring in a default rate as they go, they've already measured your place up for the managers son in law to buy when they move in.


----------



## MrBurns (15 October 2009)

grace said:


> A few months ago, I was at a conference with the major banks represented, as well as APRA, etc etc
> 
> They stated that normally, 5% of FHB's loans have personal guarantees by parents.  Only a couple of months back, they were saying that now 45% of FHB's loans are guaranteed by parents. (I will check my notes from this conference and get back to you all - this is from memory - I will check the stats for sure and confirm in a couple of days).
> 
> This is very scary indeed.  They could not afford the loan, even at record low interest rates.




If thats true thats an amazing stat and shows that Rudd will be responsible for many older people losing their homes as well as their kids.


----------



## TOBAB (15 October 2009)

cutz said:


> I dunno about that,
> 
> Question, What do you call a young couple rocking up to the bank with only the first home buyers grant as a deposit taking on 1/2 a mil to purchase a McMansion ?
> 
> ...




with no job - yeah! Doubt it though.


----------



## michael_selway (15 October 2009)

cutz said:


> I dunno about that,
> 
> Question, What do you call a young couple rocking up to the bank with only the first home buyers grant as a deposit taking on 1/2 a mil to purchase a McMansion ?
> 
> ...




Young couple both on about $100K packaged income?

Half a mil is really cheap one would think 

This is excluding any monies saved (and assistance from parents who are likely to have a lots of money from super etc)

Thanks
MS


----------



## wayneL (15 October 2009)

michael_selway said:


> Young couple both on about $100K packaged income?
> 
> Half a mil is really cheap one would think
> 
> ...




Said couple would not be looking at a half mil pile.


----------



## TOBAB (15 October 2009)

MrBurns said:


> No they arent stupid, they're lending as fast as they can and factoring in a default rate as they go, they've already measured your place up for the managers son in law to buy when they move in.




Good one!

Seriously though I agree with default rates but let's not compare AUST to the US. I hate saying this but we are in a unique position. Now I really hate syaing this but within the next 30 years there is going to be a major shift in economic power (paradigm shift perhaps - hate that word though) towards Asia. No news there. Australia feeds the Chinese jugernaut. We are extremely important to them. The US will lose importance as the Chinese and Indians domestic economies increase in size. 

In summary our economy is strong. Compared to other developed countires KRudd has spent very little.

Some property mkt segments may fall or remain the same, seriously doubt it will be across the board though. Aust is too lucky.


----------



## cutz (15 October 2009)

michael_selway said:


> Half a mil is really cheap one would think




Sorry michael,

Not really up with pricing on McMansions on the outskirts, are they worth a lot more ?

Wow the problem is worse than i imagined.


----------



## So_Cynical (15 October 2009)

Soft Dough said:


> rent increases are mostly out of the question.



My rent goes up every 12 months and i know a few people in the same boat, its pretty common now...its those Ahole property investment seminar people and the Aholes that promote them.


----------



## Soft Dough (15 October 2009)

So_Cynical said:


> My rent goes up every 12 months and i know a few people in the same boat, its pretty common now...its those Ahole property investment seminar people and the Aholes that promote them.




Yeah but it has to end sometime, ie when people cannot afford to live in the houses / have to start to share housing etc.

How can rents increase exponentially if wages are stifled at the moment. I do believe yields will increase over the next few years BUT through a combination of house prices falling and rents stagnating, not by rental returns increasing.

But then again I am man enough to make predictions on these forums.


----------



## michael_selway (15 October 2009)

cutz said:


> Sorry michael,
> 
> Not really up with pricing on McMansions on the outskirts, are they worth a lot more ?
> 
> Wow the problem is worse than i imagined.




Oh I was talking houses in general, under $500K is quite cheap etc

Thanks

MS


----------



## cutz (15 October 2009)

michael_selway said:


> Oh I was talking houses in general, under $500K is quite cheap etc
> 
> Thanks
> 
> MS




Agree micheal, 

Within a 5K radius around Melbourne you need to cough up a lot more for an established family home (actually for anything half decent).


----------



## cutz (15 October 2009)

The rain in spain falls mainly on the plain.

http://www.marketwatch.com/story/spanish-house-prices-tumble-78-in-third-quarter-2009-10-15

Interesting, considering i don't think loose lending was involved.


----------



## MR. (15 October 2009)

Speaking of $500K houses:

Mate just bought a $500K investment property. They are nowhere near on top of their existing mortgage. Bank lent them the money no worries.  I wonder, if they had applied for a $500K loan for some high tech machinery, instead of loaning money for an investment property, would they have been granted the loan? The machinery has the chance to produce something productive! What is likely to be produced by giving people with little money,  the means to buy investment properties at this late stage of the property cycle?  Sounds as if it’s going to be unproductive to the country as well as to themselves. 

Like “Storm” clients, will we see in the years to come court cases against banks from these property investors?  My bet is if they had applied for some hefty or high tech machinery loan they wouldn’t have been able to get the loan or they would have positioned the hoops to make it almost impossible. Instead, even after all that has occurred our banks easily hand out more money for investment properties. 

This property will return rent at approx $23K per year. The rent totals just $63- per day basically fixed.  With an investment of $500K into machinery the hourly rate charged will exceed $63- per hour no matter what the machinery was and has the potential to run 24 hours per day. 

And we are fixated with property?


----------



## Uncle Festivus (16 October 2009)

cutz said:


> The rain in spain falls mainly on the plain.
> 
> http://www.marketwatch.com/story/spanish-house-prices-tumble-78-in-third-quarter-2009-10-15
> 
> Interesting, considering i don't think loose lending was involved.




That story is blatantly incorrect, as everybody knows that the GFC is over, although we are "not out of the woods yet"(Good one Swanny, Bernanke). Could somebody please tell Ireland, Japan, the UK, several Baltic states etc etc that because stock markets are up their economies are now also back to normal  It's a bit like the scene out of the Naked Gun movie with Frank standing in front of the fireworks factory on fire - "Move along, nothing to see here" 


Aussie banks would be doing the proverbial in their pants at the moment, with record deposits burning a hole in their pinstriped pockets, at the same time as the party pooper RBA has given the strongest signal yet that they are going to reign in the housing bubble at whatever cost, apparently. So all those who couldn't afford a prop at 3%, what do you thing they are going to do at 5% o/night rate?

Is that why the banks have increased their delinquent loans provisions from $4B to $32B as at last qtr? What credit crisis?

We've had a near 200 pt rally in the Dow the last 2 days but the Aussie banks sp's have done zip. 

In our desperate search for yield in a world of diminishing growth, the banks in collusion with the Gov are building the last great bubble that could finally tip us into a deleveraging recession?

How would you like your debt served? Via GDP or..... (sorry Beej, no log charts )








> The current household debt to income ratio is around 155 per cent, up from about 130 per cent at the time of the last RBA rate rising cycle in 2003, Westpac said today, in releasing the September consumer confidence number.


----------



## Uncle Festivus (16 October 2009)

robots said:


> why should people who contribute nothing to society benefit from the hard work of others Uncle, or perhaps you one of those who want the freeride, a step into anothers world
> 
> my living conditions perfect thanks to me
> 
> ...




Not sure which people you are referring to? Hard work? Too easy - generous tax concessions and banks too willing to lend to anyone with a pulse, even if they can't afford it?

Perhaps you need a social conscience, or are you just a product of the 'me' generation?


----------



## explod (16 October 2009)

Uncle Festivus said:


> Not sure which people you are referring to? Hard work? Too easy - generous tax concessions and banks too willing to lend to anyone with a pulse, even if they can't afford it?
> 
> Perhaps you need a social conscience, or are you just a product of the 'me' generation?




A *real Robot *spilling out the propaganda for the Real Estate Industry.

But that is just my *very* humble opinion of course.


----------



## robots (17 October 2009)

hello,

just letting everybody know I am going to report the auction results for Melbourne today in approximately 30min,

*i hope thats okay*, it doesnt mean i think prices are going to go up 5000% or down 5000% just because i report the results

house prices still 8x income, fantastic and great for people

thankyou
professor robots


----------



## Vizion (17 October 2009)

How the hell is 8 x income good news for people??

I cannot understand how someone who had enough brains, to earn enough money to buy two properties, can continually make such dumb statements 

Report what you like, it does not change the fact you make down right stupid statements... lol


----------



## robots (17 October 2009)

hello,

i hope this okay,

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

MASSIVE 80% again, again, again

thankyou
Dr Robots


----------



## questionall_42 (17 October 2009)

Attached is a graph from McKinsey showing the global rise in prices and recent fall. 

"Although the current crisis started with the bursting of the US housing bubble, other economies around the world are feeling the effects of their own real-estate booms and busts. From 2000 through 2007, a remarkable run-up in global home prices occurred (see exhibit). But that trend has reversed abruptly. In 2008, the value of US residential real estate fell 10 percent; the global average fared only somewhat better, declining by almost 4 percent. We estimate that falling home prices erased more than $3.4 trillion of household wealth in 2008. And because home prices are slow to correct, the current slide may persist for some time, which could depress global consumption."


----------



## So_Cynical (17 October 2009)

Vizion said:


> I cannot understand how someone who had enough brains, to earn enough money to buy two properties, can continually make such dumb statements




Since when has buying property required brains? its probably the simplest form of investment (at least up until a few years ago) its always been considered low risk and somewhat conservative.

As i stated in another thread a while go...most of the wealthy people i have met over the years have made all there money in property, and the vast majority of those people are ordinary, conservative, dull and somewhat normal/dumb people.

The accidental millionaires.


----------



## explod (17 October 2009)

> As i stated in another thread a while go...most of the wealthy people i have met over the years have made all there money in property, and the vast majority of those people are ordinary, conservative, dull and somewhat normal/dumb people.




Not so, the very wealthy make their money by owning the banks, Rothchilds et al, and the old English Families who's offspring settled the colonies are still intact, they get into stocks before they are launched because they control them, they launch duds which the sheeple get into, (who make a bit) but too late, the big money gets the big money, without risk because they know.  These people on trading make 100s of percent over and over.

Savvy stock market traders a bit lower down catch enough to be far ahead of property, sure for property 20% per annum in most good times, but its chicken feed in the bigger scheme of things.   In fact start with a book on the Rothschild dynasty, as you expand your study it may open your eyes.   An elderly lady I spoke to on a flight once suggested just that and it has gradually changed my life.

You hear about the Buffet's and the Sorroses but not the large family dynasties, they stay off limits away from scrutiny and any attention.   But dig in a bit and you can pick it up.

Not knocking property.  New a bloke who gave me some tips a few years ago now , he's been dead 5 years but his family have a wonderful legacy from property.  He was first a chicken farmer but could see the urban sprawl coming his way so he brought all the other chicken farms in its path, the rest is history.

There are many ways So- Cynical, most of the wealthy have more angles than you can think of and they are worthy study.


----------



## MrBurns (17 October 2009)

To get wealthy you need two things - 


High disposable income

The brains to use that cash flow to support investments such as property or whatever.

The initial cashflow is only half the story, some people think if you have a large income you'll get rich, not so, it's how you apply that income that leads to wealth..


----------



## robots (17 October 2009)

So_Cynical said:


> Since when has buying property required brains? its probably the simplest form of investment (at least up until a few years ago) its always been considered low risk and somewhat conservative.
> 
> As i stated in another thread a while go...most of the wealthy people i have met over the years have made all there money in property, and the vast majority of those people are ordinary, conservative, dull and somewhat normal/dumb people.
> 
> The accidental millionaires.




hello,

great post So Cynical, just plod along keeping a roof over your head and helping out a couple of others(renters) to have a roof over their heads

get a little bit each year on year, have the income to manage things and presto, living large

thankyou
Dr Robots


----------



## Soft Dough (17 October 2009)

MrBurns said:


> To get wealthy you need two things -
> 
> 
> High disposable income
> ...




I agree.

and it depends on what you define as high wealth ( for me it is $10mil plus )

Personally I find most wealthy people have failed in investing in some way ( be that a dud property, dud share transactions, failed business ).  So at the very least, I can put quite a few ticks in this box.

But there is no point being excellent with money, and have the experience of failure unless you have the means to transact in reasonable amounts.


----------



## BlackPrince (18 October 2009)

In terms of krudd spending we have actually spent the 3rd highest amount on a per capital gdp basis behind US and Korea (i think)...mostly out of fiscal stimulus and not tax cuts as other countries have. Challenge now is when to turn the tap off


----------



## gfresh (19 October 2009)

I'm starting to believe the RBA will be quite effective at killing any bubble in housing develop, although still a little unsure whether their jawboning is just that, or they honestly want to slow house price rises. 2% rise in the cash rate should do it. Would mean in real terms property could prove a poor investment for a while. The RBA can always raise the "rent" every month, investors cannot. 

Although there is always that black swan flying about looking for a place to land, that can tend to unsettle perfectly laid fiscal plans 

For Brisbane, looks like things are almost coming together for a 90's repeat for Brisbane, where unemployment is now the highest in the country (on published figures anyhow), the usual growth in tourism and coal mining is floundering, and the government near broke (a high % employer up here). Seeing as monetary is done on a country-wide basis, any rises to slow the south, are going to effect the north even more so. Exhibit A ..


----------



## robots (19 October 2009)

hello,

http://www.theage.com.au/business/what-price-a-home-20091016-h0ey.html

looks as though Chris been visiting ASF, its *SPECIAL* alright Chris

the true visionaries called it, called it and called it, well done brothers

i hope in the future many more join us at this special place

thankyou
Dr Robots


----------



## MACCA350 (19 October 2009)

robots said:


> hello,
> 
> http://www.theage.com.au/business/what-price-a-home-20091016-h0ey.html
> 
> looks as though Chris been visiting ASF, its *SPECIAL* alright Chris



You obviously didn't get the drift of the article

Here's a couple of hints:


> *Sky-high*
> 
> If home affordability has been utterly vapourised by the skyward climb of home prices, you would think someone would sound the alarm.
> 
> ...




Special indeed


----------



## MACCA350 (19 October 2009)

Oh, and just for the sake of it, here's the graph linked to in the article:






cheers


----------



## robots (19 October 2009)

hello,

awesome graph Macca350, not sure about the representation of construction costs there, seems out of wack

gross generalisation, everyone has debt stress, everyone has an average income, blah blah blah

rent if its the such a good deal, you dont have to buy a place and get a loan

*SPECIAL*

thankyou
Professor Robots


----------



## grace (20 October 2009)

grace said:


> A few months ago, I was at a conference with the major banks represented, as well as APRA, etc etc
> 
> They stated that normally, 5% of FHB's loans have personal guarantees by parents.  Only a couple of months back, they were saying that now 45% of FHB's loans are guaranteed by parents. (I will check my notes from this conference and get back to you all - this is from memory - I will check the stats for sure and confirm in a couple of days).
> 
> This is very scary indeed.  They could not afford the loan, even at record low interest rates.




Ladies and Gents, thought I would update you with the stats as per COSL (Credit Ombudsman Services Ltd) at this conference.
Normally, parents guarantee 5% of all FHB's loans.  In August 09, the stats were 40% off all loans written to FHB's had parent guarantees at 95% leverage.  I recall being quite frightened when I heard this at the time.


----------



## Knobby22 (20 October 2009)

Maybe it isn't so unsustainable.
I am impressed with the real average income line. Up 40% in 15 years if that graph is correct! That's impressive

You know in the states, the general populace has been getting poorer over the same period.


----------



## satanoperca (20 October 2009)

grace said:


> In August 09, the stats were 40% off all loans written to FHB's had parent guarantees at 95% leverage.  I recall being quite frightened when I heard this at the time.




If these figures are correct, then it is frightening. Not only have FHB been suckered their parents could also get burnt. 

This leaves very little room for any hiccups in the property market that could result in prices retreating such as IR increases, lack of demand due to FHB already purchasing, reduced freebies from the government and credit lending tightening.

No subprime here, if you cannot afford to save for a deposit, just use the equity in your parents house. 

This is very similar to a story my accountant told me off. Kids get mum and dad to jump on the property boom of 2006. Using 80% equity in the full owned home they purchase an expensive apartment. Banks revalues the property after 1.5 years and determines it value to be $140K less than the purchase price and asks them to stump up the money to cover the short fall as their investment loan was %95 LVR. End result, bank sold the investment property for a huge loss and then sold the family home to cover the short fall. In two short years, mum and dad had lost the family home of 35 years and was down over $200K.

As a famous professor once said, sunshine and lolipops.


----------



## Quincy (20 October 2009)

grace said:


> . . .  *In August 09, the stats were **40% off all loans written to FHB's had parent guarantees **at 95% leverage*.  I recall being quite frightened when I heard this at the time.




At 95% leverage, should interest rates continue to rise and should prices in the subject FHB range fall for any reason then these parents who provided the guarantees might find themselves in a difficult place.


----------



## Judd (20 October 2009)

Quincy said:


> At 95% leverage, should interest rates continue to rise and should prices in the subject FHB range fall for any reason then these parents who provided the guarantees might find themselves in a difficult place.




Never, ever go guarantor for anyone even your children despite the fact that they will choose your nursing home bed.

With ours its been a "get the loan on your own merits" situation.  Two have and one still building a deposit.  For those who have, after they settled and commenced repayments, we've dump into the mortgage the legal and stamp duty costs.  That is as far as we will go now and in the future.


----------



## robots (20 October 2009)

hello,

good evening, a fine day again

just amazing how prices are going at the moment, many people have totally cleaned up Bigtime over the past 12mths

a big Well Done to those who selected this asset class, bathing in it

thankyou
Doctor Robots


----------



## satanoperca (20 October 2009)

robots said:


> hello,
> 
> good evening, a fine day again
> 
> ...




Robots, you have only cleaned up when you have sold at a profit. 

Those selling to FHB got the best free sugar kick from our courageous leader, KRUDD one could ask for as an individual in a life time.

Cheers


----------



## MrBurns (20 October 2009)

robots said:


> hello,
> 
> good evening, a fine day again
> 
> ...




Thats right and many more people will be cleaned up big time in the next 12 months.  Good evening and thank you too.

Please see future projection of the housing market in graph form (below), this was produced by "experts" so it cant possibly be wrong.


----------



## robots (20 October 2009)

hello,

just to let everybody know i will stick around tonite for a while if you have any questions regarding buying a property

many years ago we used to run Q & A of an evening where many great ASF memers provided answers to those with questions

i know Chops a Must loved participating in Q & A and often kicked off the night, so i hope someone can fill his shoes

thankyou
Doctor Robots


----------



## Bill M (20 October 2009)

Dear Robots, I bought a house on the Central Coast and my wife and I will move in it next week. My question is, should I sell my well located unit on the Northern Beaches in Sydney for 400K or should I rent it?

I am concerned because even though I could get $400 a week rent my out goings including levys, rates, agents fees, water rates, insurance and tax will give me only $200 a week net return where as if I put it in fixed interest I could double that. Should I sell or hang on a get this return? Or would you think the stockmarket would be a better bet? Any help would be appreciated.


----------



## robots (21 October 2009)

hello,

hang on to it Bill M, unless you "really" need the cash

superb location, sit tight

put it up for rent and help out a member of the community and just ride the wave of residential property

with the shonk market you will have to deal with boards, management, regulation but with plain old vanilla real estate its all you and utopia

great start

thankyou
Doctor Robots


----------



## MR. (21 October 2009)

This article was making sense then:

http://www.thebull.com.au/articles_detail.php?id=6798



> At the start of the year, people putting their property on the market were doing so out of a sense of despair, but now they're looking for the opportunity to upgrade or invest, he said.




Why are people now looking to upgrade or invest? 
Job secure! Interest rates low!  more speculation? 
Rental returns are still terrible!


----------



## Beej (21 October 2009)

MR. said:


> Rental returns are still terrible!




Where do you think they are terrible? They are not too bad over-all in Sydney and quite good in some particular areas? Do you call 5.5% NET (6.5% gross) return good? Bad? Or mediocre? I saw a 1 bedder sell last week on the lower north shore providing this return, and there are other similar properties still around.

Cheers,

Beej


----------



## satanoperca (21 October 2009)

Rental Returns from Risdex September - 

House Melbourne
Median $524K 
Rent Median $19k
Gross Return %3.6

Apartment Melbourne
Median $400K 
Rent Median $18k
Gross Return %4.5

House Sydney
Median $610K 
Rent Median $25k
Gross Return %4.0

Apartment Sydney
Median $427K 
Rent Median $22k
Gross Return %5.1

House Australia
Median $415K 
Rent Median $18k
Gross Return %4.3

Apartment Australia
Median $369K 
Rent Median $18k
Gross Return %4.8

Looks like apartments are better but would expect holding costs to be greater, body corporate.

Add on top of that average capital growth of %8-10 pa and it looks like property is a winner but that growth rate needs to be compared to the growth in household debt would I guess in somewhere around 5-10% anyway.

Cheers


----------



## MR. (21 October 2009)

Beej, had read about your one bedder before somewhere here.  

From my figures for example Pacific Pines (Gold Coast QLD) 3.93% net, Watsonia (Melbourne VIC) 3.73% net, Springwood (Brisbane Qld) 4% net. These are houses not units as well. 

That 5.5% of yours can be achieve as a bank deposit if someone had the cash. Honestly never really looked at small units because of control issues.

Trying to be in the glass half full group but just can’t see it....


----------



## MR. (21 October 2009)

Beej, 
Hang on I did look at a couple of holiday rental units, two months ago. They were all two bedders  all “absolute ocean front” the better of the lot returned 2.85% net. It was 99% occupied. They had lowered the rents and were doing better than the rest.  (went back 2 years)

The owner didn’t seem to understand why there is little interest.  The outlay of 700K and the returns are 20K per year. The agent originally claimed the return was somewhere just above 5%. That interested me. (for ocean front) But was far from the case. The vendor and agent appear to be waiting for bigger suckers to come along.

On a side note the share of the land value for that unit was $250K at 2007 prices. What's it cost for a 20 year old 90 square metre unit?


----------



## Beej (21 October 2009)

Satanoperca - thanks for the median figures, very good data! Houses usually provide lower gross rental returns due to lower fixed holding costs relative to price, a higher "ownership" premium that investors must compete against, and usually higher potential for capital growth due to direct land ownership component.

Having said that, Gold Coast, Brisbane etc look more expensive to me than Sydney based on rent returns - but remember Sydney had lower rental returns 5 years ago as well, and this has changed due to rising rents not falling property prices.



MR. said:


> That 5.5% of yours can be achieve as a bank deposit if someone had the cash. Honestly never really looked at small units because of control issues.




Yes, but in the bank you have exactly ZERO opportunity for capital growth, and no ability to leverage to benefit further from any capital growth (with commensurate downside risk of course), and also no hedge/protection against inflation. I think the inflation hedge aspect plus potential steady returns equivalent to bank cash rates may be what are/will attract SMSF investors into the market in the coming months. We shall see!



MR. said:


> Beej,
> Hang on I did look at a couple of holiday rental units, two months ago. They were all two bedders  all “absolute ocean front” the better of the lot returned 2.85% net. It was 99% occupied. They had lowered the rents and were doing better than the rest.  (went back 2 years)
> 
> The owner didn’t seem to understand why there is little interest.  The outlay of 700K and the returns are 20K per year. The agent originally claimed the return was somewhere just above 5%. That interested me. (for ocean front) But was far from the case. The vendor and agent appear to be waiting for a bigger suckers to come along.
> ...




Well they sound like poor value for an investment to me. I can only guess that they also have a market for OOs and can get a premium for that due to the ocean-front aspect? But it sounds like they weren't selling at those asking prices so therefore they are not worth that regardless?

Cost to build a 90 sqm unit? Maybe $150k-ish I would guess depending on how many in the block, and quality of materials, fit-out etc.

Cheers,

Beej


----------



## MR. (21 October 2009)

Beej said:


> Yes, but in the bank you have exactly ZERO opportunity for capital growth, and no ability to leverage to benefit further from any capital growth (with commensurate downside risk of course), and also no hedge/protection against inflation. I think the inflation hedge aspect plus potential steady returns equivalent to bank cash rates may be what are/will attract SMSF investors into the market in the coming months. We shall see!
> 
> 
> 
> ...




Cheers thanks, not far from the value I put on it. I estimated $200 (new).

I guess, I am (still) not convinced of further real estate gains in the coming years.


----------



## Soft Dough (21 October 2009)

MR. said:


> Beej, had read about your one bedder before somewhere here.
> 
> From my figures for example Pacific Pines (Gold Coast QLD) 3.93% net, Watsonia (Melbourne VIC) 3.73% net, Springwood (Brisbane Qld) 4% net. These are houses not units as well.
> 
> ...




Don't know about the others,

but pacific pines and springwood are not very good suburbs, and I know that Pacific pines prices have gone down considerably, and assume that springwood has not fared well over the last 6 months.

I think that the returns reflect the poor capital prospects of these two undesirable suburbs.


----------



## Bill M (21 October 2009)

robots said:


> hello,
> 
> hang on to it Bill M, unless you "really" need the cash
> 
> ...



I am thinking along the same lines and haven't we seen some real dooozys in the past 2 years. How can directors sell hundreds of thousands of $$$ worth of shares 1 week before a general public announcement which saw share prices dive 10% to 20% and still get away with it. Crappy regulation here in OZ.



MR. said:


> Why are people now looking to upgrade or invest?
> Job secure! Interest rates low!  more speculation?
> Rental returns are still terrible!



In my case it was purely a lifestyle choice. Having said that, plenty out there will never ever trust the stockmarket again. A lot of the older investors will just just go property even if returns are a bit lower. It's a lot easier to know you got $400 p/w coming in from good tenants rather that risking it on blue chip stocks that had cut their dividends by 30% to 40% and still haven't recovered their capital losses.


----------



## robots (21 October 2009)

hello,

yes Bill M, the regulation is dubious and thats why people have to get away from them and take charge of own life

shareholders have no idea about the position of a company, unlike RE, you can cruise past, inspect it, beautiful

anyhow back to the real asset class that performs year after year after year, 

it was a great night last night, looks as though we got this thread back on track after the "no-content" posts that were thrust upon it,

some more questions

thankyou
Doctor Robots


----------



## Dowdy (21 October 2009)

robots said:


> shareholders have no idea about the position of a company




Never heard of a PDS?



> it was a great night last night, looks as though we got this thread back on track after the "no-content" posts that were thrust upon it,
> 
> some more questions





Yes, it's great to see you, in particular, come up with more meaningful content rather then the usual one word/no content post - ie. Utopia, great day for a coffee, paradise etc and your usual one sentence nonsense. 

Hopefully you can keep up your more informative and thought out post then we can all benefit and live in utopia. Even if we don't agree, we can atleast still have a meaningful discussion


----------



## robots (21 October 2009)

Dowdy said:


> Yes, it's great to see you, in particular, come up with more meaningful content rather then the usual one word/no content post - ie. Utopia, great day for a coffee, paradise etc and your usual one sentence nonsense.




hello,

dont forget *SPECIAL*

thankyou
Doctor Robots


----------



## nunthewiser (21 October 2009)

you certainly are Doctor R


----------



## trainspotter (21 October 2009)

1986 to 2006 graph evidencing that Doctor/Professor Robots is on the money .... House prices in Australia have risen substantially over the past 20 years, far outpacing the growth in inflation, average earnings and household income. http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.htm


----------



## Soft Dough (21 October 2009)

trainspotter said:


> 1986 to 2006 graph evidencing that Doctor/Professor Robots is on the money .... House prices in Australia have risen substantially over the past 20 years, far outpacing the growth in inflation, average earnings and household income. http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.htm




And it looks fair, reasonable, and realistic until 2001.

What happened then?

Is it sustainable?

Is it desirable to be sustainable?

Answers which we know the answers to, but self interest dictates what our answers will be.

We are VERY lucky that cmpanies such as RIO and BHP began flooding the economy with wealth generated by exploiting our resources.


----------



## MrBurns (21 October 2009)

trainspotter said:


> 1986 to 2006 graph evidencing that Doctor/Professor Robots is on the money .... House prices in Australia have risen substantially over the past 20 years, far outpacing the growth in inflation, average earnings and household income. http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.htm




I guess you could also say that shares also only rise over time.

This whole thread is BS, of course property rises over time, what is also true is that there are times when it goes in reverse.

However property, like shares always recovers and goes forward, the way to succeed in either is to have impecable timing, not possible, only luck, or be almost debt free or have an ability to service debt regardless of economic conditions.

Thats it, thread closed !!!!!


----------



## Knobby22 (21 October 2009)

You aint got the power Burnsey!


----------



## trainspotter (21 October 2009)

Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.


----------



## MrBurns (21 October 2009)

Knobby22 said:


> You aint got the power Burnsey!




If robots is a professor I'm a wizard and can close threads at will, I'll just consult the wizard book again.....


----------



## trainspotter (21 October 2009)

MrBurns said:


> If robots is a professor I'm a wizard and can close threads at will, I'll just consult the wizard book again.....




Hey Mr Wizard/Burns ... can you conjure up me a nice fat RE deal with 25% nett per annum with low risk and LVR of no more than 65%?


----------



## MrBurns (21 October 2009)

trainspotter said:


> Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.




You dont need a graph to know that property prices rise over time.

The only thing debated in this thread of mostly crap is that it corrects after bubbles, stagnates then goes ahead again.
That is just as true as the statement that property keeps rising..........eventually.

So if anyone wants to argue that property doesnt crash sometimes then go ahead after a pause then keep this drivell going otherwise perhaps it just morphes into a general property thread.


----------



## MrBurns (21 October 2009)

trainspotter said:


> Hey Mr Wizard/Burns ... can you conjure up me a nice fat RE deal with 25% nett per annum with low risk and LVR of no more than 65%?




No problem, no hang on that was in 1985, sorry closed out


----------



## trainspotter (21 October 2009)

MrBurns said:


> You dont need a graph to know that property prices rise over time.
> 
> The only thing debated in this thread of mostly crap is that it corrects after bubbles, stagnates then goes ahead again.
> That is just as true as the statement that property keeps rising..........eventually.
> ...




It has morphed into an entertaining thread as it seems that robots the good human is on some really, really good gear called property and he can't wait to tell all and sundry about it VS the guys who believe that they should take the bait every time he posts. "Don't feed the trolls" I think they call it !! LOL.


----------



## nunthewiser (21 October 2009)

Might be a good idea to totally ignore any japanese graphs/data then guys ..

It could never happen here after all 

might pay to compare a few graphs actually and compare the lengths and velocitys  of various countries "bubbles" though but i dare say we can always come up with reasons that this time "its different" 

 and a BIG thanks to all the SPECIAL people here 

sunshine and lollipops , nirvana and a 6 pack and a pizza thanks

anyways ........ as you were


----------



## Uncle Festivus (21 October 2009)

trainspotter said:


> Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.




Or maybe just keeping up with money supply inflation while making people _think_ they are making real money? Take RMBS - $10B just for the direct government 'subsidy' to the big boy banks, and another $8B for the juniors that missed out?



> PRESSURE is mounting on Treasurer Wayne Swan to start winding back the government guarantee that has underwritten debt raisings for banks, with the Reserve Bank board suggesting Australia has started to lag the world on ending the program.
> ------
> Government-guaranteed bonds have accounted for the majority of corporate bond issues in 2009, with some $56 billion issued in the domestic market so far this year.




Then pile on all the other 'schemes', grants, tax subsidies, negative gearing etc etc and you have a subsidised free market capitalist system which starts to look a lot like socialism/communism, except that (Chinese) communism now looks like old capitalism???

The bottom line is that there is no free lunch - someone will be left holding the baby, the only unknown is the timing.......flip away


----------



## MrBurns (21 October 2009)

trainspotter said:


> It has morphed into an entertaining thread as it seems that robots the good human is on some really, really good gear called property and he can't wait to tell all and sundry about it VS the guys who believe that they should take the bait every time he posts. "Don't feed the trolls" I think they call it !! LOL.




Yep it's bloody hillarious actually.....


----------



## MrBurns (21 October 2009)

nunthewiser said:


> Might be a good idea to totally ignore any japanese graphs/data then guys ..
> 
> It could never happen here after all
> 
> ...




Yeah what might get the professor investigated by the FBI is if the market actually goes down for a prelonged period........it could happen.


----------



## wayneL (21 October 2009)

trainspotter said:


> Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.




The important thing to note is that numerical rises have been engineered by governments several to avoid monetary collapse, such is the importance of rising house prices to how western economies (and particularly Oz) are structured. This does via inlation.

"Real" values (as measured by comparing to wages/rents etc) have in fact collapsed several times.

Real estate paid for with cash has at times been a very very poor investment, it is gearing which makes it work over the long term.


----------



## Macquack (21 October 2009)

MrBurns said:


> I guess you could also say that shares also only rise over time.
> 
> This whole thread is BS, of course property rises over time, what is also true is that there are times when it goes in reverse.
> 
> However property, like shares always recovers and goes forward, the way to succeed in either is to have impecable timing, not possible, only luck, or be almost debt free or have an ability to service debt regardless of economic conditions.




Very good Burns, I actually like this!


----------



## nunthewiser (21 October 2009)

Macquack said:


> Very good Burns, I actually like this!






> Last edited by wayneL : Today at 10:49 PM. Reason: Let's all be nice to each other.





hahahahahah would love to know what you changed there wayne


----------



## Macquack (21 October 2009)

nunthewiser said:


> hahahahahah would love to know what you changed there wayne




I said that he has an ego, hardly an insult.


----------



## Macquack (21 October 2009)

wayneL said:


> The important thing to note is that numerical rises have been engineered by governments several to avoid monetary collapse, such is the importance of rising house prices to how western economies (and particularly Oz) are structured. This does via inflation.
> 
> "Real" values (as measured by comparing to wages/rents etc) have in fact collapsed several times.
> 
> Real estate paid for with cash has at times been a very very poor investment, it is gearing which makes it work over the long term.




This has me thinking, why does the RBA have a target rate of inflation of say 2-3% when it could have a *target rate of 0%*. Would gearing become obsolete?


----------



## wayneL (21 October 2009)

Guys, 

There has been a lot of agro on the forum lately.

Sorry if appearing to come down too hard in some instances, but we all need to make an effort to tone down.

Please don't get angry with us mods, just trying to get the forum back the way it was. It might seem OTT sometimes, and we won't catch all instances, but it should be a temporary situation.



Thanks for understanding.


----------



## wayneL (21 October 2009)

Macquack said:


> This has me thinking, why does the RBA have a target rate of inflation of say 2-3% when it could have a *target rate of 0%*. Would gearing become obsolete?




Not if you could positively gear property with a reasonably small deposit. That would still make a good investment (depending on the #'s.) .


----------



## MR. (22 October 2009)

Beej said:


> Yes, but in the bank you have exactly ZERO opportunity for capital growth, and no ability to leverage to benefit further from any capital growth (with commensurate downside risk of course), and also no hedge/protection against inflation. *I think the inflation hedge *aspect plus potential steady returns equivalent to bank cash rates may be what are/will attract SMSF investors into the market in the coming months. We shall see!




*I think the inflation hedge *

Real estate is an inflation hedge?

The 70's in particular!

http://i187.photobucket.com/albums/x308/LPShadow/HousePrices1970-2003.gif
View attachment cpi vs REAL ESTATE.bmp


http://www.rba.gov.au/Speeches/2003/_Images/100403_dg_graph1.gif
View attachment cpi2.bmp


----------



## Uncle Festivus (22 October 2009)

MR. said:


> *I think the inflation hedge *
> 
> Real estate is an inflation hedge?




Which inflation - CPI  or Money Supply? Is property 'returning' more than the money supply inflation rate? An inconvenient truth when it comes to determining the real return from property? Anybody really think the prices of assets like gold or oil are going up because of increasing demand? It's all about how much money is being thrown at things, property included.


----------



## MrBurns (22 October 2009)

Real estate is an inflation hedge *against the price of real estate*, thats all that matters, otherwise it might just get beyond you while you're not looking.


----------



## Beej (22 October 2009)

MR. said:


> *I think the inflation hedge *
> 
> Real estate is an inflation hedge?
> 
> The 70's in particular!




MR it looks to me like that house price index graph is measuring "real" (ie inflation/CPI adjusted) prices, given that in 1970 you could buy a median house in Sydney for $17.5k and today it costs $550k a nominal price index should show a 31x change from the base value in 1970. So therefore it actually proves quite clearly that property is a good CPI inflation hedge. I think that was your point though?




Uncle Festivus said:


> Which inflation - CPI  or Money Supply? Is property 'returning' more than the money supply inflation rate? An inconvenient truth when it comes to determining the real return from property? Anybody really think the prices of assets like gold or oil are going up because of increasing demand? It's all about how much money is being thrown at things, property included.




I agree with your last point. Is property returning more than money supply inflation? No probably not. It is however beating CPI by a consistent margin over the long term. The thing isn't that the idea? If you are a self funded retiree, CPI is what matters to you, not the price of property, so if your capital is hedged against CPI and then some and you have income (from rent) growing with CPI, then you are sweet? I'd want as least a part of my portfolio set-up like that anyway.

Cheers,

Beej


----------



## gfresh (22 October 2009)

MrBurns said:


> Real estate is an inflation hedge *against the price of real estate*, thats all that matters, otherwise it might just get beyond you while you're not looking.




Unfortunately this is so.. everything else is always affordable, and even become more affordable (with more features over time, e.g. technology, cars, appliances), it's only house prices that are the inefficient market. 

http://www.theage.com.au/business/housing-affordability-worsens-20091022-ha2q.html

What was it the realestate industry was banging on about, "record affordability" during multi-decade low interest rates! what a croc, it was only a very temporary phenomena that was always going to swing the other way. 

And migrants with a proper international perspective aren't going to keep paying higher and prices when they can get a higher standard of living o/s...

http://www.theage.com.au/business/m...roperty-market-20091021-h8of.html?autostart=1



> One former expat, Daniel returned to Sydney from a five-year stint in London. Now he and his wife “don't intend to go anywhere near the Australian property market” despite having saved more than $200,000 for a deposit on a home.
> 
> *“The price of property (and living) is more expensive here than most places we have travelled,” he said,* declining to give his full name.




...



> Dutch-Canadian Frans Kuiper and his Australian wife sold their home in the Netherlands in 2004 on the expectation of buying after moving to Adelaide. But five years later the couple continues to rent.
> 
> “If prices do not come down in the future, we are prepared to move overseas again,” said Mr Kuiper.
> 
> ...


----------



## MR. (22 October 2009)

Beej said:


> MR it looks to me like that house price index graph is measuring "real" (ie inflation/CPI adjusted) prices, given that in 1970 you could buy a median house in Sydney for $17.5k and today it costs $550k a nominal price index should show a 31x change from the base value in 1970. So therefore it actually proves quite clearly that property is a good CPI inflation hedge. I think that was your point though?





Beej,
No it wasn't. (I should be keeping quite) I was questioning the discrepancy. The housing price chart is in “real” prices. (ie: House prices less inflation.) 

Clearly house prices for the last 40 years have been a good hedge against inflation.  In 1975 inflation was 16% and the price of Australian houses kept up with CPI. Interesting that in 1975 the housing loan interest rate was 10%. 

If the housing loan rate was at 10% the RBA must have had the cash rate at approx 8%. While inflation was at approx 16%, that was for near 3 years. Oil shock or whatever it appears to be fact. 







As I said before I want to be in the glass half full group but:
That spike towards the end didn't look right to me in this chart and it saved me alot of $$$ 






The spike towards the end of this chart doesn't look right either. So.....



View attachment cpi vs REAL ESTATE.bmp


----------



## robots (22 October 2009)

hello,

classic reading that article from the age,

those people should be looking at/taking to the cleaners all the bloggers, cfd salesman, reporters, forex traders, cfd companies, economists, anti-property forums (which are all about laying the boot into the wealthy) who spread the propaganda

they all got it amazingly WRONG, 

they also wanted to return to Australia to have a family and live the life which a recent survey supports is one fantastic ride, that costs, yes it costs $ it aint free

and those in have typically done the hard yards, saving, working to get to a way of life no other country in the world comes close to

paradise, in and outside the front door for all

thankyou
Doctor Robots


----------



## MR. (22 October 2009)

MR. said:


> The spike towards the end of this chart doesn't look right either.




and that chart ends at 2003.

afternoon robots....


----------



## robots (22 October 2009)

nunthewiser said:


> Might be a good idea to totally ignore any japanese graphs/data then guys ..
> 
> It could never happen here after all
> 
> ...




hello, 

good afternoon MR., another great day

top effort Nun, great place and we all got each others back

thankyou
Doctor Robots


----------



## robots (22 October 2009)

hello,

any hip hop fans check kissfm.com.au now for some fine tracks 87.60 fm dial

thankyou
doctor robots


----------



## trainspotter (22 October 2009)

Nuffin more to be said really:-

http://www.thebull.com.au/articles_detail.php?id=6835

BUT ........ house prices keep on keeping on.


----------



## robots (22 October 2009)

hello,

oh yeah:

http://www.myspace.com/nuffsaidrecords

thankyou
doctor robots


----------



## MR. (23 October 2009)

Here's a chart which is more up to date then the last one posted. 
Excuse the resolution. 
View attachment realhouseprices1880to2008-4.bmp


That spike has to be a concern for buying into realestate now. 


Robots 
http://www.youtube.com/watch?v=1PLr2pKkzEs&feature=player_embedded


----------



## Beej (23 October 2009)

MR. said:


> Here's a chart which is more up to date then the last one posted.
> Excuse the resolution.
> View attachment 34147
> 
> ...




If you paid attention to charts like that you would not have bought real estate in Australia at any time since 1977! Maybe even 1967? Yea, great decision that would have been either way....

I have my doubts about the validity/correctness of that chart anyway, but my point above stands regardless 

Beej


----------



## MR. (23 October 2009)

Beej said:


> If you paid attention to charts like that you would not have bought real estate in Australia at any time since 1977! Maybe even 1967? Yea, great decision that would have been either way....
> 
> I have my doubts about the validity/correctness of that chart anyway, but my point above stands regardless
> 
> Beej




Both charts need to be drawn with a logarithmic scale. 
It would give a fairer picture of those gains.  But yet to find one.


----------



## drsmith (23 October 2009)

Logarithmic scale or not the rise in the past 10 years does look like an attempt to defy gravity. It's similar in scale to the rise in the early 50's.

A log graph but adjusted for household income (instead of inflation) with household credit as a percentage household income superimposed on top would be interesting.


----------



## drsmith (24 October 2009)

From the RBA

http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_mar03/bu_0303_1.pdf

The graph on page 4 shows household debt as a percentage of household disposable income has risen from 40% in the early 80's to 120% in 2002.

http://www.rba.gov.au/PublicationsA...ilityReview/Mar2009/Html/Graphs/graph_69.html

Household credit growth has been well in excess of 10%pa for most of the period since 2000.

http://www.rba.gov.au/PublicationsA...ilityReview/Mar2009/Html/Graphs/graph_61.html

The cost of finance interest relative to household disposable income was higher in March 2009 than it was at any time during the high interest rate period of the late 80's.


----------



## robots (24 October 2009)

hello,

oh blast, sorry Kincella i thought i had cleared out all the no-content posters by going on about a bit of other stuff

oh well, hang in there bro and yes still a MASSIVE 8x average income, superb

its getting a bit tired of that statement "it will return to the long term average" 

great to be part of this new era in our lives

thankyou
doctor robots


----------



## robots (24 October 2009)

hello,

good morning fellow Australians and distinguished guests:

http://www.theage.com.au/business/median-house-price-hits-480000-20091023-hdfz.html

WOW, higher than 2007, yes thats right brothers

its strange though WayneL, both the US and UK are throwing money around (low IR's) but not much happening to prices in those countries

its different alright, this country is it

couple of latte's this morning

thankyou
Doctor Robots


----------



## joeyr46 (24 October 2009)

Beej said:


> If you paid attention to charts like that you would not have bought real estate in Australia at any time since 1977! Maybe even 1967? Yea, great decision that would have been either way....
> 
> I have my doubts about the validity/correctness of that chart anyway, but my point above stands regardless
> 
> Beej




Your right there have been a few spikes that could have worried you at certain times and the market corrected quite heavily after them (not all prices came off heavily I saw 50% falls in some outer Brisbane regions in 91/92 period while central Brisbane houses stayed flat and very close in appeared to rise slightly)
Things are no different this time in general terms (Except debt levels are higher) so there will be an inevitable correction (how much is debatable) The biggest problem is the amount of debt that has been created worldwide if the liquidity in the system dries up we could see the biggest correction for a several decades and housing shortages or immigration won't help if the problem is liquidity
Looking at that chart from an EW perspective it is possible to count five clear waves and suggests prices will com back to 92 period of around 150000 
That does not make real estate a bad investment nor should we sell our personal home as it has never been an investment other than in lifestyle and also provided you are not heavily in debt should not be a problem But the government and the banks have shafted everyone by extending so much credit and creating this bubble


----------



## legoman (24 October 2009)

robots said:


> hello,
> 
> good morning fellow Australians and distinguished guests:
> 
> ...




Yup, population growth and a return to confidence in the medium term for the Aus economy have been enough to turn the house price thing around, with some help from the grant. Remarkable.


----------



## satanoperca (24 October 2009)

drsmith said:


> From the RBA
> 
> http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_mar03/bu_0303_1.pdf
> 
> ...




Thanks DrSmith for the links.

Now can someone provide an analysis of the following :

Debt Growth %10 p.a
Asset Growth 7% p.a
Inflation %3 p.a
Wage Growth %5 guesstimate

How much has property increased over the last 10 years if you remove debt growth. It would seem that property has increased due to expansion of credit and not from equivalent increases in income. If debt growth is removed and property only increased on wage growth would it have increased as much?

I will assume that credit growth can only expand until it reaches a ceiling, namely people being able to service the loan without starving to death. If our house hold debt to GDP is %160 how much more can it increase before we hit the ceiling and it cannot expand any further resulting in prices declining or stagnating until incomes catch up. 

Cheers


----------



## MrBurns (24 October 2009)

1000 Actions this weekend ? Shows a lot of people are cashing in at the top of this housing bubble, ready to cash up ready for the crash.


----------



## robots (24 October 2009)

satanoperca said:


> Thanks DrSmith for the links.
> 
> *Now can someone provide an analysis of the following :
> 
> ...




hello,

non issue, irrelevant to house prices

just more fluff while people continue to avoid the real reason Australia is doing so well

fills a bloggers page i guess, i just hope people start to question those who have carried on regarding the prices and delve into the true hidden motives

for example, the association they may have with CFD Companies, Fund Managers, Forex Companies, Publishers, New Media, Gambling etc etc

thankyou
Doctor Robots


----------



## MrBurns (24 October 2009)

robots said:


> hello,
> oh yeah, top day brothers
> looking forward to enjoying the weekend riding the trams looking at the architecture which creates the best store of wealth known to mankind
> *might see a few strange characters on the way
> ...




Should we notify the police ?


----------



## Beej (24 October 2009)

satanoperca said:


> Thanks DrSmith for the links.
> 
> Now can someone provide an analysis of the following :
> 
> ...




Those are interesting questions. The way see it is like this:

There is no point in looking at property price growth sans "debt" growth. Of course the two go hand in hand. The thing that needs to be understood is the primary reason for the debt expansion of the last 10-15 years, and that is that we shifted fundamentally from a high inflation to a low inflation economy, and interest rates came down and stayed down accordingly. Add to that an increase in 2 income households, high income earners delaying starting families etc (which of course were probably one shot effects), + the trend to bigger/better houses and less people per household and so on.

This might suggest that the biggest risk to property prices would be a shift back to a high inflation/high interest rate environment, and a corresponding reduction in credit, and in terms of "real" price growth, this would probably be true. But in terms of nominal price growth, even a high inflation/high interest rate climate (like we had in the 70s/80s) would likely see quite significant nominal price increases for property. Remember that GDP expands nominally with inflation as well as from real growth, so a debt to GDP ratio can remain constant, or even fall, and yet the actual numbers in terms of loan and house prices etc can continue to rise. Think about that a bit....

Scenario 1) So if things stay as they are, the economy remains robust and grows, lending continues and current inflation/interest rates remain as they have for the past 10 years, then while there might be room for a bit of growth in credit yet, the primary driver of R/E prices will be wage growth (which should continue in real terms as it has recently). That still imply's inflation plus a bit to me across the board. Remember though that this will be suburb/region dependent as wage growth is not equal and the big cities have a lot of stratification of household incomes. That's why there's 75 $1M+ median price suburbs in Sydney vs only 6 in Melbourne even though the over-all medians are not that far apart at ~$550k and~ $480k respectively. And I'm not sure the other cities have any more than 1 or 2 $1M+ median suburbs if any?

Scenario 2) If things change and we end up with a high inflation/high interest rate economy, (forced on us maybe by the bloody US and UK + globalisation), then we will be less likely to see real wage growth, or real property price growth, BUT we will see both over time run up with inflation at least, so nominal wage growth and nominal property prices (+ nominal credit figures) could still increase quite significantly. Remember as I have tried to explain above, this could all happen even with a flat or falling household debt to GDP ratio (which is based on nominal numbers by definition).

There is/was of course a scenario 3) which is the "house price crash" scenario, but this requires a systemic crisis of the banking/financial system with resulting collapse of available credit, recession/depression, massive unemployment, possible deflation, huge increase in number of mortgage foreclosures, forced sales etc; ie the US situation right now, and to a lesser extent what the UK experienced. IMO the chance of this occurring in Australia is now very very low (though never zero). If it was going to happen last year/early this year was it.

Cheers,

Beej


----------



## Dowdy (24 October 2009)

Beej said:


> There is/was of course a scenario 3) which is the "house price crash" scenario, but this requires a systemic crisis of the banking/financial system with resulting collapse of available credit, recession/depression, massive unemployment, possible deflation, huge increase in number of mortgage foreclosures, forced sales etc; ie the US situation right now, and to a lesser extent what the UK experienced. IMO the chance of this occurring in Australia is now very very low (though never zero). If it was going to happen last year/early this year was it.
> 
> Cheers,
> 
> Beej




Few things you're forgetting

 - interest rates rising
 - government grant being eliminated
 - It's not a collapse of available credit, it a collapse of available savings through banks raising their lending standards (although increasing the max borrowing limit from 95% of the value of the house to 90% is still pretty poor standards) 
 - petrol prices and everyday food cost rising putting stress of mortgage repayments
 - people don't know how to save
 - people want too much for their FIRST home


Here's a classic example...
I have this friend at work who borrowed 95% to buy her FIRST home and her land release has been delayed for about 1 year so she might not get the full first home grant either. She's angry because she thinks she deserves it (the same type of attitude i guess you get from people who receive the dole and any centrelink money and think they deserve it)
She doesn't know how to save either - she want to buy a brand new holden cruze and recently went on a holiday to Thailand.

Guess she'll learn the hard way, as will alot of people


----------



## Soft Dough (24 October 2009)

MrBurns said:


> 1000 Actions this weekend ? Shows a lot of people are cashing in at the top of this housing bubble, ready to cash up ready for the crash.




I wonder if some of the smarter investors are cashing up a little. They might see some bargains over the next 12 months or so.   Time will tell.

I just hope the people on the knife edge do not wait too long, or have contigency plans in place in case prices fall and/or banks start getting nervous.


----------



## drsmith (24 October 2009)

Below is a link to a document from the RBA which contains updated graphs to September 2009.

http://www.rba.gov.au/PublicationsA...p2009/Pdf/financial-stability-review-0909.pdf

Of particular interest is the updated graph (graph 63 on page 44) on household interest payments against household disposable income.

Emergency low interest rates and and government stimulus to household income have both failed to bring this down to peak levels of the late 80's let alone to anything that puts households into a position to cope with the rising interest rates that would come with a response to inflation.

It's a very skinny tightrope the RBA will have to walk as it raises interest rates to more normal levels let alone in response to inflation.


----------



## satanoperca (24 October 2009)

MrBurns said:


> Should we notify the police ?




Yes and the guys with the straight jackets and padded van. 

Thank you Beej for your detailed response and Dowdy, DrSmith and Soft Dough for your contribution. 

Robots if you have nothing intelligent to say or are unable to comprehend this discussion please get on a tram and check out the architecture of Melbourne.



Beej said:


> Think about that a bit....



Yes some thought is required, will get back to you. Thanks for your detailed explaination.



drsmith said:


> It's a very skinny tightrope the RBA will have to walk as it raises interest rates to more normal levels let alone in response to inflation.




This is extremely true, the economy may be considered robust but it will not take to much to get it out of kilter.


An another note, I have compiled all the auctions for five suburbs (approx 58 auctions) in Melbourne from the REIV website and will cross check on Monday when they publish this weekends auction results to see how accurate they are. Got to love self regulated statistics from the RE industry.

Cheers all, stunning day in Melbourne, going for a fish with a bottle of wine in hand.


----------



## robots (24 October 2009)

hello,

oh yeah, hahahahahahahahahahahaha

sorry sorry sorry, i will run everything by the authorities before posting in the future

like I say, Debt Growth, Asset Growth, Inflation, Wage Growth and the figures you present are irrelevant

these are things which have been brought into the discussion by the anti-property bloggers because many have trouble understanding the situation

maybe an xpose of that scene is required to find out the vested interests 

another fine day across Australia, superb

it is the spring selling period

hit the ignore button

thankyou
Doctor Robots


----------



## drsmith (24 October 2009)

Gravity too is irrelevant while you have the nice sensation of falling through the air.


----------



## drsmith (24 October 2009)

satanoperca said:


> This is extremely true, the economy may be considered robust but it will not take to much to get it out of kilter.



A sustained downturn in commodity prices is another potential breaking point. That punchbowl will have to remain in place at the very least to keep the party going.

http://www.rba.gov.au/PublicationsA...ilityReview/Mar2009/Html/Graphs/graph_78.html


----------



## satanoperca (24 October 2009)

robots said:


> hello,
> 
> oh yeah, hahahahahahahahahahahaha
> 
> ...




Did I say intelligent, sorry!!!


----------



## satanoperca (24 October 2009)

robots said:


> hello,
> 
> oh yeah, hahahahahahahahahahahaha
> 
> ...




Did I say an intelligent response, sorry!!! Just another response of hehehehe or hahahaha. 

We are truly the lucky country.

Yes, it was a beautiful day in Melbourne.


----------



## explod (24 October 2009)

> *Doc Robots*
> these are things which have been brought into the discussion by the anti-property bloggers because many have trouble understanding the situation




I hope you are not including me there ole pal, as you know have done well on property in the past, my first home gave me the start in life.

Figures in the Age today gave most suburbs a thumbs down,  Dromana down 20%, mornington held even, Mt Martha down 3%, this in the bullet proof country.

*A beautiful day yes *but I wonder what those (many) who are paying mortgages at the edge of ability, think of the day as our ole pal Glen contemplates the next rise.

*Salute you Dr thingo*  you care zilch for the family battler as long as your pockets are being lined

*explosion* but not anti property just anti insanity


----------



## GumbyLearner (24 October 2009)

explod said:


> I hope you are not including me there ole pal, as you know have done well on property in the past, my first home gave me the start in life.
> 
> Figures in the Age today gave most suburbs a thumbs down,  Dromana down 20%, mornington held even, Mt Martha down 3%, this in the bullet proof country.
> 
> ...




Michael Jackson had a monkey called Bubbles explod.

Last weekend, I had the privilege of going to a wedding dinner of one of my Mrs relos. One of the grooms parents is a current working academic at UWS. After I was informed of this I said, "Oh do you know Prof Steve Keen?" To sum up the response was that "Oh he's a wowser", even though their partner was a property speculator. All I heard for 5 minutes was supply/demand arguments. Nothing about loans, borrowing, mortgages etc..

But don't listen to me I drive TAXI'S FULL-TIME! NOT!!!!


----------



## robots (24 October 2009)

hello,

good evening friends, more great news:

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

thats right Explod because have the same opportunities as everyone else in life and the performance from most is pathetic

all continue to live in denial, MASSIVE 82% brothers

well done, hahahahahaha, xpose the frauds in your street or workplace

oh yeah big test this weekend

thankyou
Doctor Robots


----------



## GumbyLearner (24 October 2009)

robots said:


> hello,
> 
> good evening friends, more great news:
> 
> ...




Just keep ramping bro!

I heard bricks and mortar are tastier than gold!

cheers
Uneducated Moron GumbyLearner


----------



## robots (24 October 2009)

GumbyLearner said:


> Just keep ramping bro!
> 
> I heard bricks and mortar are tastier than gold!
> 
> ...




hello,

better store of wealth alright

thankyou
Doctor Robots


----------



## GumbyLearner (24 October 2009)

robots said:


> hello,
> 
> better store of wealth alright
> 
> ...




In whose universe? Your leveraged one!


----------



## robots (24 October 2009)

hello, 

kills it even more with the leverage, yeah leverage only started 5yrs ago when all the anti-property bloggers started carrying on

big congratulations to the agents and auctioneers working today, putting in for the economy

$$$$$$$$$$$$$$$$$$$$$$, thats okay isnt it? or only allowed to make money from shares?

thankyou
Doctor Robots


----------



## GumbyLearner (24 October 2009)

robots said:


> hello,
> 
> kills it even more with the leverage, yeah leverage only started 5yrs ago when all the anti-property bloggers started carrying on
> 
> ...




That's cool Robo-dogmatist!

As long as you can pay for the double-digit interest rates in the future you'll be king!  

After all in the land of the blind, the one eyed man is King! Here's one eye for ya three times! 

Cheers
GumbyLearner 
Uneducated Moron


----------



## robots (24 October 2009)

robots said:


> hello,
> 
> kills it even more with the leverage, yeah leverage only started 5yrs ago when all the anti-property bloggers started carrying on
> 
> ...




hello,

inserted, got them covered

is that like last year when they got to a HUGE 9%, HUGE 9%

sorry sorry sorry, its different this time

thankyou
Doctor Robots


----------



## Beej (24 October 2009)

Dowdy said:


> Few things you're forgetting
> 
> - interest rates rising
> - government grant being eliminated
> ...




Only the grant boost is being eliminated - that likely result in a reduction in FHB numbers, and perhaps some softening of price growth in the FHB area's/price segments, but the flow through effects from the increased sales of the past 12 months will take another 12-18 months to flow through the rest of the market. So don't expect the grant boost removal to have any dramatic effect on median prices IMO.

Interest rates - been there done that from 2004-2008. Won't have a big impact until we approach 9%+ mortgage rates. For that to happen we will either have roaring economic growth and wage driven inflation, in which case there is no crash trigger there. Or it will happen due to a US/UK driven shift to a high inflation/high interest rate economy (think 70s), in which case you have my scenario 2) from my previous post.

Banks LVRs - minimal impact on market IMO. Evidence is that credit/LVRs have been tightened in the past 12 months when the FHB prices have been rising. Unless something fundamental changes due to some systemic crisis, there won't be any great credit rationing going on there.

Cost of living rising - that's inflation, if it continues in a big way you have my scenario 2), otherwise it's business as usual scenario 1).

The last 2 points are generalisations that might apply to some but not to those who will continue to be successful in acquiring there first and subsequent properties.



> Here's a classic example...
> I have this friend at work who borrowed 95% to buy her FIRST home and her land release has been delayed for about 1 year so she might not get the full first home grant either. She's angry because she thinks she deserves it (the same type of attitude i guess you get from people who receive the dole and any centrelink money and think they deserve it)
> She doesn't know how to save either - she want to buy a brand new holden cruze and recently went on a holiday to Thailand.
> 
> Guess she'll learn the hard way, as will alot of people




She might, or she might get by just fine. Re the entitlement attitude, I'm sure some people feel that way but they will get over it. For every story like that I could trot out all the people I know with 6 figure deposits and very sensible borrowing intentions. But individual examples do not tell you what is going on in the average, that's where the stats come in. Fact: average first time mortgage is currently $290k, = about 4.5x a single average full time wage. The average mortgage over-all is about $260k. This doesn't paint a picture to me where the person from your work is typical? Unless maybe they are not actually borrowing very much, in which case if reasonable the discipline of paying a mortgage might be good for them? Especially in the long run?

Cheers,

Beej


----------



## GumbyLearner (24 October 2009)

robots said:


> hello,
> 
> inserted, got them covered
> 
> ...




Awesome! Replying to your own ramp.

Thanks  Dr. Robots Ph.D


----------



## MACCA350 (24 October 2009)

robots said:


> all continue to live in denial, MASSIVE 82% brothers



I'm certain I recall REIV mentioned in last weeks results that this week will see over 1000 auctions............yet only 818 were reported

Auctions don't just happen, they are the culmination of 4+ week advertising campaigns...........theoretically they should have accurate numbers for at least the next 3 weeks, you can't tell me that 200 odd people just pulled out(even though REIV report only 2 were postponed) of auction in the last week after spending thousands on advertising and open houses 

I smell a rat

cheers


----------



## Dowdy (24 October 2009)

Beej said:


> Interest rates - been there done that from 2004-2008. Won't have a big impact until we approach 9%+ mortgage rates. For that to happen we will either have roaring economic growth and wage driven inflation, in which case there is no crash trigger there. Or it will happen due to a US/UK driven shift to a high inflation/high interest rate economy (think 70s), in which case you have my scenario 2) from my previous post.




But you're forgetting the 50 year record low interest rates in 08. People bought with low interest rate and usually only take in a 2% increase buffer and think they're fine



> Banks LVRs - minimal impact on market IMO. Evidence is that credit/LVRs have been tightened in the past 12 months when the FHB prices have been rising. Unless something fundamental changes due to some systemic crisis, there won't be any great credit rationing going on there.




Well i actually think the banks raising their standards is a good thing but from 95% to 90% is still pretty poor. You should have at least a 20% deposit and if you don't, you shouldn't be buying a house. Also raising their standards is actually a good thing in the long run as there will be less foreclosures and people actually buying within their means 



> Cost of living rising - that's inflation, if it continues in a big way you have my scenario 2), otherwise it's business as usual scenario 1).




Remember the pain when petrol prices rose to record prices last year. The cost of living increases but their wages don't. All the little thing hurt




> For every story like that I could trot out all the people I know with 6 figure deposits and very sensible borrowing intentions.




Bet they're not first home buyers, are they?



> But individual examples do not tell you what is going on in the average, that's where the stats come in. Fact: average first time mortgage is currently $290k, = about 4.5x a single average full time wage. The average mortgage over-all is about $260k.




What also the facts say is that 5 years ago the average home loan was $154k. So you're saying the average person is now earning $100k more a year then 5 years ago. Looks like a case of over borrowing/ too much debt to me



> This doesn't paint a picture to me where the person from your work is typical? Unless maybe they are not actually borrowing very much, in which case if reasonable the discipline of paying a mortgage might be good for them? Especially in the long run?




I did tell you that they borrowed 95% of the value of the house, but like you said, it's only one case. How about another case were another person from my previous work wanted to buy a house but couldn't afford it so they used their mum as a guarantor. So it won't be a case of one person going under, it'll be 2. You may hang around different generation/age group, so your experiences will be different. Most of the people in my work industry are first home buyers/ y-generation and i used to work as a temp working from centre to centre in different suburbs and the stories were all the same.


----------



## robots (24 October 2009)

hello,

i have a work friend who is a fhb, bought at 4x average income to price, nice 3-bed in Frankston

seems to be the case with others on sites buying around that price as well, melton, caroline springs

things all going as normal, they have all buffered in 20% interest rates because they read it on a forum

thankyou
Doctor Robots


----------



## Dowdy (24 October 2009)

robots said:


> hello,
> 
> i have a work friend who is a fhb, bought at 4x average income to price, nice 3-bed in Frankston
> 
> ...





I'm not a bullsh!t artist so you can stop with the sarcasm


----------



## MR. (24 October 2009)

drsmith said:


> Below is a link to a document from the RBA which contains updated graphs to September 2009.
> 
> http://www.rba.gov.au/PublicationsA...p2009/Pdf/financial-stability-review-0909.pdf
> 
> It's a very skinny tightrope the RBA will have to walk as it raises interest rates to more normal levels let alone in response to inflation.





The following graph is from page 46 graph 70. Same link as above.



Affordability*Index constructed as the ratio of average household disposable incometo the required monthly repayment for the median-priced home (housesand apartments) financed with a 25-year loan assuming an 80 per centLVR at the full-doc prime mortgage rate.**Average since 1980 to present; estimate for September quarter 2009.

*It's an interesting graph if you have a good look.*

- At half the interest rate in 2008, we got near 1989’s (-30%) 

- It took 5% interest to achieve the long term  “0” in 2009.
- It took approximately  11% interest to achieve the long term “0” in 1991.

- If interest rates now dropped to just 1% we may have the affordability of  1997 again when interest rates were 7%.




Yes it is a very skinny tightrope for the RBA. 

## If real estate is under control at say (6% cash rate) and inflation breaks 3%, will the RBA keep raising rates knowing how deep the debts are in real estate?

## If real estate continues on it's merry way up and interest rates continue to rise to slow it down what happens when this fragile economy begins to suffer from the increased interest rates?

## Look how our dollar is strengthening against the other currencies! Imports will be cheaper and our exports and tourism (which we need) will be even more expensive. We have hardly begun raising rates.....


----------



## robots (24 October 2009)

hello,

just providing my experiences for the forum

oh yeah, 

http://www.debtdeflation.com/blogs/

i thought i recognised a familiar name: Adam Schawb from Crikey on the panel for the gig on the 23rd October

amazing, its like a new subculture 

thankyou
Doctor Robots


----------



## robots (24 October 2009)

hello,

and dont forget the weekly readings from this joint:

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

people on the frontline, ramp it up

thankyou
Doctor Robots


----------



## robots (24 October 2009)

hello,

what a great day its been,

http://www.heraldsun.com.au/business/million-dollar-question/story-e6frfh4f-1225790579554

gee i reckon Pope stole one from you there Nunthewiser, 

"sunshine and cupcakes"

thankyou
Doctor Robots


----------



## drsmith (24 October 2009)

Hello Robots,

There's a lot of vested interests behind keeping property prices high whether that be the banks or government but the reality is that the punchbowl (whether that be low interest rates/government stimulus or commodity prices) will only sustain the party for so long.


----------



## theasxgorilla (24 October 2009)

drsmith said:


> Hello Robots,
> 
> There's a lot of vested interests behind keeping property prices high whether that be the banks or government but the reality is that the punchbowl (whether that be low interest rates/government stimulus or commodity prices) will only sustain the party *for so long*.




Which has evidently translated to very bloody long!


----------



## robots (25 October 2009)

drsmith said:


> Hello Robots,
> 
> There's a lot of vested interests behind keeping property prices high whether that be the banks or government but the reality is that the punchbowl (whether that be low interest rates/government stimulus or commodity prices) will only sustain the party for so long.




hello,

thanks for your opinion drsmith, 

mine differs from yours and i believe your comments are incorrect

listen its been done to death these false prophecies of doom and gloom

we now know that all the anti-property bloggers have vested interests to divert people's money away from Property, many have been employed at CFD Companies, Forex Companies, Spread Betting Companies, Futures Brokers, Option Courses

Media, New media etc etc

back in 2001, 2002 it was dont buy its all going to fall off the cliff, make these people accountable

sorry sorry, i know i know its just around the corner

thankyou
Doctor Robots


----------



## Soft Dough (25 October 2009)

robots said:


> hello,
> 
> thanks for your opinion drsmith,
> 
> ...




So Robots,

What has caused property values to increase?

ie where has the money come from?

Undergrad Soft Dough


----------



## robots (25 October 2009)

Soft Dough said:


> So Robots,
> 
> What has caused property values to increase?
> 
> ...




hello,

and thankyou for the questions, we normally run the Q & A sessions during the week at evening time just to keep the site ticking over

but since I recognise Soft as a great contributor to the thread it wont hurt to conduct it on a sunday afternoon

Q1 A. life

Q2 A. the usual place

thankyou
Doctor Robots


----------



## So_Cynical (25 October 2009)

robots said:


> hello,
> 
> and thankyou for the questions, we normally run the Q & A sessions during the week at evening time just to keep the site ticking over
> 
> ...




LOL Robots...keeping it simple, and prob one of your best posts.


----------



## drsmith (25 October 2009)

robots said:


> hello,
> 
> thanks for your opinion drsmith,
> 
> ...



Enjoy the party whilt it lasts but bear in mind the location of the exit for a hasty retreat.

You would like the Perth commercial scene at the moment.

http://www.cityofperth.wa.gov.au/web/Business/About-Business-in-the-City/Major-City-Developments/

Judging by the number of cranes hanging over the CBD most are currently under construction.


----------



## MR. (25 October 2009)

MR. said:


> View attachment 34161
> 
> - If interest rates now dropped to just 1% we may have the affordability of  1997 again when interest rates were 7%.




Anyway, home loan interest rates would need to be between 1% and 3%.



robots said:


> Q1 A. life
> 
> Q2 A. the usual place
> 
> ...




After just 833 posts here on this thread Robots you have sumed all those posts up in just 4 words!

In other words "Property doubles every ten years." Nothing more to add. It just does.

Got it.


----------



## Soft Dough (25 October 2009)

So_Cynical said:


> LOL Robots...keeping it simple, and prob one of your best posts.




Says a lot about the other 832 posts.
At least he consistently doesn't answer questions, or form opinion.


----------



## explod (25 October 2009)

robots said:


> hello,
> 
> thanks for your opinion drsmith,
> 
> ...




Of course *dOCTOR*thing me jig we should not advise anyone.  In the investment field you have to be licensed to do that.   It seems the Real Estate Industry are immune.

Of course the comparison between them and second hand car salespersons is often quoted.   They have someone sign up, a coupla adds in the newspaper, put it on the net and a few open inspections and they collect up to 3.5% on a half mil home;  a tidy sum for about ziltch.

Many people are starting to sell with agents (I have used a local called "Property Shop, a lad by the name of Peter Cincotta I think runs it) on the net which is a start but the big turn which will one day catch on will be on an Ebay system, with a bid going for a few months and the legals done between the parties solicitors.

Its the ramping of agents, the media that feed of it, and the banks that create these distortions.   

And baby this bubble is the baby of bubbles leading to a flood of tears.

A Real Estate Agent I worked for a few years ago said the three Ps for position is really pi s in thier pockets three times.



The leeches need to be weeded out.   Perhaps a thread on this ought to start.  Bit tired at the moment


----------



## gfresh (26 October 2009)

Explod.. it's very unfortunate ebay Aus hasn't gone the path of the US and allowed direct private listings. Domain of course made sure they got their claws in their first though, so it's linked off to them  They do allow private listings though their site now, but it's pretty expensive ($499 for 1 month!).. The ebay way of comission on sale would be much better. Talk about protectionism though for the realestate industry!


----------



## MACCA350 (26 October 2009)

gfresh said:


> Explod.. it's very unfortunate ebay Aus hasn't gone the path of the US and allowed direct private listings. Domain of course made sure they got their claws in their first though, so it's linked off to them  They do allow private listings though their site now, but it's pretty expensive ($499 for 1 month!).. The ebay way of comission on sale would be much better. Talk about protectionism though for the realestate industry!



That would depend on the commission rate.

Either way you have to pay for advertising, I wouldn't class $499 for 1 month listing expensive. Going through an agent a $800k property would cost about $5k for 1 month advertising campaign, this would include signage, 1 month paper/internet/agent magazine placements, open house appointments and the agents contacting people/developers they know who would be interested. Add in commission an you'd be up for about $30k.

Do I think it's worth $30k, not at all...........but on the flip side paying only $499 and having none of the other benefits of using an agent, you may only get $700k for that otherwise $800k property...........I don't know, I'm not sure anyone can say for certainty whether agents are worth what they charge.

cheers


----------



## robots (26 October 2009)

hello,

hahaha, hilarious so ebay okay to collect commission but RE agent the devil

anything you sell on ebay you pay a cut

whats been written in the other 6000 posts?

thankyou
Doctor Robots


----------



## explod (26 October 2009)

robots said:


> hello,
> 
> hahaha, hilarious so ebay okay to collect commission but RE agent the devil
> 
> ...





In the modern day of the internet, no one should collect, it all should be between buyer and seller only, a few cents to ebay maybe but internet will hopefully get to the stage that it is just one on one and the providers only get the normal fee for connection.

As for as agents getting a bit more on the price, the market will soon overcome that and agents will become reduntant.   

Bring back the conductors on trams where at least there was a service provided and a pay packet instead of the dole.


----------



## robots (26 October 2009)

explod said:


> In the modern day of the internet, no one should collect, it all should be between buyer and seller only, a few cents to ebay maybe but internet will hopefully get to the stage that it is just one on one and the providers only get the normal fee for connection.
> 
> As for as agents getting a bit more on the price, the market will soon overcome that and agents will become reduntant.
> 
> Bring back the conductors on trams where at least there was a service provided and a pay packet instead of the dole.




hello,

ebay would be at least 4-5% of final selling price, yeah good result

and no, trams are running fine without conductors, they where slackers

full tram, what does the conductor do, nothing

thankyou
Doctor Robots


----------



## satanoperca (26 October 2009)

Good Evening All,

Auctions Results from the Weekend.

I noted down from the REIV website last week all auctions for the following suburbs and the results reported by REIV.

Port Melbourne - 12 Listed Auctions
REIV reported : 
   5 sold
   4 Pass In 
   3 Unreported - (passed in?)
   2 additional entries listed as sold to boost results

Sunshine - 3 Auctions
REIV reported :
    3 Sold
    1 additional entries listed as sold to boost results

Malvern - 7 Auctions
REIV reported :
     7 Sold - 100% correlation

Mentone - 10 Auctions
REIV reported :
     3 Sold
     2 Passed In
     3 Unreported - (passed in?)

Richmond - 24 Auctions
     19 Sold
     3 Passed In
     2 Unreported - (passed in?)
     1 additional entries listed as sold to boost results

To be fair, I will check their results later in the week.

Conclusion - take the auction results with a grain of salt and do your own research if you intend to buy or sell property.

Cheers All & Hello to the Dr


----------



## MrBurns (26 October 2009)

explod said:


> In the modern day of the internet, no one should collect, it all should be between buyer and seller only, a few cents to ebay maybe but internet will hopefully get to the stage that it is just one on one and the providers only get the normal fee for connection.
> 
> As for as agents getting a bit more on the price, the market will soon overcome that and agents will become reduntant.
> 
> Bring back the conductors on trams where at least there was a service provided and a pay packet instead of the dole.




Agents as annoying as they are do provide a service of sorts, some people wouldnt have a clue when it came to values and selling or buying so it's worthwhile from that perspective.

The second bit I fully agree with, there should be tram conductors to help women with prams and old people etc, it's pathetic that we have so many unemployed and there's no one on trams or trains to help out.


----------



## explod (26 October 2009)

robots said:


> hello,
> 
> ebay would be at least 4-5% of final selling price, yeah good result
> 
> ...




You are getting a bit twitchy *doctor THINGA MY* everyone laments the loss of conductors, they could direct older people, the tourists and most often proivided some enterternment.

And the Government is better having more low end taxpayers than paying the dole.

That Phd Robots seems to have dented you thinking somehow.  Anyway I will think about that and give you an answer in due course,.... on you iq level perhaps?


----------



## explod (26 October 2009)

explod said:


> You are getting a bit twitchy *doctor THINGA MY* everyone laments the loss of conductors, they could direct older people, the tourists and most often proivided some enterternment.
> 
> And the Government is better having more low end taxpayers than paying the dole.
> 
> That Phd Robots seems to have dented you thinking somehow.  Anyway I will think about that and give you an answer in due course,.... on you iq level perhaps?




Of course that may be a tad unfair *dOCTOR robosts* as you probably do not know what iq means.


----------



## robots (26 October 2009)

explod said:


> You are getting a bit twitchy *doctor THINGA MY* everyone laments the loss of conductors, they could direct older people, the tourists and most often proivided some enterternment.
> 
> And the Government is better having more low end taxpayers than paying the dole.
> 
> That Phd Robots seems to have dented you thinking somehow.  Anyway I will think about that and give you an answer in due course,.... on you iq level perhaps?




hello,

oh yeah, great day satanoperca you looking out to the sky now?

what, all the connies went on the dole? wouldnt surprise me couldnt work on the trams so I would doubt anyone else would employ them

thats why we now have fijians, sudanese, samoans, chinese, indians, Kiwis, Sth Americans WORKING in the country

and makes me extremely proud to see these people walking tall and enjoying Australia

paradise

thankyou
Doctor Robots


----------



## satanoperca (26 October 2009)

robots said:


> hello,
> 
> oh yeah, great day satanoperca you looking out to the sky now?




Yes Dr, sitting up in the sky, overlooking the City, watching out for the dolphins and seal downstairs in the Yarra river, while sitting in front of two monitors watching stocks, planning next move, but as you famously say, sunshine and lollipops are abound for those that are willing to give it a go.

Should also add, glad I opted out of RE for the moment and are in the biggest equity curve I have seen in my life, hoping I can keep some off it as all things work in ebs and flows and good times arn't all the time. Cherish the moment with one eye and with the other look for the next opportunity.

Monday night and the red flows freely after a day of green for me at the market. Got to love those green shoots, I hope someone is watering them or I just have to move to more fertile grounds.

Conclusion to RE after >6000 posts, it will always go up in the long run due to population growth, being an finite resource heavily governed and inflation (hedge).

Is it overpriced in relation to wages, GDP, house hold incomes etc? Are Australians over indebted?Has loose and cheap credit added fuel to prices?Do high prices benefit society? Should we be so focus/obsessed as a nation as evident by the size of this thread with investing in a single asset class?Will interest rates go up?Has the FHBG affected prices?Are we going to be flooded with cashed up overseas investors?Is Australia a sought after place to live?Are auction results accurate?Do we have a subprime?Should NG be abolished?Is it a good time to buy?Renting vs Buying?Your right I'm wrong.

Make your own conclusions. I have enjoyed the discussions and input from all, but standing on the side lines at the moment. 

Cheers.

Out to play soccer with my son on the board walk, more fun than getting on a tram but all the same, just enjoying the moment.

Way to long of a post.


----------



## Dowdy (26 October 2009)

explod said:


> In the modern day of the internet, no one should collect, it all should be between buyer and seller only, a few cents to ebay maybe but internet will hopefully get to the stage that it is just one on one and the providers only get the normal fee for connection.





You're living in a fantasy world if you think it's going to be like that. 

And ebay charge $200 flat rate to list property and they don't get anything else, even if it sells


----------



## Dowdy (26 October 2009)

explod said:


> That Phd Robots seems to have dented you thinking somehow.  Anyway I will think about that and give you an answer in due course,.... on you iq level perhaps?




The only degree he has is a BS in BS


----------



## explod (26 October 2009)

Dowdy said:


> You're living in a fantasy world if you think it's going to be like that.
> 
> And ebay charge $200 flat rate to list property and they don't get anything else, even if it sells





Could you qualify that*???*,    in this modern world anything is possible, and younger people are thinking very differently, in fact it is all by thier mobiles phones, *an explanation would be good on this point*


----------



## Dowdy (26 October 2009)

explod said:


> Could you qualify that*???*,    in this modern world anything is possible, and younger people are thinking very differently, in fact it is all by thier mobiles phones, *an explanation would be good on this point*




Well to do a barter website like ebay will mean you have to hire people to maintain it and the more traffic it generates, the more money it cost to maintain, hence the cost.

Sure there are some free classified type sites (gumtree.com.au) but those aren't auction type and don't generate the type of traffic you want if you're a seller. Yes, you will always get a few free websites that let you sell things but if you're a seller those cost are irrelevant if it doesn't bring in the traffic - location, location, location


----------



## explod (26 October 2009)

Dowdy said:


> Well to do a barter website like ebay will mean you have to hire people to maintain it and the more traffic it generates, the more money it cost to maintain, hence the cost.
> 
> Sure there are some free classified type sites (gumtree.com.au) but those aren't auction type and don't generate the type of traffic you want if you're a seller. Yes, you will always get a few free websites that let you sell things but if you're a seller those cost are irrelevant if it doesn't bring in the traffic - location, location, location





Well lets think outside the website (the square if you like).  I sold a property by just putting a sign out the front "For Sale" enquire within" took nine months, had the Scetion 32 ready and, presto 10% above the agent quote, as well as no fees.


----------



## Dowdy (26 October 2009)

explod said:


> Well lets think outside the website (the square if you like).  I sold a property by just putting a sign out the front "For Sale" enquire within" took nine months, had the Scetion 32 ready and, presto 10% above the agent quote, as well as no fees.





well if it took me 9 months to sell one of my stock, i'll still have inventory til my great, great grand kids, but i sorta get your drift


----------



## cornnfedd (27 October 2009)

The Top 100 hotspots quoted on TODAY TONITE - so it must be true. Start buying people before its too late, if TT has said it then its gotta be true.

And to make it more convincing I have put it in quotes.

Enjoy

Dr TT 



> The 100 Australian hotspots:
> 
> ACT:
> Dickson
> ...


----------



## Beej (28 October 2009)

cornnfedd said:


> The Top 100 hotspots quoted on TODAY TONITE - so it must be true. Start buying people before its too late, if TT has said it then its gotta be true.
> 
> And to make it more convincing I have put it in quotes.
> 
> ...




I hate to say it but the suburb I bought in late last year at a nice discount is on that list 

Cheers,

Beej


----------



## robots (28 October 2009)

hello,

its wednesday night, we got beats and rhymes on kissfm.com.au online broadcast

or for those in Melbourne 87.60, 87.70, 87.80 on the FM dial

get it pumping through the Bose system

thankyou
Doctor Robots


----------



## joeyr46 (28 October 2009)

Beej said:


> I hate to say it but the suburb I bought in late last year at a nice discount is on that list
> 
> Cheers,
> 
> Beej




But you still did


----------



## nunthewiser (28 October 2009)

Sincere questions i would like answered with facts and not opinion guesstimates if possible.


1. Current austrailian population including illegal citizens and other riffraff to the closest estimatable number .

2. Austalias projected growth in population INCLUDING immigration and illegal aliens skipping the border for the next 10 years .

3 The TOTAL number of registered seperate adresses out there INCLUDING flats , bedsits ,units, caravan park  permanent dwellings and other Permanant accomodation .

I do realise my question may not have any available answers but i figured here was a good a place as any to ask .

Or even point me the way to where i may find these answers.

Thankyou in advance for any effort taken in this matter .


----------



## johnnyg (28 October 2009)

Looking though realestate.com.au noticed a familiar house has just been sold for $290000, the impressive part was that it sold for $190000 on the 15th of May. New Kitchen, New Bathroom, New paint & Carpet. Amazing


----------



## Beej (29 October 2009)

Sydney market doing very well this year, and median according to APM has passed the previous 2004 peak to a new record: (http://www.smh.com.au/national/balmain-hotcakes-push-house-prices-higher-20091028-hl1e.html):



> *Balmain hotcakes push house prices higher*
> PETER HAWKINS AND JONATHAN CHANCELLOR
> SMH October 29, 2009
> 
> ...




There's also an interesting graphic on the article attached that shows how although Sydney has many very expensive areas, and a high median which tends to get a lot of focus, there are whole regions like the West and South-West of the city with medians of $375k and $360k respectively. These are all established area's with reasonable infrastructure, public transport and so on.

Cheers,

Beej


----------



## robots (29 October 2009)

hello,

great posting Beej, top effort man

still highlights location is very important and much research is required, its not just walk up and of you go

still plenty of opportunity for all, fix up the garden, lick of paint, new driveway, clean the windows and bang Equitymate!

might take 5yrs, 10yrs but on the way to paradise

thankyou
doctor robots


----------



## robots (30 October 2009)

hello,

good evening all, great day 

apologies for the late log in, out on the pushie, great to see people out enjoying themselves, plenty of new immigrants

just to summarize:

1. property doing well

thankyou

Doctor Robots


----------



## satanoperca (30 October 2009)

robots said:


> hello,
> 
> good evening all, great day
> 
> ...




Is a beautiful night here in Melbourne.

Property is doing well, some red lights showing on 

http://www.rpdata.net.au/  however.

Robots, please enlightened someone dull of sight how you determine who is an immigrant when out on your travels to come to the conclusion that there are more immigrants than usual. Seeking prognosis from a Doctor is always wise.

Anyone placing bets on which interest rate rise 0.25 or 0.5 on Tuesday with the day that stops a national with centrebet.


----------



## MrBurns (30 October 2009)

satanoperca said:


> Is a beautiful night here in Melbourne.
> 
> Property is doing well, some red lights showing on
> 
> ...




It will be .5% and robots lives in St Kilda where the immigrants outnumber the rest to the point where you need a passport to travel there.

I'd like to know where all there people came from in such a short time. I was on the road today and could hardly move in the traffic, not peak hour , but at 10 or 11 am and again after 2 pm.


----------



## drsmith (30 October 2009)

I'll go for 0.5%.

The real cash rate in Australia is still negative.


----------



## MrBurns (30 October 2009)

drsmith said:


> I'll go for 0.5%.
> 
> The real cash rate in Australia is still negative.




They're **** scared of the housing bubble, 12 months too late as usual.

This might get ugly as they wrestle it down.


----------



## drsmith (30 October 2009)

Whether the RBA went too far with its cuts this time last year is difficult to say but the task ahead is to successfully change which foot is on the tightrope.


----------



## wayneL (30 October 2009)

drsmith said:


> Whether the RBA went too far with its cuts this time last year is difficult to say but the task ahead is to successfully change which foot is on the tightrope.




Interest rates have been too low since 2002. 

...and a great big part of the reason we blew up last year... and the reason we'll blow up again before too long.


----------



## MrBurns (30 October 2009)

drsmith said:


> Whether the RBA went too far with its cuts this time last year is difficult to say but the task ahead is to successfully change which foot is on the tightrope.




They went too far for a long time, then there was the FHB bribe, then there was the relaxing of the foreign investment rules, all combined to push prices to crazy levels.


----------



## MrBurns (30 October 2009)

wayneL said:


> Interest rates have been too low since 2002. .




Absolutely spot on, not many people realise this.


----------



## satanoperca (30 October 2009)

MrBurns said:


> Absolutely spot on, not many people realise this.




Ah, but they soon will.


----------



## MrBurns (30 October 2009)

satanoperca said:


> Ah, but they soon will.




The pain felt will be a deal breaker for the re election of the little Emporer.


----------



## drsmith (30 October 2009)

wayneL said:


> Interest rates have been too low since 2002.
> 
> ...and a great big part of the reason we blew up last year... and the reason we'll blow up again before too long.



Are you saying that from a global perspective (in particular the USA) and/or do you consider the RBA went too far with it's response to the explosion 12 months ago ?


----------



## wayneL (30 October 2009)

drsmith said:


> Are you saying that from a global perspective (in particular the USA) and/or do you consider the RBA went too far with it's response to the explosion 12 months ago ?



Global perspective.


----------



## Fleeta (31 October 2009)

Wayne, did you read today that house prices in the UK went up in the last quarter - first time in a long time that has happened!

The median house price in UK is circa £190k, or less than AUD$370k - that makes UK houses cheaper than Australian houses - considering the land mass, population and incomes, that makes no sense to me or am I missing something??


----------



## italiandragon (31 October 2009)

Fleeta said:


> Wayne, did you read today that house prices in the UK went up in the last quarter - first time in a long time that has happened!
> 
> The median house price in UK is circa £190k, or less than AUD$370k - that makes UK houses cheaper than Australian houses - considering the land mass, population and incomes, that makes no sense to me or am I missing something??




"No sense" is what Australian Property market is full of, in these last years.

But do not take my word, have a deep look at this free report:

http://www.demographia.com/dhi.pdf

Spruikers did a very good job in keeping up the ceiling here but how long will they hold it before the whole castle comes down to reality?


----------



## Beej (31 October 2009)

Fleeta said:


> Wayne, did you read today that house prices in the UK went up in the last quarter - first time in a long time that has happened!
> 
> The median house price in UK is circa £190k, or less than AUD$370k - that makes UK houses cheaper than Australian houses - considering the land mass, population and incomes, that makes no sense to me or am I missing something??




You are missing two points:

Firstly, historically the AU/GPB exchange rate has been more like $AU2.50/pound or more, and average wages etc still run at about this sort of ratio. I don't have the latest average full time wage figures for the UK but I would reckon it will be around 25k GBP at the moment right (WayneL?). You need to look at a range of factors when comparing house prices between countries, but if you consider this point, then UK houses are on average 7-8 times average full time income, which (surprise!) is about the same as here in Australia!

The second point is that there is a lot more public (council) housing in the UK, meaning less private investor participation that in AU. Many might argue that that's how should be here too, and they may be right, but at this point in time it is a difference between the 2 markets.

Cheers,

Beej


----------



## Beej (31 October 2009)

italiandragon said:


> "No sense" is what Australian Property market is full of, in these last years.
> 
> But do not take my word, have a deep look at this free report:
> 
> ...




*Sigh* You have posted that silly report here many times - it is rubbish, and has been covered in this thread many times before. See this article at Business Spectator for a pretty solid debunking: 

http://www.businessspectator.com.au...a-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp

Cheers,

Beej


----------



## UBIQUITOUS (31 October 2009)

The Oz market is now at 'frothy bubble' stage, much like the UK in 2007. People are rushing in so as not to miss the next leg up. 

Its a self fulfilling prophecy built on zero fundamentals as will become clear to MOST by next year, as refused payrises and increasing unemployment do not reconcile with the hollow business plan of making money from property investment.


----------



## robots (31 October 2009)

hello,

yeah i agree Beej, 

stop writing such rubbish in this thread, go ask the bloggers who write all this propaganda what they do behind the scenes (interests in CFD Companies, Forex Companies, Donations for there false hopes etc etc)

oh yeah, ask them where the crash is and to apologise 

yes Satanoperca, easy they dont whinge

thankyou
Doctor Robots


----------



## MrBurns (31 October 2009)

UBIQUITOUS said:


> The Oz market is now at 'frothy bubble' stage, much like the UK in 2007. People are rushing in so as not to miss the next leg up.
> Its a self fulfilling prophecy built on zero fundamentals as will become clear to MOST by next year, as refused payrises and increasing unemployment do not reconcile with the hollow business plan of making money from property investment.




It might come sooner than that, I can feel a chill in the wind.


----------



## robots (31 October 2009)

hello,

OH YEAH:

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

apologies for the late posting of auction result, MASSIVE 83% 

hahahahahahaha, paradise hey WayneL? the one and only supreme country up there as usual

thankyou
Doctor Robots


----------



## MrBurns (31 October 2009)

robots said:


> hello,
> OH YEAH:
> http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162
> apologies for the late posting of auction result, MASSIVE 83%
> ...




Dodgy figures.


----------



## robots (31 October 2009)

MrBurns said:


> It might come sooner than that, I can feel a chill in the wind.




hello,

keep the spruiking going, herd the $ into the cfd betting agencies, forex companies, futures brokers, option brokers,

handout crew 

thankyou
doctor robots


----------



## MrBurns (31 October 2009)

robots said:


> hello,
> 
> keep the spruiking going, herd the $ into the cfd betting agencies, forex companies, futures brokers, option brokers,
> 
> ...




Keep the dollars in the bank waiting for the bargains, it wont be long now.

The BS meter is off the scale, thats a sure sign the party's almost over.


----------



## DB008 (31 October 2009)

This is my first post on this thread. And, to be honest, l haven't been bothered to read the 100 other pages.
As was said in the very first post, there is a limited supply and building isn't keeping up with supply= price rise, simple.


----------



## ojm (31 October 2009)

Robots, you are tops. Have never had as many laughs out of one person on a forum before. Perhaps the Late Show with Prof (or Doctor?) Robots in the near future?

On the topic of property, I am looking at buying my first in the near future. Perhaps a one bed apartment in Footscray. Would suit my price range quite nicely. However, am still uncertain if there is going to be much growth in the market for the next few years.


----------



## robots (31 October 2009)

hello,

thanks OJM, life is a great ride brother and i hope my contributions have made  it even more enjoyable for you

not sure of your position regarding buying to live in or to rent out joint, 

tomorrow when you walking down the path to get a latte dont look at the next 10 steps and where it leads you but look at where the next 100 steps will take you

dont buy new, buy old, slow and steady the way many go

thankyou
Doctor Robots


----------



## robots (31 October 2009)

hello,

check check:

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

not-surprised commentary from Mr(dont come to me unless you have 500k)Bailey, these guys never "suggest" property ever, but hey diversify the $ into some shares (management/kickbacks) and yes Managed Funds

good night, kickin off Dreamtime to line up another terrific day tomorrow

thankyou
doctor robots


----------



## italiandragon (1 November 2009)

Beej said:


> *Sigh* You have posted that silly report here many times - it is rubbish, and has been covered in this thread many times before. See this article at Business Spectator for a pretty solid debunking:
> 
> http://www.businessspectator.com.au...a-Dogma-$pd20090129-NQTPP?OpenDocument&src=mp
> 
> ...





many times?

Considering that was my 4th post in this forum, I doubt it. I did post it ONCE before. It was in March, the second of my posts.

You call it it silly and rubbish.

I don`t.

Respect other`s people opinions.

And I will respect yours even if the article you quote comes from this source:

"Christopher Joye writes Business Spectator's property blog and is *managing director of research group Rismark International which produces the RP Data-Rismark Hedonic House Price Indices*. "

which to me is not neutral either...


----------



## italiandragon (1 November 2009)

DB008 said:


> This is my first post on this thread. And, to be honest, l haven't been bothered to read the 100 other pages.
> As was said in the very first post, there is a limited supply and building isn't keeping up with supply= price rise, simple.




yes ...right...hang on: let me hurry up to buy that unit for $500,000 before it reaches $1,000,000 next year and $2,000,000 in 2011.....

No its not brand new, its a "renovator`s delight", basically I need to demolish it totally and remove the asbestos just enough to let it otherwise tenants may get mesothelioma...

Or I could buy RARE land for the cheap price of JUST $299,000 in a RARE UNKNOWN suburb which may explode....whatever.

I`m going to rent paying much less than the mortgage and invest my cash in the stock market which gave me already very good returns this year.


----------



## wayneL (1 November 2009)

italiandragon said:


> Respect other`s people opinions.




Indeed.

Many argue as if our opinion was important for the future of prices.

NEWS FLASH: It isn't!

House prices will do what they will under the pressures of supply and demand (whether manufactured or not).

I argue prices >>>>****should****<<<< be much lower. But they aren't, and the truth is, nobody knows whether that will change.

I just know that value is very poor. I won't be buying any more properties for investment purposes until this rectifies itself.


----------



## basilio (1 November 2009)

Came  across an economic analysis of the current situation and looking forward and backward. 

It's view of all economic activity is depressing basically because of the huge level of indebtedness we currently face. Naturally housing is seeen as yet another vastly overpriced product.


> _]Stoneleigh, the world economy seems to be suffering from two great structural woes at present, namely stubbornly high energy prices that are linked to demand that is persistently ahead of the supply curve, and a level of debt that has destabilized the global finance and banking systems. Can you explain for us the scale and structure of this debt and to what extent write-downs and quantitative easing (QE) have solved this problem?_
> 
> Firstly, I would say that the energy prices that currently seem stubbornly high should fall substantially as the speculative premium evaporates and demand falls on a resumption of the credit crunch. The sucker rally that has spawned all the talk of green shoots is essentially over in my opinion. The result should be a reversal of a number of trends that depend on the ebb and flow of liquidity - we should see stock markets and commodity prices fall, a significant resurgence in the US dollar and a large contraction of credit. The scale of the reversal should be substantial, as should its effects on energy demand. Demand is not what one wants, but what one is ready, willing and able to pay for, and in a severe credit crunch the capacity to pay for supplies of most things will be severely reduced.





http://www.energybulletin.net/node/50573


----------



## Beej (1 November 2009)

italiandragon said:


> many times?
> 
> Considering that was my 4th post in this forum, I doubt it. I did post it ONCE before. It was in March, the second of my posts.
> 
> ...




Apologies for the "many times" reference then - I did recall correctly that you posted the exact same article in the thread though, and it has certainly been posted many times by other typically "hit and run" posters. This thread is like deja vu where the same arguments have come up for YEARS, with such certainty from the bear side, and yet they continually have proven to be completely wrong based on what has actually happened in the market.

OK I do respect others opinions, but I maintain that if you are basing a negative view on the AU property market on that demographia report, then I think you will turn out to be wrong. The Demographia report is patently rubbish - it's analysis so one dimensional and simple that it produces conclusions like the Sunshine Coast being more expensive that New York City and London! Fails to even consider things like the fact area's exist where cashed-up big earning retirees might buy when they stop working?? I mean it's pretty obvious stuff....

As for biases etc, at least Chris Joye declares who he is, unlike the author of your cited report who does not. In fact RP_Data make there money from statistics collections, distribution etc, so they make money whether prices are going up or down (like a commercial stock market data provider). Joye has also authored reports on housing affordability for the Howard government, and I believe also worked at the RBA, so others might also argue that he in fact is an expert in the AU residential property market. Anyhoooo....

In the meantime Melbourne auction clearance rate still very high, Sydney posted 71% yesterday on preliminary APM figures (http://www.homepriceguide.com.au/saturday_auction_results/sydney_domain.pdf), reporting 216 sales with a $735k median, so lot's of higher prices sales.



wayneL said:


> Indeed.
> 
> Many argue as if our opinion was important for the future of prices.
> 
> ...




I agree that none of our opinions matter in terms of actually driving what outcome occurs. But it might matter for our own long term personal financial position with regard to what decisions we each make about property based on our opinions! 

Re value, I have seen *some* value out there. However, personally I'm not buying investment property either right now, equities have more income/growth potential IMO and that's where my spare cash is going right now. I think though the debate should also consider PPORs as that is of interest to many, and if I didn't already own my PPOR, I *would* consider now as good a time as any to take that plunge.

Cheers,

Beej


----------



## joeyr46 (1 November 2009)

I agree that none of our opinions matter in terms of actually driving what outcome occurs. But it might matter for our own long term personal financial position with regard to what decisions we each make about property based on our opinions! 
Agreed but different opinions are useful in that they offer other potential reasons for falling or rising house prices and give food for thought.
Back in the eighties I listened to stories of the great depression thinking that was a bubble (well it lasted a lot longer ) which is a bit scary because it will fully retrace back to the start as all bubbles do.
Mentally it makes no sense as that means a collapse of the monetary system etc. I seriously hope I'm wrong but house prices are Dependant on three things not two. Supply and Demand  and liquidity or a willing lender and a willing borrower, value has no bearing other than to make someone a willing buyer but if the lender sees no value then there is no transaction.
At the moment I don't believe people see houses as value but are being driven by fear they might miss the boat. As for a recovery of the economy (which is more than needed to drive house prices higher) I am hearing a lot of stories that are not saying recovery and the charts of the major stocks say more trouble ahead. the next 3 months are going to be very interesting But you have to look at long term charts not just 10 year or so
Beej you asked were I got the figures for every $16000 you should get $40 rent can't remember the name of the book but I think it was Ridges guide to Real Estate (written after the great depression dont know when exactly) but they gave figures for real estate and how it fared in the 30's If you fully owned it and recognised what was happening and had more than 1 property you could reduce the rent and get tenants and cover rates which in many cases rose very rapidly to allow councils to survive. However at least the bank did not close with all your money so you still had more than most. A lot of properties were auctioned just to cover back taxes apparently. Can this happen again, almost certainly as are debts are way above what they were then. 

Re value, I have seen *some* value out there. However, personally I'm not buying investment property either right now, equities have more income/growth potential IMO and that's where my spare cash is going right now. I think though the debate should also consider PPORs as that is of interest to many, and if I didn't already own my PPOR, I *would* consider now as good a time as any to take that plunge.

Cheers,

Beej[/QUOTE]


----------



## MACCA350 (1 November 2009)

MrBurns said:


> Dodgy figures.



No doubt.
I recorded last weeks figures started a spreadsheet to keep track............first dodgy thing I noticed was this:



> TOTAL AUCTIONS......24/10/09.......01/11/09
> 
> This week....................*818*..............339
> Last Weekend..............603..............*837*
> ...




Seems Enzo forgot the hard figures he reported on how many auctions he used for last weeks figures ...........then he expected 400 auctions this week yet came up short by 61, hmmm

Dodgy brothers mate


----------



## MACCA350 (2 November 2009)

I tell you what, it's a nightmare trying to reconcile his report, nothing really adds up.

For example take this weeks S,SB & SA against the total and you get 81.7% NOT 83%
Add up the total houses, units & land and the number does not equal total auctions or just those sold............really they should equal those sold since they are used to generate the median yet there are far more than were reported sold so those medians are fudged using guesstimates of values of many of those that didn't sell

Mate, my mind is going into melt down looking at these figures.........looks to me like creative accounting gone wrong, I mean if you're going to fudge the numbers at least reconcile what you report

What am I missing fellas, where am I going wrong

cheers


----------



## robots (2 November 2009)

hello,

people arent allowed to cancel an auction during the week, 

thats right they have to contact the real estate police, constable Macca, inspector Satanoperca, superintendent WayneL, front desk Dave to make sure its okay

i hope you put this much effort into the number of second hand bicycles selling in the Trading Post, is there a site on bicycle prices crashing

thankyou
Doctor Robots


----------



## MrBurns (2 November 2009)

MACCA350 said:


> Seems Enzo forgot the hard figures he reported on how many auctions he used for last weeks figures ...........then he expected 400 auctions this week yet came up short by 61, hmmm
> 
> Dodgy brothers mate




It's Enzos job to pump up the real estate industry, no matter what the reality is.


----------



## MACCA350 (2 November 2009)

robots said:


> hello,
> 
> people arent allowed to cancel an auction during the week,







> Postponed: 1
> Withdrawn: 2




Nope, not it...........next?


----------



## satanoperca (2 November 2009)

Hi Macca,

I did the same thing a couple of weeks ago. Recorded all auctions on REIV website and then tried to reconcile with results on Monday. Gave up.

It was my belief that the REIV auctions results should be seen as indicative of the market only, put in a variance of -5% are you will be closers the reality.

The only value that came out of the exercise was to do your own research so that you can self determine if prices are up or down for your given target suburbs.

Cheers


----------



## Beej (2 November 2009)

satanoperca said:


> Hi Macca,
> 
> I did the same thing a couple of weeks ago. Recorded all auctions on REIV website and then tried to reconcile with results on Monday. Gave up.
> 
> ...




Give the man a cigar! As stated, these are early, indicative results - DYOR to be sure what's going on in your target suburbs. Over the days/weeks/months following any given weekend 100% of the sales data becomes available and is used to formulate the various house price index results that get published. RP Data actually publish supposedly more accurate city by city auction clearance rates on each Thursday following the weekend - they claim waiting until then let's them get more comprehensive and accurate data from the agents.

Speaking of which  ABS house price series out today: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument

Headline: *ABS national house price index up 4.2% for the Sept quarter*, and now 6.2% year/year to Sept quarter.

 City by city results: (qtr/qtr/ y/y):

Sydney	    4.3%/5.9%
Melbourne	    4.7%/8.4%
Brisbane	    4.4%/5.6%
Adelaide	    1.7%/3.7%
Perth	            4.5%/4.4%
Hobart	    1.8%/5.4%
Darwin	    3.4%/12.3%
Canberra	    4.3%/7.8%

PS: Prof Keen has now officially lost his house price bet with Rory Robertson, (which was based on the ABS house price index), and I'm looking forward to coverage of his walk from Canberra to the Snowy Mountains!

Cheers,

Beej


----------



## MrBurns (2 November 2009)

Beej said:


> Speaking of which  ABS house price series out today: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument
> 
> Headline: *ABS national house price index up 4.2% for the Sept quarter*, and now 6.2% year/year to Sept quarter.
> 
> ...




A sure indicator of a market out of control, run for cover when it reverses.


----------



## Quincy (2 November 2009)

Beej said:


> Speaking of which  ABS house price series out today: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument
> 
> Headline: *ABS national house price index up 4.2% for the Sept quarter*, and now 6.2% year/year to Sept quarter.
> 
> ...






> Paul Braddick, head of property and financial systems analysis at ANZ, said the housing industry and policy authorities have a lot of work ahead to ensure supply issues don't further skew house prices.
> 
> Migration added 439,000 people to Australia's population in the year to March 2009, the strongest increase on record, he said. But dwelling completions are forecast to fall below 130,000 in the year ahead, he said.
> 
> ...





I don't think the insertion of a "smiley face" is really totally appropriate given the current situation.


----------



## SBH (2 November 2009)

Beej said:


> Give the man a cigar! As stated, these are early, indicative results - DYOR to be sure what's going on in your target suburbs. Over the days/weeks/months following any given weekend 100% of the sales data becomes available and is used to formulate the various house price index results that get published. RP Data actually publish supposedly more accurate city by city auction clearance rates on each Thursday following the weekend - they claim waiting until then let's them get more comprehensive and accurate data from the agents.
> 
> Speaking of which  ABS house price series out today: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0?OpenDocument
> 
> ...






Meanwhile its kid in a candy store time for anyone looking to buy outside of the major cities. Just when you think it cant get any better… it does. If its 0.5% tomorrow the flood gates will open.

0.5% will indicate to me that your party is over, the banks are going to extract every last cent out of the mortgagees. Thanks for saving the economy by buying some houses folks... now enjoy years of interest rate rises while your house price just sits there looking like a stunned mullet!


----------



## MACCA350 (2 November 2009)

Beej said:


> Give the man a cigar! As stated, these are early, indicative results - DYOR to be sure what's going on in your target suburbs. Over the days/weeks/months following any given weekend 100% of the sales data becomes available and is used to formulate the various house price index results that get published. RP Data actually publish supposedly more accurate city by city auction clearance rates on each Thursday following the weekend - they claim waiting until then let's them get more comprehensive and accurate data from the agents.



I understand that Beej, and that's what Satanoperca covered in his post. 

I, on the other hand, was referring to the accuracy within the presented data itself..........all the numbers are there and it should be simple to reconcile them against each other, yet they don't seem to add up

cheers


----------



## MrBurns (2 November 2009)

I reckon rates go up .5% tomorrow.


----------



## robots (2 November 2009)

hello,

yes yes yes, great info Beej and Dr Keen wont front for the walk 

looks like he got the big capital L on his forehead like all the others at GPHC, all the anti-property bloggers

sold his apartment to back himself up too, hahahahahahahaha

bring on the next one Macca, hahahahahahaha

hahahahahahahahaha, hahahahahahaha, hahahahahahaha

oh man, life 

sorry sorry i know i know i know, interest rates are going to 50%, unemployment to 50% because a blogger told me so, its like Japan, interest rates are going to ZERO, loans are going to be for 5000yrs

thankyou
Doctor Robots


----------



## MrBurns (2 November 2009)

robots said:


> hello,
> 
> yes yes yes, great info Beej and Dr Keen wont front for the walk
> 
> ...




Here's your new avitar robots, suits well and explains your posts all in one go.
You'll have to resize it somewhat.


----------



## robots (2 November 2009)

hello,

yes it is very clear that i sure are on a higher level than most Mr Burns (especially here at ASF)

not from that dangerous weed though, things you will never experience the glory of

well done to those with titles today, as expected data out from ABS showing the number one asset at it again

thankyou
Doctor Robots


----------



## MACCA350 (2 November 2009)

robots said:


> hello,
> bring on the next one Macca, hahahahahahaha
> 
> hahahahahahahahaha, hahahahahahaha, hahahahahahaha
> ...



Why are you having a go at me.........it's not my fault Enzo cant get his figures straight

I go to the trouble of putting up something interesting I found while looking through the numbers and asked why they don't make sense, and all you do is post this kind of dribble...........what, is my calculator broken or something

cheers


----------



## Beej (2 November 2009)

MACCA350 said:


> I understand that Beej, and that's what Satanoperca covered in his post.
> 
> I, on the other hand, was referring to the accuracy within the presented data itself..........all the numbers are there and it should be simple to reconcile them against each other, yet they don't seem to add up




Well that's possibly a straight error in the REIV published results. Check their website today - have they corrected any of the numbers? When I check such calcs on the APM reported numbers they seem to add up - have you checked the APM Melbourne auction results for the weekend against the REIV numbers?

Cheers,

Beej


----------



## robots (2 November 2009)

hello,

not having a go Macca, just discussing the issues around Property and S.Keen has been one interesting issue

thankyou
Doctor Robots


----------



## robots (2 November 2009)

hello,

just in case:

ABS Stats Melbourne up 8.4% YoY, 4.7% Qtr

paradsie man

thankyou
Doctor Robots


----------



## robots (2 November 2009)

hello,

*sunshine and lollipops*

well called professors, utopia

thankyou
Doctor Robots


----------



## trainspotter (2 November 2009)

*QBE LMI predicts 23% price growth*

Australia's capital cities will enjoy double digit house price growth over the coming three years, a new report by lenders' mortgage insurance firm QBE LMI has claimed.

The company's Housing Outlook 2010-12 report highlights record-low interest rates as being a key factor both in alleviating mortgage pressure on households and in maintaining affordability. Other positive cited include healthy rental returns, housing shortages and price reductions in top-end properties giving home owners the opportunity to trade up.

http://www.yourmortgage.com.au/news/3422/default.aspx 

*A new report is warning rising interest rates will lead to climbing defaults on home loans in the Australian mortgage market.*

The report by investment bank JP Morgan and Fujitsu Consulting found housing affordability has barely improved, despite interest rates being near 50 year lows. 

Households remain highly indebted, with first home buyers borrowing on average 25 per cent more than they did before the global financial crisis. 

Fujitsu Consulting's managing consulting director, Martin North, says house prices here remain among the most expensive in the world.

"In Australia, the average price compared with income, is a lot higher than the UK or the US, or almost any other Western country. And what that means is that most people have to pay more than they would in those other markets.

"So affordability at low levels of interest rates are roughly at long-term levels, but of course as interest rates go up then affordability will deteriorate quite rapidly."

While Martin North does not believe Australia has a house price bubble, he does believe the high prices are due to a large supply shortage.

"It depends how you define a bubble. If you look back since 1990, house prices have moved up dramatically and consistently, with a few wobbles. We've seen areas of the market move up very quickly. So, for example, the First Home Owner Grant stimulated the bottom end of the market," he said.

"I don't think we're in a bubble. I think it's a much more fundamental economic question, which is, what is the right supply and demand equilibrium point in the housing industry? 

"I think, at the moment, we've got the situation where we have a lot of demand and we haven't got enough supply, and therefore long-term rates are high, prices are high, and what that means is not so much a bubble as a longer-term economic challenge."

http://www.abc.net.au/news/stories/2009/10/06/2706219.htm?site=local


----------



## robots (2 November 2009)

hello,

great trainspotter, sure isnt bubbleland

everybody i am just going to have a bath and enjoy a chicken snitzel sandwich,  glass of pepsi and will be back soon

thankyou
Doctor Robots


----------



## MrBurns (2 November 2009)

trainspotter said:


> *QBE LMI predicts 23% price growth*




A mortgage insurance company better hope for rises like that otherwise they'll be down the shute very quickly when the defaulters start to roll in.

I think it's industry BS.


----------



## drsmith (2 November 2009)

The mass recognition of any bubble is the sound of it popping.


----------



## joeyr46 (2 November 2009)

drsmith said:


> The mass recognition of any bubble is the sound of it popping.




Exactly oil was $147 dollars with very sound fundamentals that ensured it would go to $200 plus That wasn't a bubble either We could blame the speculators !What were they saying about properties fundamentals again Low supply heaps of demand and of course the RBA is going to stop a bubble forming Better late than never I suppose but being cynical I'd say that guarantees we are at the end of a bubble


----------



## rosinger (2 November 2009)

Beej said:


> Well that's possibly a straight error in the REIV published results. Check their website today - have they corrected any of the numbers? When I check such calcs on the APM reported numbers they seem to add up - have you checked the APM Melbourne auction results for the weekend against the REIV numbers?




My first post on ASF (although been reading a lot), so be gentle 

What I fail to understand is why do we have to rely on Enzo to provide dodgy (or not) numbers. Why don't we have transparency in the RE market, just like any other market?

People are following articles in the electronic and printed media, like a herd, without being able to make an informed decision when buying / selling a property. These articles are driven  / payed for by interesants, resulting in massive confusion and a distorted market.

I mean, goverment (state or canberra) must know all the RE transactions results to collect stamp duty - isn't this info public property (if not, it should)?

And why can't you fine experts apply technical analysis techniques to the RE market (median figures maybe) and reach a conclusion (or at least an agreeent)? 

Cheers, Joshua


----------



## Macquack (2 November 2009)

trainspotter said:


> *QBE Loan Mortgage Insurance  predicts 23% price growth*
> 
> Australia's capital cities will enjoy double digit house price growth over the coming three years, a new report by lenders' mortgage insurance firm QBE LMI has claimed.
> 
> ...




*Loan Mortgage Insurance is a rort*. 

One of the new breed of 'insurance products' (product my a*se) that requires one party to pay a premium for the benefit of insuring another party!

If you default on a loan, it is not you who benefits from the insurance, but your lender.

The report goes on about housing affordability. I suggest this form of rip-off insurance be scrapped which will improve housing affordability.


----------



## Beej (2 November 2009)

rosinger said:


> My first post on ASF (although been reading a lot), so be gentle
> 
> What I fail to understand is why do we have to rely on Enzo to provide dodgy (or not) numbers. Why don't we have transparency in the RE market, just like any other market?
> 
> ...




Firstly - welcome!

Land Titles offices don't get the sales information (and collect stamp duty etc) until settlement of a property sale which typically occurs 6 weeks after contract exchange (the initial sale). So the only way initial sales data can be collected immediately is via non compulsory reporting by real estate agents and so forth; this is what APM and REIV etc base there initial auction sales data on each weekend. 1 week later RP data report auction sales data which is meant to more accurate., but still not 100%. 

A couple of months later we get the house price tracking stats from APM, RP-Data, Residex and finally the ABS - they are all based on actual government reported sales (via land titles registration), but each uses published but different statistical techniques in what they report.

In terms of technical analysis, many people do it, all the data providers mentioned provide both public and private (subscription only) reports for investors, R/E agents etc, but at the end of the day any forecast/prediction, just like for the stock market, is nothing more than someone's opinion, and no guarantee of future outcomes!

The best thing to remember about real estate is that all markets are local. DYOR in your target area if looking to buy or invest, and understand, the dynamics driving it, who is selling and who is buying and what the trends are and so on. Don't rely on newspaper articles, or internet forums etc to tell you what is going on 

Cheers,

Beej


----------



## MACCA350 (3 November 2009)

Beej said:


> Well that's possibly a straight error in the REIV published results. Check their website today - have they corrected any of the numbers? When I check such calcs on the APM reported numbers they seem to add up - have you checked the APM Melbourne auction results for the weekend against the REIV numbers?
> 
> Cheers,
> 
> Beej



Just checked and nothing has been changed. It's not just one number wrong though, there's holes all through it.

Had a look through the APM website but I'm not sure I can access their data, don't you need a subscription for the latest data?

cheers


----------



## MACCA350 (3 November 2009)

This should make the good doctor incoherent again:






cheers


----------



## Beej (3 November 2009)

MACCA350 said:


> Just checked and nothing has been changed. It's not just one number wrong though, there's holes all through it.
> 
> Had a look through the APM website but I'm not sure I can access their data, don't you need a subscription for the latest data?
> 
> cheers




For weekly APM auction results go to http://www.domain.com.au/Public/weekinreview.aspx?cid=AuctionResults and select city. You will get the last weeks results as collated by APM. It's not 100%, there are often missing auctions and so forth, but it probably get's 70-80% of results, and it's available every Saturday evening at about 7pm for that day's auctions.

Cheers,

Beej


----------



## MACCA350 (3 November 2009)

Thanks Beej, no problem with their figures. I was wondering where Domain got their reports from, I originally thought their data was pulled from their advertised properties.

Interesting that they report 709 properties at 78% clearance rate while REIV reported 818 properties at 82% clearance rate for the same week..............not a major difference but would be interesting to follow up in a few months time with the data pulled from the land titles registry to see which data is more accurate. Do you know if any of them give weekly results with the land title data so I can check against.

cheers


----------



## Mofra (3 November 2009)

Macquack said:


> *Loan Mortgage Insurance is a rort*.
> 
> One of the *new *breed of 'insurance products' (product my a*se) that requires one party to pay a premium for the benefit of insuring another party!
> 
> ...



I wouldn't say it's a new breed of product, as it has been around for years. 

The whole LMI issue is a bit chicken and egg though - would lenders be willing to lend above 80% LVR as they do now if they knew they had to front the risk? I'd suggest in many cases no, even if the LMI lending guidelines are often more stringent than standard lending terms. In some respects it's a "nice" evil to have if it allows more people to obtain credit once they meet reasonable criteria.


----------



## Beej (3 November 2009)

MrBurns said:


> I reckon rates go up .5% tomorrow.




Wrong again Mr Burns!


----------



## MrBurns (3 November 2009)

Beej said:


> Wrong again Mr Burns!




I thought later they'll be kind to all the bleeding hearts on Cup Day but watch out next month.

Another nail in the coffin of the property bulls.....HA. perhaps young Aussie couples will be able to pick through the bargains and forced sales that are to come, unfortunately some of those forced sales will also be from young Aussie couples, thanks Rudd you steaming pile of .........errrr....Krudd.


----------



## robots (3 November 2009)

hello,

yeah wrong again Mr Burns, oh well maybe one day the stars will aline for you brother

and so everything goes along its merry way

yeah blame someone else again

thankyou
doctor robots


----------



## gav (3 November 2009)

Oh no, a whole $35 (ish) extra per month... How ever will I cope? 

Seriously, if you can't afford interest rates of 12%+, you shouldn't have bought in the first place.


----------



## satanoperca (3 November 2009)

http://rba.gov.au/MediaReleases/2009/mr-09-25.html



> Housing credit growth has been solid and dwelling prices have risen *appreciably* this year. Business borrowing has been declining as companies have sought to reduce leverage in an environment of tighter lending standards.




Am I missing something here, house prices up, housing credit up - banks all happy. Great
Business borrowings still *declining*, but who cares about that it is only the workhorse of the economy that creates wealth to buy houses/service mortgage debt or is it in the short term.

So interest rates up under the guise of the inflation genie or the fact that we need house prices to keep rising by growing debt, no need for companies to expand and grow anymore. This debt is provided by foreign investors who are attracted by our high interest rates - money flow into the country. 

I hope we see business lending trend change directions or I cannot see how property price growth will be sustainable over the next 2-5years.

Cheers


----------



## MrBurns (3 November 2009)

robots said:


> hello,
> yeah wrong again Mr Burns, oh well maybe one day the stars will aline for you brother
> and so everything goes along its merry way
> yeah blame someone else again
> ...




I heard someone saw thousands of rats running along Acland St St Kilda, could those be rats deserting a sinking ship ?


----------



## robots (3 November 2009)

hello,

yes you are missing something, its like a small self sufficient hobby farm

ticking over, slowly growing, slow and steady

but because many have the blinkers on when it comes to housing its must be out of whack, not right

"business" is the only thing which does something for the economy

sorry sorry i know i know, its all going to go bust in 6mths, 12mths, 2 yrs, 3yrs, 5yrs

going to be great to be around for the next 40+yrs here at ASF

thankyou
doctor robots


----------



## explod (3 November 2009)

satanoperca said:


> http://rba.gov.au/MediaReleases/2009/mr-09-25.html
> 
> 
> 
> ...




Then why are small businesses finding it increasingly difficult to borrow.   Builders finding finance very tight to impossibe for even small extension projects.   Maybe the stats are reflecting that and being read the wrong way.

Spose we all only see things the way we want it to be.


----------



## satanoperca (3 November 2009)

Explod,

Business finding it hard to obtain credit and in many cases having credit lines reduced is what I'm also seeing.

It could be seen that businesses are deleveraging, paying down debts or not able to obtain credit. Either way, it is not all green shoots.

Just trying to understand the fundamentals aside from property always goes up which is a myth as shown by the chart above unless stimulated with "over a 10 year period or more"

Robots, given you impeccable qualifications in this area I would have thought you were capable of giving an explaination of australia's economy at little more indepth than a self sufficient hobby farm. Did you get that from the back of the wheaties box.



> sorry sorry i know i know, its all going to go bust in 6mths, 12mths, 2 yrs, 3yrs, 5yrs



 Little over dramatic.


----------



## robots (3 November 2009)

hello,

i need to explain it that way here at ASF because so many small minds around 

like a people's poet, someone who can explain things easily to the lower classes of society

sorry sorry sorry, the anti-property bloggers say its all going to crash, 40%, 50%, interest rates to 20%, sorry sorry

thankyou
doctor robots


----------



## Bill M (3 November 2009)

Update on my situation. Bought a house outside of Sydney and was in 2 frames of mind on whether to sell my well located Sydney unit or rent it. Whilst I was moving last week on Wednesday I noticed a unit down the passage way was open for inspection (for rental). The rental for a 1br unit with no views was $370 p/w. I witnessed (in a 15 minute open for inspection window) at least 1 dozen parties come through that unit. When the agent was locking up I approached her to come and look at my place and give me a quote on how much rental I could achieve.

She told me that out of all those people who saw the advertised unit one party needed/wanted that unit so badly they offered $390 p/w for it (more than the listing price). I think they must have taken it as the unit is no longer available for rent. (All in 15 minutes)

This agent told me that as I have storage, a breakfast bar and ocean views my unit would get $420 p/w very easily and that we could try for more.

This was more than I expected and I will for sure now become a rental property investor again. 

People seem to forget that there is a severe shortage of good rental properties in Sydney, people actually outbid each other looking for that home. I am in the process now of preparing my unit for rental.

Incidentally, I mentioned this way back in the thread, the cheapest home loans you were ever going to get was when the RBA brought rates down to 3%. At that time you could have fixed a 5 year loan at 6.5% and if I was a first home buyer I would have definitely taken up that offer with all the other grants. Since then rates are creeping up but the situation is still pretty good at current rates and offers. Good luck to all property investors, nothing beats that weekly income coming in.


----------



## MrBurns (3 November 2009)

Bill M said:


> Good luck to all property investors, nothing beats that weekly income coming in.




Congratulations but dont forget the income is less, Council and Water rates, agents fees, maintenance, insurance and vacancy.
I've never found residential investments are any good unless there's capital gain to look forward to.


----------



## robots (3 November 2009)

hello,

well done Bill M, good work man and hope you enjoy the new location 

thankyou
doctor robots


----------



## Bill M (3 November 2009)

MrBurns said:


> Congratulations but dont forget the income is less, Council and Water rates, agents fees, maintenance, insurance and vacancy.
> I've never found residential investments are any good unless there's capital gain to look forward to.




Yes that is true but I have weighed this up. What would you do with 400K? Put it in cash 4%? Put it in shares + or - 50% (big risk) or plug it into good old fashioned bricks and mortar where the rent comes in week after week and the price might stay the same for a while but keeps going up in the long term? For now I will stay a property investor, who knows what I might do later.


----------



## MrBurns (3 November 2009)

Bill M said:


> Yes that is true but I have weighed this up. What would you do with 400K? Put it in cash 4%? Put it in shares + or - 50% (big risk) or plug it into good old fashioned bricks and mortar where the rent comes in week after week and the price might stay the same for a while but keeps going up in the long term? For now I will stay a property investor, who knows what I might do later.




Thats fair enough and whats more you dont have to pay stamp duty because you already own it


----------



## Bill M (3 November 2009)

robots said:


> hello,
> 
> well done Bill M, good work man and hope you enjoy the new location
> 
> ...



The new place is great, nice and quite neighbourhood. The lake is a 15 minute walk away, I tell I've never seen so many black swans.... I thought they were once in a life time share market disasters till I moved up here. I'm not counting my chickens just yet but this just does us fine so far...:


----------



## Macquack (3 November 2009)

MrBurns said:


> Congratulations but dont forget the income is less, *Council and Water rates, agents fees, maintenance, insurance and vacancy*.




You can add *Land Tax *to that list.


----------



## Bill M (3 November 2009)

MrBurns said:


> Thats fair enough and whats more you dont have to pay stamp duty because you already own it




Yeah but I had to pay it to the blood suckers for the new joint.... $10,800 

Oh well we got to pay for those pot holed roads... Hah that's a new thread, the NSW GOVT!!!


----------



## Bill M (3 November 2009)

Macquack said:


> You can add *Land Tax *to that list.




I thought that kicked in at $1 Million? I got well under that with both properties combined, am I wrong?


----------



## Macquack (3 November 2009)

Bill M said:


> I thought that kicked in at $1 Million? I got well under that with both properties combined, am I wrong?




*Land Tax (NSW)
Rates and thresholds
Rates 2009*
Land tax is calculated on the combined value of all the *taxable land* you own. The land tax threshold for *2009 is $368,000*. Your land tax assessment is calculated on the combined value of all the taxable land you own above the threshold. The rate of tax is $100 plus 1.6 per cent of the land value between the threshold and the premium rate threshold.

http://www.osr.nsw.gov.au/taxes/land/rates/

*PPOR not included*.
Let me guess, are you refering to Tuggerah Lake?


----------



## awg (3 November 2009)

Bill M said:


> Yeah but I had to pay it to the blood suckers for the new joint.... $10,800
> 
> Oh well we got to pay for those pot holed roads... Hah that's a new thread, the NSW GOVT!!!




roads on the Central Coast..hehehehe

The F3 Newcastle to Sydney Expressway is blocked way too many times per year

Also re the prior post, Land tax is per person, so if in joint names, seperate thresholds apply


----------



## Bill M (3 November 2009)

Macquack said:


> *Land Tax (NSW)
> Rates and thresholds
> Rates 2009*
> Land tax is calculated on the combined value of all the *taxable land* you own. The land tax threshold for *2009 is $368,000*. Your land tax assessment is calculated on the combined value of all the taxable land you own above the threshold. The rate of tax is $100 plus 1.6 per cent of the land value between the threshold and the premium rate threshold.
> ...




Thanks mate, I shouldn't have been so lazy and looked it up myself. OK so Central Coast is exempt but how would they value a block of 38 units land value in Sydney? In any case I wouldn't get anymore than 400k for my unit so the land value at a stab in the dark guess couldn't be any more than 200k so I am well under.

The lake, close, it is Budgewoi lake actually.:walker:


----------



## drsmith (3 November 2009)

Macquack said:


> *Land Tax (NSW)
> Rates and thresholds
> Rates 2009*
> Land tax is calculated on the combined value of all the *taxable land* you own. The land tax threshold for *2009 is $368,000*. Your land tax assessment is calculated on the combined value of all the taxable land you own above the threshold. The rate of tax is $100 plus 1.6 per cent of the land value between the threshold and the premium rate threshold.
> ...



I've always been of the view that negative gearing should be wound back but at the same time this sort of nonsense should also be done away with.


----------



## Bill M (3 November 2009)

drsmith said:


> I've always been of the view that negative gearing should be wound back but at the same time this sort of nonsense should also be done away with.




Would you also apply that the share market investors? I mean some investors who borrowed money for stocks are also losing now (negative gearing) should they also be denied negative gearing tax breaks?


----------



## drsmith (3 November 2009)

I'm not saying negative gearing should be done away with but deductions for wage and salary earners should at least be restricted to, say a maximum 125% of the investment's income as an example. This is regardless of the investment type.

The point of my post above was not so much at negative gearing but at capital taxes such as land tax by the NSW government as shown above. If this were removed and savings from limitations on negative gearing handed to state governments then thats one less reliance of government budgets on inflated property prices. 

Tax reform 1.01.


----------



## Macquack (3 November 2009)

Bill M said:


> OK so Central Coast is exempt but how would they value a block of 38 units land value in Sydney?




You can do a free search of your land value here (for NSW)
https://lpi-online.lpi.nsw.gov.au/cgi-bin/lpis/menu.pl

Unit in a block of 38 units on the northern beaches worth about $400,000 - have to be *Dee Why*?


----------



## robots (4 November 2009)

hello,

good evening fellow property owners and general public, hope the day has been enjoyable

Bill M, normally the rates notice has a land value component on it, check that out

dont forget Kissfm.com.au tonite for beats and rhymes with the hip hopping show on shortly

yes ban negative gearing for share, cfd's, forex, options, all of those investment classes which provide nothing for the economy

thankyou
Doctor Robots


----------



## MrBurns (4 November 2009)

robots said:


> yes ban negative gearing for share, cfd's, forex, options, all of those investment classes which provide nothing for the economy
> 
> thankyou
> Doctor Robots




How does inflating house prices help the economy ?


----------



## robots (4 November 2009)

hello,

listen mate I dont know who you are or what you up to but i suggest you start by re-reading the numerous posts from some of the masters of property here at ASF

anything from Robots, Beej, Kincella, Gonefishin' 

use the search function

thankyou
doctor robots


----------



## nunthewiser (4 November 2009)

LOL

Chicken parma , slab of ruskies and a half priced block of land from a "distressed" sale settles on the 25th................

Give it another couple of rate rises and there will be plenty more to share around too bruthha,s.

Sunshine and lollipops for everyone.


----------



## MrBurns (4 November 2009)

robots said:


> hello,
> listen mate I dont know who you are or what you up to but i suggest you start by re-reading the numerous posts from some of the masters of property here at ASF
> anything from Robots, Beej, Kincella, Gonefishin'
> use the search function
> ...




Just as I thought you haven't got a clue ROFL


----------



## MrBurns (4 November 2009)

robots said:


> hello,
> 
> masters of property here at ASF
> 
> ...




Thanks for the laugh, I almost wet myself at that one


----------



## nunthewiser (4 November 2009)

> Many homeowners upped debt on low rates More than 75 per cent of homeowners took advantage of low interest rates to add to their mortgage loan or take on other forms of debt, a new survey has found.
> 
> 
> 
> ...





http://www.thebull.com.au/articles_detail.php?id=7121

Intresting stuff this intrest rate readings

Everything will be ok though, no one out there would be overextended, would they?


----------



## jbocker (4 November 2009)

MrBurns said:


> How does inflating house prices help the economy ?




Now you got _me _thinking Mr Burns, how does inflating anything help the economy?

I suppose inflated house prices means more stamp duty (albeit taxes are a crap way to 'help' the economy and then only the govts)


----------



## cutz (4 November 2009)

jbocker said:


> Now you got _me _thinking Mr Burns, how does inflating anything help the economy?
> 
> I suppose inflated house prices means more stamp duty (albeit taxes are a crap way to 'help' the economy and then only the govts)




It's all part of the illusion, just like the Myer float, private equity buys it out, dresses it up, hots it up then offloads it back to the mug.

Sorry off topic, but you know what i mean.


----------



## Vizion (5 November 2009)

Bill M said:


> Would you also apply that the share market investors? I mean some investors who borrowed money for stocks are also losing now (negative gearing) should they also be denied negative gearing tax breaks?




I am .

Removing negative gearing means that the rent may go up bit, more likely it means that the value of some properties go down, cashed up investors will no longer regard them as so appealing an option. If their sale value goes down through a correction, then required rental return should go down, plus some people who would be renting can finally buy so the demand for rental properties goes down too. 
Its a huge distortion that the already-haves get these tax breaks on second, third and fourth properties, whilst those who cannot afford even one house get held out of the market by the artificial demand created. 

A person having a valuable primary residence doesn't affect me or you, unless of course your bidding on the same place as a PPOR. An investor though buying up the medium-value property in an area to use as investment/rental properties does. All concessions for these types of purchases should be scrapped IMHO. If it produces a bit of a correction, so be it & all the better for the vast majority of the people in this country. There are now, what is it? 54% in home ownership in the age bracket between 29 & 39, down from 62% or so. There is nothing socially responsible in any government which does not its level best to house its own population as the last few have not done.

As for when it comes to investing in shares, it's a risk. Why should you get a tax break because you stuffed up and leveraged yourself to the hilt at 75% plus thinking the only way was up? Its about time people stood on their own two feet and took responsibility for their actions. If you have investments you should be watching them & practising risk management. Not everyone who had shares took a bath.

Cheers


----------



## cutz (5 November 2009)

Bill M said:


> Would you also apply that the share market investors? I mean some investors who borrowed money for stocks are also losing now (negative gearing) should they also be denied negative gearing tax breaks?




Yeah do away with negative gearing on everything, is it not enough that you get a tax break on investment earning ?

The fact of the matter is the person caught up in the above scenario borrowed too much, perhaps the incentive was to negative gear, perhaps encouraged by some silly accountant.

Agree with Vizion on this one, get rid of the routs and let property find it's own level.


----------



## Beej (5 November 2009)

MrBurns said:


> How does inflating house prices help the economy ?




As others have alluded to: One could also ask how do inflated share prices help the economy?



			
				Vizion said:
			
		

> A person having a valuable primary residence doesn't affect me or you, unless of course your bidding on the same place as a PPOR. An investor though buying up the medium-value property in an area to use as investment/rental properties does. All concessions for these types of purchases should be scrapped IMHO. If it produces a bit of a correction, so be it & all the better for the vast majority of the people in this country. There are now, what is it? 54% in home ownership in the age bracket between 29 & 39, down from 62% or so. There is nothing socially responsible in any government which does not its level best to house its own population as the last few have not done.




Vizion makes some pretty good arguments I think. However the economic benefit of investors participating in the rental market is pretty clear - the provision of privately funded rental accommodation, taking the burden for that off the government (ie less public housing required).

PS: Vizion, in terms of falling home ownership rates in the 29-39 year old bracket, there could be other reason for this, including the trend for people to marry and have kids later than in the past, meaning less "need" for the added security of home ownership. Plus the (related) tendency of that generation to have spent their 20s living it up, traveling the world extensively (which previous generations didn't do anywhere near as much), and as consequence saving a lot less than previous generations did at this stage of their lives. These factors have resulted in the desire/need for home ownership to be deferred until later in life. 

By the way I also see these demographic shifts/factors as a big part of the reason why there is currently so much pent up demand for home ownership in Australia, as the current batch of 29-39 year olds are all currently busy getting married, having lot's of babies and so forth, as evidenced by the mini baby-boom that has been going on for the past few years.

Cheers,

Beej


----------



## MrBurns (5 November 2009)

Beej said:


> As others have alluded to: One could also ask how do inflated share prices help the economy?




What have shares got to do with what I said ? 
Nothing.
It's just your way of deflecting things.

The statement was made that booming house prices are good for the economy and I asked , how ?
The truth is that that statement is pure and utter BS like a lot of the property bull propaganda in this thread.


----------



## Beej (5 November 2009)

MrBurns said:


> What have shares got to do with what I said ?
> Nothing.
> It's just your way of deflecting things.
> 
> The statement was made that booming house prices are good for the economy and I asked , how ?




No such statement was made that I can see?? Looks like all you did was build a nice straw man argument there? Here's the quote you  responded to:



robots said:


> yes ban negative gearing for share, cfd's, forex, options, all of those investment classes which provide nothing for the economy





So all Robot's was pointing out is that negative gearing can be used to offset financing costs for a range of investment vehicles, all of which can be accused as doing nothing for the economy. You asked how rising house prices in particular benefit the economy? So I asked how rising "other" asset prices helped? A clever mind would quickly realise that the whole argument is moot.



> The truth is that that statement is pure and utter BS like a lot of the property bull propaganda in this thread.




So the statement that you made up is utter BS then? That could well true as it would be well aligned then with much of what is written here by irrational property bears..... 

PS: As a matter of fact, rising house prices can and do help the economy, through two factors:

1) The well documented "wealth effect" which results in increased domestic demand/consumption as people feel "wealthier" due to the value of their number one asset. 

2) Rising prices produces more improvement, renovation and new building/property development which creates jobs in the building and materials industries - a significant chunk of Australia's GDP comes from this.

I also acknowledge though that there are negative effects as well, both economic and social, so the real question is what is the NET effect? 

Cheers,

Beej


----------



## Moderator (5 November 2009)

The Moderator requests that the posters on this thread remains civil towards each other, despite the fact that the same arguements have been repeated for hundreds of pages now.

Thanks

Your friendly Moderator


----------



## nunthewiser (5 November 2009)

uh oh.


----------



## MrBurns (5 November 2009)

Moderator said:


> The Moderator requests that the posters on this thread remains civil towards each other, despite the fact that the same arguements have been repeated for hundreds of pages now.
> 
> Thanks
> 
> Your friendly Moderator




Yes I lost it for a minute there, feeling better now


----------



## Taltan (5 November 2009)

Beej

Housing is a human need shares aren't. So if the share market's "inflated" thats good for the economy because it means businesses are profitable. Property can be inflated not only because its making money but also because supply of a needed good is scarce. 

The Govts of the last 10 years have been negligent in providing this need. As Mr Burns said this debate has nothing to do with the pros and cons of negative gearing on shares


----------



## nunthewiser (5 November 2009)

Taltan said:


> Beej
> 
> So if the share market's "inflated" thats good for the economy because it means businesses are profitable.




Wrong.

Shareprices OFTEN have absolutely ZILCH to do with a business being profitable ...


----------



## Mofra (5 November 2009)

nunthewiser said:


> Wrong.
> 
> Shareprices OFTEN have absolutely ZILCH to do with a business being profitable ...



But to draw a long bow, higher shareprices mean cap raisings are easier 

It's all about the credit baby, in any form you can get it.


----------



## nunthewiser (5 November 2009)

Mofra said:


> But to draw a long bow, higher shareprices mean cap raisings are easier
> 
> It's all about the credit baby, in any form you can get it.





Gday 

Yep definately a long bow there mate 

This last round of cap raisings by most of the majors were done around there lows just after/during the correction .

High shareprices had nothing to do with them ones .

But yeah re credit , makes the world go round.


----------



## MrBurns (5 November 2009)

nunthewiser said:


> Wrong.
> 
> Shareprices OFTEN have absolutely ZILCH to do with a business being profitable ...




Not always but most of the time and at least someones putting in but higher house prices benefit no one but the parasite residential investor.
I say parasite because unlike the commercial property investor or share investor their greed effects couples wanting a roof over their head to raise a family.


----------



## trainspotter (5 November 2009)

http://www.heraldsun.com.au/news/vi...80-per-cent-mark/story-e6frf7kx-1225793318627

The good news just keeps on keeping on. *sigh*


----------



## gav (5 November 2009)

trainspotter said:


> http://www.heraldsun.com.au/news/vi...80-per-cent-mark/story-e6frf7kx-1225793318627
> 
> The good news just keeps on keeping on. *sigh*




Anyone else notice that article is dated November 30, 2009


----------



## Bill M (5 November 2009)

cutz said:


> Yeah do away with negative gearing on everything, is it not enough that you get a tax break on investment earning ?
> 
> The fact of the matter is the person caught up in the above scenario borrowed too much, perhaps the incentive was to negative gear, perhaps encouraged by some silly accountant.
> 
> Agree with Vizion on this one, get rid of the routs and let property find it's own level.




You agree in doing it across the board so you are not biased either way which is good.

Some 24 years ago one of our previous governments did abolish negative gearing on housing and it stuffed up the whole rental market from memory. Rentals went up, property went up and it did not help low income earners or tenants. It was so bad they they had to reverse that decision 1987, it just didn't work.


----------



## trainspotter (5 November 2009)

gav said:


> Anyone else notice that article is dated November 30, 2009




Weird HUH gav? Must be future newspaper or something?  But at the top of the webpage the correct date is 5th November??


----------



## Vizion (5 November 2009)

Beej

I agree to a point that private individuals as landlords helps the rental market. However why is government backed development of housing always touted as a bad thing? 9.95 billion of negative gearing tax lost to our nations coffers plus 6.2 billion in reduced CGT would build allot of housing & infrastructure. They don't have to build crappy boxes either. 

If the federal government treated the building of housing as a business, but one with modest profit margins and not a free for the masses band-aid, or one that gouged as much as possible as allot of business tries too. I think it would go along way to putting the breaks on spiralling prices.
Not only that they would actually be creating jobs and not just moving them about as they normally do. Our current system of federal / state / local is at least one tier to many and an enormous black hole we pour money into. Its the major cause of the bottle necks we have in planning, State blaming Federal, local blaming State etc etc. My own companies corporate dept is a 5 million a yr black hole. Any business and government is a business, just a poorly run one. Should be trying to minimise those costs and making them more efficient. 

There are other many ways to enable a larger part of the population to make money than through housing as an investment model. They would all have positive flow on effects to the nation as a whole. An increased ability to spend on retail etc, as well as other less tangible but equally important benefits that removing a little of the social inequalities and the ridiculous  cost increases of housing, brought upon by our current housing policies, would enable in our nation. Is anybody seriously saying that before the property boom, people where not making money (large amounts of it at that) any other way?

As has been stated here more than once, there is a load of business that would not exist if not for housing. I'm not one who believes  
this does not actually help to grow our economy. If your struggling to pay off the roof over your head though, your not spending in other sectors of our economy are you. Your not really spending at all unless your going heavily into "bad" debt, look where that got the rest of the western world.

Just my


----------



## awg (5 November 2009)

Bill M said:


> You agree in doing it across the board so you are not biased either way which is good.
> 
> Some 24 years ago one of our previous governments did abolish negative gearing on housing and it stuffed up the whole rental market from memory. Rentals went up, property went up and it did not help low income earners or tenants. It was so bad they they had to reverse that decision 1987, it just didn't work.





Agree thats a problem, 

As most new property investors are heavily geared

No new investment in rental, the consequences got so dire, Keating reversed.

Public housing is problematic and innefficient for Govts, they keep winding it back.

IMO even the change in bracket thresholds has reduced investor interest in rental property.

maybe it would settle out in the wash, but I wouldnt want it happening on my Govt watch, as it would take several years and be a bit nasty


----------



## Taltan (5 November 2009)

nunthewiser said:


> Wrong.
> 
> Shareprices OFTEN have absolutely ZILCH to do with a business being profitable ...




ZILCH? so I guess the p/e ratio is just something unrelated the analysts made up??? Both markets are often distorted but long-term prices have a lot to do with profitability


----------



## Vizion (5 November 2009)

Bill - 

1985 -> 1986 saw prices drop in real terms in all cities except Sydney, where they went up by only 1.3%
After negative gearing was re-introduced in 1987->1988 prices rose in real terms in every capital, 7% in Sydney and 12% in Melbourne as examples. Stats - A.B.S

They did not reintroduce negative gearing because prices went up, they brought it back because it was not popular at the top end of town where the majority of party funds come from. Little people do not have the ears of politicians etc. I know this as I deal with their offices & state government depts on an ongoing basis. Plus paying 16% interest on a house that is staying still in real terms is not a vote winner even if its a short term thing.

While there was a spike in rental prices in 1986. Rental vacancies remained almost constant from the end of negative gearing until its re-introduction. The facts bandied about do not support the argument that a removal of negative gearing caused a decline in supply which is what allot of people like to throw into the mix. Given a couple of years this would have levelled out when average wage rises had caught up. Not in time to stop a backlash against an incumbent government though. Most people only see short term and tend to be reactionary.

There is allot of misinformation from some very powerful lobby groups here. Most of it is simply not true. The higher the mortgage is the more money banks, real estate agencies etc stand to make on transactions. Not to mention stamp duty for the states, and so it goes on. Our banks for instance went from being profitable to hugely profitable in the space of a decade. Institutions making 25% profit increases per year ongoing, has to come from somewhere. Who does everybody think pays for that really?

Its like the frog in the hot bath analogy, do it gradually and everybody will wear it till it's too late, do it all in one hit and people scream and carry on and get out the bath.


----------



## MrBurns (5 November 2009)

Vizion said:


> There is allot of misinformation from some very powerful lobby groups here. Most of it is simply not true. The higher the mortgage is the more money banks, real estate agencies etc stand to make on transactions. Not to mention stamp duty for the states, and so it goes on. Our banks for instance went from being profitable to hugely profitable in the space of a decade. Institutions making 25% profit increases per year ongoing, has to come from somewhere. Who does everybody think pays for that really?




True.


----------



## joeyr46 (5 November 2009)

Bill M said:


> You agree in doing it across the board so you are not biased either way which is good.
> 
> Some 24 years ago one of our previous governments did abolish negative gearing on housing and it stuffed up the whole rental market from memory. Rentals went up, property went up and it did not help low income earners or tenants. It was so bad they they had to reverse that decision 1987, it just didn't work.




My memory is different to yours I remember it being brought in in a budget but the carry on from the vested interests saying what was likely to happen (no evidence mind just opinions ) they reversed it before it came into effect. But your right it was a long time ago under Keating so only 90% sure! 

But whether this causes property to rise not sure because we had it when property went backwards as well as rising (faling nearly 50% in some areas) and that is a fact I remember well 100%

IMO I think liquidity is the real cause of prices rising and this is across the board not just property  and without any valid reason other than created credit which unfortunately cannot be sustained regardless of what the government does. All other areas have started to unravel can't see why property won't follow.


----------



## MrBurns (5 November 2009)

Watch Ch2 now....learn something.


----------



## Quincy (6 November 2009)

House prices to keep rising for years : - 

http://www.smh.com.au/business/doll...foreign-property-investors-20091105-hzx3.html



> *Dollar's strength can't deter foreign property investors*
> 
> CHRIS ZAPPONE - November 6, 2009 - 7:13AM
> 
> ...






> A spokesperson for Assistant Treasurer Nick Sherry said despite the rule changes the FIRB rules were designed to spur the creation of additional housing supply rather than add to affordability problems.






> Nonetheless, the impact of the new investment has raised questions about housing affordability for would-be owner-occupiers.
> 
> *One Melbourne real estate agent, who asked not to be identified, privately worried about what the Chinese demand would do for the chances of local buyers.*
> 
> ...


----------



## Taltan (6 November 2009)

Quincy, the source of these articles are real estate agents. I am yet to read any of them ever suggesting the property will turn downwards which makes their opinions generally irrelevant. 

Robots - please write in English. Also if you are a doctor please also tell us for what? otherwise in respect of those who have furthered themselves maybe stop using the name.


----------



## MrBurns (6 November 2009)

> One Melbourne real estate agent, who asked not to be identified, privately worried about what the Chinese demand would do for the chances of local buyers.




I'll tell you what it's done it's ruined it Rudd changed the overseas investment rules and has completely put the market out of whack.

Rudd has distorted the property market and the repercussions will be dire.


----------



## MrBurns (6 November 2009)

Taltan said:


> .
> Robots - please write in English. Also if you are a doctor please also tell us for what? otherwise in respect of those who have furthered themselves maybe stop using the name.




ROFL


----------



## Wysiwyg (6 November 2009)

MrBurns said:


> Not always but most of the time and at least someones putting in but higher house prices benefit no one but the parasite residential investor.
> I say parasite because unlike the commercial property investor or share investor their greed effects couples wanting a roof over their head to raise a family.



Do you mean like taking advantage of people who at this stage in their lives can't afford to take out a mortgage. In a capitalist society anything within the law goes.


----------



## MrBurns (6 November 2009)

Wysiwyg said:


> Do you mean like taking advantage of people who at this stage in their lives can't afford to take out a mortgage. In a capitalist society anything within the law goes.




I meant young couples trying to build a life.

And yes you're quite right, as long as it's within the law they can do whatever they like, would be nice if the law made residential investing less attractive for that reason, it's peoples homes we're talking about.


----------



## Vizion (6 November 2009)

robots said:


> hello,
> 
> vizion, fine man, rent no big deal and keep the dollars in shares




At no point did I say that you should rent vs buy, or keep you money in shares.  Try to get your facts straight.

What I am saying is that many more should be given the chance to own. That's the Ozzie way is it not? To help the battlers out, not lock them out for years. To let them do what others have been able to do when the cost of ownership was at a level the vast majority could attain. That's called social responsibility not "Socialism" there is a vast difference. 

Incidentally I have an IP & PPOR thanks, I'm not renting.

Seriously you put forward no cohesive view point other than to act like a kid in a school yard. "Why?... "just because" aaaaaaaaaaaand repeat. 
 You remind me of the Monty Python sketch of the man who pays to have an argument.

http://video.google.com/videoplay?docid=-572077907195969915#

If it was not for the comic factor I would have hit the ignore button ages ago


----------



## explod (6 November 2009)

Taltan said:


> Robots - please write in English. Also if you are a doctor please also tell us for what? otherwise in respect of those who have furthered themselves maybe stop using the name.





Absolutely *hear hear* have tried in vain on just this point.  His flaunting of some Honorary Phd is a disgrace to the traditions of academia, would have thought the monitors would have picked up in this ignoramus, but alass to no avail.

And I'm with all the other recent posters, the efforts should be towards all being able to afford and keep thier own home.

How about some incentives and tax breaks for traders/investors in the markets?  Of course it is rediculous and so is the property negative gearing etc.   If one has suffiecient to invest/speculate then an even palying field that does not drain others through the tax system.  But obviously the real estate/property lobby has the biggest effect on elections perhaps.

*And that also is not socialist*, it is a democratic fair go.


----------



## trainspotter (6 November 2009)

Give over guys ... robots is the real deal ... he has stuck to his story of "House prices to keep rising for years" and they have. The thread is not about affordability or locking out FHB or young couples etc. Whilst I personally do not agree with all that is written he has not waivered in his endeavours to keep the sunshine and lollipops brigade on the up. Have we ever considered that robots could be a real estate agent ramping the cause? HAha hah aha h ha ........ I think not. Just a genuine guy who strongly believes in residential real estate or owning your own home.

Yes, some of the subject matter is peurile in the way it is written and lacks panache of a recognised PhD BUT he is correct thus far. In other words I have not seen any data that proves otherwise. Now before the rest of the ASFers go on the "FLAME ON" approach, think about it in it's most simplistic form, "Have house prices continued to rise?" Yes or no? Ummmm ....... I think robots has got us cold on this one.


----------



## Mofra (6 November 2009)

explod said:


> How about some incentives and tax breaks for traders/investors in the markets?



They (we!) do. I can claim any interest deductions from margin or other loans and claim that against income earned from investment or trading activity. Deductability of interest is not asset class specific as far as I am aware. 
Any acquisition costs (be it stamp duty for homes or brokerage for equities) can be used to increase the cost base for CGT purposes as well. Again, not asset class specific.

Obviously it is more noticeable for property because the amounts claimed are generally much higher.


----------



## Wysiwyg (6 November 2009)

trainspotter said:


> "Have house prices continued to rise?" Yes or no? Ummmm ....... I think robots has got us cold on this one.




Yes but who or what group pushes the average cost of housing up? The Real Estate Agent? The Politicians? A Professional Group of Real Estate Investors? 

Who?


----------



## Vizion (6 November 2009)

If this thread was *only* about prices rising then I would think it would have been a damn short thread. Prices will always rise *eventually*. That's a given I would think  To be fair, Robbie has stated more than once he's in it for the long haul. 

This thread though has developed into so much more. I don't see why that's a problem  There are obvious problems of affordability for a great many and that has been of growing concern for many. People want to discuss that.

Robbie's general attitude seems to be more "stuff them" and that's gotten some peoples backs up methinks.

I am of the "opinion" that there will be a correction in pricing or something else is going to give. I would rather see a controlled (if that's even possible) one rather than an uncontrolled rout


----------



## explod (6 November 2009)

trainspotter said:


> Have we ever considered that robots could be a real estate agent ramping the cause? HAha hah aha h ha ........ I think not. Just a genuine guy who strongly believes in residential real estate or owning your own home.
> 
> :




Absolutely spot on, last week when I did a tretise on the Real Estate Agents there was not a post for 20 hours, *unprecedented silence*, and on a Sunday Monday too when the ramping over the weekend sales is usually at its height.

Dont' you worry about the ole innocent sounding Robots.

Reminds me a lot of norm galleger


----------



## robots (6 November 2009)

hello,

so vizion, you going to sell up or ride out the storm you are predicting

sit on them brother

thankyou
Doctor Robots


----------



## Macquack (6 November 2009)

Wysiwyg said:


> Yes but who or what group pushes the average cost of housing up? The Real Estate Agent? The Politicians? A Professional Group of Real Estate Investors?
> 
> *Who*?




I put the blame/credit squarely at the hands of the private banks that are soley responsible for increasing the size of the money supply. The Reserve Bank *tries* to control the growth in the money supply by *trying* to control the private banks credit creation process.

For robots and Co, do you acknowledge that house prices would not continue to rise without the private banks perpetually increasing the money supply? The downside to this is that all new money created reduces the value of all existing money.


----------



## Wysiwyg (6 November 2009)

Macquack said:


> I put the blame/credit squarely at the hands of the private banks that are soley responsible for increasing the size of the money supply.



So the banks make lending more accessible and an increased number of  consumers are able to buy houses. This additional demand for housing from the increased number of consumers pushes the average house price up.

Pretty simple but I didn't think it was that simple. Like I bet the Real Estate Agents throw a pretty penny on top of the price when valuing.


----------



## Macquack (6 November 2009)

Wysiwyg said:


> So the banks make lending *more accessible *and an *increased number of  consumers *are able to buy houses. This additional demand for housing from the increased number of consumers pushes the average house price up.
> 
> Pretty simple but I didn't think it was that simple. Like I bet the Real Estate Agents throw a pretty penny on top of the price when valuing.




I agree with this Wysiwyg. I must add that the "increased number of  consumers" also have an *increased pool of funds *to draw on (money supply) only limited by the applicable interest rate.

Money is the only infinite resource 'known' or 'unknown' to man.


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## joeyr46 (7 November 2009)

Mofra said:


> They (we!) do. I can claim any interest deductions from margin or other loans and claim that against income earned from investment or trading activity. Deductability of interest is not asset class specific as far as I am aware.
> Any acquisition costs (be it stamp duty for homes or brokerage for equities) can be used to increase the cost base for CGT purposes as well. Again, not asset class specific.
> 
> Obviously it is more noticeable for property because the amounts claimed are generally much higher.




Interest against property can be claimed against personal income but not sure in fact I don't think interest against shares can, has to be claimed against profit from shares which means you have to sell them to get the tax break, (Not certain about this will stand corrected if I'm wrong but have never leveraged shares so a non issue for me.


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## Quincy (7 November 2009)

> *Home buyers must be prudent - Rudd *
> 
> From: AAP November 07, 2009 1:27PM
> 
> ...




Don't worry about our meddling with the market and don't worry about our decison to enable foreign investors to more easily enter the market, "PRUDENCE FROM HOME BUYERS MUST TAKE OVER"

oh yeah . . . and don't forget to check your bank balance if you have bought a property or are considering buying one !


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## condog (7 November 2009)

Im the last to back anything Kevin Rudd has done economically. In fact Id be more likely to let my 8 year old run the economy then Rudd. But fact is he doesnt control interest rates, stam duty, investor sentiment and the other major factors that cuase property bubbles.....

If you want to blame anyone, the state governements are far more to blame for pathetic planning forsight, holding back develelopment of land, allowing ownership of large chunks of prime development land to fall into developers clutches that then control the release of it to suit price structures they desire.

In terms of banks being to blame, thats complete nonsense ... The major cause is supply / demand factors, of which the banks and RE agents are minor players.

Whileever our disposable incomes keep rising, the money supply (via federal and state deficits ) keeps rising and whilever supply is hampered by poor planning and land allocation prices will keep climbing. Governments trying to recoup infrastructure costs from developers only exacerbates the problem....

Hence the reason NSW has the biggest supply issues, because the Government has absolutely no idea.


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## Taltan (7 November 2009)

joeyr46 said:


> Interest against property can be claimed against personal income but not sure in fact I don't think interest against shares can, has to be claimed against profit from shares which means you have to sell them to get the tax break, (Not certain about this will stand corrected if I'm wrong but have never leveraged shares so a non issue for me.




Interest against shares can also be claimed against personal income exactly the same way as property can. You don't need to sell the shares to get the tax break.

The big difference recently has been the interest rates at which the banks will lend. The bank will lend at 6% for a unit in sticksville but still charge 8%+ for borrowings to invest in a big 4 bank. On the other hand borrowings for shares are much more flexible


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## joeyr46 (7 November 2009)

Taltan said:


> Interest against shares can also be claimed against personal income exactly the same way as property can. You don't need to sell the shares to get the tax break.
> 
> The big difference recently has been the interest rates at which the banks will lend. The bank will lend at 6% for a unit in sticksville but still charge 8%+ for borrowings to invest in a big 4 bank. On the other hand borrowings for shares are much more flexible




Thanks for that was not sure thought it could only be claimed against profits from shares not against income from other things


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## joeyr46 (7 November 2009)

Dont know the signicance or if it actually matters as far as prices are concerned but according to the Aust Bureau of Stats only 33% of homes are owner occupied in year 2007/8 down 10% from 1994/5 whilst mortgages doubled to an average $150000


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## Vizion (7 November 2009)

condog - I agree with some of you points. However this country did not have an explosion in house prices till it allowed the inequalities that the tax breaks of negative gearing and reduced CGT enabled. That IS tax law driven and that IS in the hands of the federal government. 
Inflation is also controlled by an institution, we have inflation for a reason, to continue our usage of debt. do we all actually think the RBA is totally independent? Ahem... sure... right...
These policies allow people with access to cheap money to kept making money. The money keeps flowing through banks & finance institutions who make profit from interest charged etc.

Joey - it has major significance.

Anyone who thinks our current system is NOT set up to maintain the status quo of people with cash to keep making cash, has rocks in their head. It has NOTHING to do with ensuring we have sufficient rental properties for the population or any of the other reasons given. Zilch... Zero... Nada

The rocks comment is not directed at any one person incidentally. 

Questions.
Who did the increased 1st home owners grant help most? Did it enable more people to enter the housing market or did it keep the money flowing through the banks and finance institutions...

More Questions.
Can you create demand & artificially control that through supply? Who drives up the cost really... The people who get the loan or the people who allow you to borrow ever larger amounts.

Answers on a postcard no later than next Tuesday when we will draw for the meat tray.


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## Quincy (8 November 2009)

condog said:


> Im the last to back anything Kevin Rudd has done economically. In fact Id be more likely to let my 8 year old run the economy then Rudd. *But fact is he doesnt control *interest rates, stam duty, investor sentiment and *the other major factors that cuase property bubbles..... *





As mentioned any number of times in this thread, supply and demand is a major factor with regard to the direction that property prices take.

Demand to some extent has been influenced by the Rudd Govenment's involment : - 

1. Record immigration levels (federal government policy) increases demand ;
2. The First Home Owners Boost introduced in October 2008 (federal government policy) increased demand ;
3. Federal government decision earler this year to enable foreign investors to more easily enter the market because of a relaxation in the rules covering foreign investment in Australia's property market - this has increased demand for property from foreign investors.



> If you want to blame anyone, the state governements are far more to blame for pathetic planning forsight, holding back develelopment of land, allowing ownership of large chunks of prime development land to fall into developers clutches that then control the release of it to suit price structures they desire.




Yes, I agree with this point of view. This is the other side of the coin - the "supply" side of the equation.

Given the current circumstances, house prices will keep rising IMO. Unemployement and interest rates may slow the rate of increase but won't stop it.  Until the supply issue is properly addressed there is only one way for house prices to go.


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## Beej (8 November 2009)

joeyr46 said:


> Dont know the signicance or if it actually matters as far as prices are concerned but according to the Aust Bureau of Stats only 33% of homes are owner occupied in year 2007/8 down 10% from 1994/5 whilst mortgages doubled to an average $150000




I think you will find that 33% figure represents the number of homes in Australia owned outright with no mortgage. In 94/95 it was 42%. About 70% of homes are owner occupied (meaning 37% or so have a mortgage), and about 30% are rented.

PS: Taltan is 100% correct about negative gearing able to be used for interest expenses related to *any* income producing investment, including property, shares etc. And Taltan, as for margin loan rates vs home loan rates, easy, use your home loan to borrow at lower costs for shares - that's one of the many non obvious benefits of PPOR ownership - easy access to lowest cost finance for other purposes.

Cheers,

Beej


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## Macquack (8 November 2009)

condog said:


> In terms of banks being to blame, thats complete nonsense ... The major cause is supply / demand factors, of which the banks and RE agents are *minor players*.




Real estate agents are minor players, but the banks are *major players*.

A definition of Demand -


> The amount of a particular economic good or service that consumers want to purchase at a given *price*.




Don't see too many people paying cash for their properties, so saying banks are minor players is nonsense.


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## condog (8 November 2009)

Macquack said:


> Real estate agents are minor players, but the banks are *major players*.
> 
> A definition of Demand -
> 
> ...




If you see it this way, thats your opinion and your fully perfectly entitled to it...  even if I think your wrong... pointless arguing over this ...


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## condog (8 November 2009)

The flip side is that right now interest rates which would usually pull back house prices may infact exacerbate the issue and force house prices up....in some markets...

EG: Sydney which has chronic and serious supply issues, a rise in interest rates may actually cause less development and actually exacerbate the supply side issues......

Based on this there is  a very strong case for interest rates to be pegged to borrowing in particular markets....

Eg Sydney investors at 3.5% base rate while perth might be at 4%  ???? Not sure of the costs or mechanics but it makes more sense then the farcical system of hitting everyone with the same club.


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## Gordon Gekko (8 November 2009)

I found this article interesting and wonder how the results will affect most asset classes in particular housing.

Yes I'm still a bear.

http://www.scribd.com/doc/21663635/Debt-Deflation-October-2009


Best

G


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## robots (8 November 2009)

hello,

good afternoon brothers, great day again across Australia

10yrs ago banks were lending, 20yrs ago banks were lending, 30yrs ago banks were lending, and at 90% lvr's across those time frames as well

some of the big4 weren't into CDO's or the creation out of thin air, it is bigger than the four pillars but they are a necessary tool

for the record, it is my BELIEF that prices are doing well because many are living large here in Australia and many realise this and want to secure a piece of that for the years to come, 

and if that makes for an investment then so b it

this place is paradise, utopia, the whitelight,

thankyou
Doctor Robots


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## Mofra (9 November 2009)

condog said:


> If you want to blame anyone, the state governements are far more to blame for pathetic planning forsight, holding back develelopment of land, allowing ownership of large chunks of prime development land to fall into developers clutches that then control the release of it to suit price structures they desire.



Not sure if holding back the development of land is really a massive factor in overall house prices; just taking the example of Melbourne, we are already one of the geographically largest cities in the world with a population of litle over 4m. Population density is the factor here - governments don't want to be seen as promoting low density housing as it makes the provision of adequate infrastructure a nightmare. 



condog said:


> In terms of banks being to blame, thats complete nonsense ... The major cause is supply / demand factors, of which the banks and RE agents are minor players.



Disagree - if banks overnight tightened their LVR provisions to 80% max, prices in the FHB segment of the market _would_ stagnate for years. Credit is king.


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## Mc Gusto (9 November 2009)

Gordon Gekko said:


> I found this article interesting and wonder how the results will affect most asset classes in particular housing.
> 
> Yes I'm still a bear.
> 
> ...




Great presentation.

I am with you...bearish on property as an asset class


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## joeyr46 (9 November 2009)

Beej said:


> I think you will find that 33% figure represents the number of homes in Australia owned outright with no mortgage. In 94/95 it was 42%. About 70% of homes are owner occupied (meaning 37% or so have a mortgage), and about 30% are rented.
> 
> PS: Taltan is 100% correct about negative gearing able to be used for interest expenses related to *any* income producing investment, including property, shares etc. And Taltan, as for margin loan rates vs home loan rates, easy, use your home loan to borrow at lower costs for shares - that's one of the many non obvious benefits of PPOR ownership - easy access to lowest cost finance for other purposes.
> 
> ...



yes article was badly written always thought about 2/3rds were buying or owned but even then 10% less owning is not a good sign although figures may be rubbery due to what the money is borrowed for as in investments or pleasure


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## robots (9 November 2009)

hello,

http://www.theage.com.au/opinion/po...-wounded-a-day-20091109-i4gj.html?autostart=1

just posting this up to highlight the situation and the DIFFERENCE between us and many other countries of the world

all reasons why australia is different, paradise around every corner 

and yes a race occurs to grab a part of it

thankyou
Doctor Robots


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## robots (9 November 2009)

hello,

no surprise you can pick up a joint in down town Detroit for 10k

thankyou
Doctor Robots


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## Taltan (10 November 2009)

40 years ago before globalisation, world's best practice etc. stock markets too did not affect each other the Dow would gain 2% the Nikkei would fall 1% and the ASX would be steady in one day with very little international correlation. 40 years on and of course the biggest indicator of daily movement is what happened on Wall Street. 

Its because houses in Detroit are going for 10k I believe that in the long-term there will have to be a correlation between the price of a house in Detroit, Paris & Sydney. More specifically a balance between the rental yields on those houses. If Chinese investors can get better returns for housing in Detroit they will eventually go there. This is many years away but the like the stock markets it will happen


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## Mofra (10 November 2009)

Taltan, much of the reason for the new correlation in price is the correlation in business activity, from demand for goods being set on a global basis rather than a national one, to the competition for credit now being completely globally based as well.

A choice of where to live is much harder to set on the same macro-scale as there are occupational considerations to be had (ie Detroit as a city is a basket case financially with a shrinking population) as well as personal choices (many people prefer to live in proximity to their family & friends).


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## Taltan (10 November 2009)

Mofra that is why its many years away mostly because people are not free to move to another country. However as you said the competition for credit and goods (housing is a good) is now global. More and more housing investment is being done for profit not just shelter. This capital will invariably chase the best returns. I acknowledge this is all a fair way away but already there is a correlation between Qld, NSW & Vic house prices that is stronger than 30 years ago.


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## satanoperca (10 November 2009)

> The mortgage market contracted in October after buyers were spooked by the first increase in interest rates in 19 months, according to a survey.
> 
> Mortgage broker AFG’s monthly Mortgage Index showed that the mortgage market contracted 11.5 per cent.




& just a couple more IR rises for a happy new year.

If they were spooked with 0.25% increase, what is going to happen when rates rise by x8 of 0.25%. 

Cheers


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## robots (10 November 2009)

Taltan said:


> 40 years ago before globalisation, world's best practice etc. stock markets too did not affect each other the Dow would gain 2% the Nikkei would fall 1% and the ASX would be steady in one day with very little international correlation. 40 years on and of course the biggest indicator of daily movement is what happened on Wall Street.
> 
> Its because houses in Detroit are going for 10k I believe that in the long-term there will have to be a correlation between the price of a house in Detroit, Paris & Sydney. More specifically a balance between the rental yields on those houses. If Chinese investors can get better returns for housing in Detroit they will eventually go there. This is many years away but the like the stock markets it will happen




hello,

oh yeah, chinese investors are buying everything, every weekend

this rumour was started by the anti-property blogging crew and has grown to now be dirty chinese gov money, the kids, the gold fish, they never sell for eternity

people aren't interested in rental yield, but good luck if you like following shonk markets

thankyou
doctor robots


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## Taltan (10 November 2009)

Robots Unlike Mofra I didnt expect you to grasp my comments. However I did expect you to understand yields and return on investments concepts, but I guess one should never assume.


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## robots (10 November 2009)

hello,

2001 the same reasons were used, its many years away but it will happen

03/04 the same reasons were used, but it will happen

09 the same reasons, but it will happen

my heart goes out to the people who listened to these spruikers and followed them into the grave, please hold them accountable

schiller, keen, GPHC and not robots, beej or kincella

many ignored the true believers and still do sadly so its make sense people get so sensitive about it

but, thanks for your opinion

thankyou
doctor robots


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## satanoperca (10 November 2009)

Hello,[

QUOTE=robots;508692]
oh yeah, chinese investors are buying everything, every weekend
[/QUOTE]

Any facts/figures to back up this claim.

Cheers


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## MACCA350 (10 November 2009)

robots said:


> hello,
> 
> oh yeah, chinese investors are buying everything, every weekend
> 
> this rumour was started by the anti-property blogging crew and has grown to now be dirty chinese gov money



Was speaking to a friend on the weekend(he's been an estate agent for about 20 years and is an owner of his current agency and is also an advocate and auctioneer). 

He mentioned he has most definitely noticed the international presence both at auctions and in private sales, and were not talking just one or two here, in many cases they are the majority.

You may laugh, stick your fingers in your ear and sing la-la-la or bury your head in the sand, but it is real like it or lump it.

cheers


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## robots (10 November 2009)

MACCA350 said:


> Was speaking to a friend on the weekend(he's been an estate agent for about 20 years and is an owner of his current agency and is also an advocate and auctioneer).
> 
> He mentioned he has most definitely noticed the international presence both at auctions and in private sales, and were not talking just one or two here, in many cases they are the majority.
> 
> ...




hello,

thats a good one for the sig Macca350,

8x average income to average house,

price rises all across the country

no crash but record prices which clearly indicates the only thing affected by the GFC is the shonk market

*You may laugh, stick your fingers in your ear and sing la-la-la or bury your head in the sand, but it is real like it or lump it*

and my BELIEF is because this is paradise 

thankyou
doctor robots


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